Distressed debts hit Goldman Sachs
Traders got burned by a constellation of souring debts tied to a coal-mining giant and struggling mall retailers, as well as wagers linked to the US dollar
New York — Goldman Sachs Group’s fixed-income revenue was so unexpectedly weak in the first quarter that last week’s earnings report left the stock tumbling and Wall Street buzzing over what happened. Part of the answer is now emerging. Traders got burned by a constellation of souring debts tied to a coal-mining giant and struggling mall retailers, as well as wagers linked to the US dollar, according to people familiar with the matter. The bank incurred tens of millions of dollars in losses on companies including Peabody Energy and Energy Future Holdings. Borrowings from retailers including Rue 21, Gymboree and Claire’s Stores also stung, the people said. The behind-the-scenes losses contributed to a disappointing profit, announced April 18, that left analysts and shareholders puzzling about what went wrong. The firm’s fixed-income desks handling bonds, currencies and commodities generated $1.69bn in revenue, about $340m below estimates and barely higher than a year-earlier, which w...
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