Auction-Rate Securities Cover Headlines With Bristol-Myers Squibb Loss. The broader investment world is getting a crash-course in the arcane world of auction-rate securities as news of Bristol-Myers Squibb's $275 million impairment charge on an investment of $811 in ARS hit the wires this week. (See our "Link of the Day" and the Bloomberg article.) Auctions began failing in August, causing these securities to turn into longer-term holdings and causing an exodus from the formerly $300 billion sector. Though just 2% ($6 billion) of the sector has had problems, ARS were already reeling from an accounting decision to classify them as non-cash holdings. Today's Wall Street Journal article "Credit Woes Hit in Unlikley Places" says, "Bristol-Myers, which has traded auction-rate securities for nine years, is hardly alone. CFO Andrew Bonfield says his auditors, Deloitte & Touche, tell him they have around 70 clients who are dealing with issues like this." Other companies, like 3M and USAir, have taken smaller, similar charges. The demise of ARS is one reason for recent massive inflows into money market funds.

Email This Article




Use a comma or a semicolon to separate

captcha image