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Gibson Greeting Cards

In: GLOBAL DERIVATIVE DEBACLES From Theory to Malpractice

Author

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  • Laurent L Jacque

Abstract

Gibson Greeting cards are more likely to conjure images of Santa Claus than being associated with Wall Street's daring and possibly unscrupulous financial engineers. The Cincinnati, Ohio-based manufacturer of consumer products specializing in greeting cards and wrapping paper had sales revenue reaching $547 million in 1993 with profits of $20 million that same year. Gibson's unlikely and traumatic foray in the world of arcane derivatives was motivated by the desire to reduce funding costs. In 1991, Gibson had raised $50 million in fixed rate debt: the coupon interest rate was set at 9.33% with repayment of principal staggered over the period 1995 to 2001. When interest rates started to decline, Gibson unfortunately found itself unable to prepay the bond issue because of a restrictive clause in its indenture…

Suggested Citation

  • Laurent L Jacque, 2015. "Gibson Greeting Cards," World Scientific Book Chapters, in: GLOBAL DERIVATIVE DEBACLES From Theory to Malpractice, chapter 13, pages 217-220, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814663267_0013
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