Settlement Risk

You've sold a bond to a buyer who came to you through Goldman Sachs. Is there risk that the buyer, paying $50 million for that bond you'd owned for 7 years, and which has 13 years left to maturity...will disappear? Not settle? Not pay? Sure, there's risk. Small, but it's out there.

This throw-away issue became a real one in the crisis of 2008/09, when there was no liquidity anywhere in the markets, meaning that a lot of transactions didn't really complete or settle. That is, the buyer went bust between the time they'd committed to buy...and when the actual wire transfer of the cash was due.

Can happen. Caveat Emptor.