In addition to the $5 billion from Berkshire Hathaway, which comes in the form of perpetual preferred shares, Goldman will raise at least $2.5 billion in common equity in a public offering.
Berkshire Hathaway will have warrants to buy another $5 billion in common stock. The perpetual preferred stock will have a dividend of 10%.
I was buyint GS for some of our clients last week, so this is obviously music to my ears. On the other hand, 10% on that preferred is a little steep. I saw GS short term bonds for sale today with 9% yields which I’m sure won’t be available tomorrow.