Kazakh banks suffer from credit crunch 30 Sep 2007 A helterskelter property boom has been financed by foreign currency borrowing. With global wholesale markets shut, the big banks have had to resort to central bank funding. Fortunately, the oil price has made Kazakhstan so rich that it won t have trouble paying for a bailout if one is needed.
Recession could be best way forward for US 30 Sep 2007 The notion sounds heretical. But the Fed s effort to keep growth positive carries big risks higher inflation and a delayed workout of issues like inadequate saving, a weak industrial base and too much housebuilding. Retrenchment makes sense after years of excess consumption.
ABN battle damages victor more than loser 30 Sep 2007 RBS s likely success in the auction for its Dutch rival will come at a high cost. It s paying a huge price just as times are getting tough for investment banks. Barclays, by contrast, will suffer a reputational hit. But if it can show a clear strategy, that should be repairable.
Virgin Mobile IPO raises questions 30 Sep 2007 Richard Branson scored big with his UK cell phone group. Can he repeat with the $1bn valued float of his US mobile venture with Sprint? Perhaps, but the group s structure limits minority investor rights. Moreover, phone service to poor youth isn t the growth area it once was.
Buyout barons keep the LBO machine pumping 28 Sep 2007 Financing is hard to come by, but Cerberus and Bain both pulled off multibillion dollar leveraged buyouts in the past week. These deals illustrate the increasingly creative tactics buyout barons must embrace to keep their fee machines running.
UK buy-to-let loses fizz 28 Sep 2007 Buytolet investors have enjoyed fabulous returns in recent years. But as rates rise and house prices wobble the feast is over. Yet the sector s plight does not look desperate. Leverage is low and rising rents should allow most landlords to sit out harder times.
Is First Data credit’s dead-cat bounce? 28 Sep 2007 Banks placed over $9bn of KKR s loan package. That appears to bode well for coming deals. But it also mopped up a lot of demand. New leveraged loan investors are popping up. But unless the CLO market revives, demand for buyout megadeals will remain iffy.
Should loyalty programmes jettison airlines? 27 Sep 2007 As backwards as that may sound there may be more value in airline frequent flyer programmes than in their core business. Where it s been done, in Canada, it was a home run. That s why the Vikings have locked their harpoons on American Airlines.
Bankers test the limits with energy MLPs 27 Sep 2007 Energy companies are spinningoff billions worth of assets into Master Limited Partnerships. MLPs promise to pay a steady stream of cash to investors. But the type of assets going into new MLPs could make that promise hard to keep.
Wendel likely to turn up pressure on Saint-Gobain 27 Sep 2007 The French investment fund has built up a E1.6bn, 6% stake in building materials group SaintGobain. It says the surprise move is friendly. But Wendel s stated strategy has always been to "control" the companies it invests in. Saint Gobain s sleepy days are over.
Spanish superman flies to Rock’s rescue 27 Sep 2007 But that s not a big comfort to the struggling UK bank. Jose Maria RuizMateos may like the superhero s outfit but lacks his super powers. He doesn t appear to have the expertise or the funds to solve Northern Rock s problems. His approach may be just another publicity stunt.
Osmond won’t win Resolution with sub-market bid 27 Sep 2007 Offers below market price rarely win. There s little reason to think that the entrepreneur s lowball offer for the insurer will either. Sure, Resolution s alternative, a merger with Friends Provident, looks easy to beat. But Osmond will need to be more generous to do so.
Kazakhstan may be veering towards Putinism 27 Sep 2007 The cost doubling and two year delay at Kashagan has infuriated Kazakhstan, which bears much of the cost of the slippage. Putin tempts Kazakhstan to follow his tough antiforeigner policies and renew old ties. It will probably succumb to temptation.
Mol shareholders should pile on the pressure 27 Sep 2007 The Hungarian group vehemently opposes a E14bn offer from OMV, its Austrian oil and gas rival. Despite a 20% premium, the board won t talk. Yet Mol s shareholders are understood to favour a deal. Overcoming the shabby defence won t be easy, but investors aren t powerless.
Smiths’ new boss should break it up 26 Sep 2007 Where Philip Bowman goes, a sale usually follows. He got a good price for drinks business Allied Domecq and utility Scottish Power. Investors will hope the new chief executive can sprinkle similar magic dust on Smiths Group. A breakup of the UK conglomerate looks overdue.
Burma may be a value-added Western intervention 26 Sep 2007 Most countries where humanitarian intervention is contemplated are basket cases. Intervention can do little to bring prosperity. Burma s different. It s surrounded by Asian tigers and could be one, too. The best Western remedy would be to find a new leader.
Devil is in the detail of General Motors’ UAW deal 26 Sep 2007 It sounds positive. Offloading healthcare liabilities at a discount would shore up GM's balance sheet and free up some $3bn of cash a year. But the size of the discount is key. And GM would lose a lot of the benefit of setting up a healthcare trust if it throws in a backstop.
Quant funds off hook for August crisis 26 Sep 2007 Early academic work on hedge fund quantagion in August concludes computerdriven trading per se may not have kicked off the volatility. But the research implies it may not matter much as different hedge fund strategies are increasingly correlated, heightening systemic risks.
Lenders gain ground in debt-equity tug-of-war 26 Sep 2007 Not long ago, shareholder friendly tactics, which boiled down to leveraging up to enrich shareholders, pummelled lenders. But a new convertible bond deal by Standard Pacific shows this trend may anecdotally be reversing.
Bank of England auction attracts only embarrassment 26 Sep 2007 Attracting no bids at all after a public Uturn last week to supply the market with liquidity is another slap in the face for the Bank. Fear of exposure probably deterred financial institutions from turning to the Old Lady. Again King looks out of touch with the market.
Buffett should pull a Salomon on Bear 26 Sep 2007 The Nebraskan billionaire, said to be considering an investment in the Wall Street firm, has kept his powder dry waiting for opportunity. Bear s relatively cheap today. But rather than buy a stake, Buffett should make Jimmy Cayne et al sweat with convertible preferred stock.
Sarko budget shirks serious reform 26 Sep 2007 Only days after Fillon, the prime minister, said France was bankrupt , the government is sticking to a highspend and highdeficit trend. Reform of the bloated state apparatus will wait. Sarkozy has lost an opportunity to put his money where his mouth is.
Sliding dollar could result in new Plaza accord 26 Sep 2007 If the greenback crosses $1.50 to the euro, the pips will really squeak in Europe. Asian currencies, by contrast, haven t risen much. Political pressure will mount for a managed exchange rate system which pushes the yen and renminbi up against both the dollar and euro.
How far could US homebuilder stocks fall? 26 Sep 2007 Many have plummeted by half this year, but could have much further to go. In the early 1990s housing bust, they traded at only 50% of book. If asset values drop back to the levels seen before the worst excesses of the housing boom, homebuilder stocks may have to halve again.
Nasdaq almost locks up OMX 25 Sep 2007 The US exchange has secured a further 17% of shares in the Nordic operator from key shareholders, but at a much higher price. Fortunately for Nasdaq, its ally Borse Dubai has agreed to pay more than half the increased bill.
Echostar not pulling a Viacom with spin-off 25 Sep 2007 The satellite TV group is the latest media company to consider separating cashcow broadcast businesses from fastergrowing operations. This wheeze doesn t always create value as Viacom illustrates. But Echostar s plans look to be on the right track.
Paulson’s hedge fund boffins go back to the future 25 Sep 2007 The Treasury boss has assembled a group of hedge fund managers and one of investors to devise risk management best practices. But the industry tackled that issue in a similar way seven years ago. Despite the growth of funds since then, there may not be much to add.
E.on’s chairman gets the protectionist bug 25 Sep 2007 Wulf Bernotat, the head of Germany s largest utility, calls for companies to be protected from hostile takeovers. He s simply wrong. He also should know better. The Spanish government s hostility to E.on prevented it from taking over Endesa. Wulf is playing with fire.
How can sovereign funds make themselves acceptable? 25 Sep 2007 The flood of capital from the Middle East, Russia and Asia into Western banks, retailers and stock exchanges is causing queasiness. More transparency and greater independence will help. But, ultimately, it comes down to power: Russia is more threatening than Singapore.
Goldman appointed too late to Northern Rock dossier 25 Sep 2007 Getting financial advice on the Northern Rock crisis is a splendid idea. It s a pity the Treasury and FSA didn t do that weeks ago. If the authorities had had proper advice they might have come up with a constructive marketbased solution instead of a chaotic bailout.