Nasdaq concedes defeat in LSE battle 20 Aug 2007 The US group wasn t likely to turn its 31% stake in its evergrowing London rival into a takeover. It leaves with a modest profit. But if it now doesn t beat Borse Dubai s $4bn rival bid for Nordic operator OMX, Nasdaq will suffer a serious credibility bashing.
Skype would be better off with Facebook or MySpace 20 Aug 2007 The internet telephony firm now boasts 220m users. But it has few obvious synergies to bring to its online auctioneer parent, Ebay. But as an adjunct to a social networking site like Facebook or MySpace, it s easy to see how Skype might add some value.
HSBC Korea bank bid looks politically savvy 20 Aug 2007 Korea Exchange Bank currently trades at just 1.5 times book. That probably reflects its troubled ownership picture under Lone Star Funds. After December s Korean election, KEB s ownership troubles could dissipate. That would cause its sale price to soar.
Carry trade unwind deepens liquidity crisis 17 Aug 2007 For years, hedge funds and others have borrowed in cheap yen and lent wherever yields were high. That helped sustain the credit bubble. The trade is now being reversed, at an accelerating pace. The result will be deleveraging around an already creditsqueezed world.
Will troubled markets thwart Akzo-ICI deal? 17 Aug 2007 The Dutch chemicals group s shares have fallen on fears that financing issues at partner Henkel may block its £8bn bid for its UK rival. Those doubts seem unfounded. But in troubled markets, shareholders might not be keen on a high multiple deal in a cyclical sector.
No reason to bail out of Indonesia 17 Aug 2007 In an emerging market debt crisis, Indonesia would suffer. Yet the Indonesian economy appears stable, with continuing solid growth. That suggests emerging markets may suffer only modestly unless a world recession hits. Current heavy selling may be overdone.
Beleaguered Bear buoyed by banter 17 Aug 2007 An analyst at an obscure Florida brokerage claimed the Chinese could take a stake in Bear Stearns. The bank s stock jumped 13%. But the report was based on unfounded speculation, as the writer admitted. It looks like frightened investors will grab at anything.
Bernanke put not quite what it seems 17 Aug 2007 The US central bank cut the littleused discount rate by 50 basis points. It hopes to unblock credit markets but not add moral hazard. Markets rejoiced initially at the news, as if to welcome a Bernanke put . But the Fed s signals are much more mixed.
Market dislocation produces $42bn merger arb 17 Aug 2007 That s the total gap between what s being offered in 25 big pending deals and where they now trade. In six deals, spreads are over 10%. Turmoil is undermining confidence in deals like Sallie Mae, ABN, BCE and Sainsbury. This may be an opportunity but only for the bravest.
What’s your porn star name? 17 Aug 2007 Been bitten by a zombie? Received a buttery nipple? No? Then you haven t been one of the Facebook users downloading 80m such applications. As frivolous as it sounds, VCs and bankers have been crawling all over the website for investment and M&A ideas with good reason.
Questions linger in Dell accounting scandal 17 Aug 2007 Investors breathed a sigh of relief after the computer group's internal probe revealed smaller than expected restatements. Yet Dell admits unnamed senior executives participated in fraud. Ongoing SEC and Justice Department probes may shed more light.
Emerging markets may be last to crash 16 Aug 2007 In this panic, emerging markets bonds have held up well. They re yielding less than higher rated bonds from richcountry companies. That s the reward of years of high liquidity and low interest rates. There s much more of a cushion now than a decade ago.
Solution to ratings fiasco is less regulation 16 Aug 2007 Red tape will be the kneejerk reaction of politicians to the way agencies awarded tripleA ratings to mountains of structured credit junk. That s exactly the wrong response. The derivatives bubble occurred because agencies have semiofficial status. They need deregulation.
Activism’s golden age may be coming to an end 16 Aug 2007 With the leveraged finance market effectively shut, uppity investors can t simply push companies to sell themselves or gear up. Unless they have novel ideas about boosting earnings and improving operations, activists will be screaming in a vacuum.
Credit spectre haunts bond insurers 16 Aug 2007 The market has pummelled stocks of firms like MBIA and Ambac on fears of big losses on the CDOs they have insured. That s possible, although they ve weathered credit storms before. More troubling may be what the crunch means for their access to capital.
Central banks should hold the line on rates 16 Aug 2007 The market is banking on a Fed rate cut and ECB inaction. But the current crunch is a liquidity problem, not a rate squeeze. Lower rates wouldn t help money markets clear. But they might renew financial overconfidence. That s the last thing the world needs.
Countrywide draw-down signals distress 16 Aug 2007 The former mortgage darling has seen the price of insuring its credit rocket after pulling down its full $11.5bn credit line from its banks. That shores it up for now. But with its debt trading in the gutter, it ll be hard to raise new funds unless the mortgage market improves.
Nestle’s downgrade could mark end of credit trend 16 Aug 2007 The Swiss food company has lost its AAA rating leaving only six European and US nonfinancial groups sporting the top credit badge. The number of AAA companies has shrunk by 90% over 25 years. Yet credit market indigestion suggests the pendulum may soon swing back.
Europe’s mortgage minnows may become easier bait 16 Aug 2007 It was easy for small lenders to flourish when money was cheap. But reduced liquidity has exposed the benefits of size and diversity. Many mortgage banks may be able to brave the storm. But if it rages too long, they might be driven into the arms of bigger rivals.
Investment banks find a way around commitment letters 16 Aug 2007 Banks have mostly given up on pledging money for buyouts. But that doesn t mean they will stop doing deals. One idea doing the rounds is for LBO clients to bid for a subsidiary, such as Kraft s Post cereal, and use the parent as a financier.
Meet the LBO that only lasted six months 15 Aug 2007 Even by current standards, Simon Halabi's leveraged buyout of health chain Esporta was short he only completed the deal in February. Unfortunately for the Syrian billionaire, it wasn't very sweet: he's likely to lose £150m. But the credit crunch isn't the only culprit.
Flowers gets half way out of NIBC 15 Aug 2007 The private equity boss has got Iceland s Kaupthing to buy his troubled Dutch bank, NIBC Holding, for E3bn. But he only gets some cash now. Kaupthing is paying a lot in shares, which Flowers can t sell for up to two years. If NIBC blows up again, he'll still be on the hook.
America won’t follow Ancient Rome soon 15 Aug 2007 The US Comptroller General sees striking similarities between the US and ancient Rome. But this popular analogy falls apart on examination. All empires decay. But the sustainability challenges that David Walker sees are longterm and by no means insuperable.
Quality assets are no shield against credit crunch 15 Aug 2007 Especially if your assets don t match liabilities. Look at Thornburg, a US mortgage group whose stock fell 46% due to margin calls. It may make highquality loans, but it uses shortterm debt. That leaves it exposed to lenders whims. And they re running for the exits.
Why is Wall Street afraid of bailouts? 15 Aug 2007 Bear Stearns lent money to its troubled hedge fund. And Goldman essentially held a rights issue for a quant fund. But both firms deny they were bailouts. Banks have increasingly taken on huge offbalance sheet risks. This is just the tip of the iceberg.
Europe and euro look past their peaks 15 Aug 2007 European growth faltered in the second quarter of this year. The increase in interest rates and the rise in the euro have taken their toll. The ECB should deliver on its promised September rate hike. But then it might have to pause sooner than it hoped. The euro looks vulnerable.
KKR’s new IPO prospectus hedges its bets 14 Aug 2007 Turbulent markets forced the buyout shop to slice a 175word essay on the benefits of cheap debt out of the new version of its prospectus. And it has toned down rhetoric throughout. Rather than a platform for sourcing and making investments it s now just a firm .
China reverses global financial role 14 Aug 2007 For most of the last decade, China has exported deflation and consumer goods. But its huge trade surplus is leading to domestic inflation. Higher prices will also be exported, both directly and through a rising renminbi. The ultimate result is higher Western interest rates.
Don’t count Wal-Mart out just yet 14 Aug 2007 WalMart shares tumbled 5% after the retail giant slashed its earnings forecasts on weakness in consumer spending. But there are some bright spots. WalMart won't turn the ship around overnight, but it has the makings of a contrarian bet.
Banks must honour credit commitments 14 Aug 2007 The market for Canadian assetbacked commercial paper is in turmoil after banks declined to provide emergency funding. But the banks should provide liquidity regardless of their legal position. If they don t the credit crunch could get much worse.