Lehman serves up amuse-bouche 8 Sep 2008 Jeremy Isaacs, the Europe and Asia boss, is quitting after Bart McDade pipped him to become Dick Fuld's heir apparent. Other senior posts are being shuffled. But the real meal will come next week when the firm details plans to spin off its bad bank and replenish capital.
Conoco puts BG under high pressure 8 Sep 2008 The US major has offered A$9.6bn for half of Origin Energy s coal gas assets, trumping BG s offer of $14bn for the whole thing. BG isn t out for the count, since it has cash and certainty on its side. But beating Conoco s offer will be costly.
GSE bailout turns tables on CDS players 8 Sep 2008 Selling default insurance on Fannie and Freddie once looked brave. But it turned out to be a winning bet. The bailout has triggered the contracts, but a lot of the GSE debt still trades around face value. Protection sellers have earned premiums and shouldered little risk.
Fannie and Freddie Q&A 8 Sep 2008 The nearnationalisation of the Fannie Mae and Freddie Mac raises some basic questions. Richard Beales and Edward Hadas ask and answer them.
UK building societies should stay boring 8 Sep 2008 Without uppity shareholders to please, mutuals should be well placed to weather a downturn. The Derbyshire and Cheshire are merging with Nationwide because they were too racy. That doesn t preclude further consolidation but does mean it s less likely among duller peers.
HBOS should sell Australian assets now 8 Sep 2008 It may not look like the UK lender needs more capital. But another 5% drop in house prices would push the loantovalue ratio on a third of its mortgages above 90%. That could damage capital though impairments and higher riskweightings. HBOS should move before there s a problem.
New Fannie and Freddie bosses look good on paper 8 Sep 2008 Herb Allison and David Moffett bring fresh blood and some muchneeded financial and organisational nous to the ailing mortgage giants. Good though that is, the US government is now calling the shots. That reduces the role of the chiefs to heavily supervised caretakers.
Let the market kill the GSEs – politicians won’t 8 Sep 2008 Fannie Mae and Freddie Mac have no place in a wellordered economy, but are difficult to euthanize. The market, which has brought them down, should finish the job. The GSEs' guarantee fees should be raised enough to make them uncompetitive once the mortgage market recovers.
TPG’s WaMu bet could test notion of control 8 Sep 2008 Some buyout investors shied away from the US thrift because they couldn t get full control. Now WaMu's CEO has rightly been replaced just months after TPG invested $2bn. It may not always be so easy, but if TPG can get most of what it wants, its rivals might have to rethink.
Paulson’s bazooka hits target with precision 7 Sep 2008 The nationalisation of Fannie and Freddie hits some right notes. The CEOs are ousted, equity and preferred holders are hosed and the businesses run off. This should help stabilise US housing. But it leaves the inevitable task of dismantling the GSEs to a future administration.
UBS’s new bond boss may miss some of the drama 5 Sep 2008 Carsten Kengeter looks like a reasonable choice to run UBS s fixed income business. He has been a senior banker for Goldman in Europe and Asia. But Wall Street s gardening leave policies will keep him from hitting the ground until March by then, a lot may have changed.
Markets wrong on details but right on fear 5 Sep 2008 European bank shares tumbled on Thursday when investors freaked out over the ECB s mild tightening of collateral rules. The Korean won and rouble are under exaggerated pressure. But overreactions can t be avoided in a great global deleveraging. They just make the situation worse.
It’s still the economy, stupid 5 Sep 2008 The jump in US unemployment to a fiveyear high of 6.1% underlines that the November 4 presidential election is likely, for many, to be about the economy rather than nebulous values or even national security. Data due in the meantime are unlikely to be pretty.
Russia can stiff foreigners until oil prices drop 5 Sep 2008 With nearly $600bn of currency reserves, Russia can afford to support the rouble. While oil prices are high, it can ignore foreign bleating in the short term. Once oil prices fall, life will become much tougher for Russian consumers. That s when the West will have some leverage.
Altria has lots to chew on with $10bn UST deal 5 Sep 2008 At some 18 times earnings, the maker of smokeless tobacco wouldn t be coming cheap. To justify the premium, Altria would need to cut about a third of UST s costs to make money it would need to go further. For its first deal since breaking up, the stakes are high.
Nakheel IPO echoes DP World 5 Sep 2008 The Dubai stateowned property developer has good reason to mull an initial public offering. Its $3.5bn convertible Islamic bond matures in a year and a listing would ease repayment costs. DP World used an IPO to similar ends, but Nakheel will hope the likeness ends there.
Dell can’t sell its way out of trouble 4 Sep 2008 The PC giant just released a mini laptop for $399. But another cheap offering won t patch Dell s wounds. Its business model is broken and its balance sheet is in disarray. Shareholders shouldn t expect a new product to be the salve.
Friends looks a bad bet for Cowdery 4 Sep 2008 The UK insurer s investors may welcome renewed interest from the entrepreneur the moribund stock price has perked up. But Friends looks cheap because it has problems. Breaking up the company and selling the unwanted parts would be tricky. It s a deal Cowdery should avoid.
Boeing should avoid making Big Three promises 4 Sep 2008 A strike would threaten production, including of the muchdelayed Dreamliner. With orders flowing amid stilllimited competition, Boeing may be tempted to offer more healthcare and other benefits. But as Detroit learned, longterm commitments are dangerous.
Pension funds face doubts over PE allocations 4 Sep 2008 How much should investors entrust to buyout firms after the LBO bust? Skewed returns and the effect of leverage leave the answer murky and investors uncertain. That may help explain why private equity funds have managed to raise a lot this year, but not as much as in 2007.
Nestlé’s loss looks to be Unilever’s gain 4 Sep 2008 Paul Polman missed out on the top job at Nestlé. Now he will be the first outsider to run Unilever. He needs to get the internal candidates he pipped to the post onside. But experience at Nestlé and P&G should help him give his new employer some much needed zip.
Alaska’s oil and welfare state are keys to Palin’s success 4 Sep 2008 The nominee for vice president s strong fiscal record wasn t hard to achieve 2008 revenues were 40% above forecast, making budgeting easy. Yet Alaska still gets far more from the feds than it pays. Even resourcerich Hugo Chavez gets by without such largesse.
The next nasty surprise for US housing and banks? 3 Sep 2008 Many hope US home prices will recover enough in the next few years to head off mass defaults on the $200bn of option adjustablerate mortgages outstanding. That looks increasingly farfetched. The loans may reset sooner than expected causing a new wave of delinquencies.
Ospraie losses hurt investors, managers – and Lehman 3 Sep 2008 The commodities hedge fund group is closing its $2.8bn flagship fund after it lost nearly 40% of its value. It shows how tough life has been for hedge funds. Fund investors will feel the pain, as will Ospraie s respected managers. Poor old Lehman has a walkon role, too.
Bankrupt LBO targets reveal lax lending 3 Sep 2008 The failures of US retailers Linens n Things and Mervyn s don't look good for buyout barons. Mervyn s alleges they pushed it over the edge. And Linens may yet reward its owners. In both cases, private equity owners took advantage but only because lenders dropped their guard.
BP has been punished long enough 3 Sep 2008 The oil giant has deservedly underperformed rival Shell for the last two years. But it has worked hard to fix operational problems, and a resolution to the dispute over its Russian joint venture looks likely. What s more, BP is spending less than Shell to deliver higher growth.
Central banks wrestle with liquidity shortage 3 Sep 2008 Overnight interest rates look frozen for some time in the US, eurozone and UK. That won t help banks, which are unwilling to lend to each other. The authorities want to keep markets going without subsidising bad behaviour. That looks very tough in this prolonged credit crunch.
Deutsche Börse hedge funds should make aims clear 3 Sep 2008 Atticus Capital and The Children s Investment Fund say they want changes to the German stock exchange s Supervisory Board. But they don t say who should go or why. Oddly, they seem to back the bourse s strategy. They can t expect support if they are so opaque.
$100 oil isn’t cheap 3 Sep 2008 Oil prices are sinking towards $100 a barrel. But robust global demand suggests the price may not decline much more. Even at $100, the black stuff is still 50% more expensive than in 2007 and still enriching oilproducing countries to the detriment of economic growth elsewhere.
Colonial probably won’t go the way of Martinsa Fadesa 3 Sep 2008 After Fadesa went bust with E5.4bn of debt in July, many expected the Spanish property sector to collapse like skittles. Colonial, with E8.9bn of debt, is certainly at the mercy of its banks. But it's in all parties' interests to restructure the debt not tip it into bankruptcy.