Seat Pagine is LBO poster-child for wrong reasons 2 Dec 2008 The buyout of the Italian directories publisher was Europe s largest leveraged deal in 2003. Now the company is seeking breathing room on part of its E3.1bn debt mountain. Even if the banks oblige, the Silver private equity consortium which controls it faces difficult choices.
Why are investors taking money out of hedge funds? 2 Dec 2008 The average hedge fund is down more than 20% this year, but has still beaten stocks and other investments. Yet investors look set to pull out perhaps a quarter of their cash. For one Highbridge fund, the figure is 36%. Others could lose more. Breakingviews offers six reasons why.
Bank of Russia nears decision time on the rouble 2 Dec 2008 Russia s central bank has softly managed the rouble down since August, spending $150bn worth of reserves in the process. But it may have to choose a more radical, cleancut devaluation in view of falling oil prices and looming current account deficits.
The Fed’s quantitative easing: A guide for the perplexed 2 Dec 2008 The Federal Reserve looks to be taking a page from the Bank of Japan s book and using money supply growth, rather than interest rate targeting alone, to spur the US economy. With rate cuts proving ineffectual, it may have little choice. Dwight Cass explains.
Tesco fightback shows early promise 2 Dec 2008 The UK retailer is having some success in meeting the challenge posed by discounters and tougher domestic competition. Cheaper ranges, cost cuts and disciplined cash control are paying off. But with a slowdown overseas and falling inflation, the pressure on Tesco remains intense.
GE Capital imagines a bleak economic outlook 2 Dec 2008 That is why the industrial giant s financing division is scaling down its balance sheet significantly, and revamping its funding model. If its assumptions are correct 9% unemployment, two airline liquidations, and crummy debt markets then further shrinkage may be required.
Dow takes big hit to seal Kuwaiti deal 1 Dec 2008 Kuwait Petroleum agreed to pay $9.5bn for 50% of the US company s basic chemicals business a year ago. Now, it s injecting $7.5bn and receiving a $1.5bn distribution from the JV. Dow s need to consummate another merger may explain why it accepted.
New Star speeds towards supernova moment 1 Dec 2008 The UK asset manager has virtually collapsed under £240m of debt, its shares falling to scrap. It may yet persuade lending banks to swap their loans for equity. But unless a solution is found fast, New Star will turn into a black hole.
New era of government borrowing changes the game 1 Dec 2008 US and European issuance will hit records as governments fund deficits and rescues. That s problematic for policymakers, who have to manage their countries rising debt burdens. It also raises challenges for others, including investors and nongovernment borrowers.
Deutsche’s loan to Trump put hope over experience 1 Dec 2008 Deutsche Bank hoped the US property magnate s early1990s meltdown was a onetime affair. But, like its problems with Harry Macklowe another developer with a troubled borrowing past its decision to overlook The Donald s record and extend him credit is now causing grief.
EU and France need to find compromise on bank package 1 Dec 2008 The EU is objecting to France setting formal credit growth targets in return for capital on the grounds that it may amount to unfair competition. But Europe is simultaneously pushing for an EUwide stimulus package. A way should be found of squaring the circle.
HuffPost valued at a tenth of NY Times 1 Dec 2008 The threeyear old political blog just raised $25m for a $100m valuation. While half what it was reportedly seeking, it s a tenth of the Times market cap. This either shows how bad things are for old media titans, or how wrongly the market is punishing them.
Gordon Brown less Moses, more Nick Leeson 1 Dec 2008 Comparing the UK PM to the Old Testament prophet who led the Jews towards the promised land as Lord Mandelson did at the weekend is ridiculous. A more apposite comparison might be a rogue trader who plays double or quits after running up massive debts.
Italy’s bank bailout could lead to meddling 1 Dec 2008 On the face of it Italy s belated recapitalisation plan seems market friendly, although woefully short on details. But the creation of a local government body to advise the Treasury is mysterious and could be a back door for pulling all sorts of strings.
Yahoo should just call Microsoft’s bluff 1 Dec 2008 Everyone s losing out to Google. Yahoo says extra scale would reverse the trend. If it really believes that, it should make a public offer of $8bn in stock to Microsoft in exchange for MSN and put CEO Steve Ballmer on the back foot.
Berlusconi shows Murdoch who is boss in Italy 1 Dec 2008 Italy s prime minister has doubled value added tax for pay TV to 20%. That s hurt the Sky Italia business of media rival Murdoch. The move could give Berlusconi s terrestrial TV network a fillip at Sky s expense. It's the latest reminder of Italy's hostile media terrain.
Volvo sale plan may boost Ford’s bailout prospects 1 Dec 2008 It should have unloaded the Swedish car maker when it sold its other luxury brands. Buyers now will be hard to find. But showing sceptical US lawmakers that it s willing to take draconian steps to restructure may help Ford s case when it goes hat in hand to Congress this week.
Repossession reprieves are a gamble 1 Dec 2008 RBS is giving defaulting mortgage borrowers longer payment holidays if needed. There s political capital in keeping people in their homes which means other lenders are likely to follow suit. But the policy defers painful decisions and risks distorting the housing market.
Ryanair’s E750m bid puts Aer Lingus on the spot 1 Dec 2008 The lowcost carrier is having another pop at Aer Lingus after pulling a hostile bid in 2006, and has cut its offer by 50%. Aer Lingus s poor performance has made the airline vulnerable. But investors should still price in the risks of renewed union and EU opposition to any deal.
Itinere deal keeps Sacyr from the emergency room 1 Dec 2008 Sacyr's E7.9bn sale of its tollroad unit helps cut its E19bn debt mountain, and allows the Spanish construction group to meet debt payments for the next year or so. But it may not be enough in the medium term. The buyer, Citi Infrastructures, has got a good, if complex, deal.
Redemptions leave hedge funds shaken 1 Dec 2008 Investors last opportunity to pull out money this year is past. Fund managers can now take stock of the damage perhaps involving as much as a quarter of the industry s shrunken assets. Even Paul Tudor Jones, an industry veteran, is rethinking the way he does business.
Sweden’s slow-motion car crash 1 Dec 2008 Ford and GM have asked Sweden for financial assistance with their struggling Volvo and Saab units. But Sweden s scope to help is limited even if it wants to. It all shows how vulnerable foreign subsidiaries are when global owners implode.