California treasurer has right idea on CDS 31 Mar 2010 Bill Lockyer is asking the big banks that underwrite the state's bonds to tell him about their role in the market for related credit insurance. It's a fair question. And this kind of disclosure could be a better way to deal with CDS concerns than a hasty and simplistic ban.
Oil sands IPO shows investors’ short memories 31 Mar 2010 The stampede for Athabasca s shares is a tribute to Canada s extra heavy oil. Yet it was only two years ago the sector was hit hard by the economy. Greater bullying from Venezuela and its ilk make it all too easy to forget the potentially painful risks of another price slump.
Irish bad bank could succeed where others failed 31 Mar 2010 Irish banks may need as much as 32 billion euros in extra capital after the government imposed stiff haircuts on toxic loans. Much of this may have to come from the state. But Ireland's tough approach to its bad bank may finally allow its financial system to escape the crisis.
Ireland risks falling into debt spiral 31 Mar 2010 The government's postbubble pain is not over. Irish banks will be propped up, adding more debts to the deficits that come with a 7 percent GDP drop. Poor recovery prospects point to evermounting debts, unless something is done. Further public sector cuts seem essential.
Citi’s future embodied by executive out the door 31 Mar 2010 Bill Rhodes wasn t regarded in global financial centers as a hotshot investment banker or trader. He was Citi s, and by extension America s, world banker, advising clients and resolving sovereign debt crises. Though he s leaving, Rhodes represents what Citi needs to become again.
Cerberus reloads Remington maker with PIK toggles 31 Mar 2010 A deflating firearms bubble backfired on the private equity firm s plans last year for an IPO of gunmaker Freedom Group. Now triggerhappy credit investors are taking their rifles off safety and letting Cerberus unload some of its stake.
Gartmore shows that reputation is fragile 31 Mar 2010 Four months after a rocky IPO, fund manager Gartmore's suspension of a key employee has poleaxed the shares. As the IPO document put it in its list of risk factors: Gartmore's reputation could be damaged by factors such as litigation, regulatory action, misconduct... Too true.
Bank of England turns more radical on bank terror 31 Mar 2010 The bank's financial stability head says big UK lenders gain 50 bln pounds a year from being too big to fail and that they could become safer by studying the structure of al Qaeda. While provocative, his remarks suggest regulators are open to taking drastic action on bank size.
Yuan’s rise is inevitable and helpful 31 Mar 2010 China is suffering from growing pains, including a currency that is fixed but shouldn't be. The undervalued yuan threatens to create a disastrous trade war with the U.S. But compromise is within reach. China's hot economy makes a little yuan appreciation advisable now.
Obama embarks on all of the above energy policy 31 Mar 2010 Expanded oil and natural gas drilling off the U.S. coastline won't bring America energy security, much less independence. But by throwing a bone to the drill baby drill brigade, the president may increase political support for his overall climate change agenda.
Complacency seeps in as Fed stops buying MBS 30 Mar 2010 There are good reasons to expect private investors to fill the void after the central bank ends its $1.25 trn program. But with mortgage bonds trading at a premium and Fed officials talking about eventually selling their stash, buyers might want to exercise caution.
Willie Walsh gains upper hand in labour struggle 30 Mar 2010 The BA boss is playing a risky game by warring with his staff. Predecessor Bob Ayling was forced out of the UK airline a decade ago partly because he couldn't handle the unions. But, helped by public sympathy and support from shareholders, Walsh appears to be winning the war.
Dubai World lenders have some power in debt talks 30 Mar 2010 The emirate needs the consent of lenders before it can take full ownership of property unit Nakheel, a move it sees as vital to protecting the local economy. That gives Dubai World's creditors leverage in negotiating a better restructuring deal. They may have some success.
China cornered by iron ore price change 30 Mar 2010 BHP Billiton and Vale have persuaded Japanese steelmakers to accept quarterly prices for iron ore, ditching the system of annual fixedprice contracts. China may complain, but its hunger for iron ore meant it did not agree a benchmark price last year. It is likely to fail again.
Northern Rock debt payback at least a decade away 30 Mar 2010 The UK lender was recently split into a good and bad bank. As the latter winds down, it should repay a 23 bln pound taxpayer loan. But even assuming a benign recovery this will take at least ten years. Selling the good bank will help, but not enough to pay off the loan in full.
CIC should sit out Chinese bank capital raisings 30 Mar 2010 The sovereign wealth fund may be tempted to top up its investments in ICBC and peers as they raise funds. But CIC can get higher returns elsewhere, and public investors should be happy to make up the difference. Even with heavy dilution, the state's majority stake looks secure.
Good news wakes investors up to Ford risk 30 Mar 2010 Selling Volvo, paying back some debt and the UAW s warrants auction all underscore the automaker s recovery. But a 5 pct drop in the stock also suggests investors are rightly wary about Ford s valuation and the prospect of another dilutive equity fundraising.
Weak U.S. productivity could create Long Recession 30 Mar 2010 Financial crises are too often followed by slow and meager recoveries. It could happen in America, if business productivity slumps. The omens are not good, especially bad trends in the pace of innovation. Washington can help. While cutting deficits, it should promote growth.
CKX’s king of content struggles to keep crown 30 Mar 2010 With his personal finances tied up, Robert Sillerman is trying to take his firm which owns the rights to Elvis, Ali and Idol private. CKX shareholders will want a hunky premium, though. That will require Sillerman to put up more equity or lose his grip on the group.
CLO expirations could roil markets 30 Mar 2010 Call it a quirk of fate. Many European buyout loans will come due just as many CLOs, the structured vehicles that financed them, start winding down. That leaves a large funding gap. To close it, new investors are required. Borrowers should expect a rough and expensive transition.
Malaysia needs to get out of its economy’s way 30 Mar 2010 A government economic report highlighted the country s relative economic slippage since the Asian crisis and justifiably blamed increased government intervention and cronyism. PM Najib s speech pressed the right reform buttons, but entrenched opposition may stymie change.
OSI bid battle may end with a whimper 30 Mar 2010 After Japan's Astellas went hostile for the $3.5 bln U.S. biotech, many expected a bidding war to break out. OSI is trying to attract rival suitors, but has now opened its books to Astellas. A sweetened bid, around current market values, would probably seal the deal.
Time, gentlemen, for Punch Taverns chief to go 30 Mar 2010 Giles Thorley built Punch into Britain's biggest pubs group by using a private equitystyle balance sheet. The financial engineering has failed. Despite a rescue rights issue, the shares are lower today than when Thorley took over seven years ago. A pub pro might do better.
Insider-dealing probe should win reprieve for FSA 29 Mar 2010 The UK regulator is finally making progress in cracking down on market abuse. But it will be broken up if the opposition Conservative party wins the election. Though there is a case for rethinking supervision of banks, the Tories should leave the FSA's enforcement division alone.
U.S. savers doing little to fund economy’s needs 29 Mar 2010 The U.S. savings rate dropped to 3.1 pct in February, well below the level seen in 2009. That s a step in the wrong direction, with problematic knockon implications for both trade and budget deficits. Above all, low savings leave the U.S. ever more dependent on foreign cash.
JPMorgan’s WaMu tax grab less greedy than it seems 29 Mar 2010 Going after $1.4 bln in rebates might look a bit rich for a bank that snapped up its defunct rival for a song in 2008. But the deal would help taxpayers too, by capping FDIC s potential liability from the WaMu sale. If lawyers can agree, it s a swap that sounds reasonable.
Hot tech firms snub VCs, IPOs with D rounds 29 Mar 2010 Silicon Valley darlings have long faced a choice sell or go public. Now firms such as Facebook and Yelp are accepting later financing rounds that both raise capital and create liquidity. It s a good way to get the benefits of a float while staying private. Expect more.
Volvo victory comes with strings for Geely 29 Mar 2010 At $1.8 billion, the Chinese car maker looks to have struck a good price for Ford's Swedish brand. Volvo's technology is the real prize. The catch is Geely will be stuck with Volvo's expensive European workers, and the deal won't do much to fill its own partlyempty factories.
China’s tough line on Rio should apply at home too 29 Mar 2010 Four employees of the AngloAustralian miner received 714 years for bribery and stealing secrets. Politics will have played a role. Given the perception of persistent corruption in China, it looks worryingly like Western firms have been singled out for exemplary treatment.
UK Tories panic with tax cut pledge 29 Mar 2010 Should they win the election, the Conservatives pledge to reverse a tax rise scheduled for 2011. Easing taxes on employment makes sense, but the move undermines their promise to cut sky high borrowing. It looks too like a jittery reaction to Labour's resurgence in the polls.