Loan market’s acute pain may also be chronic 19 Nov 2008 Spiralling risk aversion and the collapse of the securitisation machine caused the corporate loan market to seize up. But potential secondary market problems threaten to keep some investors on the sidelines.
Citi slump shows markets still gripped by fear 19 Nov 2008 Buying some SIV assets seems to have prompted a near25% decline in the bank s shares. It shouldn t have. But bad news is oozing out everywhere, from real estate to the Fed to Detroit. That ll put a strain on government efforts to calm the markets. And Citi is at the vanguard.
LBO firms face tough choice: double down or get out 18 Nov 2008 KKR s Masonite is the latest LBO in trouble. Many others are staring at bankruptcy. Buyout firms must decide whether to inject more cash into companies or let them go belly up. With few opportunities elsewhere, anteing up may be wise, even if it doesn t mint big fees.
Credit insurers don’t need new aid 17 Nov 2008 European suppliers are squealing because credit insurers are pulling back. The squeeze is real, but two large insurers are already backed by the Dutch and French governnments. The better way forward is for customers to speed up payments and let the market cull some weaklings.
Convertibles push tech companies towards the brink 17 Nov 2008 US technology companies issued gobs of convertible debt in recent years and much of it is maturing soon. Low stock prices make conversion unlikely, and paying the debt off would drain precious cash. With refinancing absurdly expensive, issuers have few attractive choices.
Dexia tries to put troubled past behind 14 Nov 2008 The new chief executive of the governmentrescued, BelgianFrench bank will sell part of the troubled bond insurance business at a E1.5bn loss. Separately, Dexia lost another E1.5bn in the third quarter. Some decks are being cleared, but investors won t be rejoicing soon.
French oligarchs start to feel the pinch 14 Nov 2008 The families who own or control eight of France s top quoted companies have lost E24bn since January. By Russian standards, that s almost small change. But most of the French billionaires have consumeroriented businesses, so their pain could get worse.
Apollo’s latest spiral shows futility of debt innovations 14 Nov 2008 Realogy is now trying to avert bankruptcy despite throwing the switch on its PIK toggle. That was supposed to give LBOs breathing room but made the situation worse. Leon Black will need all his vaunted restructuring skills to save his struggling portfolio.
Barclays’ shareholders need a Carol Galley 14 Nov 2008 The legendary fund manager would have corralled institutional investors into rejecting the bank s illconceived capitalraising in her 1990s heyday. UK shareholders now own less of the FTSE, and are less focused on the long term. But they ve also become much more supine.
Hedge funds shrivel – and hope to re-emerge 14 Nov 2008 George Soros sometimes sounds overexcited. But in predicting that the hedge fund sector will shrink 5075%, the billionaire fund elder may not be exaggerating. The destruction, though, should eventually be creative, producing a more grownup industry.
Buyout loan orphans return to burden banks 13 Nov 2008 Just when Wall Street s leveraged loan headache had subsided to a manageable throb, more pain threatens. Loans repackaged for hedge funds are ending up back with banks as the schemes unwind. Worse, no one knows the extent of banks potential exposure.
Hedge fund disclosure isn’t always helpful 13 Nov 2008 Policymakers have been quizzing billionaire fund managers including John Paulson about issues such as improving transparency. Regulators should see more of the right data, and monitor them. But public disclosures can easily be misinterpreted and that goes beyond hedge funds.
Hedge fund quasi-rights issues only for the brave 13 Nov 2008 GSO asked investors for money to help meet margin calls. They may be happy to comply as in discounted rights issues, buying in cheaply can mitigate earlier losses, if assets recover. New inflows may also head off margindriven spirals. But it could magnify investor pain later.
Tarp shape-shifting makes best of bad job 12 Nov 2008 Hank Paulson no longer wants to buy any troubled assets with the $700bn he demanded from Congress. The US Treasury boss's belated aboutface makes sense, but it caught investors offguard. That underlines how he and his colleagues still need to explain themselves better.
Banks snub Fed’s New Year’s present 12 Nov 2008 The US central bank just offered $150bn of shortterm loans that can be drawn over the yearend period as a confidenceboosting measure. Banks only took $13bn despite a microscopic interest rate. Liquidity constraints no longer appear to be behind the lending freeze.
Wellcome tries to time private equity exit 11 Nov 2008 The UK s biggest charity is taking bids for some of its substantial private equity holdings. Publicly quoted shares may have plummeted even more than the private sort, making Wellcome s private commitments look too large. But if it has too many followers, any gap will close.
AmEx joins growing herd jostling at Fed’s trough 11 Nov 2008 The credit card giant is smart to become a bank and get full access to government largesse. However, the Fed has put taxpayers at greater risk from consumer credit woes. That may be worthwhile if it keeps AmEx lending. But the central bank is suffering from mission creep.
Fannie Mae’s Augean stables remain a mess 10 Nov 2008 The quasinationalised mortgage giant did away with most of its former sunny assumptions and reported a $29bn thirdquarter loss. That s actually a worthwhile cleanup, but deterioration of its mortgage and guarantee portfolios look likely to cause US taxpayers more pain.
US job losses pressure Obama’s policymaking 7 Nov 2008 The unemployment surge to the highest level in 14 years puts additional pressure on the presidentelect. It could give him the momentum to push through intelligent but controversial policies. But the need to quell growing economic panic could also tempt him to overreach.
If Blackstone believes its advice it should go private 6 Nov 2008 After all, Steve Schwarzman s firm is trading at 25% of its IPO price. The buyout shop had negative revenues in the third quarter and may not pay its next dividend. If Schwarzman really believes Blackstone can overcome these problems, he should snap up its shares.