Bondholders still fear LBO risk 4 Sep 2007 The stalled leveraged buyout market hasn t stymied demand for poison put protection on highgrade bonds. In fact, it seems to be growing. And it might not just be a delay in investors reaction to the slump. Some borrowers will be punished if they pile on debt without an LBO.
State Street fears look overblown 4 Sep 2007 Shareholders have wiped billions off the Boston bank s value amid fears over its commercial paper conduits. But its subprime exposure is minimal. And State Street has enough firepower to cover most scenarios without tanking earnings.
Dubai not about to take over the world 4 Sep 2007 The Emirate is on the prowl. A $4bn bid for Nordic exchange OMX is just a start. It is evaluating 20 other possible targets. That may sound ominous to governments afraid of an Arab takeover. But Dubai isn t all that rich. It has to choose carefully.
Musical chairs at ratings agencies won’t solve problem 31 Aug 2007 McGrawHill replaced the president of Standard & Poor s amid mounting criticism of the firm s ratings of mortgagebacked securities. The real problem is the conflict of interest between issuers and agencies and the lack of competition in the business.
Bush should resist housing bailouts 31 Aug 2007 President Bush s plan for the US government to prop up some stretched subprime mortgage borrowers is fraught with moral hazard. At least it is on a small scale, so far. The problem is that it could be the thin end of a dangerous wedge.
Barclays’ $1.6bn SIV rescue calms nerves 31 Aug 2007 By persuading junior noteholders to bear the credit risk, Barclays has managed to rescue the Cairn vehicle at minimal cost to itself. But it isn t out of the woods yet. No one knows what marktomarket exposures it may be hiding. And like other banks, it s keeping schtum.
Nasdaq may find it hard to sell LSE stake in one go 30 Aug 2007 The US exchange s decision to offload a 31% holding in its London archrival seems to have attracted a longlist of potential buyers. Yet, it might not be that easy. Nasdaq wouldn t want to sell to a likely rival and it's not clear the stake is beneficial to anyone else.
Cheyne woes show credit crunch far from over 29 Aug 2007 The London hedge fund manager s latest problems with one of its listed credit funds may be due to bad luck rather than poor judgement. But it s still deeply troubling. Cheyne hopes for an orderly windup, but if it s forced into a firesale, the damage could be spread wide.
Stakes rise for hedge funds to cash out 28 Aug 2007 Many funds, already hurt by volatility, are set for a poor August. That makes it sound as if they ve missed the chance to sell stakes. But while impressing public markets has become harder, a private sale or purchase of a hedge fund stake can still stack up.
Brokerage stocks may have further to fall 28 Aug 2007 Wall Street s top five firms might look cheap they have lost a combined $74bn in value since hitting their highs earlier this year. But what if markets don t improve? To match their lows in previous crises, most brokerage stocks have to plummet by another fifth or more.
Are US corporate balance sheets really strong? 28 Aug 2007 According to company accounts, S&P 500 companies have cut leveraged almost in half since 2002. Investors take comfort from the caution. Maybe they shouldn t. If financial assets are valued at replacement cost, leverage still looks high. Weak markets could cause big problems.
Rehashed Home Depot deal no model for other LBOs 27 Aug 2007 Both the buyers and the seller made concessions to ensure the sale of the DIY chain s wholesale supply unit could proceed. But extending them to other deals will be tough. Some only work because Home Depot is hiving off a subsidiary, not selling itself whole.
Borse Dubai’s reprieve keeps OMX in play 23 Aug 2007 The Swedish regulator did not punish the Emirate group, despite judging that it acted illegally in its $4bn approach to its Nordic rival. Still, Borse Dubai s behaviour may come back to haunt it. That would be a relief for its trumped rival, US operator Nasdaq.
BofA benefits from a self-fulfilling prophecy 23 Aug 2007 The very act of injecting $2bn of capital shifted the perception of Countrywide s future on a dime and put Ken Lewis in the money. Assuming Countrywide s problems were liquidity, not credit, related this is a brilliant move and may call a bottom of a kind.
Is Schwarzman the smartest man on Wall Street? 23 Aug 2007 The Blackstone chief s timing surely looks smart. He beat his competitors to the public market. But for now, he s the only one to benefit. For public investors to gain from Blackstone s timing prowess, it needs to use its stock to grow.
E-trade and Ameritrade pushed into merger talks 22 Aug 2007 Merging the two biggest US discount stock brokers is a nobrainer up to a third of total costs could be cut. Yet both were reluctant. With minority investors pressuring Ameritrade and ETrade s expansion into mortgage lending looking dicey, it s time to reconsider.
Private equity won’t save bankers’ bonuses 22 Aug 2007 Buyout houses have loaded up the banks with $330bn of unsellable buyout debts. Now they want to buy some of it at a big discount. But they can t afford to buy very much. And bankers with bonuses in mind may not want to give the buyout barons a good deal.
Borse Dubai plays strange game in OMX battle 22 Aug 2007 The Emirate group made the hardtoswallow claim that it was undecided about a bid for its Nordic rival when it bought 28% of the shares. The Swedish regulator will decide if Borse Dubai acted legally. But in any case, the interloper has aggravated resistance to its proposal.
Investors shouldn’t bank on a Buffett put 21 Aug 2007 Speculation that the famed investor could use his $50bn cash pile to buy firms like Countrywide or TXU may titillate investors. But Buffett won t strike unless he can negotiate sweet deals for his shareholders. That will only happen when real distress rears its head.
LBO underwriters should bite the bullet 21 Aug 2007 Banks that are on the hook to provide $330bn of debt for pending leveraged buyouts don t want to sell it at firesale prices. But while taking a quick hit to move the debt off their books would slash bonuses, it might cauterise a potentially greater wound.