KKR Financial smart to launch rights offering 20 Aug 2007 It s often a sign of distress. But this one, along with a private placement, leaves the LBO firm s credit investing unit well protected. KKR Financial now has enough cash to cover any margin calls and to snap up distressed assets.
Nasdaq concedes defeat in LSE battle 20 Aug 2007 The US group wasn t likely to turn its 31% stake in its evergrowing London rival into a takeover. It leaves with a modest profit. But if it now doesn t beat Borse Dubai s $4bn rival bid for Nordic operator OMX, Nasdaq will suffer a serious credibility bashing.
Market dislocation produces $42bn merger arb 17 Aug 2007 That s the total gap between what s being offered in 25 big pending deals and where they now trade. In six deals, spreads are over 10%. Turmoil is undermining confidence in deals like Sallie Mae, ABN, BCE and Sainsbury. This may be an opportunity but only for the bravest.
Countrywide draw-down signals distress 16 Aug 2007 The former mortgage darling has seen the price of insuring its credit rocket after pulling down its full $11.5bn credit line from its banks. That shores it up for now. But with its debt trading in the gutter, it ll be hard to raise new funds unless the mortgage market improves.
Credit spectre haunts bond insurers 16 Aug 2007 The market has pummelled stocks of firms like MBIA and Ambac on fears of big losses on the CDOs they have insured. That s possible, although they ve weathered credit storms before. More troubling may be what the crunch means for their access to capital.
Quality assets are no shield against credit crunch 15 Aug 2007 Especially if your assets don t match liabilities. Look at Thornburg, a US mortgage group whose stock fell 46% due to margin calls. It may make highquality loans, but it uses shortterm debt. That leaves it exposed to lenders whims. And they re running for the exits.
Banks must honour credit commitments 14 Aug 2007 The market for Canadian assetbacked commercial paper is in turmoil after banks declined to provide emergency funding. But the banks should provide liquidity regardless of their legal position. If they don t the credit crunch could get much worse.
KKR’s new IPO prospectus hedges its bets 14 Aug 2007 Turbulent markets forced the buyout shop to slice a 175word essay on the benefits of cheap debt out of the new version of its prospectus. And it has toned down rhetoric throughout. Rather than a platform for sourcing and making investments it s now just a firm .
Forget leveraged buyouts. Blackstone’s big risk is real estate 13 Aug 2007 As a result of deals such as EOP, Blackstone's property group made up half of revenues in the first half of this year. That could be hard to sustain. Commercial real estate is overvalued, financing harder to come by, and new property is flooding the market.
Citi looks well positioned to endure credit pain 13 Aug 2007 The megabank s structured products unit is reportedly down $700m in recent weeks. That puts a spotlight on its rivals performance. Citi can shrug the losses off relatively easily. But if its rivals suffer on a similar scale they could be in a lot more trouble.
Will corporate credit be the next shoe to drop? 8 Aug 2007 Recent market turmoil might just be an aversion to dodgy mortgages and overly cheap LBO debt. If so, it ought to be manageable. But it could get worse. Moody s predicts a near tripling of defaults by junkrated companies in the next year. That would prolong the pain.
Hedge funds looking at an Indian summer 8 Aug 2007 Like the Brits, hedge funds have survived the July storms and are now cautiously optimistic that the worst is behind them. Sure, no one expects a return to the conditions earlier this year. But for many strategies, the best part of the year could lie ahead.
Should fund managers finance investor redemptions? 7 Aug 2007 News of a hedge fund restricting its investors redemptions is often its death knell. So managers are eager to avoid taking that step. Some are even said to be digging deep into their own wallets to inject more capital. That might tide the fund over or sink the manager.
Where are the subprime vultures? 3 Aug 2007 Still circling, evidently. Rapid price declines haven t attracted the same carrioneaters that pounce on troubled corporate bonds. A few, like Marathon and Prudential, are dipping a beak in. But with the bottom nowhere in sight, most remain hugging the sidelines.
Private equity’s US tax defence is flawed. 2 Aug 2007 Buyout shops are trying to woo Democrats by arguing that a tax hike would force them to raise fees on vulnerable investors like pensions. That makes no sense. If buyout funds could charge more, they already would. And, in fact, fees have been coming down.
Nasdaq opts not to fight futile battle 2 Aug 2007 The US exchange s decision to support the E5.8bn LSE/Borsa Italiana tieup looks canny. A vain novote would have brought no benefit. Nasdaq probably still covets the LSE. Yet the balance has changed. A merger may now seem more appropriate than a takeover.
Morgan Stanley is right to hive off MSCI 1 Aug 2007 The data and riskmanagement company is little more than a blip on the Wall Street giant s earnings. But as a standalone business, MSCI should command a higher multiple than its parent, and could be worth as much as $3bn.
Blackstone doesn’t deserve sell-side’s love 1 Aug 2007 Almost all the Wall Street analysts that cover the private equity firm kicked off their research with a buy rating. These calls might please Blackstone, which pays lucrative fees to investment banks. But they ignore the challenges the LBO shop faces.
Nervous investors ignore strong economy 1 Aug 2007 Markets are hypersensitive to credit problems that s why they suddenly tumbled on Tuesday. Healthy economic releases were brushed aside. That makes sense as long as liquidity is what matters. A strong economy could even be bad for markets, because it makes rate cuts unlikely.
Did Brian Hunter manipulate the energy markets? 27 Jul 2007 Regulators, waving damning electronic messages saying he wanted the natural gas market smashed , believe he did. But the government s case is far from airtight. The evidence suggests that he was just one of many traders playing a manipulative game.