Blackstone’s DT bet not looking so hot 10 Aug 2006 The slump in Deutsche Telekom shares has wiped out much of the equity the buyout group put up for its E2bn stake in the telecoms giant. But Blackstone may not be the only loser. Deutsche Bank could also be on the hook, since it provided massive leverage for the deal.
Foiled UK bomb plot knocks markets 10 Aug 2006 Despite the situation in the Middle East, the markets snapped back quickly after the May and June correction. Perhaps that was complacent. But the key point is that the plot was foiled. This is a lowtech enemy. For the time being, the bigger risk to markets is still economic.
Activists give Lampert a bloody nose 9 Aug 2006 The buyout of minorities at Sears Canada should have been easy work for hedge fund whiz Eddie Lampert. But activist investor Pershing Square objected. It persuaded Canadian regulators Lampert used dodgy tactics to get support for Sears's bid.
Global interest rate trends de-couple 9 Aug 2006 The US stands alone. While the rest of the world is raising rates in the face of inflation, the Fed has paused. America may have much worse growth prospects. But there is also a difference in psychology. Bernanke is more willing to take chances.
Philips’ chipmaker to raise record E4.5bn in junk 8 Aug 2006 It seems brave to cut out the loan market completely when there were jitters last week in the high yield bond market. But KKR's strategy actually makes sense. For a cyclical chipmaker like Philips, the bond market offers particular advantages.
Pension reform to boost mutual fund industry 8 Aug 2006 Gigantic fund houses such as Fidelity are likely to get a boost from US pension reform, which encourages greater individual savings. Smaller asset managers have less to gain, but the business remains highly profitable. Private equity buyers have taken note.
High yield bonds no longer a slam dunk 7 Aug 2006 So far this year, raising debt in the junk bonds markets has been easypeasy. But last week s VNU deal shows that s not the case anymore. In fact, the warning signs have been around a while. Investors seem to be getting spooked by the spectre of rising interest rates.
UK starting to pay for borrowing binge 7 Aug 2006 Debt defaults are up 68% this year. That was enough to get lenders to start moaning. But it is far from a crisis yet. Barclaycard is still earning a decent 13% return. And mortgage lenders aren t holding back. There s room for much worse news.
Greenmail makes a comeback in US 2 Aug 2006 Old raiders may be dressing themselves up as hedge fund managers. But now some hedgies are donning the cloaks of oldstyle raiders. Take Daniel Loeb at Third Point. He's getting a lump of stock in an industrial firm bought back for dropping demands for seats on its board.
Jabre’s gamble goes spectacularly wrong 28 Jul 2006 The star hedge fund manager hoped that appealing his fine for market abuse would pave the way for a deal with Financial Services Authority. But this was a dangerous game of double or quits. Unfortunately for Jabre, the fine remains and he s now unlikely to work in the City again.
Now everyone can play in credit derivatives 28 Jul 2006 A new product from JP Morgan has opened up the world of credit derivatives to all fund managers, even if they re not credit specialists. But the exoticallynamed iTraxx Total Return Swaps is no capitalprotected investment. It has big risks. Investors need to be careful.
Nymex rushes to cash out 28 Jul 2006 The largest US energy exchange says it wants to go public, making it the last of the major markets to do so. But Nymex's internal valuation suggests it will sell stock at a higher premium than it deserves given burgeoning competition.
Options scandals could spur tech M&A 27 Jul 2006 There s solid financial logic for mergers among enterprise software companies. The ongoing options mess could put more into play. Look at HP s successful $4.5bn bid for Mercury Interactive. It was a sitting duck after scandal cost the group its CEO and stock premium.
How Ferrovial squared the circle 26 Jul 2006 The answer is an unusual financing technique used by UK water companies. But for this to work, existing BAA bondholders must buy in. The mystery was always how Ferrovial could borrow £12bn equivalent to three times leverage and keep BAA's credit rating.
Amvescap gambles on Wilbur Ross 24 Jul 2006 The fund manager s $375m purchase of WL Ross brings together the separate worlds of traditional asset management and private equity. Buying talent in the financial services world rarely works out as well as planned. But this deal could be an exception.
Debt markets open for HCA deal 24 Jul 2006 The biggest buyout of all time won t have any problem attracting investors. But that doesn t mean they ll support a slew of megadeals. Because of its low leverage, growing ebitda and a nearly recessionproof business, HCA may have an easier time raising funds.
CMA Global Hedge defies market with $400m IPO 19 Jul 2006 This is by some margin the biggest hedge fund of funds IPO to date and comes on the back of two tough months for the industry. Its success reflects the huge investor demand for uncorrelated assets and the inherent advantages of permanent capital.
Gloom overwhelms fickle fund managers 19 Jul 2006 In two months, they ve dropped from mild economic doubt to the worst pessimism in a decade, according to a Merrill Lynch survey. Sentiment has deteriorated much faster than reality. With cash balances high, there could be room for a relief rally.
Break-fees can damage an auction 18 Jul 2006 Take McCarthy & Stone, which has agreed to pay a breakfee only to one bidder. This may choke off rival bids for the UK housebuilder. UK listing regulations are partly to blame. But boards should be wary of being sucked into restrictive fee arrangements.
Citi fails diversification test 17 Jul 2006 One argument for retaining the conglomerate is to provide steady growth by smoothing out the peaks and valleys. But as Q2 earnings showed, this is not the case in practice. The structure isn't working.