Category Archives: Credit markets

AIG Stay of Execution: Holding Company Can Access $20 Billion of Subsidiary Capital

AIG appears to have fended off the immediate threat of a downgrade with the granting of permission by New York State for the parent to gain access to subsidiary capital. While certainly quite a waiver, it is also possible that AIG has overcapitlaized subs and thus this move may be defensible as far as policyholders […]

Fitch Downgrades AIG to A

Reader Steve provided the link to Fitch’s website, which shows the announcement and apparently it’s being reported on CNBC. But what matters is what Moody’s and S&P do….

Certain Pimco, Vanguard Funds, Japanese Banks, Biggest Losers on Lehman Bankruptcy (Updated)

What the credit crisis gives, it also takes away. Bond giant Pimco was a huge winner on the Fannie/Freddie rescue, but Bloomberg reports that it did not fare so well with Lehman. From Bloomberg: Pimco Advisors LP, Vanguard Group Inc. and Franklin Advisers Inc. are among the investment companies that will face losses of at […]

AIG Asks the Fed for Help

This is truly unbelievable. Even as little as a week ago, the idea that AIG, the world’s biggest insurer, would go begging the Fed for help would have seemed daft. But that’s now an element of the meltdown in progress. And AIG is a major credit default swaps writer, bigger than Bear. If Bear could […]

NY Times: Lehman Filing For Bankruptcy (Update: Gross Sees "Tsunami")

Hat tip readers dd and viv on this update from the New York Times’ Dealbook: Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help […]

AIG: "Rush Is On to Prevent Big Insurer From Failing" (Even More Scary Updates)

This post was modified from its original version due to the New York Times reporting that regulators were involved in discussions for AIG to take urgent measures to prevent a debt downgrade. Note the tone of the story at the Times (by Gretchen Morgenson and Mary Williams Walsh) presents the situation as more dire than […]

Lehman Bankruptcy Looms; Emergency Lehman Swaps Session Today (Slightly Revised and Updated)

Reader Steve A , Scott and Saboor also pointed to the Bloomberg story reporting that the International Swaps Dealers Association had announced an emergency Sunday session to net Lehman-related position in anticipation of a possible bankruptcy filing, From Bloomberg: Wall Street prepared for a potential Lehman Brothers Holdings Inc. bankruptcy after Barclays Plc said it […]

NY Times: Barclays, Most Likely Lehman Suitor, Walks from Deal

The noose is tightening, with the powers that be facing the unattractive choices of a politically unpopular bailout (and egg on their face) versus an unwind of Lehman with potentially disastrous consequences. Will Paulson blink? So far, the word is no. From the New York Times (Hat tip reader DaddyMac): Unable to find a savior, […]

WSJ: Private Sector Resolution Looking Less Likely; Pressure Continues for Bailout (Updated)

The Wall Street provided an update on the Lehman rescue efforts which were consistent with its earlier coverage, which discussed considerable impediments to a “good bank/bad bank” solution with Wall Street firms providing the capital to support the bad bank. Note this contradicts the more optimistic report from CNBC on this approach (which we viewed […]

CNBC: Lehman Bad Bank Deal Drafted; Firms Expected to Kick in $3 Billion Each

A few hours ago, we went over the most recent report on the Lehman talks sponsored by the Fed (the Wall Street Journal had a remarkably detailed account), and it seemed as if the obstacles to getting a deal done were considerable. Although there was discussion of forming a “good bank/bad ban” structure, it sounded […]

AIG Plans $20 Billion Asset Sale

The UK’s Times reports that AIG is looking to liquify some holdings to shore up its balance sheet and hopefully its stock price. While AIG, like Lehman, is making a “reassure investors” presentation ahead of its scheduled earnings announcement, the article gives the impression that AIG can provide a more concrete, readily executed salvage operation […]

Lehman Options Limited; Firm Hires Bankruptcy Attorneys

The New York Times and the Wall Street Journal provided Saturday afternoon updates on Lehman. The discussions increasingly acknowledge that a deal may not be in place by Sunday as initially hoped (understandable, given the authorities’ unwillingness to provide support and the near-impossibility of doing adequate due diligence in a few days) and have moved […]

AIG: Stock Falls 30%, Bonds and Credit Default Swaps Trading at Distressed Levels

Even though all eyes have been on Lehman, the potentially more troubling slow-motion train wreck is AIG. The insurer is a large credit default swaps protection writer and provides a host of financing products. Not only is AIG a larger firm than Lehman and could trigger a systemic event in the CDS market alone, but […]

Emergency Fed Meeting: Paulson and Fed Attempt to Jawbone Wall Street to Rescue Lehman

Not surprisingly, it appears increasingly unlikely that private parties are wiling to take on a company that is pretty certain to have negative net worth, particularly when the point of a deal is to have someone, anyone take on the liabilities. But the Fed and Treasury are equally unwilling (at least as of now) to […]

Financial Times: BofA, JC Flowers, CIC Joint Lehman Bidders

The Financial Times tells us that a consortium, Bank of America, bank investor JC Flowers, and Chinese Investment Company are pursuing a joint bid for Lehman. At least on paper, this makes far more sense than a solo BofA bid. The bank already has a garbage barge on its hands in the form of Countrywide, […]