The Financial Times reports that selling group discipline broke down on a $14 billion loan syndication for the acquisition of Harrah’s by Apollo Group and Texas Pacific Group. Buyers are unresponsive, a big problem for Wall Street, which is sitting on $150 billion of inventory that is already considerably underwater. Ironically, the interest rate cut […]
Read more...We have been skeptical about the possibility of a private-sector rescue of the troubled bond insurers. Nevertheless, both the Wall Street Journal and the Financial Times reported progress on discussions to shore up Ambac, the number two insurer, and that efforts were underway to assist the smaller fry. From the Financial Times: US and European […]
Read more...Spain has been in the throes of a housing bubble that is arguably worse than ours, since housing (narrowly defined) accounts for 5% of US GDP versus 18% of Spain’s. And like the US, Spain’s mortgage banks have entered a financial crisis and are making heavy use of the ECB’s discount window. But oddly, this […]
Read more...An excellent post by Elizabeth Warren at Credit Slips reviews some of the canards that have been successfully presented to promote the interests of various business interests against hapless consumers. The latest involves payday lending. The very fact that the Pentagon has come out against payday lending (they’ve proposed a usury ceiling of 36%) should […]
Read more...An alert reader tipped us off to the latest development on the bond insurer front. As Reuters tells us, while XL’s insurance subsidiaries are not bond insurers, the are exposed to bond insurer Security Capital via a reinsurance/investment relationship. XL’s senior debt was downgraded one level to Baa1. From Reuters: Moody’s Investors Service on Friday […]
Read more...Although we have been skeptical of the bond insurer rescue efforts led by New York state insurance superintendent Eric Dinallo, a report today by Bloomberg claimed progress was being made with the monoline insurer deemed most in need of assistance, Ambac. From Bloomberg: New York Insurance Superintendent Eric Dinallo is trying to organize a bank-led […]
Read more...I should never underestimate the relentless optimism of US equity investors (or perhaps the cleverness of MBIA’s flacks picking the middle of the night to release a fourth quarter earnings announcement that fell considerably short of already-low expectations). Thursday we had the remarkable spectacle of MBIA CEO Gary Dunton making statements that can only be […]
Read more...The turn of phrase in financial reporting can sometimes be a hair misleading. Today’s Bloomberg story reporting on marked price increases in the credit default swaps market in the wake on news overnight from MBIA and Standars & Poor’s, starts out by saying, “The risk of companies defaulting soared…..” No, the risk of companies defaulting […]
Read more...Why MBIA issued its earnings press release at such a weird hour is beyond me. The related news stories are time stamped 0:56 AM at Bloomberg and 1:08 AM at the Wall Street Journal. Saving bad news till the middle of the night is not going to alleviate the reaction. Or perhaps MBIA has an […]
Read more...Things seem to come full circle. 30% to 70% of the subprime loans issued in 2006 that later defaulted involved borrower fraud, according to the FBI, although people would say in many cases it might more accurately be called lender fraud (“oh, just sign the application, we’ll fill it out for you”). The FBI is […]
Read more...In an interview with the Financial Times, Merrill CEO John Thain said that he didn’t believe an industry-wide approach to rescuing the bond insurers would succeed. Thain instead advocated investments on a company by company basis. But the estimates of loss exposures are now coming in so high that it is difficult to conceive that […]
Read more...Bloomberg reports that hedge fund Pershing Square’s chief Bill Ackman has increased pressure on bond insurers and regulators by circulating a new analysis of potential losses to MBIA and Ambac, the two biggest bond insurers, that concludes the damage to each could reach $11.6 billion. This calculation is arguably more accurate than Ackman’s previous estiimates, […]
Read more...The bad numbers get bigger all the time. This eyepopping $534 billion figure for the amount of debt that Standard and Poor’s plans to either downgrade or put on negative watch was released a couple of hours ago after the exchanges were closed (sorry, I saw it but was unable to post till now). The […]
Read more...John Dizard, in “Prepare for return of a direct lending world,” argues that central bankers believe that securitization is not coming back in any meaningful way in the foreseeable future, and banks will therefore have to roll up their sleeves and do old-fashioned lending in much greater volumes than before. That may seem like a […]
Read more...While there was not much in the way of new developments on the bond insurer front on Tuesday, the media chatter features some interesting cross currents. On the one hand, the Financial Times, which had some relatively upbeat coverage the day before, had an article on the impressively large level of short interest in the […]
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