The worldwide slump in credit markets is likely to last for at least another year, triggering a reduction in leveraged buyouts, according to a survey of banks, private-equity managers and hedge funds in Europe.
Borrowing will be constrained as investors avoid the leveraged loans that fueled this year's record buyouts, accounting firm Grant Thornton UK LLP in London said today in a report based on a survey of 110 executives last month.
``The credit crunch is sending private equity back to basics,'' said David Ascott, head of private equity at Grant Thornton in London. ``We will see fewer assets bought and exits will need to be carefully considered.''
Bonds that helped Kohlberg Kravis Roberts & Co., Bain Capital LLC and Apax Partners Worldwide LLP pay for LBOs this year have dropped 15 percent below face value as record U.S. mortgage foreclosures sap demand for all but the highest-rated government notes. Banks have about $283 billion of LBO debt they planned selling, according to research by Bank of America Corp. in Charlotte, North Carolina.
LBOs have fallen to $157 billion so far in the second half of this year, from a record $579 billion in the first half, according to data compiled by Bloomberg.
microcapwatch.net
четверг, 29 ноября 2007 г.
U.S. Securitized Debt May Rally in First Quarter, Lehman Says
Bonds backed by consumer debt and mortgages in the U.S. may rebound in the first quarter, following record-high yield premiums demanded by investors to own the securities this month, according to Lehman Brothers Holdings Inc. analysts.
The average spread investors demand to hold agency, mortgage-backed, asset-backed and commercial mortgage-backed securities rather than Treasuries widened to 139 basis points this month, 30 basis points higher than the previous peak in May 2000, Lehman analysts, led by New York-based Jack Malvey, wrote in a report today. A basis point is 0.01 percentage point.
Asset-backed and commercial mortgage-backed bonds have the widest spreads, wrote Malvey, whose team won the top position for the seventh straight year in Institutional Investor magazine's annual poll of the best U.S. bond analysts. Securities backed by credit cards and auto loans yield 71 basis points more than bonds of top-rated investment-grade companies, the widest since 1992, according to the report.
The investment-grade securitized assets ``look exceptionally cheap relative to their spread volatility and versus pure corporate credit risk,'' Malvey wrote. ``The securitized space looks increasingly ripe for an early `First Quarter Effect''' rally.
A survey by the New York-based securities firm shows 39 percent of the respondents expect global capital market conditions to begin to improve from the second quarter of next year, followed by 24 percent who don't expect it to happen until the second half. Respondents who expect the start of a recovery in January accounted for 15 percent of those surveyed, while 12 percent said it will be in 2009, when the U.S. real estate market hits the bottom.
microcapwatch.net
The average spread investors demand to hold agency, mortgage-backed, asset-backed and commercial mortgage-backed securities rather than Treasuries widened to 139 basis points this month, 30 basis points higher than the previous peak in May 2000, Lehman analysts, led by New York-based Jack Malvey, wrote in a report today. A basis point is 0.01 percentage point.
Asset-backed and commercial mortgage-backed bonds have the widest spreads, wrote Malvey, whose team won the top position for the seventh straight year in Institutional Investor magazine's annual poll of the best U.S. bond analysts. Securities backed by credit cards and auto loans yield 71 basis points more than bonds of top-rated investment-grade companies, the widest since 1992, according to the report.
The investment-grade securitized assets ``look exceptionally cheap relative to their spread volatility and versus pure corporate credit risk,'' Malvey wrote. ``The securitized space looks increasingly ripe for an early `First Quarter Effect''' rally.
A survey by the New York-based securities firm shows 39 percent of the respondents expect global capital market conditions to begin to improve from the second quarter of next year, followed by 24 percent who don't expect it to happen until the second half. Respondents who expect the start of a recovery in January accounted for 15 percent of those surveyed, while 12 percent said it will be in 2009, when the U.S. real estate market hits the bottom.
microcapwatch.net
пятница, 23 ноября 2007 г.
U.S. Banks Ready to Move Forward on SIV `Superfund,' WSJ Says
Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co., which have been putting together a plan to revive credit markets, are likely to start asking other banks to sign up to specific financial terms next week, the Wall Street Journal reported, citing people familiar with the matter.
The plan is to create a so-called superfund amounting to $75 billion to $100 billion as a potential buyer of assets from structured investment vehicles, off-balance-sheet entities that have got into difficulties because of lack of liquidity in credit markets; so far, other banks have expressed informal interest, the newspaper said.
BlackRock Inc. is likely to be named as the fund's manager and it will help to set prices for assets, though it probably won't invest in the fund, the Journal added.
investorarticles.net
The plan is to create a so-called superfund amounting to $75 billion to $100 billion as a potential buyer of assets from structured investment vehicles, off-balance-sheet entities that have got into difficulties because of lack of liquidity in credit markets; so far, other banks have expressed informal interest, the newspaper said.
BlackRock Inc. is likely to be named as the fund's manager and it will help to set prices for assets, though it probably won't invest in the fund, the Journal added.
investorarticles.net
FGIC May Get Capital After Natixis Rescues Bond Unit
Financial Guaranty Insurance Co., the insurer for $315 billion of bonds, may get the capital it needs to avoid losing top credit rankings after French banks bailed out competitor CIFG Guaranty, Fitch Ratings said.
FGIC, controlled by PMI Group Inc., Blackstone Group LP, and Cypress Group, has at most three weeks to show it deserves AAA grades, Fitch analyst Thomas Abruzzo said in an interview yesterday from New York. Groupe Banque Populaire and Groupe Caisse d'Epargne agreed to take control of CIFG yesterday from their Natixis banking subsidiary and doubled the company's capital with a $1.5 billion investment.
``They'll do whatever is necessary to protect their ratings and their franchise,'' Abruzzo said of the companies. Fitch says New York-based FGIC, the fourth-largest debt guarantor, is the most vulnerable in the industry.
FGIC helped borrowers from the New York Yankees to the Alaska Railroad Corp. sell AAA bonds. Mounting downgrades of insured debt backed by assets such as mortgages are raising concerns about the stability of FGIC, MBIA Inc., Ambac Financial Group Inc. and their competitors, as well as the safety of the $2.4 trillion of securities they guarantee. The companies are being reviewed by Moody's Investors Service and Fitch.
investorarticles.net
FGIC, controlled by PMI Group Inc., Blackstone Group LP, and Cypress Group, has at most three weeks to show it deserves AAA grades, Fitch analyst Thomas Abruzzo said in an interview yesterday from New York. Groupe Banque Populaire and Groupe Caisse d'Epargne agreed to take control of CIFG yesterday from their Natixis banking subsidiary and doubled the company's capital with a $1.5 billion investment.
``They'll do whatever is necessary to protect their ratings and their franchise,'' Abruzzo said of the companies. Fitch says New York-based FGIC, the fourth-largest debt guarantor, is the most vulnerable in the industry.
FGIC helped borrowers from the New York Yankees to the Alaska Railroad Corp. sell AAA bonds. Mounting downgrades of insured debt backed by assets such as mortgages are raising concerns about the stability of FGIC, MBIA Inc., Ambac Financial Group Inc. and their competitors, as well as the safety of the $2.4 trillion of securities they guarantee. The companies are being reviewed by Moody's Investors Service and Fitch.
investorarticles.net
среда, 21 ноября 2007 г.
European Bonds Advance, Pushing Two-Year Yields to 11-Month Low
European government bonds opened higher, pushing two-year yields to their lowest in 11 months.
The yield on the two-year German note fell 5 basis points to 3.68 percent by 7:05 a.m. in London. The price of the 4 percent security due September 2009 rose 0.08, or 80 euro cents per 1,000-euro ($1,483) face amount, to 100.54.
The yield on the 10-year bund, Europe's benchmark, dropped 3 basis points to 4.02 percent.
pennystock-news.net
The yield on the two-year German note fell 5 basis points to 3.68 percent by 7:05 a.m. in London. The price of the 4 percent security due September 2009 rose 0.08, or 80 euro cents per 1,000-euro ($1,483) face amount, to 100.54.
The yield on the 10-year bund, Europe's benchmark, dropped 3 basis points to 4.02 percent.
pennystock-news.net
Argentina, Mexico, Venezuela: Local Bond and Currency Preview
The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous day's session.
Argentina: President Nestor Kirchner yesterday said the unemployment rate fell to 8.1 percent in the third quarter, the lowest since October 1992, compared with 8.5 percent in the second quarter. Industrial production rose 9.3 percent to 9.5 percent for the 12 months through October, Kirchner said.
The national statistics institute is scheduled to release its third-quarter unemployment report Nov. 22 and industrial production data on Nov. 23.
The yield on Argentina's 5.83 percent inflation-linked peso note due in December 2033 fell 1 basis point to 8.57 percent, according to Citigroup Inc.'s unit in Argentina.
Argentina's peso was little changed at 3.1315 pesos per dollar.
Mexico: The unemployment rate probably fell to 3.81 percent in October, from 3.87 percent the previous month, according to the median forecast of economists surveyed by Bloomberg News.
The government is scheduled to release the data at 3:30 p.m. New York time.
The yield on the 7.25 peso-denominated bonds due in December 2016 rose 4 basis points to 8.09 percent, according to Banco Santander SA.
Mexico's peso rose 0.3 percent to 10.966 per dollar.
Venezuela: The country plans to sell $250 million of dollar-denominated bonds due in 2038 starting today. Venezuela also plans to offer 268.8 billion bolivars ($125.2 million) of 10.37 percent local-currency bonds due in May 2013 and 268.8 billion bolivars of 10.37 percent bolivar securities maturing May 2014, the Finance Ministry said in a statement yesterday. The government plans to accept bids today and tomorrow, and will announce results on Nov. 23.
The bolivar gained 1.6 percent to 6,300 bolivars per U.S. dollar in the unregulated market, traders said.
pennystock-news.net
Argentina: President Nestor Kirchner yesterday said the unemployment rate fell to 8.1 percent in the third quarter, the lowest since October 1992, compared with 8.5 percent in the second quarter. Industrial production rose 9.3 percent to 9.5 percent for the 12 months through October, Kirchner said.
The national statistics institute is scheduled to release its third-quarter unemployment report Nov. 22 and industrial production data on Nov. 23.
The yield on Argentina's 5.83 percent inflation-linked peso note due in December 2033 fell 1 basis point to 8.57 percent, according to Citigroup Inc.'s unit in Argentina.
Argentina's peso was little changed at 3.1315 pesos per dollar.
Mexico: The unemployment rate probably fell to 3.81 percent in October, from 3.87 percent the previous month, according to the median forecast of economists surveyed by Bloomberg News.
The government is scheduled to release the data at 3:30 p.m. New York time.
The yield on the 7.25 peso-denominated bonds due in December 2016 rose 4 basis points to 8.09 percent, according to Banco Santander SA.
Mexico's peso rose 0.3 percent to 10.966 per dollar.
Venezuela: The country plans to sell $250 million of dollar-denominated bonds due in 2038 starting today. Venezuela also plans to offer 268.8 billion bolivars ($125.2 million) of 10.37 percent local-currency bonds due in May 2013 and 268.8 billion bolivars of 10.37 percent bolivar securities maturing May 2014, the Finance Ministry said in a statement yesterday. The government plans to accept bids today and tomorrow, and will announce results on Nov. 23.
The bolivar gained 1.6 percent to 6,300 bolivars per U.S. dollar in the unregulated market, traders said.
pennystock-news.net
понедельник, 19 ноября 2007 г.
More Economists See U.S. Recession Ahead, Business Group Says
The number of economists forecasting the U.S. will slip into recession almost doubled over the last two months, according to a survey by the National Association for Business Economics.
Nine of 50 economists pegged the odds of a contraction over the next 12 months at 50 percent or higher, according to a poll taken from Oct. 22 to Nov. 6. Just five of 46 held a similar view in September.
The spillover from the biggest housing slump in 16 years, turmoil in financial markets and higher energy prices will cause growth to slow to an annual pace of 1.5 percent this quarter, less than the survey participants previously forecast. More than two-thirds of those polled said the chance of recession was at least 25 percent.
``While the U.S. economy faces a higher risk of recession from credit markets, housing and energy prices, NABE's panelists still do not see recession as the most likely outcome,'' said Ellen Hughes-Cromwick, the group's president and chief economist at Ford Motor Co., in a statement.
The economy will expand 2.6 percent from now to next year's fourth quarter, according to the survey. While that is lower than September's forecast, it would still surpass the 2.4 percent projected for 2007.
The survey's median forecast for fourth-quarter growth matched the projection in a Bloomberg News survey also taken earlier this month. Many of the economists surveyed by NABE also participated in the Bloomberg poll.
makemoremoney-usa.com
Nine of 50 economists pegged the odds of a contraction over the next 12 months at 50 percent or higher, according to a poll taken from Oct. 22 to Nov. 6. Just five of 46 held a similar view in September.
The spillover from the biggest housing slump in 16 years, turmoil in financial markets and higher energy prices will cause growth to slow to an annual pace of 1.5 percent this quarter, less than the survey participants previously forecast. More than two-thirds of those polled said the chance of recession was at least 25 percent.
``While the U.S. economy faces a higher risk of recession from credit markets, housing and energy prices, NABE's panelists still do not see recession as the most likely outcome,'' said Ellen Hughes-Cromwick, the group's president and chief economist at Ford Motor Co., in a statement.
The economy will expand 2.6 percent from now to next year's fourth quarter, according to the survey. While that is lower than September's forecast, it would still surpass the 2.4 percent projected for 2007.
The survey's median forecast for fourth-quarter growth matched the projection in a Bloomberg News survey also taken earlier this month. Many of the economists surveyed by NABE also participated in the Bloomberg poll.
makemoremoney-usa.com
Bond Market to Fed: Recession Threat Means More Cuts
The headline in the financial futures market these days says Federal Reserve Chairman Ben S. Bernanke is withholding some vital information: The economy is so bad the central bank will have to lower interest rates at least three-quarters of a percentage point to avoid a recession.
Bernanke's two rate cuts since September failed to reassure the bond market, where volatility has risen four of the past five weeks, according to Merrill Lynch & Co.'s MOVE Index. Yields on Treasury bills, the haven for bond investors in times of turmoil, are near their lows of August, when losses on securities backed by subprime mortgages froze credit markets.
While the record low dollar and the fastest inflation in 14 months give policy makers reasons to keep the target rate for overnight loans between banks at 4.5 percent, traders expect 3.75 percent early in 2008. Interest-rate futures on the Chicago Board of Trade show the Fed will cut borrowing costs in December and again in the first quarter, as the worst housing slump since 1991 deepens and retailers including J.C. Penney Co. and Macy's Inc. forecast slumping sales.
Investors are sending the message to Bernanke that ``you're wrong and we're going to lead you to the next ease,'' said Thomas Tucci, head of U.S. government bond trading in New York at RBC Capital Markets. The firm is the investment-banking arm of Canada's biggest bank.
Fed fund futures show traders see a 90 percent chance the central bank will reduce its target a quarter-percentage point to 4.25 percent at its Dec. 11 meeting, 67 percent odds of another 25-basis-point cut in January, and a 43 percent likelihood the rate falls to 3.75 percent in March. Policy makers already lowered the target from 5.25 percent in August.
makemoremoney-usa.com
Bernanke's two rate cuts since September failed to reassure the bond market, where volatility has risen four of the past five weeks, according to Merrill Lynch & Co.'s MOVE Index. Yields on Treasury bills, the haven for bond investors in times of turmoil, are near their lows of August, when losses on securities backed by subprime mortgages froze credit markets.
While the record low dollar and the fastest inflation in 14 months give policy makers reasons to keep the target rate for overnight loans between banks at 4.5 percent, traders expect 3.75 percent early in 2008. Interest-rate futures on the Chicago Board of Trade show the Fed will cut borrowing costs in December and again in the first quarter, as the worst housing slump since 1991 deepens and retailers including J.C. Penney Co. and Macy's Inc. forecast slumping sales.
Investors are sending the message to Bernanke that ``you're wrong and we're going to lead you to the next ease,'' said Thomas Tucci, head of U.S. government bond trading in New York at RBC Capital Markets. The firm is the investment-banking arm of Canada's biggest bank.
Fed fund futures show traders see a 90 percent chance the central bank will reduce its target a quarter-percentage point to 4.25 percent at its Dec. 11 meeting, 67 percent odds of another 25-basis-point cut in January, and a 43 percent likelihood the rate falls to 3.75 percent in March. Policy makers already lowered the target from 5.25 percent in August.
makemoremoney-usa.com
пятница, 16 ноября 2007 г.
Industrial Production in U.S. Probably Stagnated in October
Industrial production in the U.S. stalled last month as slowing sales prompted factories to make less clothing, furniture and appliances, economists said before a report today.
Production at manufacturers, mines and utilities rose 0.1 percent, the same as in September, according to the median forecast in a Bloomberg survey of economists. Capacity utilization, which measures the proportion of plants in use, fell to 82 percent from 82.1 percent the prior month, economists said before the Federal Reserve's report.
The figures suggest the biggest housing slump in 16 years may be starting to spill over to other industries. A weaker dollar and stronger growth abroad is boosting demand from overseas, keeping factory output from tumbling.
``Soft manufacturing production is reflecting overall slowing in demand,'' said Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York. ``We look for a relatively soft reading.''
Economists' projections ranged from a decline of 0.5 percent to a gain of 0.3 percent. The Fed will release the report at 9:15 a.m. in Washington.
Retail sales increased 0.2 percent in October following a 0.7 percent increase the prior month as Americans skimped on furniture and sporting goods, a report this week from the Commerce Department showed. The slowdown suggests rising fuel prices and falling property values are leaving shoppers with little extra cash to spend on non-essentials.
Whirlpool Corp., the world's largest appliance maker, said last month that third-quarter sales in North American fell 8 percent as the housing slump hurt demand for refrigerators and dishwashers.
predictpennystock.com
Production at manufacturers, mines and utilities rose 0.1 percent, the same as in September, according to the median forecast in a Bloomberg survey of economists. Capacity utilization, which measures the proportion of plants in use, fell to 82 percent from 82.1 percent the prior month, economists said before the Federal Reserve's report.
The figures suggest the biggest housing slump in 16 years may be starting to spill over to other industries. A weaker dollar and stronger growth abroad is boosting demand from overseas, keeping factory output from tumbling.
``Soft manufacturing production is reflecting overall slowing in demand,'' said Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York. ``We look for a relatively soft reading.''
Economists' projections ranged from a decline of 0.5 percent to a gain of 0.3 percent. The Fed will release the report at 9:15 a.m. in Washington.
Retail sales increased 0.2 percent in October following a 0.7 percent increase the prior month as Americans skimped on furniture and sporting goods, a report this week from the Commerce Department showed. The slowdown suggests rising fuel prices and falling property values are leaving shoppers with little extra cash to spend on non-essentials.
Whirlpool Corp., the world's largest appliance maker, said last month that third-quarter sales in North American fell 8 percent as the housing slump hurt demand for refrigerators and dishwashers.
predictpennystock.com
Citigroup, Merrill Push Financial Borrowing Costs to Records
For the first time, the world's biggest financial institutions are paying more to borrow in the corporate bond market than the average company.
Bonds of banks, brokerages and insurance companies yield 1.49 percentage points more than U.S. Treasuries, matching a record high set in October 2002, according to indexes compiled by New York-based Merrill Lynch & Co. The average industrial company bond trades at a yield premium of 1.34 percentage points.
Investors are demanding extra compensation for the risk of owning Citigroup Inc., Merrill Lynch and Barclays Plc on concern that the $50 billion in losses already reported from subprime mortgages will increase. The total damage may reach $400 billion worldwide, Deutsche Bank AG analysts said this week in a report, and Wells Fargo & Co. Chief Executive Officer John Stumpf said the housing market is the worst since the Great Depression.
``The fear is that we haven't seen the losses yet, we've only seen the estimates of the losses and the credibility of the banks and brokers to assure people they have a good handle on it is really the key issue,'' said John Atkins, corporate bond analyst at research firm IDEAglobal in New York.
Until the subprime-mortgage crisis erupted, banks had always paid less than the average company to lend, according to Merrill indexes that began in 1996. Financial company yield spreads began trading higher in August and reached a record Nov. 13.
predictpennystock.com
Bonds of banks, brokerages and insurance companies yield 1.49 percentage points more than U.S. Treasuries, matching a record high set in October 2002, according to indexes compiled by New York-based Merrill Lynch & Co. The average industrial company bond trades at a yield premium of 1.34 percentage points.
Investors are demanding extra compensation for the risk of owning Citigroup Inc., Merrill Lynch and Barclays Plc on concern that the $50 billion in losses already reported from subprime mortgages will increase. The total damage may reach $400 billion worldwide, Deutsche Bank AG analysts said this week in a report, and Wells Fargo & Co. Chief Executive Officer John Stumpf said the housing market is the worst since the Great Depression.
``The fear is that we haven't seen the losses yet, we've only seen the estimates of the losses and the credibility of the banks and brokers to assure people they have a good handle on it is really the key issue,'' said John Atkins, corporate bond analyst at research firm IDEAglobal in New York.
Until the subprime-mortgage crisis erupted, banks had always paid less than the average company to lend, according to Merrill indexes that began in 1996. Financial company yield spreads began trading higher in August and reached a record Nov. 13.
predictpennystock.com
четверг, 15 ноября 2007 г.
Public School Funds Hit by SIV Debts Hidden in Investment Pools
Hal Wilson smiles at the blue numbers on his desktop screen. His money is yielding 5.77 percent. For the chief financial officer of Florida's Jefferson County school board, that means the $2.7 million of taxpayer funds he's placed in the state's Local Government Investment Pool is earning more on this October day than it would get in a money market fund.
And Wilson says he knows the Florida officials who manage the funds of the 1,559-student district have invested them wisely.
``We're such a small school district,'' Wilson, 55, says. ``We don't have the time or staff for professional money management. They have lots of investment advisers. It's risk free and easy.''
It may be easy, but it's not risk free. What Wilson didn't know in October -- and what thousands of municipal finance managers like him across the country still haven't been told -- is that state-run pools have parked taxpayers' money in some of the most confusing, opaque and illiquid debt investments ever devised.
These include so-called structured investment vehicles, or SIVs, which are among the subprime mortgage debt-filled contrivances that have blown up at the biggest banks in the world.
Red ink from subprime debt rocked Merrill Lynch & Co., the world's biggest brokerage, in October, spurring a $2.24 billion third-quarter loss, an $8.4 billion writedown and the ouster of Chief Executive Officer Stan O'Neal.
Less than a week later, subprime losses felled Charles Prince, CEO of Citigroup Inc., the largest bank in the U.S.
predicstockmove.com
And Wilson says he knows the Florida officials who manage the funds of the 1,559-student district have invested them wisely.
``We're such a small school district,'' Wilson, 55, says. ``We don't have the time or staff for professional money management. They have lots of investment advisers. It's risk free and easy.''
It may be easy, but it's not risk free. What Wilson didn't know in October -- and what thousands of municipal finance managers like him across the country still haven't been told -- is that state-run pools have parked taxpayers' money in some of the most confusing, opaque and illiquid debt investments ever devised.
These include so-called structured investment vehicles, or SIVs, which are among the subprime mortgage debt-filled contrivances that have blown up at the biggest banks in the world.
Red ink from subprime debt rocked Merrill Lynch & Co., the world's biggest brokerage, in October, spurring a $2.24 billion third-quarter loss, an $8.4 billion writedown and the ouster of Chief Executive Officer Stan O'Neal.
Less than a week later, subprime losses felled Charles Prince, CEO of Citigroup Inc., the largest bank in the U.S.
predicstockmove.com
GE Bond Fund Investors Cash Out After Losses From Subprime
A short-term bond fund run by General Electric Co.'s GE Asset Management returned money to investors at 96 cents on the dollar after losing about $200 million, mostly on mortgage-backed securities.
The GEAM Trust Enhanced Cash Trust, a short-term bond fund with about $5 billion in assets, told non-GE investors on Nov. 8 that they could withdraw their money before losses mounted. Enhanced cash funds usually offer higher yields than money- market funds by investing in riskier assets.
All outside investors, who together held ``several hundreds of millions of dollars'' in the fund, pulled their money, Chris Linehan, a GE Asset Management spokesman in Stamford, Connecticut, said yesterday in an interview. Most of the fund's money before the redemptions came from GE's corporate pension plan and remains invested.
Enhanced cash funds ``never promised to be stable value, though investors may have believed that,'' said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence Newsletter. There are a number these funds ``under duress,'' he said.
Barron's first reported the GE fund's losses yesterday.
Linehan said the losses were from mortgage-backed securities, including those linked to subprime home loans. He couldn't say how much the fund had invested in mortgage debt. The fund didn't own collateralized debt obligations, which are securities backed by pools of bonds and loans, or commercial paper or notes issued by structured investment vehicles, known as SIVs.
predicstockmove.com
The GEAM Trust Enhanced Cash Trust, a short-term bond fund with about $5 billion in assets, told non-GE investors on Nov. 8 that they could withdraw their money before losses mounted. Enhanced cash funds usually offer higher yields than money- market funds by investing in riskier assets.
All outside investors, who together held ``several hundreds of millions of dollars'' in the fund, pulled their money, Chris Linehan, a GE Asset Management spokesman in Stamford, Connecticut, said yesterday in an interview. Most of the fund's money before the redemptions came from GE's corporate pension plan and remains invested.
Enhanced cash funds ``never promised to be stable value, though investors may have believed that,'' said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence Newsletter. There are a number these funds ``under duress,'' he said.
Barron's first reported the GE fund's losses yesterday.
Linehan said the losses were from mortgage-backed securities, including those linked to subprime home loans. He couldn't say how much the fund had invested in mortgage debt. The fund didn't own collateralized debt obligations, which are securities backed by pools of bonds and loans, or commercial paper or notes issued by structured investment vehicles, known as SIVs.
predicstockmove.com
вторник, 13 ноября 2007 г.
Oaktree Has $10 Billion to Purchase Distressed Debt
Oaktree Capital Management LLC, the Los Angeles-based private equity fund with $51 billion in assets, has raised more than $10 billion in the past 12 months to invest in distressed debt, Chairman Howard Marks said.
Oaktree has raised $4 billion for a fund to buy leveraged buyout loans stuck with investment banks in the U.S. and Europe, Marks told reporters in Hong Kong yesterday. Some 40 percent of Oaktree's funds are linked to distressed investments.
``Debt in unsuccessful LBOs will be a major feature of the landscape in coming years and a major part of what we do in our new distressed debt funds,'' Marks said. ``Other people plant the seeds, when it goes bad, we harvest.''
Citigroup Inc., JPMorgan Chase & Co. and other banks have offered discounts of as much as 4 percent in the U.S. and Europe to clear about $300 billion of leveraged-buyout financing they promised before losses on subprime mortgages shut down the market for high-risk debt in July. Rising costs and tighter access to funding may undermine some borrowers' ability to service debt.
Oaktree profited in the early 1990s from buying distressed LBO debt as the U.S. economy was mired in a ``significant credit crunch,'' said Marks.
Seeking Opportunities
Morgan Stanley said on Nov. 9 that it lost $3.7 billion in the first two months of the third quarter on wrong-way bets on subprime-related securities, cutting third-quarter profit by $2.5 billion. The writedowns follow similar losses at Merrill Lynch & Co. and Citigroup Inc. as investors shun bonds related to U.S. home loans made to risky borrowers.
Marks said the ``major change in psychology'' in the market and its lack of liquidity may create more investment opportunities for Oaktree.
``The events of the last few months bode relatively well for it occurring sometime in the next year or two,'' Marks said in an interview with Bloomberg television. ``This time around, Europe has fully taken up the LBO mantra and we think there will be lots of opportunities.''
Oaktree also plans to raise $500 million to $1 billion next year to make property investments in Asia, Marks said. In September, the company bought Singapore-based Pangaea Capital Management LP, a real-estate focused fund management company.
microcapmarket.org
Oaktree has raised $4 billion for a fund to buy leveraged buyout loans stuck with investment banks in the U.S. and Europe, Marks told reporters in Hong Kong yesterday. Some 40 percent of Oaktree's funds are linked to distressed investments.
``Debt in unsuccessful LBOs will be a major feature of the landscape in coming years and a major part of what we do in our new distressed debt funds,'' Marks said. ``Other people plant the seeds, when it goes bad, we harvest.''
Citigroup Inc., JPMorgan Chase & Co. and other banks have offered discounts of as much as 4 percent in the U.S. and Europe to clear about $300 billion of leveraged-buyout financing they promised before losses on subprime mortgages shut down the market for high-risk debt in July. Rising costs and tighter access to funding may undermine some borrowers' ability to service debt.
Oaktree profited in the early 1990s from buying distressed LBO debt as the U.S. economy was mired in a ``significant credit crunch,'' said Marks.
Seeking Opportunities
Morgan Stanley said on Nov. 9 that it lost $3.7 billion in the first two months of the third quarter on wrong-way bets on subprime-related securities, cutting third-quarter profit by $2.5 billion. The writedowns follow similar losses at Merrill Lynch & Co. and Citigroup Inc. as investors shun bonds related to U.S. home loans made to risky borrowers.
Marks said the ``major change in psychology'' in the market and its lack of liquidity may create more investment opportunities for Oaktree.
``The events of the last few months bode relatively well for it occurring sometime in the next year or two,'' Marks said in an interview with Bloomberg television. ``This time around, Europe has fully taken up the LBO mantra and we think there will be lots of opportunities.''
Oaktree also plans to raise $500 million to $1 billion next year to make property investments in Asia, Marks said. In September, the company bought Singapore-based Pangaea Capital Management LP, a real-estate focused fund management company.
microcapmarket.org
Och-Ziff Capital Shares May Rise After $1.15 Billion Share Sale
Och-Ziff Capital Management Group LLC may climb in its first day of trading after raising $1.15 billion in the largest initial public offering by a U.S. hedge- fund manager.
The New York-based investment firm, run by former Goldman Sachs Group Inc. trader Daniel Och, sold 36 million shares at $32 apiece, just above the mid-point of its $30-to-$33 target, the firm said yesterday in a statement. It will also sell 38.1 million shares to Dubai International Capital LLC, the investment firm controlled by the emirate's ruler. Och will receive about $1.1 billion in proceeds and keep a 48.5 percent stake valued at $5.9 billion.
The deal follows IPOs earlier this year by Blackstone Group LP, manager of the world's largest leveraged buyout fund, and Fortress Investment Group LLC, a New York-based hedge-fund and LBO firm. New York-based Blackstone's shares have fallen 26.5 percent since the company went public in June, while Fortress has declined 5.4 percent since its February debut.
``The success of the sale reflects an ongoing interest in alternative managers, because they will lead the growth in the asset-management industry,'' said Aaron Dorr, a managing director at Putnam Lovell in New York, a unit of Jefferies Group Inc.
The sale gives Och-Ziff, founded in 1996 with money from the Ziff family, a market value of about $12.3 billion.
Och-Ziff will have two share classes after the offering. The public will own about 9 percent of the firm through Class A stock, and Dubai International will own an additional 9.9 percent.
microcapmarket.org
The New York-based investment firm, run by former Goldman Sachs Group Inc. trader Daniel Och, sold 36 million shares at $32 apiece, just above the mid-point of its $30-to-$33 target, the firm said yesterday in a statement. It will also sell 38.1 million shares to Dubai International Capital LLC, the investment firm controlled by the emirate's ruler. Och will receive about $1.1 billion in proceeds and keep a 48.5 percent stake valued at $5.9 billion.
The deal follows IPOs earlier this year by Blackstone Group LP, manager of the world's largest leveraged buyout fund, and Fortress Investment Group LLC, a New York-based hedge-fund and LBO firm. New York-based Blackstone's shares have fallen 26.5 percent since the company went public in June, while Fortress has declined 5.4 percent since its February debut.
``The success of the sale reflects an ongoing interest in alternative managers, because they will lead the growth in the asset-management industry,'' said Aaron Dorr, a managing director at Putnam Lovell in New York, a unit of Jefferies Group Inc.
The sale gives Och-Ziff, founded in 1996 with money from the Ziff family, a market value of about $12.3 billion.
Och-Ziff will have two share classes after the offering. The public will own about 9 percent of the firm through Class A stock, and Dubai International will own an additional 9.9 percent.
microcapmarket.org
MBK, CCMP Capital Picked to Bid for Korea's Himart
Buyout firms CCMP Capital Asia and MBK Partners Ltd. are among the four companies short-listed to bid for South Korean electronics retailer Himart Co., said four people with direct knowledge of the matter.
Investors led by Affinity Equity Partners Ltd. are seeking at least 2 trillion won ($2.2 billion) for Seoul-based Himart, the people said, declining to be identified as talks are private. The group bought it for 787.8 billion won in April 2005, according to Affinity's Web site.
Consumer spending is driving South Korea's longest economic expansion in 15 years, helping retailers increase sales and profits and making them more attractive to potential buyers. Himart, which estimates it has about a quarter of the nation's home appliances market, boosted profit 31 percent last year.
``Assets worth more than $1 billion like Himart don't come to the market often these days in Korea,'' said Seoul-based Peter Ko, head of Korea at H&Q Asia Pacific Ltd. Buyout firms ``have raised a lot of capital which they need to put to work.''
Private equity funds have invested $70.3 billion in the Asia-Pacific region this year, 36 percent more than in the year- earlier period, according to Asian Venture Capital Journal.
Also on the short list are GS Holdings Corp., a Seoul-based company whose operations include an online shopping service and retailer GS Mart Co.; and Eugene Corp., a South Korean builder and maker of concrete. Goldman Sachs Group Inc. was hired to sell Himart by Affinity and the company's other owners, Temasek Holdings Pte. and the Government of Singapore Investment Corp., the people said.
stockmarketreview.net
Investors led by Affinity Equity Partners Ltd. are seeking at least 2 trillion won ($2.2 billion) for Seoul-based Himart, the people said, declining to be identified as talks are private. The group bought it for 787.8 billion won in April 2005, according to Affinity's Web site.
Consumer spending is driving South Korea's longest economic expansion in 15 years, helping retailers increase sales and profits and making them more attractive to potential buyers. Himart, which estimates it has about a quarter of the nation's home appliances market, boosted profit 31 percent last year.
``Assets worth more than $1 billion like Himart don't come to the market often these days in Korea,'' said Seoul-based Peter Ko, head of Korea at H&Q Asia Pacific Ltd. Buyout firms ``have raised a lot of capital which they need to put to work.''
Private equity funds have invested $70.3 billion in the Asia-Pacific region this year, 36 percent more than in the year- earlier period, according to Asian Venture Capital Journal.
Also on the short list are GS Holdings Corp., a Seoul-based company whose operations include an online shopping service and retailer GS Mart Co.; and Eugene Corp., a South Korean builder and maker of concrete. Goldman Sachs Group Inc. was hired to sell Himart by Affinity and the company's other owners, Temasek Holdings Pte. and the Government of Singapore Investment Corp., the people said.
stockmarketreview.net
Legg Mason, SunTrust Shore Up Money Funds for SIVs
Legg Mason Inc. and SunTrust Banks Inc. are propping up money-market funds to cushion them from possible losses on debt issued by structured investment vehicles.
Legg Mason invested $100 million in one of its money funds and arranged $238 million in credit for two others, the Baltimore-based company said in a Nov. 9 regulatory filing. SunTrust Banks Inc. received approval from regulators last month to protect two money funds that bought debt from Cheyne Finance Plc if the SIV is unable to repay the Atlanta-based bank.
The 10 largest managers of U.S. money funds have $50 billion in SIV debt, some issued by vehicles such as Cheyne that defaulted because of losses from securities linked to subprime mortgages, according to reports from the companies. At least three companies -- Legg Mason, SunTrust and Wachovia Corp. of Charlotte, North Carolina -- have stepped in to make sure their funds don't ``break the buck,'' or fall below the $1 a share net asset value that all funds strive to maintain.
``This is the first real case'' of securities held by money-market funds defaulting, said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence Newsletter.
Money funds, considered among the safest investments, loaded up on asset-backed commercial paper with the hope of increasing returns. Asset-backed commercial paper maturing in 90 days yielded an average 5.3 percent this year, 0.6 percentage point more than Treasuries with similar maturities, data compiled by Bloomberg show.
stockmarketreview.net
Legg Mason invested $100 million in one of its money funds and arranged $238 million in credit for two others, the Baltimore-based company said in a Nov. 9 regulatory filing. SunTrust Banks Inc. received approval from regulators last month to protect two money funds that bought debt from Cheyne Finance Plc if the SIV is unable to repay the Atlanta-based bank.
The 10 largest managers of U.S. money funds have $50 billion in SIV debt, some issued by vehicles such as Cheyne that defaulted because of losses from securities linked to subprime mortgages, according to reports from the companies. At least three companies -- Legg Mason, SunTrust and Wachovia Corp. of Charlotte, North Carolina -- have stepped in to make sure their funds don't ``break the buck,'' or fall below the $1 a share net asset value that all funds strive to maintain.
``This is the first real case'' of securities held by money-market funds defaulting, said Peter Crane, founder of Crane Data LLC, the Westborough, Massachusetts-based publisher of the Money Fund Intelligence Newsletter.
Money funds, considered among the safest investments, loaded up on asset-backed commercial paper with the hope of increasing returns. Asset-backed commercial paper maturing in 90 days yielded an average 5.3 percent this year, 0.6 percentage point more than Treasuries with similar maturities, data compiled by Bloomberg show.
stockmarketreview.net
понедельник, 12 ноября 2007 г.
$100 Oil May Mean Recession as U.S. Economy Hits `Danger Zone'
Rising fuel prices that businesses and consumers took in stride earlier this year may now be near the point of pushing the weakened U.S. economy into recession.
``We are in a danger zone,'' says Nariman Behravesh, chief economist at Global Insight Inc. and a former Federal Reserve economist. ``It would take two shocks to bring the economy to its knees. We got one shock in the form of the credit crunch. Oil could be that second shock.''
Crude-oil prices are poised to cross the $100-a-barrel mark while the U.S. economy is still reeling from a surge in corporate borrowing costs. Europe and Japan are vulnerable as well, after the U.S. subprime-mortgage collapse contaminated their credit markets.
Even before the latest jump in energy costs, economists expected U.S. growth to slow to less than 2 percent in the fourth quarter -- half the third quarter's pace. Andrew Cates, an economist at UBS AG in London, said his models suggest a 45 percent chance of a U.S. recession next year, up from 33 percent last month, as oil prices prove a ``growing concern.''
Japan risks its fourth recession since the early 1990s, with its index of leading economic indicators falling to zero for the first time in a decade. The European Commission last week cut its 2008 growth forecast for the 13 nations that share the euro to 2.2 percent from 2.5 percent, partly because of costlier crude. The economy grew 2.8 percent last year.
Energy Efficiency
The world economy may still dodge recession as emerging markets continue to expand. A report last week by Deutsche Bank AG said gains in energy efficiency mean the effect of more expensive oil will ``remain muted.''
Even so, gloom is spreading at a speed that suggests ``we're walking a really fine line,'' says John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ``Even a month ago, you probably wouldn't have thought we'd be seeing a sustained credit problem and oil holding up above $85 a barrel.''
Crude oil traded at a record $98.62 last week on the New York Mercantile Exchange and ended the week at $96.32, bringing its increase this year to 58 percent. Prices adjusted for inflation exceed the previous record, set in 1981 when Iran cut exports.
The dilemma for central banks is how to balance oil's drag on their economies against the risk of higher inflation. Fed Chairman Ben S. Bernanke told Congress Nov. 8 that oil prices threaten both ``renewed upward pressure'' on inflation and ``further restraint on growth.''
investormarketreview.com
``We are in a danger zone,'' says Nariman Behravesh, chief economist at Global Insight Inc. and a former Federal Reserve economist. ``It would take two shocks to bring the economy to its knees. We got one shock in the form of the credit crunch. Oil could be that second shock.''
Crude-oil prices are poised to cross the $100-a-barrel mark while the U.S. economy is still reeling from a surge in corporate borrowing costs. Europe and Japan are vulnerable as well, after the U.S. subprime-mortgage collapse contaminated their credit markets.
Even before the latest jump in energy costs, economists expected U.S. growth to slow to less than 2 percent in the fourth quarter -- half the third quarter's pace. Andrew Cates, an economist at UBS AG in London, said his models suggest a 45 percent chance of a U.S. recession next year, up from 33 percent last month, as oil prices prove a ``growing concern.''
Japan risks its fourth recession since the early 1990s, with its index of leading economic indicators falling to zero for the first time in a decade. The European Commission last week cut its 2008 growth forecast for the 13 nations that share the euro to 2.2 percent from 2.5 percent, partly because of costlier crude. The economy grew 2.8 percent last year.
Energy Efficiency
The world economy may still dodge recession as emerging markets continue to expand. A report last week by Deutsche Bank AG said gains in energy efficiency mean the effect of more expensive oil will ``remain muted.''
Even so, gloom is spreading at a speed that suggests ``we're walking a really fine line,'' says John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ``Even a month ago, you probably wouldn't have thought we'd be seeing a sustained credit problem and oil holding up above $85 a barrel.''
Crude oil traded at a record $98.62 last week on the New York Mercantile Exchange and ended the week at $96.32, bringing its increase this year to 58 percent. Prices adjusted for inflation exceed the previous record, set in 1981 when Iran cut exports.
The dilemma for central banks is how to balance oil's drag on their economies against the risk of higher inflation. Fed Chairman Ben S. Bernanke told Congress Nov. 8 that oil prices threaten both ``renewed upward pressure'' on inflation and ``further restraint on growth.''
investormarketreview.com
Goldman Held Bigger Share of Level 3 Assets Than Citi, Merrill
Goldman Sachs Group Inc. held a bigger proportion of hard-to-value assets at the end of the third quarter than Citigroup Inc. and Merrill Lynch & Co., two of the firms hardest hit by subprime mortgage losses.
Goldman's Level 3 assets, for which market prices are so scarce that companies use internal models to gauge their value, accounted for 6.9 percent of the New York-based firm's $1.05 trillion total at the end of August, according to a filing with the U.S. Securities and Exchange Commission. Citigroup classified 5.7 percent of its assets as Level 3 on Sept. 30 and Merrill reported 2.5 percent.
Investors have grown wary of banks and brokerages with difficult-to-sell securities on their books, after profits at Citigroup and Merrill were crippled by at least $19 billion of writedowns, mostly from bonds backed by home loans to borrowers with poor credit histories. While Goldman officials say the firm won't report an ``extraordinary'' drop in its subprime holdings, investors have remained skeptical, pushing its shares down 15 percent this month in New York Stock Exchange trading.
``It's hard to believe Goldman is perfect,'' said Jon Fisher, who helps oversee $22 billion at Minneapolis-based Fifth Third Asset Management and sold his Goldman, Merrill and Morgan Stanley shares in the past 12 months. ``Their losses might be smaller than others, but that doesn't mean they don't have a problem.''
Goldman posted a 79 percent increase in third-quarter profit, the biggest on Wall Street, even after shaving $1.48 billion from the value of high-yield loans. Morgan Stanley, Lehman Brothers Holdings Inc. and Bear Stearns Cos. reported declines, and Merrill Lynch & Co. said $8.4 billion of writedowns led to a $2.2 billion loss, the biggest in the firm's history. All the companies are based in New York.
LBO Market
``Just because they're in Level 3 doesn't mean we're not pricing them correctly,'' Goldman Chief Accounting Officer Sarah Smith said in a Nov. 9 interview. ``We mark our positions to the point where we could exit at that moment.''
The 33 percent increase in Level 3 assets in the third quarter was mostly due to the freeze in the leveraged buyout market, which left firms including Goldman stuck with loans, Smith said. Goldman wrote down the value of those commitments when the debt was moved to Level 3. As the buyout market recovers, the loans may be upgraded to Level 2, she said.
Goldman's Level 3 holdings totaled about $72 billion at the end of August. Stripping out stakes owned by others, Goldman's ``exposure'' was $50.9 billion, or 4.9 percent of the firm's total assets. A ``substantial percentage'' are private equity and real estate investments, said Goldman spokesman Lucas van Praag.
investormarketreview.com
Goldman's Level 3 assets, for which market prices are so scarce that companies use internal models to gauge their value, accounted for 6.9 percent of the New York-based firm's $1.05 trillion total at the end of August, according to a filing with the U.S. Securities and Exchange Commission. Citigroup classified 5.7 percent of its assets as Level 3 on Sept. 30 and Merrill reported 2.5 percent.
Investors have grown wary of banks and brokerages with difficult-to-sell securities on their books, after profits at Citigroup and Merrill were crippled by at least $19 billion of writedowns, mostly from bonds backed by home loans to borrowers with poor credit histories. While Goldman officials say the firm won't report an ``extraordinary'' drop in its subprime holdings, investors have remained skeptical, pushing its shares down 15 percent this month in New York Stock Exchange trading.
``It's hard to believe Goldman is perfect,'' said Jon Fisher, who helps oversee $22 billion at Minneapolis-based Fifth Third Asset Management and sold his Goldman, Merrill and Morgan Stanley shares in the past 12 months. ``Their losses might be smaller than others, but that doesn't mean they don't have a problem.''
Goldman posted a 79 percent increase in third-quarter profit, the biggest on Wall Street, even after shaving $1.48 billion from the value of high-yield loans. Morgan Stanley, Lehman Brothers Holdings Inc. and Bear Stearns Cos. reported declines, and Merrill Lynch & Co. said $8.4 billion of writedowns led to a $2.2 billion loss, the biggest in the firm's history. All the companies are based in New York.
LBO Market
``Just because they're in Level 3 doesn't mean we're not pricing them correctly,'' Goldman Chief Accounting Officer Sarah Smith said in a Nov. 9 interview. ``We mark our positions to the point where we could exit at that moment.''
The 33 percent increase in Level 3 assets in the third quarter was mostly due to the freeze in the leveraged buyout market, which left firms including Goldman stuck with loans, Smith said. Goldman wrote down the value of those commitments when the debt was moved to Level 3. As the buyout market recovers, the loans may be upgraded to Level 2, she said.
Goldman's Level 3 holdings totaled about $72 billion at the end of August. Stripping out stakes owned by others, Goldman's ``exposure'' was $50.9 billion, or 4.9 percent of the firm's total assets. A ``substantial percentage'' are private equity and real estate investments, said Goldman spokesman Lucas van Praag.
investormarketreview.com
суббота, 10 ноября 2007 г.
South Korean Stocks Rise; SK Telecom Gains, Doosan Heavy Falls
South Korean stocks rose, led by SK Telecom Co., after the company said it may bid for Hanarotelecom Inc.
``Telecommunication shares are strong today on the potential for mergers and acquisitions,'' said Cho Min Keon, who manages the equivalent of $540 million at Kyobo Investment Trust Management Co. in Seoul. ``The Kospi will stay around 2,000 for a while until the U.S. market gives a clear direction.''
Doosan Heavy Industries & Construction Co. and STX Group company shares fell after prosecutors arrested two executives at an STX unit on suspicion of stealing technology from Doosan Heavy.
The Kospi index rose 0.6 percent to 1,990.47 in Seoul. The Kosdaq fell 0.1 percent to 779.04. Kospi 200 futures expiring in December advanced 0.7 percent to 253.00, while the underlying index rose 0.9 percent to 252.21.
SK Telecom Co., South Korea's largest mobile-phone operator, said yesterday it's reviewing whether to make a bid for Hanarotelecom, after being approached by Goldman Sachs Group Inc. regarding a possible deal. Hanaro said Nov. 6 that the sale of 39 percent held by American International Group Inc. and Newbridge Capital LLC was in the ``final stages.''
SK Telecom rose 9,500 won, or 4.1 percent, to 239,000 won. Hanaro, South Korea's second-largest high-speed Internet access provider, climbed 480 won, or 5 percent, to 10,100 won.
earnwithpennystock.com
``Telecommunication shares are strong today on the potential for mergers and acquisitions,'' said Cho Min Keon, who manages the equivalent of $540 million at Kyobo Investment Trust Management Co. in Seoul. ``The Kospi will stay around 2,000 for a while until the U.S. market gives a clear direction.''
Doosan Heavy Industries & Construction Co. and STX Group company shares fell after prosecutors arrested two executives at an STX unit on suspicion of stealing technology from Doosan Heavy.
The Kospi index rose 0.6 percent to 1,990.47 in Seoul. The Kosdaq fell 0.1 percent to 779.04. Kospi 200 futures expiring in December advanced 0.7 percent to 253.00, while the underlying index rose 0.9 percent to 252.21.
SK Telecom Co., South Korea's largest mobile-phone operator, said yesterday it's reviewing whether to make a bid for Hanarotelecom, after being approached by Goldman Sachs Group Inc. regarding a possible deal. Hanaro said Nov. 6 that the sale of 39 percent held by American International Group Inc. and Newbridge Capital LLC was in the ``final stages.''
SK Telecom rose 9,500 won, or 4.1 percent, to 239,000 won. Hanaro, South Korea's second-largest high-speed Internet access provider, climbed 480 won, or 5 percent, to 10,100 won.
earnwithpennystock.com
Australian Stocks Advance, Led by Rio Tinto on BHP Buyout Bid
Australian stocks rose as Rio Tinto Group surged to a record after BHP Billiton Ltd. renewed its offer to buy the miner in what would be the biggest acquisition in history.
``If BHP is confident enough about the macroeconomic outlook to do this, then it tells me they've got a positive view for commodities over the next five years,'' said Hans Kunnen, who helps manage $117 billion at Colonial First State Global Asset Management in Sydney, including BHP and Rio stock. ``The outlook is positive for resources stocks.''
BHP dropped after investors and analysts said it may have to add cash to its stock offer for it to be successful.
National Australia Bank Ltd. led financial stocks higher after the lender posted a record second-half profit and Federal Reserve Chairman Ben S. Bernanke spurred speculation of another cut in U.S. borrowing costs.
The S&P/ASX 200 Index advanced 24.10, or 0.4 percent, to 6,545.70 at the close in Sydney, after sliding the most in three months yesterday. It is headed for a 2.3 percent decline this week. Almost the same number of stocks rose as fell.
Rio Tinto, the world's third-largest miner rose to a record with its biggest gain in more than 20 years, jumping A$17.50, or 15 percent, to A$130.90. The number of Rio shares traded today was more than three times the stock's daily average over the past six months. The stock has increased in value by a third in less than eight weeks.
earnwithpennystock.com
``If BHP is confident enough about the macroeconomic outlook to do this, then it tells me they've got a positive view for commodities over the next five years,'' said Hans Kunnen, who helps manage $117 billion at Colonial First State Global Asset Management in Sydney, including BHP and Rio stock. ``The outlook is positive for resources stocks.''
BHP dropped after investors and analysts said it may have to add cash to its stock offer for it to be successful.
National Australia Bank Ltd. led financial stocks higher after the lender posted a record second-half profit and Federal Reserve Chairman Ben S. Bernanke spurred speculation of another cut in U.S. borrowing costs.
The S&P/ASX 200 Index advanced 24.10, or 0.4 percent, to 6,545.70 at the close in Sydney, after sliding the most in three months yesterday. It is headed for a 2.3 percent decline this week. Almost the same number of stocks rose as fell.
Rio Tinto, the world's third-largest miner rose to a record with its biggest gain in more than 20 years, jumping A$17.50, or 15 percent, to A$130.90. The number of Rio shares traded today was more than three times the stock's daily average over the past six months. The stock has increased in value by a third in less than eight weeks.
earnwithpennystock.com
пятница, 9 ноября 2007 г.
U.S. Trade Deficit Probably Widened in September on Oil Imports
The U.S. trade deficit probably widened in September from a seven-month low as the price of imported oil jumped to a record, economists said ahead of a government report today.
The gap grew to $58.5 billion, from $57.6 billion in August, according to the median forecast in a Bloomberg News survey of 76 economists.
Exports may have cooled after setting records for six consecutive months, even as a weaker dollar and growing economies overseas sustain demand for American goods in coming months. Trade will continue to contribute to gross domestic product and help manufacturers weather a housing-related slump in demand.
``Imports should rise, with oil likely the biggest swing factor,'' said Neal Soss, chief economist at Credit Suisse Group Inc. in New York. ``External demand should continue to add to GDP and should provide an offset to the drag from housing.''
The Commerce Department will issue the report at 8:30 a.m. in Washington. Economists' estimates of the deficit ranged from $54.5 billion to $61.1 billion.
The price of imported petroleum rose 5.4 percent in September and was up 20 percent from the same time a year earlier, the biggest year-over-year increase since August 2005, the Labor Department reported last month.
The cost of all imported goods probably rose 1.2 percent in October following a 1 percent increase the previous month, led by another jump in crude prices, economists forecast a report from Labor today will also show.
microcapwatch.net
The gap grew to $58.5 billion, from $57.6 billion in August, according to the median forecast in a Bloomberg News survey of 76 economists.
Exports may have cooled after setting records for six consecutive months, even as a weaker dollar and growing economies overseas sustain demand for American goods in coming months. Trade will continue to contribute to gross domestic product and help manufacturers weather a housing-related slump in demand.
``Imports should rise, with oil likely the biggest swing factor,'' said Neal Soss, chief economist at Credit Suisse Group Inc. in New York. ``External demand should continue to add to GDP and should provide an offset to the drag from housing.''
The Commerce Department will issue the report at 8:30 a.m. in Washington. Economists' estimates of the deficit ranged from $54.5 billion to $61.1 billion.
The price of imported petroleum rose 5.4 percent in September and was up 20 percent from the same time a year earlier, the biggest year-over-year increase since August 2005, the Labor Department reported last month.
The cost of all imported goods probably rose 1.2 percent in October following a 1 percent increase the previous month, led by another jump in crude prices, economists forecast a report from Labor today will also show.
microcapwatch.net
Investors Shred Bernanke's `Balanced' Outlook, Bet on Rate Cut
Federal Reserve Chairman Ben S. Bernanke failed to convince investors that there's no need for further interest-rate cuts soon.
Bernanke told lawmakers in Washington yesterday that officials already expect the economy to ``slow noticeably'' this quarter, and warned of ``upside risks'' to inflation. Futures traders focused on his growth comments, increasing the odds of a quarter-point cut in the benchmark rate on Dec. 11 to about 90 percent, from 70 percent a day earlier.
The speculation may complicate Fed decision making, raising the risk of a sell-off in stocks and bonds should officials keep the main rate at 4.5 percent. Bernanke and his colleagues may try to reinforce their message of a neutral stance on borrowing costs between now and their next meeting, economists said.
``Market participants don't think the Federal Reserve is facing reality,'' said Allen Sinai, president of Decision Economics Inc., a New York forecasting firm. ``We have a consumer that is facing a lot of headwinds. We have a business sector that is showing lower revenues, and we have a banking system that is showing a lot of cracks.''
Bernanke said in his remarks to the Joint Economic Committee of the U.S. Congress that he expects ``more reasonable'' growth by the American spring. He predicted the economy will pick up later in 2008 as the impact of the housing slump wanes.
microcapwatch.net
Bernanke told lawmakers in Washington yesterday that officials already expect the economy to ``slow noticeably'' this quarter, and warned of ``upside risks'' to inflation. Futures traders focused on his growth comments, increasing the odds of a quarter-point cut in the benchmark rate on Dec. 11 to about 90 percent, from 70 percent a day earlier.
The speculation may complicate Fed decision making, raising the risk of a sell-off in stocks and bonds should officials keep the main rate at 4.5 percent. Bernanke and his colleagues may try to reinforce their message of a neutral stance on borrowing costs between now and their next meeting, economists said.
``Market participants don't think the Federal Reserve is facing reality,'' said Allen Sinai, president of Decision Economics Inc., a New York forecasting firm. ``We have a consumer that is facing a lot of headwinds. We have a business sector that is showing lower revenues, and we have a banking system that is showing a lot of cracks.''
Bernanke said in his remarks to the Joint Economic Committee of the U.S. Congress that he expects ``more reasonable'' growth by the American spring. He predicted the economy will pick up later in 2008 as the impact of the housing slump wanes.
microcapwatch.net
четверг, 8 ноября 2007 г.
Bankruptcy Law Backfires on Banks as Foreclosures Offset Gains
Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills.
The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.
``Be careful what you wish for,'' Westbrook said. ``They wanted to make sure that people kept paying their credit cards, and what they're getting is more foreclosures.''
Washington Mutual, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. spent $25 million in 2004 and 2005 lobbying for a legislative agenda that included changes in bankruptcy laws to protect credit card profits, according to the Center for Responsive Politics, a non-partisan Washington group that tracks political donations.
The banks are still paying for that decision. The surge in foreclosures has cut the value of securities backed by mortgages and led to more than $40 billion of writedowns for U.S. financial institutions. It also reached to the top echelons of the financial services industry.
investorarticles.net
The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.
``Be careful what you wish for,'' Westbrook said. ``They wanted to make sure that people kept paying their credit cards, and what they're getting is more foreclosures.''
Washington Mutual, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. spent $25 million in 2004 and 2005 lobbying for a legislative agenda that included changes in bankruptcy laws to protect credit card profits, according to the Center for Responsive Politics, a non-partisan Washington group that tracks political donations.
The banks are still paying for that decision. The surge in foreclosures has cut the value of securities backed by mortgages and led to more than $40 billion of writedowns for U.S. financial institutions. It also reached to the top echelons of the financial services industry.
investorarticles.net
Morgan Stanley Marks Down $3.7 Billion, Cuts Outlook
Morgan Stanley joined Merrill Lynch & Co. and Citigroup Inc. in booking losses on subprime mortgage- related assets and said the outlook for credit markets is bleaker than in September.
The second-biggest U.S. securities firm by market value after Goldman Sachs Group Inc. said it lost $3.7 billion in the two months through Oct. 31. Prices for securities linked with home loans to risky borrowers sank further than traders expected, cutting fourth-quarter earnings by $2.5 billion, the New York- based bank said. The figure may change by the end of the month.
Merrill Lynch, the third-largest firm, said two weeks ago that it wrote down $8.4 billion of leveraged loans and fixed- income securities while Citigroup, the biggest U.S. bank, said Nov. 4 that its holdings lost as much as $11 billion of their value in October. Colm Kelleher, Morgan Stanley's chief financial officer, said markets may take three to four quarters to recover instead of the one or two he predicted in September.
``The healing process will take longer,'' Kelleher, 50, said in an interview yesterday. ``The dislocation in the market has been quite severe, liquidity has dried up.''
Concern about potential writedowns at Morgan Stanley has pushed the stock lower this week, bringing this year's decline to 24 percent. The shares fell 6.9 percent to $51.19 in New York Stock Exchange composite trading yesterday and traded up at $51.35 in Germany as of 11:15 a.m. local time. Citigroup and Merrill are both down more than 40 percent this year.
investorarticles.net
The second-biggest U.S. securities firm by market value after Goldman Sachs Group Inc. said it lost $3.7 billion in the two months through Oct. 31. Prices for securities linked with home loans to risky borrowers sank further than traders expected, cutting fourth-quarter earnings by $2.5 billion, the New York- based bank said. The figure may change by the end of the month.
Merrill Lynch, the third-largest firm, said two weeks ago that it wrote down $8.4 billion of leveraged loans and fixed- income securities while Citigroup, the biggest U.S. bank, said Nov. 4 that its holdings lost as much as $11 billion of their value in October. Colm Kelleher, Morgan Stanley's chief financial officer, said markets may take three to four quarters to recover instead of the one or two he predicted in September.
``The healing process will take longer,'' Kelleher, 50, said in an interview yesterday. ``The dislocation in the market has been quite severe, liquidity has dried up.''
Concern about potential writedowns at Morgan Stanley has pushed the stock lower this week, bringing this year's decline to 24 percent. The shares fell 6.9 percent to $51.19 in New York Stock Exchange composite trading yesterday and traded up at $51.35 in Germany as of 11:15 a.m. local time. Citigroup and Merrill are both down more than 40 percent this year.
investorarticles.net
среда, 7 ноября 2007 г.
European Government Bonds Gain; 10-Year Yield at 4.17 Percent
European government bonds advanced in London.
The yield on the 10-year German bund, the benchmark for Europe, fell 1 basis point to 4.17 percent by 7:09 a.m. in London. The price of the 4.25 percent security due July 2017 rose 0.09, or 90 euro cents per 1,000 euro ($1,464) face amount, to 100.61.
The yield on the two-year note was at 3.94 percent.
pennystock-news.net
The yield on the 10-year German bund, the benchmark for Europe, fell 1 basis point to 4.17 percent by 7:09 a.m. in London. The price of the 4.25 percent security due July 2017 rose 0.09, or 90 euro cents per 1,000 euro ($1,464) face amount, to 100.61.
The yield on the two-year note was at 3.94 percent.
pennystock-news.net
Denver Approves $550 Million Bonds for Streets, Facilities
Denver voters approved $550 million of bonds for streets, parks, libraries, health and human services and cultural institutions and a property tax increase.
The largest single bond proposal in the all-mail ballot, $150 million was for streets, transportation and other public works, according to the Denver Elections Division.
Voters in Colorado's capital and most-populous city also approved proposals to borrow $131 million for refurbishing and expanding Boettcher Concert Hall and the Denver Museum of Nature & Science as well as $93 million for park and recreation improvements.
Other proposals passing called for selling $65 million of municipal bonds for a new crime lab, firing range and fire station; $52 million for libraries; $49 million for child-care centers, a new animal shelter and an expansion at Denver Health Medical Center and $10 million to renovate Denver's city hall.
Voters also accepted a 2.5-mill property-tax increase dedicated to providing cash for the city-county government to maintain public facilities. One mill is $0.001.
pennystock-news.net
The largest single bond proposal in the all-mail ballot, $150 million was for streets, transportation and other public works, according to the Denver Elections Division.
Voters in Colorado's capital and most-populous city also approved proposals to borrow $131 million for refurbishing and expanding Boettcher Concert Hall and the Denver Museum of Nature & Science as well as $93 million for park and recreation improvements.
Other proposals passing called for selling $65 million of municipal bonds for a new crime lab, firing range and fire station; $52 million for libraries; $49 million for child-care centers, a new animal shelter and an expansion at Denver Health Medical Center and $10 million to renovate Denver's city hall.
Voters also accepted a 2.5-mill property-tax increase dedicated to providing cash for the city-county government to maintain public facilities. One mill is $0.001.
pennystock-news.net
вторник, 6 ноября 2007 г.
Treasuries Fall as Stock Advances Damp Demand for Safest Assets
Treasuries fell after a rebound in stocks reduced demand for the safety of U.S. government assets.
The two-year note yield rebounded from its lowest since 2005 as European stocks and U.S. equity futures gained. Traders reduced bets that the Federal Reserve will cut borrowing costs a third time this year.
Treasuries are ``continuing to mirror equities to a very large extent,'' said John Canavan, a fixed-income analyst in Princeton, New Jersey, at Stone & McCarthy Research Associates. ``We really need to see a sharper equity breakdown or stronger evidence of an economic slowdown to sustain this rally.''
The two-year note yield rose 4 basis points, or 0.04 percentage point, to 3.71 percent at 9:09 a.m. in New York, according to bond broker Cantor Fitzgerald LP. It touched 3.61 percent yesterday, the lowest since April 2005. The price of the 3 5/8 percent securities due in October 2009 fell 2/32, or 63 cents per $1,000 face amount, to 99 27/32.
Yields on 10-year Treasuries increased 3 basis points to 4.36 percent. Yields move inversely to bond prices.
Treasuries are headed for their best year since 2002 after Citigroup Inc., the largest U.S. bank, joined Merrill Lynch & Co., the world's largest brokerage, and Credit Suisse Group in reporting writedowns tied to mortgages made to people with poor credit histories.
Standard & Poor's 500 Index futures expiring in December increased 0.5 percent. The Dow Jones Stoxx 600 Index, a measure of European stocks, rose after three days of losses, adding 0.5 percent. The Morgan Stanley Capital International Asia Pacific Index climbed 0.4 percent after sliding almost 4 percent in the previous two sessions.
makemoremoney-usa.com
The two-year note yield rebounded from its lowest since 2005 as European stocks and U.S. equity futures gained. Traders reduced bets that the Federal Reserve will cut borrowing costs a third time this year.
Treasuries are ``continuing to mirror equities to a very large extent,'' said John Canavan, a fixed-income analyst in Princeton, New Jersey, at Stone & McCarthy Research Associates. ``We really need to see a sharper equity breakdown or stronger evidence of an economic slowdown to sustain this rally.''
The two-year note yield rose 4 basis points, or 0.04 percentage point, to 3.71 percent at 9:09 a.m. in New York, according to bond broker Cantor Fitzgerald LP. It touched 3.61 percent yesterday, the lowest since April 2005. The price of the 3 5/8 percent securities due in October 2009 fell 2/32, or 63 cents per $1,000 face amount, to 99 27/32.
Yields on 10-year Treasuries increased 3 basis points to 4.36 percent. Yields move inversely to bond prices.
Treasuries are headed for their best year since 2002 after Citigroup Inc., the largest U.S. bank, joined Merrill Lynch & Co., the world's largest brokerage, and Credit Suisse Group in reporting writedowns tied to mortgages made to people with poor credit histories.
Standard & Poor's 500 Index futures expiring in December increased 0.5 percent. The Dow Jones Stoxx 600 Index, a measure of European stocks, rose after three days of losses, adding 0.5 percent. The Morgan Stanley Capital International Asia Pacific Index climbed 0.4 percent after sliding almost 4 percent in the previous two sessions.
makemoremoney-usa.com
Alibaba Shares Triple in Hong Kong Trading Debut
Alibaba.com Ltd., operator of China's largest online trading site for companies, almost tripled on its first day of trading in Hong Kong, making the stock four times more expensive than Google Inc. relative to earnings.
The Chinese company's shares closed at HK$39.50 from their HK$13.50 offer price. That gives Hangzhou-based Alibaba a market value of $25.7 billion, closing in on Yahoo Japan Corp. as Asia's biggest Internet company.
The stock trades at 155 times next year's estimated earnings, underscoring the surge in demand for Chinese shares that made PetroChina Co. the world's first $1 trillion company yesterday. Alibaba, founded nine years ago by a former English teacher with $60,000, predicts profit will almost triple this year on rising online trades in the world's fastest-growing major economy.
``It's a high valuation but if Alibaba can use its leadership position in the e-commerce market to get more Chinese businesses to pay for its services, it will justify it,'' said Rafe Xu, an analyst at Sinopac Securities Asia Ltd. in Shanghai, who plans to initiate coverage on the company. ``They have a lot of work to do.''
Investors got a chance to buy Alibaba shares in last month's $1.5 billion initial public offering, the biggest by an Internet company since Google's $1.9 billion IPO in 2004. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley arranged the Chinese company's sale, which led Hong Kong individuals to order about 257 times the amount of stock available to them.
makemoremoney-usa.com
The Chinese company's shares closed at HK$39.50 from their HK$13.50 offer price. That gives Hangzhou-based Alibaba a market value of $25.7 billion, closing in on Yahoo Japan Corp. as Asia's biggest Internet company.
The stock trades at 155 times next year's estimated earnings, underscoring the surge in demand for Chinese shares that made PetroChina Co. the world's first $1 trillion company yesterday. Alibaba, founded nine years ago by a former English teacher with $60,000, predicts profit will almost triple this year on rising online trades in the world's fastest-growing major economy.
``It's a high valuation but if Alibaba can use its leadership position in the e-commerce market to get more Chinese businesses to pay for its services, it will justify it,'' said Rafe Xu, an analyst at Sinopac Securities Asia Ltd. in Shanghai, who plans to initiate coverage on the company. ``They have a lot of work to do.''
Investors got a chance to buy Alibaba shares in last month's $1.5 billion initial public offering, the biggest by an Internet company since Google's $1.9 billion IPO in 2004. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley arranged the Chinese company's sale, which led Hong Kong individuals to order about 257 times the amount of stock available to them.
makemoremoney-usa.com
понедельник, 5 ноября 2007 г.
Subprime Contagion May Claim 10-Year Treasuries Next
The U.S. housing slowdown that propelled 10-year Treasuries to their biggest gains since 2002 may soon make the same securities laggards in the government bond market.
The notes returned 9.6 percent since mid-June as investors sought a haven from credit market losses caused by subprime mortgages, Merrill Lynch & Co. index data show. Sales of bonds backed by housing loans have dropped 20 percent this year as home purchases declined, according to Citigroup Inc., reducing the need for longer-maturity Treasuries as a hedge.
Fund managers may ``no longer buy the 10-year Treasury'' to protect their holdings, said Ajay Rajadhyaksha, head of interest rate strategy in New York at Barclays Capital Inc., one of 21 primary dealers of U.S. government securities obligated to bid at Treasury auctions.
The mortgage market's influence over Treasuries has increased as the amount of home loans quadrupled to $10.9 trillion since 2001, according to the Mortgage Bankers Association in Washington. More than $6 trillion of securities backed by home loans are outstanding, compared with $4.5 trillion of U.S. government debt securities, data compiled by the Treasury show.
About $100 billion of 10-year Treasuries trade every week among the primary dealers, according to Federal Reserve data. Hedging by owners of housing-related bonds surges to as much as 45 percent of that amount when yields drop by about a quarter percentage point, Rajadhyaksha said.
predictpennystock.com
The notes returned 9.6 percent since mid-June as investors sought a haven from credit market losses caused by subprime mortgages, Merrill Lynch & Co. index data show. Sales of bonds backed by housing loans have dropped 20 percent this year as home purchases declined, according to Citigroup Inc., reducing the need for longer-maturity Treasuries as a hedge.
Fund managers may ``no longer buy the 10-year Treasury'' to protect their holdings, said Ajay Rajadhyaksha, head of interest rate strategy in New York at Barclays Capital Inc., one of 21 primary dealers of U.S. government securities obligated to bid at Treasury auctions.
The mortgage market's influence over Treasuries has increased as the amount of home loans quadrupled to $10.9 trillion since 2001, according to the Mortgage Bankers Association in Washington. More than $6 trillion of securities backed by home loans are outstanding, compared with $4.5 trillion of U.S. government debt securities, data compiled by the Treasury show.
About $100 billion of 10-year Treasuries trade every week among the primary dealers, according to Federal Reserve data. Hedging by owners of housing-related bonds surges to as much as 45 percent of that amount when yields drop by about a quarter percentage point, Rajadhyaksha said.
predictpennystock.com
PetroChina's Value Tops $1 Trillion, Surpassing Exxon
PetroChina Co. almost tripled on its first day of trading in Shanghai, becoming the world's first company to be valued at $1 trillion, larger than the entire Russian stock market.
PetroChina shares rose to 43.96 yuan from the sale price of 16.7 yuan, giving the state-owned oil producer a greater market value than Exxon Mobil Corp. and General Electric Co. combined.
The rally makes PetroChina shares four times more expensive than those of Exxon, even though China's biggest oil producer has a quarter of the revenue. China's stock market was valued at less than $1.1 trillion before tripling this year and giving the communist nation five of the world's 10 biggest companies.
PetroChina's valuation is ``an indication of China coming of age and also of its stock market bubble,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore.
The oil producer's Shanghai listing pushes China's stock market beyond the U.K. as the world's third-largest. PetroChina trades at 55 times earnings, four times Exxon's ratio of 13 times earnings and near the 58 times for Google Inc., the world's most-used Internet search engine.
In Hong Kong, PetroChina fell 8.2 percent to HK$18. Exxon is worth $488 billion on the New York Stock Exchange.
predictpennystock.com
PetroChina shares rose to 43.96 yuan from the sale price of 16.7 yuan, giving the state-owned oil producer a greater market value than Exxon Mobil Corp. and General Electric Co. combined.
The rally makes PetroChina shares four times more expensive than those of Exxon, even though China's biggest oil producer has a quarter of the revenue. China's stock market was valued at less than $1.1 trillion before tripling this year and giving the communist nation five of the world's 10 biggest companies.
PetroChina's valuation is ``an indication of China coming of age and also of its stock market bubble,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore.
The oil producer's Shanghai listing pushes China's stock market beyond the U.K. as the world's third-largest. PetroChina trades at 55 times earnings, four times Exxon's ratio of 13 times earnings and near the 58 times for Google Inc., the world's most-used Internet search engine.
In Hong Kong, PetroChina fell 8.2 percent to HK$18. Exxon is worth $488 billion on the New York Stock Exchange.
predictpennystock.com
суббота, 3 ноября 2007 г.
Treasuries Rise as Bank Losses Trump Growth in Employment
Treasuries rose, pushing two-year note yields to the lowest since 2005, as investors bet that bank losses on mortgage loans will slow the economy.
U.S. government debt securities erased declines sparked by a Labor Department report showing the economy created more jobs in October than economists forecast. Shares of financial- services companies including Merrill Lynch & Co. fell to a two- year low as analysts predicted the housing slump will cause banks to lose more money.
``Problems in the financial market and housing market will eventually show up in the real economy,'' said Robert Calhoun, who oversees about $50 billion as chief investment officer in Richmond, Virginia, at Tattersall Advisory Group. The longer the Federal Reserve waits to lower interest rates further, ``the more severe the eventual impact will be.''
Yields on two-year notes, more sensitive than longer- maturity debt to changes in interest rates, fell 8 basis points, or 0.08 percentage point, to 3.67 percent at 4:29 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The yield earlier touched 3.62 percent, the lowest since July 2005. The price of 3 5/8 percent securities maturing in October 2009 rose 5/32, or $1.56 per $1,000 face amount, to 99 29/32.
Traders increased bets on a quarter-percentage-point cut in the Fed's target for the overnight lending rate between banks at policy makers' next meeting on Dec. 11, interest-rate futures show. The implied probability of a cut rose to 70 percent from 60 percent, based on the prices of federal funds futures listed on the Chicago Board of Trade.
Taiwan's Stocks Slide Most in 11 Weeks: World's Biggest Mover
Taiwan's stocks dropped the most in 11 weeks, extending losses in global markets on concern overseas sales will cool as a U.S. housing recession crimps demand in the world's biggest economy.
Hon Hai Precision Industry Co. led exporters lower after U.S. consumer spending rose less than economists forecast and manufacturing slowed more than estimated.
``The outlook for the U.S. economy remains gloomy,'' said Yu Reming, who helps manage $1.3 billion at Entrust Investment Trust Corp. in Taipei. ``Export-oriented companies will suffer.''
The Taiex index slid 325.14, or 3.4 percent, to close at 9,273.09 in Taipei. That's the biggest decline since Aug. 16 and the largest fluctuation among markets included in global benchmarks. About seven stocks dropped for every one that gained. Futures due in November plunged 4.4 percent to 9,230.
U.S. stocks tumbled yesterday, sending the Standard & Poor's 500 Index 2.6 percent lower. Citigroup Inc., the biggest U.S. bank by assets, slid the most since 2002 after CIBC World Markets analyst Meredith Whitney cut her rating on the stock and said the lender may have to cut its dividend.
Hon Hai, the world's largest contract electronics manufacturer, dropped NT$14, or 5.9 percent, to NT$225. Taiwan Semiconductor Manufacturing Co., the world's biggest supplier of made-to-order chips, fell NT$2.60, or 4.1 percent, to NT$61.60. U.S. buyers account for about three-quarters of the chipmaker's sales.
пятница, 2 ноября 2007 г.
Citic Securities Rises by Limit on Bear Stearns Deal
Citic Securities Co., Asia's largest brokerage by market value, jumped by the 10 percent daily limit on its first day of trading in Shanghai since announcing a $1 billion cross-investment with Bear Stearns Cos.
The Beijing-based company, whose shares have been suspended since Oct. 22, climbed to a record 116.52 yuan at 2:47 p.m. local time, valuing it at $51.7 billion. During the trading halt, Citic Securities also reported a more than eightfold increase in third- quarter profit.
Citic has reaped more revenue from trading fees as Chinese individuals piled into stocks, sending the benchmark CSI 300 index up 170 percent this year. The Bear Stearns deal may bolster Citic's capabilities in areas such as bond issuance and trading in structured products, and help it secure more work advising cross-border mergers involving Chinese companies.
The tie-up ``will globalize Citic Securities and improve its competitiveness,'' said Liang Jing, an analyst at Guotai Junan Securities Co. in Shanghai. ``China needs to cultivate an internationalized investment banking firm to help its companies with mergers and acquisitions abroad.''
Bear Stearns, the investment bank that's been hit the hardest by the global subprime crisis, said Oct. 22 that Citic Securities will spend $1 billion to obtain the equivalent of 6 percent of its shares, while it will invest the same amount in Citic to form a strategic partnership.
Citic Securities shares have soared more than eightfold in the past year, propelling the company past Nomura Holdings Inc. as Asia's largest securities firm by market value. On Nov. 25, it said third-quarter profit jumped to 4.15 billion yuan from a restated 494.7 billion yuan a year earlier.
microcapmarket.org
The Beijing-based company, whose shares have been suspended since Oct. 22, climbed to a record 116.52 yuan at 2:47 p.m. local time, valuing it at $51.7 billion. During the trading halt, Citic Securities also reported a more than eightfold increase in third- quarter profit.
Citic has reaped more revenue from trading fees as Chinese individuals piled into stocks, sending the benchmark CSI 300 index up 170 percent this year. The Bear Stearns deal may bolster Citic's capabilities in areas such as bond issuance and trading in structured products, and help it secure more work advising cross-border mergers involving Chinese companies.
The tie-up ``will globalize Citic Securities and improve its competitiveness,'' said Liang Jing, an analyst at Guotai Junan Securities Co. in Shanghai. ``China needs to cultivate an internationalized investment banking firm to help its companies with mergers and acquisitions abroad.''
Bear Stearns, the investment bank that's been hit the hardest by the global subprime crisis, said Oct. 22 that Citic Securities will spend $1 billion to obtain the equivalent of 6 percent of its shares, while it will invest the same amount in Citic to form a strategic partnership.
Citic Securities shares have soared more than eightfold in the past year, propelling the company past Nomura Holdings Inc. as Asia's largest securities firm by market value. On Nov. 25, it said third-quarter profit jumped to 4.15 billion yuan from a restated 494.7 billion yuan a year earlier.
microcapmarket.org
Japan's Housing Slump Threatens Growth, Ministers Say
Japan's worst housing slump in four decades and rising oil prices threaten growth in the world's second-largest economy, Cabinet ministers said.
``There is concern that a decline in housing investment will become a factor pushing down gross domestic product,'' Economic and Fiscal Policy Minister Hiroko Ota said in Tokyo today. ``I'm more focused on the downside risks to the economy.''
Housing starts fell 44 percent in September and 43.3 percent in August because of stricter rules for obtaining building permits. The government this week said it would relax the regulations after industry criticism that they were too onerous.
``We've heard that the Land Ministry has taken some measures, but there will be some impact in any case,'' Finance Minister Fukushiro Nukaga told reporters.
The Bank of Japan this week cut its economic growth forecast to 1.8 percent from 2.1 percent for the year ending March, in part because of the drop in construction activity.
Credit Suisse Group today said the economy will expand 1.3 percent in the period, slower than the 1.7 percent predicted last month and 2.9 percent estimated in July.
stockmarketreview.net
``There is concern that a decline in housing investment will become a factor pushing down gross domestic product,'' Economic and Fiscal Policy Minister Hiroko Ota said in Tokyo today. ``I'm more focused on the downside risks to the economy.''
Housing starts fell 44 percent in September and 43.3 percent in August because of stricter rules for obtaining building permits. The government this week said it would relax the regulations after industry criticism that they were too onerous.
``We've heard that the Land Ministry has taken some measures, but there will be some impact in any case,'' Finance Minister Fukushiro Nukaga told reporters.
The Bank of Japan this week cut its economic growth forecast to 1.8 percent from 2.1 percent for the year ending March, in part because of the drop in construction activity.
Credit Suisse Group today said the economy will expand 1.3 percent in the period, slower than the 1.7 percent predicted last month and 2.9 percent estimated in July.
stockmarketreview.net
Japan's 10-Year Bonds Complete Weekly Gain on Slump in Stocks
Japan's 10-year bonds advanced, completing a weekly gain, after a slide in stocks drove demand for the relative safety of government debt.
Benchmark securities followed a rally yesterday in U.S. Treasuries, after analyst downgrades of Citigroup Inc. set off the steepest drop in U.S. financial companies in five years and a decline in Japanese shares. The U.S. economy may worsen, Bank of Japan Governor Toshihiko Fukui told lawmakers today in Tokyo.
``The market is having another bout of worry from the results of banks,'' said Patrice Conxicoeur, who oversees $5 billion in assets in Hong Kong as chief executive officer at Sinopia Asset Management (Asia Pacific) Ltd. There's a ``nice end-of-week correction and flight to quality.''
The yield on the 1.7 percent bond due September 2017 fell 7.5 basis points to 1.59 percent, the biggest decline since Sept. 10, at 4:51 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. Benchmark yields have dropped 3.5 basis points from last week.
Yields on five-year notes declined 8 basis points to 1.08 percent today, the largest slide since Aug. 17. A basis point is 0.01 percentage point.
Technical chart traders use to predict yield changes suggested the five-year notes fell too quickly yesterday and were poised to rise. The five-day relative strength index on five-year yields was 70 yesterday, compared with 33 on Oct. 31. A level above 70 suggests a bond's price may reverse direction.
investormarketreview.com
Benchmark securities followed a rally yesterday in U.S. Treasuries, after analyst downgrades of Citigroup Inc. set off the steepest drop in U.S. financial companies in five years and a decline in Japanese shares. The U.S. economy may worsen, Bank of Japan Governor Toshihiko Fukui told lawmakers today in Tokyo.
``The market is having another bout of worry from the results of banks,'' said Patrice Conxicoeur, who oversees $5 billion in assets in Hong Kong as chief executive officer at Sinopia Asset Management (Asia Pacific) Ltd. There's a ``nice end-of-week correction and flight to quality.''
The yield on the 1.7 percent bond due September 2017 fell 7.5 basis points to 1.59 percent, the biggest decline since Sept. 10, at 4:51 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. Benchmark yields have dropped 3.5 basis points from last week.
Yields on five-year notes declined 8 basis points to 1.08 percent today, the largest slide since Aug. 17. A basis point is 0.01 percentage point.
Technical chart traders use to predict yield changes suggested the five-year notes fell too quickly yesterday and were poised to rise. The five-day relative strength index on five-year yields was 70 yesterday, compared with 33 on Oct. 31. A level above 70 suggests a bond's price may reverse direction.
investormarketreview.com
House to Vote on $49.5 Billion Hedge-Fund, Buyout-Firm Tax Rise
The U.S. House will take up a measure that would raise taxes on executives of hedge funds and private- equity firms by $49.5 billion over the next decade and prevents a separate tax increase on middle-income families this year.
The tax-writing Ways and Means Committee approved a $77 billion measure yesterday that would block the alternative minimum tax from imposing $50.6 billion in new levies on millions of households this year. The Democratic majority rejected Republican amendments to alleviate the minimum tax without raising taxes elsewhere to make up the lost revenue for the government.
``For those people who have been able to be evading the various taxes and avoiding taxes, we're sorry to have to include you in relief for 23 million people, but we think that's fair,'' said Representative Charles Rangel, the New York Democrat who heads the panel.
The committee's 22-13 vote along party lines marked the first legislative step in a race by lawmakers to forestall a minimum-tax increase by mid-November. The legislation must be approved by the full House, where it is opposed by many Republicans, and by the Senate, where the proposals to raise taxes on hedge-fund and private-equity managers may face resistance from lawmakers of both parties.
earnwithpennystock.com
The tax-writing Ways and Means Committee approved a $77 billion measure yesterday that would block the alternative minimum tax from imposing $50.6 billion in new levies on millions of households this year. The Democratic majority rejected Republican amendments to alleviate the minimum tax without raising taxes elsewhere to make up the lost revenue for the government.
``For those people who have been able to be evading the various taxes and avoiding taxes, we're sorry to have to include you in relief for 23 million people, but we think that's fair,'' said Representative Charles Rangel, the New York Democrat who heads the panel.
The committee's 22-13 vote along party lines marked the first legislative step in a race by lawmakers to forestall a minimum-tax increase by mid-November. The legislation must be approved by the full House, where it is opposed by many Republicans, and by the Senate, where the proposals to raise taxes on hedge-fund and private-equity managers may face resistance from lawmakers of both parties.
earnwithpennystock.com
O'Neal's $161 Million Merrill Payout May Spur `Say-on-Pay' Bill
Senate Banking Committee Chairman Christopher Dodd says Merrill Lynch & Co.'s $161.5 million exit package for former Chairman and Chief Executive Officer Stan O'Neal may revive efforts in Congress to give shareholders more power to curb CEO salaries.
O'Neal shouldn't be rewarded for poor performance, Dodd said in an interview in Washington, adding that his committee may proceed with legislation aimed at capping excessive executive pay.
``There's a lot of controversy, mostly on the other side,'' said Dodd, a Connecticut Democrat, referring to Republicans. ``We'll try to get unanimity where we can. But there's a possibility we'll move on it.''
A bill to give investors a non-binding vote to protest excessive compensation was approved by the House of Representatives in April, almost four months after Home Depot Inc.'s ex-CEO Robert Nardelli got a severance package valued at $210 million. O'Neal left Merrill earlier this week with $161.5 million in securities and retirement funds. Merrill's board refused to give him a severance package following a record $8.4 billion writedown of subprime mortgages.
The U.S. Securities and Exchange Commission, responding to complaints from investors, adopted rules in July 2006 to make executive compensation more transparent to shareholders. In the Senate, Dodd will need to pick up some Republican votes to get the so-called say-on-pay bill moving again.
microcapwatch.net
O'Neal shouldn't be rewarded for poor performance, Dodd said in an interview in Washington, adding that his committee may proceed with legislation aimed at capping excessive executive pay.
``There's a lot of controversy, mostly on the other side,'' said Dodd, a Connecticut Democrat, referring to Republicans. ``We'll try to get unanimity where we can. But there's a possibility we'll move on it.''
A bill to give investors a non-binding vote to protest excessive compensation was approved by the House of Representatives in April, almost four months after Home Depot Inc.'s ex-CEO Robert Nardelli got a severance package valued at $210 million. O'Neal left Merrill earlier this week with $161.5 million in securities and retirement funds. Merrill's board refused to give him a severance package following a record $8.4 billion writedown of subprime mortgages.
The U.S. Securities and Exchange Commission, responding to complaints from investors, adopted rules in July 2006 to make executive compensation more transparent to shareholders. In the Senate, Dodd will need to pick up some Republican votes to get the so-called say-on-pay bill moving again.
microcapwatch.net
China's Pension Fund Won't Comment on Sale Report
China's government pension fund declined to comment on a newspaper report that it's been instructed to reduce equity holdings within a month.
The National Council for Social Security Fund must cut the stocks in its investment portfolio by at least 30 percent and up to 50 percent, according to a report in yesterday's Securities Times, a state-run newspaper, which didn't cite a source.
The stock sale is valued at between 40 billion yuan ($5.4 billion) and 60 billion yuan, the newspaper said, citing its own calculation. This is the first time the pension fund has reduced its holdings amid China's stock market rally, the newspaper said without elaborating.
Jin Yingzi, the pension's deputy director-general, declined to comment today when reached by phone in Beijing. Li Keping, director general of the pension's investment department, couldn't be reached to comment.
Gao Xiqing, vice chairman of the pension fund, said during an April 27 investment forum in Beijing that China's stock prices are ``defying gravity.'' China's key stock index has soared by another 60 percent since Gao's remarks. Gao couldn't be reached today to comment.
investorarticles.net
The National Council for Social Security Fund must cut the stocks in its investment portfolio by at least 30 percent and up to 50 percent, according to a report in yesterday's Securities Times, a state-run newspaper, which didn't cite a source.
The stock sale is valued at between 40 billion yuan ($5.4 billion) and 60 billion yuan, the newspaper said, citing its own calculation. This is the first time the pension fund has reduced its holdings amid China's stock market rally, the newspaper said without elaborating.
Jin Yingzi, the pension's deputy director-general, declined to comment today when reached by phone in Beijing. Li Keping, director general of the pension's investment department, couldn't be reached to comment.
Gao Xiqing, vice chairman of the pension fund, said during an April 27 investment forum in Beijing that China's stock prices are ``defying gravity.'' China's key stock index has soared by another 60 percent since Gao's remarks. Gao couldn't be reached today to comment.
investorarticles.net
Ignoring Buffett, Fabien Pictet Eyes North Korea Fund
Fabien Pictet & Partners Ltd., a British money manager that specializes in emerging markets, plans to establish a fund focused on joint ventures in North Korea.
Fabien Pictet has applied to North Korea's embassy in London for permission to visit Pyongyang to explore opportunities, Chief Executive Officer Richard Yarlott said in an interview. The closely held firm initially would buy into South Korean companies doing business in the north, he said.
``It would be very difficult to put more than $50 million directly into North Korea,'' said Yarlott, 47, who helps manage $750 million of bonds and equities. ``But it would be very easy to put $500 million into listed South Korean companies and then later, as we see specific private equity opportunities, go with them.'' He declined to give further details.
A North-South agreement on economic cooperation, signed Oct. 4, may foster cross-border projects in industries such as mining and shipbuilding. Still, that prospect isn't enough to lure billionaire investor Warren Buffett to a northern plunge.
pennystock-news.net
Fabien Pictet has applied to North Korea's embassy in London for permission to visit Pyongyang to explore opportunities, Chief Executive Officer Richard Yarlott said in an interview. The closely held firm initially would buy into South Korean companies doing business in the north, he said.
``It would be very difficult to put more than $50 million directly into North Korea,'' said Yarlott, 47, who helps manage $750 million of bonds and equities. ``But it would be very easy to put $500 million into listed South Korean companies and then later, as we see specific private equity opportunities, go with them.'' He declined to give further details.
A North-South agreement on economic cooperation, signed Oct. 4, may foster cross-border projects in industries such as mining and shipbuilding. Still, that prospect isn't enough to lure billionaire investor Warren Buffett to a northern plunge.
pennystock-news.net
ChemChina Offers $2.7 Billion for Nufarm, People Say
China National Chemical Corp. offered A$2.96 billion ($2.7 billion) for Australian farm-chemical maker Nufarm Ltd., inviting two U.S. buyout firms including Blackstone Group LP to join, three people familiar with the matter said.
China National, known as ChemChina Group, submitted a letter to Nufarm on Oct. 31 with an indicative bid of A$17.25 per share, two of the people said, declining to be identified because the details are private. The company asked Blackstone, manager of the world's biggest buyout fund, and Fox Paine & Co. to take minority stakes in Nufarm, they said.
ChemChina would be the first state-owned Chinese company to team up with buyout firms for an overseas acquisition, the people said. Buying Nufarm will give it control of the world's second- largest supplier of off-patent agricultural chemicals as farmers plant bigger crops to take advantage of rising prices for wheat, soybeans and other foods.
``You'll see more of the giant state-owned firms teaming up with the big boys in the buyout industry,'' said Vincent Chan, chief executive officer of Spring Capital Asia Ltd., a Hong Kong based buyout firm. ``The benefits are complementary. It helps Chinese companies go overseas to seek growth, and boosts returns for buyout firms.''
New York-based Blackstone, which counts China's $200 billion sovereign wealth fund among its investors, in September agreed to buy a stake in ChemChina's specialty chemicals unit, China National BlueStar Group Corp., for $600 million.
makemoremoney-usa.com
China National, known as ChemChina Group, submitted a letter to Nufarm on Oct. 31 with an indicative bid of A$17.25 per share, two of the people said, declining to be identified because the details are private. The company asked Blackstone, manager of the world's biggest buyout fund, and Fox Paine & Co. to take minority stakes in Nufarm, they said.
ChemChina would be the first state-owned Chinese company to team up with buyout firms for an overseas acquisition, the people said. Buying Nufarm will give it control of the world's second- largest supplier of off-patent agricultural chemicals as farmers plant bigger crops to take advantage of rising prices for wheat, soybeans and other foods.
``You'll see more of the giant state-owned firms teaming up with the big boys in the buyout industry,'' said Vincent Chan, chief executive officer of Spring Capital Asia Ltd., a Hong Kong based buyout firm. ``The benefits are complementary. It helps Chinese companies go overseas to seek growth, and boosts returns for buyout firms.''
New York-based Blackstone, which counts China's $200 billion sovereign wealth fund among its investors, in September agreed to buy a stake in ChemChina's specialty chemicals unit, China National BlueStar Group Corp., for $600 million.
makemoremoney-usa.com
Fidelity Sheds Corporate Skin; Move May Eliminate U.S. Taxes
Fidelity Investments, the world's largest mutual-fund manager, reorganized its corporate structure, a move that could increase profits for its owners by eliminating hundreds of millions of dollars in future taxes.
FMR Corp., the closely held parent of Boston-based Fidelity, converted into a limited liability company, or LLC, according to an Oct. 15 filing with the U.S. Securities and Exchange Commission. FMR shareholders, including the family of Chairman Edward ``Ned'' Johnson III, approved the change earlier this year, company spokeswoman Anne Crowley said yesterday.
The switch could eliminate FMR's federal taxes because LLCs can pass on all earnings to their owners, who then pay individual rates, according to Robert Willens, a tax analyst at Lehman Brothers Holdings Inc. in New York. The shareholders and FMR might have to pay a one-time capital-gains levy if the Internal Revenue Service rules, as it has in the past, that such a conversion equates to a sale of the company for tax purposes.
``Going from a corporation to an LLC, you have this toll charge, so to speak,'' Willens said in an Oct. 31 interview. ``Usually it's the last thing you would ever want to do.''
Fidelity, founded by Ned Johnson's father in 1946, plans to remain a private company, Crowley said.
predictpennystock.com
FMR Corp., the closely held parent of Boston-based Fidelity, converted into a limited liability company, or LLC, according to an Oct. 15 filing with the U.S. Securities and Exchange Commission. FMR shareholders, including the family of Chairman Edward ``Ned'' Johnson III, approved the change earlier this year, company spokeswoman Anne Crowley said yesterday.
The switch could eliminate FMR's federal taxes because LLCs can pass on all earnings to their owners, who then pay individual rates, according to Robert Willens, a tax analyst at Lehman Brothers Holdings Inc. in New York. The shareholders and FMR might have to pay a one-time capital-gains levy if the Internal Revenue Service rules, as it has in the past, that such a conversion equates to a sale of the company for tax purposes.
``Going from a corporation to an LLC, you have this toll charge, so to speak,'' Willens said in an Oct. 31 interview. ``Usually it's the last thing you would ever want to do.''
Fidelity, founded by Ned Johnson's father in 1946, plans to remain a private company, Crowley said.
predictpennystock.com
Agile Property of China Plans $400 Million Bond Sale
Agile Property Holdings Ltd., a homebuilder in the southern Chinese province of Guangdong, plans to sell as much as $400 million of bonds, according to an e-mail sent to investors.
The property developer is promoting the sale to investors in Singapore, Hong Kong, London and in the U.S. from Nov. 5 till Nov. 13, the e-mail shows. HSBC Holdings Plc is arranging the sale.
Agile Property joins Foshan, Guangdong province-based Country Garden Holdings Co. in selling debt to expand in China, where housing prices in 70 major cities had the biggest recorded increase in September. The risk of owning Chinese property developer's debt rose yesterday on concern that Country Garden's record $1.5 billion bond offering will drive up borrowing costs.
Credit-default swaps on Agile Property bonds rose by 20 basis points to 345 basis points at 10:15 a.m. in Singapore, according to BNP Paribas SA. Each basis point, or 0.01 percentage point, on a contract protecting $10 million of debt from default for five years adds $1,000 to the annual cost.
Credit-default swaps are financial instruments based on bonds or loans that are used to speculate on a company's ability to repay debt. They were conceived to protect bondholders by paying the buyer face value in exchange for the underlying securities should the borrower default.
Agile Property last sold dollar-denominated bonds in September last year, when it raised $400 million. The extra yield, or spread, on the 9 percent bonds maturing in 2012 has risen to 460 basis points, from about 426 basis points more than Treasuries when the securities were sold on Sept. 15, 2006, according to prices from Merrill Lynch & Co.
The Chinese developer is rated Ba3 by Moody's Investors Service, three levels below investment grade, and one level higher at BB by Standard & Poor's.
predicstockmove.com
The property developer is promoting the sale to investors in Singapore, Hong Kong, London and in the U.S. from Nov. 5 till Nov. 13, the e-mail shows. HSBC Holdings Plc is arranging the sale.
Agile Property joins Foshan, Guangdong province-based Country Garden Holdings Co. in selling debt to expand in China, where housing prices in 70 major cities had the biggest recorded increase in September. The risk of owning Chinese property developer's debt rose yesterday on concern that Country Garden's record $1.5 billion bond offering will drive up borrowing costs.
Credit-default swaps on Agile Property bonds rose by 20 basis points to 345 basis points at 10:15 a.m. in Singapore, according to BNP Paribas SA. Each basis point, or 0.01 percentage point, on a contract protecting $10 million of debt from default for five years adds $1,000 to the annual cost.
Credit-default swaps are financial instruments based on bonds or loans that are used to speculate on a company's ability to repay debt. They were conceived to protect bondholders by paying the buyer face value in exchange for the underlying securities should the borrower default.
Agile Property last sold dollar-denominated bonds in September last year, when it raised $400 million. The extra yield, or spread, on the 9 percent bonds maturing in 2012 has risen to 460 basis points, from about 426 basis points more than Treasuries when the securities were sold on Sept. 15, 2006, according to prices from Merrill Lynch & Co.
The Chinese developer is rated Ba3 by Moody's Investors Service, three levels below investment grade, and one level higher at BB by Standard & Poor's.
predicstockmove.com
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