Year: 2009

GM demise shows growing maturity of CDS market

5 Jun 2009

A default by the Motown manufacturer used to be the scary monster in derivatives specialists nightmares. Now it has happened and the CDS market is scarcely stirring. Sure, investors had years to prepare. But experience, new processes and better information all helped.

Monier kicks off season of sour restructuring

5 Jun 2009

PAI paid E2.4bn for Lafarge s roofing business in 2007. But leverage and recession are forcing the French private equity group out. Creditors, led by distressed debt investors, will cut debt in half, put in new money and take over. This won t be the last reworked European deal.

Pound could plunge again as UK risk soars

5 Jun 2009

Sterling has been on a harebrained upward surge. But the prime minister s precarious position amplifies the UK s big risks: a huge fiscal deficit, a tripleA rating at risk and a possible financing crisis. At least a sharp fall in the pound would be good for the country.

Renminbi not the answer for dollar diversifiers

4 Jun 2009

Malaysia may follow Brazil in denominating more Chinese trade in the Chinese currency. The symbolism pleases Beijing and diversifying foreign currency holdings out of dollars makes sense. But the overcontrolled renminbi is a less suitable store of value than the freemarket yen.

Devaluations loom in eastern Europe

4 Jun 2009

A failed Latvian debt auction is a clear market no to the attempt at devaluationfree restructuring. Latvia probably can t hold out, and Estonia and Lithuania are likely to follow. Baltic woes are bad for Swedish banks and for other frail eastern European economies.

Rio Tinto right to pursue plan B

4 Jun 2009

After a sharp rise in the miner s share price, the terms of the $19bn cash injection from Chinalco clearly gave too much to the Chinese. Rio can now pursue a megarights issue. It should mine shareholders as much as possible, before turning to cashrich rival BHP Billiton.

Personal view: Britain has too many low-quality politicians

4 Jun 2009

The MPs expenses scandal has underlined the need to reform UK politics. Hugo Dixon suggests a seven point plan for dramatic improvement.

US FDIC, Treasury deals need more disclosure

4 Jun 2009

The government is deep into the financial sector. Selling out to LBO firms or others at a loss to taxpayers may be the best way out. But with transparency an Obama tenet, failing to spell out deal details risks a loss of public trust, say Lauren Silva Laughlin and Richard Beales.

Magna will struggle to keep promises on Opel jobs

4 Jun 2009

The Canadian carparts maker promised to keep Opel s factories open while shifting some of the German carmaker s production to Russia. Opel s Western European sites face a bleak future if Russia ends up as the company's lowcost base.

Debenhams cashes in on an exuberant market

4 Jun 2009

The UK retailer is avoiding a straightforward rights issue by offering £323m of shares to all comers and then letting existing holders claw some back. The markets are disjointed. Underwriters are scarce and strategic shareholders are shy, but institutions are happy to buy.

Interview: Indiana to Obama – what about the law?

4 Jun 2009

Three Indiana pension funds have filed a lawsuit challenging the proposed restructuring of bankrupt US car maker Chrysler. Indiana State Treasurer Richard Mourdock gave his perspective on the politicallycharged situation to Breakingviews.com's Lauren Silva Laughlin.

Shareholders show why they don’t need a bill of rights

4 Jun 2009

Saks s owners did away with a staggered board and plurality voting. Exxon s opted not to split the roles of chairman and CEO. Biogen s chose Icahn over management while Target s rejected Ackman. Since lawmakers introduced the Bill of Rights, investors have proved its superfluity.

The LBO club doesn’t look so chummy anymore

4 Jun 2009

Not long ago, the government was probing private equity firms for acting too clubby. As the brewing battle over Clear Channel s proposed debt exchange suggests, however, it could soon be more like open warfare in the land of the leveraged.

RJR barbarian Peter Cohen stages Wall St comeback

4 Jun 2009

The man who advised RJR Nabisco to go private 20 years ago is going public by backing his investment firm Ramius into listed broker Cowen. Though the former Shearson chief and Weill acolyte doesn t plan to build another Citi, he still has ambition, and timing, on his side.

Silicon Valley may be too clubby for Obama

4 Jun 2009

The recent probe into the hiring practices of tech heavies like Apple, Google and Yahoo suggests as much. The place is cliquey. But the competition for talent is fierce. This is more likely shot off the bow from competition authorities.

Germany may get pain but little gain

3 Jun 2009

Germany used less stimulus and runs lower deficits than other big economies. That made its slump deeper, but raised hopes of a healthier recovery. Regrettably, its chancellor is right to fear that central bank easing may cause inflation, depriving Germany of austerity s rewards.

Banks should pay for their own bailouts

3 Jun 2009

That s the intriguing idea being floated by a Bank of England deputy governor. Not only would such a scheme protect taxpayers; it might discourage banks from running into trouble in the first place.

Silicon Valley geared up to profit from Detroit’s weakness

3 Jun 2009

A handful of VC firms are placing big bets on the decline of the US auto industry. Given GM s recent bankruptcy, some may pay off sooner than expected. Whether electric cars or simply better parts for existing ones, there s a number of ways VCs can profit.

Osmond pays heavy price for second chance on Pearl

3 Jun 2009

The serial entrepreneur looks to have reached a deal with his banks and secured £500m of new capital. The fallout from his heavily geared, topofthemarket deal to buy Resolution could have been much worse. But Osmond still has to see his own near50% stake heavily cut down.

Regulators rightly push bank pay into the open

3 Jun 2009

US and Swiss authorities are moving to greater disclosure on salaries and bonuses. Rather than kowtow to populist gawking at individual compensation, they re appropriately focused on how pay is set. But transparency is of value only if shareholders act on the flaws they re shown.

Huge stimulus stabilises, but is unsustainable

3 Jun 2009

There is mounting evidence of stabilising output around the world. But the global economy s decline was steep and based on stimulus and money emission that cannot be sustained for long. Fast rising unemployment makes it hard for consumers to take over from governments.

Hummer drivers don’t eat tofu. Oh, wait…

3 Jun 2009

China provided General Motors with an unlikely buyer for the tanklike vehicle that taste forgot. Heavy machinery maker Tengzhong may actually be a better owner than a rival carmaker and pledges to save US jobs will be welcome. Shame Hummers are everything China needs less of.

Oh, to work at BBVA

3 Jun 2009

The Spanish bank s offer to pay staff to take five years off and do as they wish looks very generous. BBVA is already among Europe's most efficient lenders. The fact that the move makes financial sense says much about Spain s onerous labour laws and overstaffed banking sector.

Tech bid battle more about bad times than good

3 Jun 2009

A $2bn bidding war has broken out between storage companies EMC and NetApp over Data Domain. With deals scarce, this sounds encouraging. But Data Domain s raison d'être is helping IT companies shrink their costs rather than grow their businesses.

Devils remain in derivatives plumbing details

3 Jun 2009

JPMorgan, Goldman and others responded to US Treasury boss Tim Geithner s sabrerattling with promises to reduce risk and improve transparency in the nearly $600 trillion market. But much depends on how their broadbrush plans which still invite wrangling are implemented.

Elan clever to market chunk of self to big pharma

2 Jun 2009

The IrishAmerican biotech faces a 2011 cash crunch. So selling a minority stake, to Pfizer or Bristol, makes sense given its intriguing but unfunded drugs pipeline. Moreover, the wave of pharma consolidation could hinder a full sale.

Has Jamie Dimon uttered a word too many?

2 Jun 2009

The JPMorgan chief s willingness to criticise Tarp and PPIP can be refreshing and spot on given the silence of many of his peers. Knocking Tarplinked warrants while eating some capitalraising humble pie is less clear cut. Sometimes staying silent is the greater virtue.

Tarp repayment rules take another illogical turn

2 Jun 2009

Requiring strong banks like JPMorgan to prove they can sell equity is odd enough. Now the Fed is telling Morgan Stanley to raise $2.2bn just weeks after it sold more than double what it needed to comply with stress tests. The Fed s Tarp policy contradictions are piling up.

Market rally lowers cost of agreed stock deals

2 Jun 2009

Agreements to issue stock during market crashes can be terribly dilutive. However, the current rally has allowed companies ranging from Ford to Express Scripts a chance to issue fewer shares today instead of potentially more tomorrow.

Bank stake sales suggest a normalising market

2 Jun 2009

Goldman Sachs and Abu Dhabi are dumping $9bn of ICBC and Barclays stock. It s hard to blame them for opportunistically cashing in these supposedly strategic investments. While there are some big sellers around, successful institutional placings will bode well for RBS and Lloyds.