Year: 2009

CIT jumps through bankruptcy; next trick harder

9 Dec 2009

The US business lender is set to emerge from Chapter 11 with nearly $11 billion less debt. Yet the company still has to figure out a way to raise funds to make new loans on attractive terms. It may have slashed its debt burden, but its longterm viability still looks uncertain.

Taiwan can’t hold off Chinese investors forever

9 Dec 2009

The island's premier says he won't let mainlanders take control of its banks in the near future. Such opposition to Chinese investment is becoming hard to sustain. Taiwan's recovery depends on China acting as export buyer of last resort. It may have to become more welcoming.

Junior creditors get help in bankruptcy fights

9 Dec 2009

It isn't easy for lesser creditors to organize opposition to a bankrupt US company s restructuring plan. But in recent decisions on Six Flags and Freedom Communications, judges have handed them small wins. They should take heart that a debtor s plan isn t always a fait accompli.

Mexico’s $1 bln oil hedge is costly insurance

9 Dec 2009

The country has bought protection against the oil price falling below $57. Hedging worked spectacularly well for Mexico when oil prices plummeted earlier this year. But this latest move looks particularly expensive. No wonder so few oil producers do the same thing.

Hollywood IPO gets two thumbs down

9 Dec 2009

The Film Department has little to show after two years of operation just one U.S. hit after burning through tens of millions in cash. The flotation plan looks like a lastditch attempt to pay off debt and transform its business model. Investors should steer clear.

Nakheel’s accounts looks optimistic

9 Dec 2009

The Dubai developer reckons its assets fell just 5 percent in the first half. But property prices dropped about 25 percent. What's more, all this was six months ago and the accounts are unaudited. But even on its own reading, Nakheel had virtually run out of cash by June.

Britain’s bankers had it coming

9 Dec 2009

The UK's planned oneoff tax on bonuses may well damage the City. But this year's profits are clearly a windfall, earned on the back of a massive bailout. The industry's failure to restrain pay is so socially insensitive that it has only itself to blame for the assault.

Lloyds investors should buy CoCos, not shares

9 Dec 2009

The UK bank's shares look like dead money for several years. Dividends will be a long time in coming and there are uncertainties over the UK economy. For incomehungry investors, Lloyds' contingent convertible bonds look a better bet than subscribing for more shares.

Commission to temper US deficit is a good idea

9 Dec 2009

The healthcare debate shows Washington has little stomach to close the longterm budget gap. Congressional selfcontrol would be best but seems unlikely. A bipartisan commission that would give Congress recommendations for budget cuts and revenue options is the next best thing.

Obama’s modest jobs plan is welcome

8 Dec 2009

The US president's new jobs program is Scroogelike compared with the expensive splurge congressional Democrats and liberal groups wanted. It's a sign that Obama has rightly decided that ignoring the yawning budget deficit would act against economic and employment growth.

Kenya dreams of debt extravaganza

8 Dec 2009

Easier markets may be going to the prime minister s head. Raila Odinga should forget about selling $10 billion in debt next year equal to onethird of Kenya s GDP. The funds would largely provide a feast for the corrupt. Privatizations are a better way to get foreign money.

Extra due diligence is no excuse to hike IPO fees

8 Dec 2009

A Dutch court recently ruled that investment banks have a duty of care to investors in new issues. That may lead to improved IPO due diligence. The risk is that advisers use this as an excuse to charge higher fees for what they ought to be doing in the first place.

China will blow Blackberry a raspberry

8 Dec 2009

Research In Motion is hailing China as the next frontier for Blackberry. But don't expect too much success out of the world's largest mobile market. Blackberry will not appeal to China's masses, and some of the expats have already been served out of Hong Kong.

Junior creditors have upper hand in Gala tussle

8 Dec 2009

Mezzanine debtholders are well placed to grab a slice of the UK gambling group in a looming restructuring. Senior creditors are unlikely to object. It's a reversal of previous debt restructurings that have hurt junior debtholders, though won't be easily repeated.

Greece sows seeds of possible euro zone crisis

8 Dec 2009

A downgrade of the deficitridden country adds to concern about the single currency's troubled periphery. The euro is no panacea for nations which rode the boom and are now in difficulties. Serious adjustments and political fortitude are prerequisites for avoiding further shocks.

Dubai Holding needs to clarify its position

8 Dec 2009

The personal vehicle of the emirate's ruler is heavily exposed to property and its estimated $7 billion of debt doesn't have a sovereign guarantee. If Dubai Holding wants to reassure investors that it isn't the next Dubai World, it could start by answering these questions.

New Japan stimulus is early, and risky, backtrack

8 Dec 2009

Yukio Hatoyama s DPJ, elected only in August on a stimuluscutting ticket, has approved a big new spending package. The cost of the measures will add to public debt already at 219 pct of GDP potentially crowding out the private sector as well as the DPJ s election promises.

New Morgan Stanley boss makes smart first moves

8 Dec 2009

CEOdesignate James Gorman is putting the firm's CFO and a top banker in charge of the key securities business. Veteran lieutenants should help preserve the culture and ease fears about Gorman's pedigree. Now comes the harder part devising Morgan Stanley's strategy for success.

Record cheap money is causing pain-inducing bubble

8 Dec 2009

Global monetary conditions could hardly be easier. Growth is the policy goal, but a side effect is unduly rapid increases in some asset prices a bubble. Central bankers shouldn't wait for another market crash or the return of inflation before making money scarcer.

UK map giveaway throws bread upon the waters

8 Dec 2009

Raising revenue by giving things away is every politician's dream. But the UK government's proposal to give away map, weather and transport data will stimulate creative users. It should also generate more tax revenue than would have been raised through a straight sale.

RUSAL IPO: VEB hurdle not a big one

7 Dec 2009

RUSAL's Hong Kong IPO will be postponed until next year after the exchange's listing committee sought clarification over how a $4.5 billion loan to VEB bank would repaid. But if that's the only obstacle, it shouldn't be too problematic given VEB's evident support for RUSAL.

MAN shareholders should be wary of Scania merger

7 Dec 2009

Shares in German truckmaker MAN have weakened after several boardroom departures. The fear is that Ferdinand Piech, who chairs MAN as well as its lead shareholder VW, may now push for a tieup with rival Scania. A deal may be better for VW than for MAN's other investors.

AmTrust highlights danger of political meddling

7 Dec 2009

FDIC tried to seize and sell Ohio s AmTrust last January but local politicians intervened. The bank went bust 11 months later a delay that may have increased FDIC's losses. The lesson: keep the regulatory apparatus free from politics.

European LBOs still far from bubble territory

7 Dec 2009

A rash of prospective deals shows the credit crisis hasn't killed the industry off. But lending terms remain tight and buyout funds can't find a home for all the cash raised in better times. This market is still a long way from the giddy heights of the credit boom.

Tories shouldn’t meddle with bank taxes lightly

7 Dec 2009

The UK opposition party wants to stop banks using previous losses to boost dividends. But denying banks a perk enjoyed by other businesses is rife with practical problems, could perversely encourage fat bonuses and would make banks less attractive to private shareholders.

EPA’s carbon ruling creates confusion for business

7 Dec 2009

The US environmental regulator's finding that greenhouse gases endanger human health won t create new carbon restrictions any time soon. Litigation and legislative pushback will keep such actions in stasis. What it will no doubt achieve is greater regulatory uncertainty.

London shouldn’t weep for lost Kazakhs

7 Dec 2009

The nation's central bank governor says it may now favour Hong Kong and the Middle East for listings because London investors were too fickle during the crisis. But the likes of Kazakhmys and ENRC haven't brought a lot to London and Asian investors can be even more fickle.

US employment bolsters dollar, challenges markets

7 Dec 2009

The prospect of a turn in the U.S. job market has pushed the greenback up, and made investors expect an earlier end to the Fed's zero interest rate policy. If the trend continues, the dollar could fly, and markets that have thrived on the dollar carry trade could suffer.

TARP funds shouldn’t become another US stimulus

7 Dec 2009

Using spare bank rescue cash to create jobs would be good politics but bad economics. The labor market is slowly mending itself, but the US fiscal situation remains dire. Applying most of the money to debt repayment would be a sign America is serious about deficit reduction.

Clear Channel struggles at right time

7 Dec 2009

The highly geared media group is in danger of breaching covenants. That makes the expense of tapping highyield markets for $2.5 bln a worthwhile cost. Lucky for Clear Channel and its private equity backers, there are enough investors still looking to pad yearend returns.