Debt on autopilot

August 28, 2009

At first glance this week’s budget projections paint President Obama as a spendthrift. The White House itself offered a grim glimpse of a future in which U.S. debt more than doubles to $17.5 trillion in a decade — an increase of nearly $10 trillion.

Leveraged loans making a comeback?

August 24, 2009

The $4 billion financing for Warner-Chilcott’s acquisition for P&G’s drug business is another sign of credit markets coming back to an even keel, but it’s not clear how much juice the banks have to keep the momentum going if they don’t find investors for the debt.

British (fantasy) Land for shares

August 18, 2009

Shares in British Land, a big UK property company, have rocketed by almost two thirds from their March lows. After Tuesday’s results, they stand at a one-third premium to net asset value (NAV) of 361 pence per share. Fuelled by takeover speculation, the shares seem to be orbiting far above bricks-and-mortar reality.

A Blessing for Conti?

August 12, 2009

FRANCE-PROTESTS/Three things stand out about the “compromise” reached between German auto parts and tyre maker Continental and its biggest shareholder Schaeffler to oust Conti’s CEO Karl-Thomas Neumann in favour of Schaeffler’s own man Elmar Degenhart.

Anglo American clears more clutter

August 12, 2009

CHILE-CODELCO/ANGLOAMERICANJohn Parker’s appointment as chairman of Anglo American seems to be having the desired catalytic effect – even though the British businessman is barely through the door.

Back to the future for debt panel proposal

August 10, 2009

MALAYSIAAnything that saves time and money in the restructuring of debt sounds like a good idea — particularly given there are likely to be a lot more bad loans that will need sorting out in the coming months and years. 

from Rolfe Winkler:

Fed: Stop the presses

August 7, 2009

On Thursday, the Bank of England said that it would run its printing press a bit faster while the European Central Bank hinted that theirs might slow down sooner than expected.

Best performers reads like a who’s who of risky assets

August 4, 2009

It’s hard not to get a little nervous when you see a chart like the one Bank of America-Merrill Lynch strategists put out on the top asset performers in July. Sure, it kinda sorta makes sense that the most beaten down assets would outperform, but it makes you wonder if all the stimulus pumped into the system is setting up the financial markets, at least the most vulnerable, for another fall.

Debt leaves Reed a lot of digging to do

July 30, 2009

CHINA-COAL/    Crispin Davis wanted to bolster Reed Elsevier’s risk management business when as chief executive he spent $4.1 billion on ChoicePoint.
    Last year’s acquisition was not a bad one — it’s a ray of light in Thursday’s otherwise largely depressing results for his successor Ian Smith — but the debt taken on to fund the deal is looming over him after the failure to sell the RBI magazines business.
    Instead, he has been forced to raise around $1.65 billion in a large, unpopular share placing to keep on top of the $8.4 billion debt pile. A failure of risk management, then. It suddenly seems a long time since Reed handed some $4 billion from the sale of its education business back to shareholders at the beginning of 2008.
    Reed is not alone in having to take such drastic action — drinks can maker Rexam needed a rights issue to keep the credit markets onside — but the 15 percent fall in Reed’s shares reflects the nasty surprise.
    Reed and its advisers can expect some flak from the Association of British Insurers (ABI) which hates these big share placings because they threaten the first-refusal rights of existing shareholders.
    Reed has stretched the 10 percent new share concession to the limit, adding 9.9 percent to its existing issued capital.
    It protests that debt repayments are comfortably far into the future, but the move still smacks of “needs must” and Reed admits that its credit metrics are “too stretched” given the economy and its business cycle.
    Add that to a retreat from its profit guidance for the year, and it’s no wonder shareholders are spooked.

Wiedeking makes millions betting the ranch

July 20, 2009

It isn’t only the investment bankers who have pay packages that offer perverse incentives.