Archive - Mar 17, 2009

Tyler Durden's picture

Citigroup Chief Economist To Be Geithner's New Advisor





Citi's chief economist Lewis Alexander is said to be leaving for a post with the U.S. Treasury Department. Alexander will be a direct counselor to Tim Geithner. This makes some sense keeping in mind who Geithner's predecessor was.

Mr. Alexander's role as Citigroup's chief economist didn't entail significant management responsibilities. But his optimistic economic forecasts colored executives' views that the U.S. was unlikely to face a prolonged slump.

 

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GGP Downgraded To "Default" By S&P





Not really news, but at least reflects that the rating agency has a pulse and still tracks companies. The reasons for the D rating (from C) is none other than yesterday's bond default by GGP and cross-default provisions which that event triggered.

 

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REITs Continue The Dividend Trap





If only companies knew they would be rewarded with aggressive buying of their stock after reducing and/or PIKing cash dividends they likely would have done so much, much sooner... After all why would investors demands cash out of "dividend stocks." This little trick however has not escaped REITs Mack-Cali and Simon Properties. CLI announced after market close today that it would be reducing its dividend by 30%, from $2.56 to $1.80 (a 30% reduction) and would pay the quarterly dividend of $0.45 on April 13 with an ex-div date of April 3.

 

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FDIC To Commingle TLGP Fee Increase With DIF





As Zero Hedge expected, the FDIC announced today that surcharges imposed on the TLGP program will be in effect on April 1st. I wrote about the topic extensively here, discussing its implications for capital raising, specifically for bank holding companies. The FDIC's press release can be found here.

 

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First Heavily Oversubscribed TALF Deal Hits Market





Hat tip reader Michael who points out that Nissan has launched a presumably heavily oversubscribed TALF deal which is a "AAA"-rated four-part sale that includes a 0.32 percent issue offered at a spread of 40 basis points over one month Libor, a one-year issue offered at 185-200 basis points over eurodollar swap futures and two-year and 3.16 year notes at spreads of 200 to 225 basis points and 325 to 350 basis points over swaps.

 

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S&P Mouthing Off On Private Jets





S&P earlier downgraded Textron and Textron Financial to BBB- which was not at all surprising. However, an amusing tidbit in their report presents just how ingrained the sentiment against private jets is: if the ultimate lagging indicator S&P is saying jets are a liability, it may be time to actually splurge for that Dassault you have had your eye on recently.

 

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New Jersey Joining Fray: Suing Lehman Executives For Losses





America's armpit claims "misrepresentations by Lehman execs led to the state losing millions." New Jersey's suit names top executives and board members, claiming it lost $100 million on stock investments... Ernst & Young is also a defendant in the lawsuit.

 

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AIG Employees Not Too Happy With Persistent Death Threats





Interesting summation of the AIG populist anger from an employee's point of view.

 

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Cenveo Amending Credit Facility





Another highly leveraged company seems poised to test the generosity of its lenders. Commercial printer Cenveo snuck the following language in its 10-K filing today, hoping nobody would notice and destroy its stock price ahead of "unprecedented economic uncertainty and volatility":

Capital Structure:

 

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Some More On "Positive" Housing Number





Homes completed rose to 785,000 in February, a 2.3% rise from January. Single family completions were 505,000, a 8.2% drop from January. Still, this is about 200,000 above the current pace of sales; therefore, months’ supply is expected to remain near a multi-decade high of 13.2 months in February.

 

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Loans Versus Bonds Relative Value: March 17





Since I last wrote about the bond to loan differential on February 19 (original post) things have deteriorated in credit land. The average loan yield has widened by 9 bps to 857 bps while the average bond is now over 300 bps wider at 1740 bps. It seems the equity market rollercoaster has no impact on credit markets (especially in names that have both secured and sub debt) which know just one direction: down.

 

Tyler Durden's picture

Loans Versus Bonds Relative Value: March 17





Since I last wrote about the bond to loan differential on February 19 (original post) things have deteriorated in credit land. The average loan yield has widened by 9 bps to 857 bps while the average bond is now over 300 bps wider at 1740 bps. It seems the equity market rollercoaster has no impact on credit markets (especially in names that have both secured and sub debt) which know just one direction: down.

 

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More Pain For Auto Suppliers





The spillover from D-3's empty wallets is beginning to really hurt domestic auto suppliers. First, Ford spinoff Visteon, which last week barely made a $16 million bond interest payment, last night joined Lear (which Carl Icahn tried to acquire unsuccesfully in early 2007) in announcing it would likely receive going concern language from its auditors.

 

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BWICs Gallore





March 31 redemption deadlines anyone? The avalanche of BWICs hitting the market is oddly missing from mainstream media... Just today a cursory glance reveals over $110 in CMBS million being shopped by brokers; additionally there is a $98 million loan BWIC as well as the odd $40 million of Lehman bonds looking for a bid.

 
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