Archive - Mar 2009

Hot on the heels of its sale leaseback transaction, the NYT, in a mad dash to generate any possible cash, has disclosed it is now selling its corporate jet next.

On March 10, Markit gave information on the new participants in the upcoming IG12 on-the-roll investment grade index. The current IG11 index is set to roll into the new index on March 20, and continuing on the high turnover rate seen in the IG10-11 roll, in which 10 names were exchange, the current roll swaps out another 9 names. The majority of the removals are fallen angels with only one M&A predicated adjustment, based on the the Pfizer-Wyeth transaction.

On March 10, Markit gave information on the new participants in the upcoming IG12 on-the-roll investment grade index. The current IG11 index is set to roll into the new index on March 20, and continuing on the high turnover rate seen in the IG10-11 roll, in which 10 names were exchange, the current roll swaps out another 9 names. The majority of the removals are fallen angels with only one M&A predicated adjustment, based on the the Pfizer-Wyeth transaction.

From S&P release:

On March 12, 2009, Standard & Poor's Ratings Services lowered its long-term ratings on General Electric Co. (GE) and units, including General Electric Capital Corp. (GECC), by one notch to 'AA+' from 'AAA'. We affirmed the 'A-1+' short-term credit ratings. The outlook is stable.

Yellow Pages operator RH Donnelley announced its full year results earlier and said it was seeking to restructure its capital structure. The company whose EBITDA was 2% lower from prior year at $1.4 billion was impacted by 8% declining advertising sales at $2.5 billion.

Yellow Pages operator RH Donnelley announced its full year results earlier and said it was seeking to restructure its capital structure. The company whose EBITDA was 2% lower from prior year at $1.4 billion was impacted by 8% declining advertising sales at $2.5 billion.

• Initial jobless claims rise to 654k as continuing claims hit record 5.3 million
• The ruble back to center stage (Bloomberg)
• Wall Street base salaries to double (Bloomberg)
• The Madoff drama climax (Reuters)
• How to deal with the insurance bailout (

We climbed the wall of worry today only to step off the top rung almost level to where we started. So it goes – sideways is the new up. Bears continue to predominate every discussion – leaving a 0.25% rally in equities a win. Similarly, bonds at 2.91% in 10Y is a significant rally as 3.02% holds again.

• Obama, Geithner failing to revive economy (WSJ)
• Cuomo claims Merrill misled congress on bonuses (Docket)
• Roubini: the made-off ponzi economy as a mirror of Bernie Madoff ($$$ RGE)
• USO at mercy of traders (WSJ)
• 4 states with une
  

Moody's shredder is on max today. The rating agency cut Developers Diversified Realty's unsecured rating to Baa3, the lowest investment grade rating, and its preferred stock rating to Ba1, or junk, and has kept the company on negative outlook. Expect a comparable cut from S&P any minute which last week put virtually the entire REIT space on downgrade watch.

The jist of Moody's report:

If anyone wants empirical proof of the concept Zero Hedge brought up two weeks ago that the "creeping equitiziation" higher and higher into the capital structure of the sick banks is becoming a major issue for existing bondholders, one just needs to look at the price of Citi 7.25% Sub Notes due October 2010 (70) and Bank of America's 7.4% Senior Sub Debt due January 2011 (85).

If anyone wants empirical proof of the concept Zero Hedge brought up two weeks ago that the "creeping equitiziation" higher and higher into the capital structure of the sick banks is becoming a major issue for existing bondholders, one just needs to look at the price of Citi 7.25% Sub Notes due October 2010 (70) and Bank of America's 7.4% Senior Sub Debt due January 2011 (85).

Or not... The company reported a record loss today of $23.9 billion, said it will need to draw another $30.8 billion on its federal loan, and has announced its liabilities exceed its assets, as the fair value of its net assets declined by $120 billion. Among other things, FRE announces its disclosure/procedures are not effective, had 4 material weaknesses in internal control, and sees a high provision for credit losses in 2009...

In shattering many an LBO investor's dreams, who had been waiting and waiting for Baugur to buy luxury retailer Saks (another company that could make headlines here in the not too distant future), the Icelandic retail roll-up will not be LBOing anyone any time soon, as today it finally caved and filed for bankruptcy. Baugur, whose investments include London toy-store Hamley's and a partial stake in Debenhams and Saks, has disclosed debts which exceed its assets by $1.3 billion.

Another great idea from Laszlo Birinyi who wants to get rid of all the companies that people were clamoring to be added into the Dow at the last rotation. Laszlo is all about removing Bank Of Countrywide Lynch, GE, Alcoa and GM and adding the companies that have not been hammered (yet) such as Chubb, Visa, Newmont, and Schlumberger. Of course, in two years when these four (and who knows how many others) get to the point where Citi's whopping 20% move only budged 5 points in the DJ50, Laszlo will pull some other big cap companies to replace those.