Archive - Feb 18, 2009 - Story

Whoodathunkit. The fashion company actually has debt... And not just any debt, but rapidly maturing one at that. BCBG has a $20 million loan payment in March which is very unlikely it will be able to make. Things are so bad even S&P came out of its rat hole and downgraded the company to CCC+

Developing News:

The legal developments for UBS just keep getting worse and worse. The latest comes in the form of a lawsuit by the SEC, alleging UBS reaped at least $380 million of ill-gotten gains by acting as an unregistered broker dealer and investment adviser. Not sure how this one works unless they had some shadow division that was not under the general UBS AG corporate umbrella. Or maybe this is the secret Ponz that Harry said he would disclose - would be oddly elegant to blame the Swiss for our troubles for once.

Just when we thought today, contrary to statistical expectations, may be bankruptcy free, Foamex came out of left field with its first day motions. The company, which had emerged from its most recent bankruptcy in early 2007, was impacted by a drop in auto sales and mattress products, its two key end markets, while laboring under a massive debt load.

The cost to insure against a U.S. default hit an all time high of 90 bps today ($90k on $10 million in insurance). Again, who pays if it defaults?

Presented without comment

The dominatrix of doom who singlehandedly brought down Citi (with a little help from Vikram), has decided to call it quits at Oppenheimer and is starting Meredith Whitney Advisory, an "Investment Bank for the New Age".

For any still employed bankers, who aren't currently experiencing margin calls from their employer, and who plan on making a solid 20% on the bonanza that TBT will unlikely generate by the end of the year, here is the deal of a lifetime.

Interesting CDS insight from Markit's own Gavin Nolan. The Eastern European weakness is spreading from sovereigns to corporates, with telecoms that have EE exposure being blown out of the water. Telenor, Hellenic Telecom, Telekom Austria and TeliaSonera most impacted today. Expect this to spread to consumer, industrials and tech.

...To cover Goldman margin calls! That's what happens when you borrow from your company against its own stock only to see it plummet. Allegedly only a few partners affected. The irony continues - Goldman itself will advise the partners (for a fee) on how to deal with these margin calls...

Courtesy of Gasparino.

Nothing so far today, means two tomorrow.

In the meantime apparently there was movement higher in auto term loans today as the rescue proposals imply government funding would rank junior to existing private financing. Chrysler, Ford and GM all gained 2-3 points in intraday trading.

Also, Bernanke to release Long-Term economic forecasts and present the Fed's long-term inflation goal. Fed says "credit risk in Fed actions exceptionally low." Greenspan used to say bubble risk in Fed actions exceptionally low too...

Anyone who has ever traded CDS has noticed the self-fulfilling prophecy of accelerated widening or tightening on an initial move in single name spread. This phenomenon has stumped traditional cash credit investors who don't realize the peculiar technicalities of the CDS market. It is explained by dealer structured credit desks that tend to chase the market, meaning as spreads widen they buy CDS, and vice versa. Because of this, otherwise small moves in single names can lead to profound jumps in spread.

How does it work:

CLOs, or the guys who many allege got us into this whole mess, are alive and kicking. The forward calendar for capital raises for CLOs indicates almost $1.8 billion in capital is set to be raised for 5 managers. Among them are TCW, ING, Stanfield, ING and Aladdin... Wait, wasn't the last one supposed to be ending its CLO operations and migrating to DIPs only? Oh well. Calendar below.

At record low of $12.40. The whole "more sellers than buyers" theme...

In the latest twist on the bonus debacle, Dresdner Kleinwort (bought recently by German megabank Commerzbank from another megabank Allianz), which is not known for wise financial decisions (let's buy Wasserstein for an insane amount of $$$, only to see him bail a year later) has asked bankers to "voluntarily" give up all bonuses, even contractually guaranteed ones.

Obama will unveil his Homeowner Stability Initiative at noon today. And it will cost you. Apparently the plan has grown from the previously expected $50 billion to $75 billion now. The focus will be aiding house flippers... er, homeowners, who "owe more on their mortgages than their homes are currently worth, and borrowers on the verge of foreclosure." Heaven forbid they should be in foreclosure on their 4th spec home in Lake Tahoe.