Archive - Feb 2009 - Story

After almost a week of not showering, and snoring in a sleeping bag, one California Republican Senator seems to have cracked and will vote against his conscience, but for going home and a fresh change of clothes.

A comparable relative value analysis evaluating spreads on most liquid loans and bonds for 30 indicative corporate issuers yields interesting results. The average loan yield is currently at Libor +848 while the average bond spread is at Libor + 1435, a 587 bps differential, and a 230 bps widening to the LTM average of 358 bps.

• GSEs' exponentially growing backing: now at $400 billion (Washington Post)
• The end of anonymous Swiss bank accounts: huge political implications (Reuters)
• European banks agree to CDS clearinghouse (Bloomberg)
• Stock rock stars (

• UBS to reveal names of tax cheats as part of DOJ Settlement, presumably more than just current administration officials (Bloomberg)
• Cerberus' Japanese Aozora bank lost money on everything from GMAC to Madoff (Bloomberg)
• Next bail out target: Eastern Europe (FT)
• Another trucker prepares for
  

Larry Gluck and Stellar LLC who had hoped to auction off the Riverton Harlem housing project on Friday, got some more bad news today, when Wells Fargo announced it is seeking foreclosure on the 1,230 unit apartment complex. The auction has now been cancelled until further notice according to Steve Solomon, a spokesman for Gluck.

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...