Archive - Mar 3, 2009 - Story

Hartford Financial was downgraded by S&P for the third time in a month, this time from BBB+ to BBB, a mere two notches above being considered full blown junk. In its statement, S&P said:

In the latest example of just how half-baked the administration's "economic recovery" ideas are, the Fed and U.S. Treasury just announced that TALF sponsors will not be subject to the same executive compensation limits that all other TARP recipients have to adhere to.

Blockbuster denies hiring Kirkland & Ellis to explore bankruptcy, and instead K&E's role will be to assist with refinancing. We do have our doubts as usually every K&E involvement ends up in a monthly retainer filed on Whitehall street, but we'll go with the company on this one.

Bloomberg amends it prior release:

“We’ve hired them for refinancing and capital raising initiatives,” said Karen Raskopf, a Blockbuster spokeswoman..“We do not intend to file for bankruptcy.”

From S&P downgrade just issued:

Update: No Bankruptcy to be filed apparently. Bloomberg is headline hungry pessimism monger (unlike Zero hedge)

Total car sales down to 58,813 from 107,592. Hilariously the company is banging the table and claims its sales forecast will be met... GM sees its Q2 2009 production at 550,000 vehicles, a 34% cut. It is odd that the company will be making any cars at all when it still has 781,000 vehicles in inventory at the end of February.

General Growth Properties, which is currently in defaults on numerous loans and is at the mercy of its lenders, has received bids of almost $400 million for mall properties including Faneuil Hall and South Street Seaport reports Bloomberg.

In line with apocalyptic expectations and with a roughly 9.5 million SAAR, Ford reports car and truck sales down to 99,400 from 192,799 a year ago. "Industry sales at these levels make it more challenging for GM a Chrysler to become profitable and pay back $17.4 billion in U.S. loans." At the end of February, Ford, Lincoln and Mercury inventories totaled 405,000 units. Inventories are 32 percent lower than a year ago. Ken Czubay, VP of sales and marketing says:

In line with apocalyptic expectations and with a roughly 9.5 million SAAR, Ford reports car and truck sales down to 99,400 from 192,799 a year ago. "Industry sales at these levels make it more challenging for GM a Chrysler to become profitable and pay back $17.4 billion in U.S. loans." At the end of February, Ford, Lincoln and Mercury inventories totaled 405,000 units. Inventories are 32 percent lower than a year ago. Ken Czubay, VP of sales and marketing says:

Pershing's option debacle in TGT is reaching fever pitch. PSIV's drop in February was 3 times the drop in Target shares, according to an emailed statement to the few left investors in the fund. This follows PSIV's 40.1% drop in January. As we wrote, Ackman will allow Target fund redemptions in March, and put in some of his personal wealth in the fund. Since inception, PSIV is down 93%!

Granted AAPL has 0 debt compared to GE's $500 + billion. Nonetheless, the snapback in tech is sure to be vicious once funds have to sell the only performing sector to fund humongous margin calls.

Canadian door manufacturer Masonite, which in 2005 was acquired by KKR for $2.5 billion, has prenegotiated the terms of its upcoming bankruptcy with its lenders. The company which breached covenants as long ago as middle of 2008 has long been expected to file for chapter 11.

Prepare for some extra taxpayer backstopped leverage... 10 to 1 leverage to be exact... Somehow the TALF is supposed to become the securitization vehicle (as securitizations as a product have become extinct) of the government backstopping investments in everything from student loans to CMBS... Of course, seeing what the market reaction has been on every incremental governmental chef being appointed to the indigestible feast that is U.S. economy, this should firmly drop us to closer to a 5 handle soon.