Archive - Mar 5, 2009 - Story

Just when one thought the tragicomedy couldn't get any worse. WSJ just out that Annette Nazareth, who was Geithner's pick for Deputy Secretary Treasury, has withdrawn from consideration. It is not known yet if this was because she did or did not pay her taxes.

***Update***

A second candidate, Caroline Atkinson, has withdrawn her nomination to oversee international affairs.

As WSJ reports:

General Motors, which today received a going concern opinion from its auditors who had somehow missed putting that language into the doomed company's 10-K over the past several years, was much closer to bankruptcy than the general media will have you believe. As a result of the going concern statement, the company was in dire need of an amendment to its credit facility which would prevent this from translating into a full blown event of default as per the old language.

For the first time in what seem forever, an external investor has funded a DIP. Today Magna Entertainment, a small Canadian racetrack operator, filed for bankruptcy which is not notable seeing how all financials seem poised to join it in liquidation purgatory.

From the pen of Oaktree's own intellectual Golliath. Highly recommended (here if Scribd does not work)

Bloomberg reports that Highbridge's $8 billion multistrat fund has lost its losing touch and shockingly made money. Allegedly the fund is up 4.5% YTD. Henry Swieca, in true fashion, has been on both the bond and convertible bandwagons (which are in serious pain lately) and has returned 15% in leveraged loans and 8.5% in converts, while also generating 6% in Asia.

Everyone knew it was going to happen just not when. The when is now, according to Jon Pierson president of recruiting company 10X partners as quoted by Hedge Fund Alert.

Everyone knew it was going to happen just not when. The when is now, according to Jon Pierson president of recruiting company 10X partners as quoted by Hedge Fund Alert.

Good article by Bloomberg catching up on the negative basis trade, and specifically on the dynamics basis holders exert on companies which are staring at the bankruptcy abyss. In a nutshell basis holders will do all they can to accelerate the filing of corporate issuers of bonds and CDS due to the asymmetric payoff they stand to gain on the CDS leg versus the bond leg.

As the chart below indicates non-agency RMBS, CMBS and ABS were running about $240 billion per quarter at the market's peak, which confirms our previous point that at $1 trillion max capacity, the TALF's $1 trillion in purchase power equates to 2.7 years of issuance at the peak 2001-2005 levels, and will likely not be filled any time soon.

As the chart below indicates non-agency RMBS, CMBS and ABS were running about $240 billion per quarter at the market's peak, which confirms our previous point that at $1 trillion max capacity, the TALF's $1 trillion in purchase power equates to 2.7 years of issuance at the peak 2001-2005 levels, and will likely not be filled any time soon.

From the rumor bag: SAC Capital's head of HR, Margaret Belden has followed the example of former in house psychologist Ari Kiev, and broken the bonds of servitude to the king of Greenwich plumbing Stevie Cohen.

For those that remember the surreal weekend before Lehman filed chapter 11, Barclays was considered an eleventh hour white knight who would swoop in and buy the bank. These rumors were squashed after Barclays pussied out, saying it would not be able to afford Lehman without the Queen's, the Fed's and Santa Claus' blessings... Nonetheless, the bank did its diligence, and 4 days after Lehman filed, Barc used the smoke and mirrors of bankruptcy court to snatch the U.S. broker dealer for metaphorically pennies on the dollar, and literally $1.75 billion.

BAC 340/360: +30
C 525/545: +35
JPM 200/215: +20
WB 270/290: +25
WFC 270/290: +25
MER 425/445: +25
MS 430/450: +15
GS 335/350: +15
GECC: 16.5/18.5

ING stock down almost 20% in Europe trading:

Lastly, Trichet just adjusted ECB growth forecasts:

2009 growth -3.2% to -2.2%; prev -1.0% to 0.0%
2010 growth -0.7% to 0.7%; prev 0.5% to 1.5%

BAC 340/360: +30
C 525/545: +35
JPM 200/215: +20
WB 270/290: +25
WFC 270/290: +25
MER 425/445: +25
MS 430/450: +15
GS 335/350: +15
GECC: 16.5/18.5

ING stock down almost 20% in Europe trading:

Lastly, Trichet just adjusted ECB growth forecasts:

2009 growth -3.2% to -2.2%; prev -1.0% to 0.0%
2010 growth -0.7% to 0.7%; prev 0.5% to 1.5%

• Evans-Pritchard: Europe's banks face a $2 trillion dollar shortage (Telegraph)
• BoE cuts rates to 0.5%, will print over $100 billion of new cash (Reuters)
• Delta sells planes as operations plummet (