Archive - Mar 2009 - Story

Another highly leveraged company seems poised to test the generosity of its lenders. Commercial printer Cenveo snuck the following language in its 10-K filing today, hoping nobody would notice and destroy its stock price ahead of "unprecedented economic uncertainty and volatility":

Capital Structure:

Homes completed rose to 785,000 in February, a 2.3% rise from January. Single family completions were 505,000, a 8.2% drop from January. Still, this is about 200,000 above the current pace of sales; therefore, months’ supply is expected to remain near a multi-decade high of 13.2 months in February.

Since I last wrote about the bond to loan differential on February 19 (original post) things have deteriorated in credit land. The average loan yield has widened by 9 bps to 857 bps while the average bond is now over 300 bps wider at 1740 bps. It seems the equity market rollercoaster has no impact on credit markets (especially in names that have both secured and sub debt) which know just one direction: down.

Since I last wrote about the bond to loan differential on February 19 (original post) things have deteriorated in credit land. The average loan yield has widened by 9 bps to 857 bps while the average bond is now over 300 bps wider at 1740 bps. It seems the equity market rollercoaster has no impact on credit markets (especially in names that have both secured and sub debt) which know just one direction: down.

The spillover from D-3's empty wallets is beginning to really hurt domestic auto suppliers. First, Ford spinoff Visteon, which last week barely made a $16 million bond interest payment, last night joined Lear (which Carl Icahn tried to acquire unsuccesfully in early 2007) in announcing it would likely receive going concern language from its auditors.

March 31 redemption deadlines anyone? The avalanche of BWICs hitting the market is oddly missing from mainstream media... Just today a cursory glance reveals over $110 in CMBS million being shopped by brokers; additionally there is a $98 million loan BWIC as well as the odd $40 million of Lehman bonds looking for a bid.

Some seriously premature tightening in insurance cos...

Some seriously premature tightening in insurance cos...

Even distressed investing legends make horrible decisions. The latest example is Thornburg Mortgage, a single-family residential mortgage lender focusing on "prime and superprime" borrowers, which was saved from bankruptcy last March by a Matlin Patterson-led consortium which executed a global refinancing that saw $1.4 billion of new sub secured notes come in to provide critical operational funding to satisfy margin calls, auction swaps and various other cash needs.

• Credit card issuers choke U.S.

• At the heart of the Eastern European inferno: UniCredit SpA (Bloomberg)
• More on MTM manipulation and the stupidity of TALF (Naked Capitalism)
• Cheerleading the losing game: Obama's rating slips (Bloomberg)
• Lazard auctioning two of Lehman's bank units (

I have spent some time on my IPhone playing Texas Hold’em. This is self-therapy as we all yearn to control the environment even as the rest of the world has spun out beyond our wildest dreams. The one trouble with losing to a computer or worse a phone – is that there is no real benefit or cost.

Ed Garden's former directorial chair is still warm, and already the company is rumored to be making advance preparations for a bankruptcy. According to Debtwire, the company is negotiating a DIP financing with existing revolver agent Citigroup (unfortunately most of Citi's DIP arranging bankers have recently departed the company). The likely DIP will total about $400 million, consisting of $100 million in new cash, and two separate roll ups, one of the $150 million AR facility, and another of the pre-petition revolver.

Just end the charade already... Holders of GGP's 3.625% bonds today did not, much to their lack of surprise, end up with a mysterious $395 million wire transfer in their accounts. They now have the option of forcing the company to file for bankruptcy (yes, yes, 30 day grace period and all).

And now for a little Moody's hatin'. The rater looks at insurance companies, and predicts that due to horrendous operating results, declining statutory capital and the weaker players' inevitably becoming swallowed by the larger/healthier ones (very curious just who these are), there will be a significant consolidation wave in the insurance industry.