April, 2009
‘Unprecedented stress’ for US life insurers
Causing some consternation among US Life Insurance investors on Thursday should be a report released by rating agency Standard & Poor’s yesterday. No punches are pulled:
The dramatic rise in the expected level of corporate defaults reflects our opinion of the weak credit profiles of many corporations going into this period of economic contraction.
Another reason to vote down the Rio/Chinalco deal
Here’s something that’s likely to anger shareholders in Rio Tinto.
It’s the pricing of a $1.5bn convertible bond launched by rival mining company Anglo American on Thursday.
The Bonds will be convertible into new ordinary shares of Anglo American plc (“Shares”) and will have a coupon of 4% per annum,
Liquidising the credit rally
The recent stabilisation in the Institute for Supply Management Index (ISM) has been hailed by some as justification for a rally in corporate credit.
Indeed, there’s historical precedence for that. Over the past 40 years,
CDS report: Rally gathering pace
European credit markets opened stronger once more on Thursday extending what has become a fairly consistent rally since the start of April for investment grade corporate debt especially.
Increasing numbers of analysts are coming out in favour of taking on greater risk in credit investment at the opening of the second quarter,
Any angels left in heaven?
Corporate debt sin is on the rise.
The number of fallen-angels — investment grade corporates downgraded to junk status — is rising, according to a report just out from S&P. The rating agency notes that 17 companies have been junked in the past month alone,
Lunch Wrap
On FT Alphaville Thursday morning,
- Record IB revenues for JP Morgan.
- Mystic Bob Diamond.
- Goldman creates orphans and other conspiracies.
- Forget Treasuries, is copper the future for China?
- More on China,
Record IB revenues for JP Morgan
Well if anyone was going to have record investment banking revenues in Q1 it was going to be JP Morgan. Here’s the bank’s summary:
• Generated record firmwide revenue of $26.9 billion and pretax, pre-provision profit of $13.5 billion (on a managed basis 1):
Crude inventories still a problem
At the beginning of March there was a lot of talk in the crude market about an end to the contango coming soon, mostly due to some destocking of floating inventory. FT Alphaville was not convinced. In fact we reminded:
Markets live transcript 16 Apr 2009
Markets live chat transcript for the chat ending at 12:16 on 16 Apr 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) NH:hello everyone NH:and welcome to another session of Markets Live
Taxing tweets
Isn’t Twitter useful:
Maybe Gordon’s just there to admire the view. Or maybe, given how keen the PM is on offshore tax havens n’ stuff, he was there to ask why the (Scottish) Clydesdale bank only yesterday set up a major new subsidiary on Guernsey,
Goldman creates orphans and other conspiracies
One of the biggest internet financial furores this week has been over Goldman’s ‘orphan month’ – December 2008.
The bank changed its 2009 year-end to December, instead of using a fiscal year through March,
Come friendly banks and fall on Stroud
FT Alphaville has seen a copy of Stroud District Council’s internal audit report, detailing the fact that the council lost £3m through investments in failed Icelandic bank Glitnir.
The council has already been good enough to provide the unwashed with an executive summary of its report,
China, the currency factor and copper
China’s latest – and weaker than expected – GDP growth figures issued on Thursday had an immediate effect on currency markets, helping reverse earlier gains in the Australian dollar and adding to renewed weakness in the New Zealand dollar.
Forget Treasuries, is copper the future for China?
China’s Q1 GDP growth figures came in on Thursday at a quarterly 6.1 per cent – less than the widely forecast 6.3 per cent, reports Reuters, reflecting a further slowdown in the country’s hitherto stellar growth.
Further reading
Elsewhere on Thursday,
- Why should anyone bail out Madoff’s victims?
- The bear around the corner.
- Q1 earnings: Deception and realities.
- Merger rumours are back.
- Richard Bernstein’s 10 key investment guidelines.
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper blog: Don’t set Goldman free, Mr Geithner
Goldman Sachs’ Lloyd Blankfein wants his institution to pay back the $10bn in taxpayer money it took last autumn when its future looked dicey.
Snap news
Breaking pre-market news on Thursday,
- Blue Oar considering its position regarding a possible offer for Dowgate Capital — statement.
- Hargreaves Lansdowne assets under management fall to £10.2bn,
UBS sees Q1 loss, more job cuts
UBS confirmed investors’ worst fears on Wednesday as it unveiled an estimated Q1 loss of almost SFr2bn ($1.75bn) and cuts of more than 11% to its workforce at an annual shareholders meeting. The meeting also approved the issue of new capital,
AIG nears $2bn disposal
AIG is in advanced talks to sell its US personal lines insurance business to Zurich Financial Services for about $2bn. Selling the unit, which includes car, bike and commercial vehicle insurance, to the Swiss group would help AIG repay $100bn in US federal aid.
China growth slows to record low
China’s economy slowed in the first quarter to its weakest pace on record, but an improvement in data for March offers tentative signs that the worst may be over for the world’s third-largest economy, reports Reuters.
US backs off China currency allegations
The Obama administration on Wednesday backed away from earlier claims that China is manipulating its currency, declining to cite Beijing in a closely watched report to Congress. The move avoids a confrontation with China as it implicitly recognises Beijing’s efforts to avoid competitive devaluation.
Moody’s downgrades building societies
Nine UK building societies, including Nationwide, have been downgraded by Moody’s – some by as much as four notches – amid concerns about their exposure to falling house prices and specialist mortgage loans.
Yahoo ready to sell HotJobs
Yahoo is seeking buyers for its HotJobs employment site and could dispose of other businesses, highlighting the push by Carol Bartz to streamline operations just three months after taking over as CEO of the internet search firm.
EBay to buy Korea’s Gmarket
EBay, operator of the most visited US e-commerce site, offered to buy South Korea’s Gmarket for $1.2bn to expand overseas, reports Bloomberg. EBay will make a cash offer to buy all outstanding shares of Gmarket for $24 apiece,
GM in talks to sell Saturn brand
A group of US car dealers and a buyout firm are in talks with General Motors to buy the beleaguered carmaker’s Saturn brand and turn it into an independent vehicle retailer. The group, including US-based Black Oak Partners,
Goldman stands apart on Lyondell losses
Goldman Sachs’ decision to write down $850m of its loans to LyondellBasell, unveiled in the US bank’s Q1 results this week, stands in sharp contrast to efforts by Lyondell’s other creditors – such as Citi,
Rio executives face angry investors
Rio Tinto executives told disgruntled shareholders on Wednesday that compromises were not out of the question on the terms of the miner’s $19.5bn fund-raising deal with Chinese aluminium group Chinalco.
Return sought of Stanford commissions
The US court-appointed official leading the effort to compensate victims of the alleged $8bn investment fraud by Texan billionaire Sir Allen Stanford is seeking to recover more than $40m of commissions paid to brokers who solicited clients across the US.