Tuesday, August 14, 2007

"Honey, I Shrunk The Company"

Time for another award winning performance....... And this happened despite no exposure to the US subprime market and a 100% mortgage insurance for their loans..... This example shows that it´s all about liquidity.....The same factors that were driving things to unsustainable levels are now making no difference with casualties on the way down

Mal wieder Zeit einen Preis für besondere Leistungen auszusprechen..... Bemerkenswert ist das dieser Verfall stattgefunden hat obwohl kein Bezug zu Subprime besteht und die Hypotheken zusätzlich abgesichert sind. Es geht wie immer nur um die Liquidität der Kreditmärkte.... Die gleichen Faktoren die auf dem Weg gen Norden nicht unterschieden haben reißen jetzt Querbeet alle auf dem Weg gen Süden mit.

Rams Says U.S. Credit Markets Threaten to Cut Profit
Aug. 14 (Bloomberg) -- Australia's Rams Home Loans Group Ltd. said the shakeout in global debt markets may cut profit, sparking a 19 percent plunge in the stock that makes it the nation's worst- performing initial public offering this year.

The impact on the company's June profit forecast ``is likely to be material'' because of rising financing costs, Rams said today in a statement. The Sydney-based lender, which went public last month, gets almost half the funds for its mortgages by selling short-term debt in the U.S.
...."Rams won't be the last Australian company to feel it, and you can multiply it by a hundred overseas.''

Rams, with A$14.2 billion ($11.9 billion) of loans, is the first Australian mortgage company to warn profit may be hurt by the deepening crisis in credit markets. Australian hedge funds Absolute Capital Group Ltd. andBasis Capital Fund Management Ltd. have already been caught in the rout and are trying to avoid selling assets at distressed prices.

The shares slumped 34 cents to A$1.41 at the close in Sydney. The stock has declined 43 percent since being sold to the public at A$2.50 each and listing July 27.

Rams press release ``The U.S. has experienced unprecedented disruptions in recent weeks, which has resulted in material increases in spreads and shortages in liquidity,'' Rams said in the statement.

Forecast in Doubt
The cost of U.S. short-term commercial loans has risen about 20 basis points to 32 basis points above the 30-day bank bill swap rate, Rams said.

The lender included a debt-market crisis among a list of potential risks in a June 27 document for prospective investors ahead of its A$695 million share sale. UBS AG managed and underwrote the offering, when Rams forecast a 35 percent gain in 2008 net income to A$58.6 million.

Rams, which has 80 branches in New South Wales, Victoria, Queensland and Western Australia states, said it had no investments in U.S. subprime loans, the source of the spreading turmoil in credit markets. All the company's loans have 100 percent mortgage insurance, it said.

Analysts at Credit Suisse yesterday cut their profit estimate for Rams by between 10 percent and 15 percent, citing the problems in debt markets. Still, the broker raised its rating for the stock to ``outperform'' from ``neutral'' following a decline in the shares.

``We estimate the current conditions could trigger a refinancing of Rams' extendible commercial paper structure to more expensive, longer-term funding,'' Alex Chau, a Sydney-based analyst at Credit Suisse, said in the report.

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