Nachdem man American Investment Banks "Shots In The Dark" vom Economist gelesen hat sollte es nicht weiter verwunderlich sein warum Anleihen aus Kolumbien momentan weniger risikobehaftet sind als Papiere von Lehman, Bear Stearns & Co.....
Sept. 10 (Bloomberg) -- Wall Street is getting no benefit from the biggest bond market rally in five years.
Lehman Brothers Holdings Inc. faces higher borrowing costs today than it did in June, even after the steepest quarterly drop in U.S. Treasury yields since 2002 pushed interest rates down for everyone from Procter & Gamble Co. to AT&T Inc. Investors are so leery of Bear Stearns Cos. that its 10-year bonds trade at a discount to Colombia, the South American nation that's barely investment grade. Goldman Sachs Group Inc. is being punished with a higher yield than Caterpillar Inc., the heavy-equipment maker.
Standard & Poor's said less than a year ago that Lehman continued to merit an A+ credit rating because of its ``exceptional liquidity, strong cost controls and excellent risk management.''
Today, bond yields show that Lehman is considered more risky than Colombia, where the government has been waging a four-decade war with drug-funded rebels and one in 10 members of the workforce is unemployed. Colombia is rated BBB- by S&P, the lowest investment-grade rating, and carries a Ba2 junk rating from Moody's Investor's Service.
Investors dismissed Bear Stearns's A+ rating when it sold $2.25 billion of five-year notes in August, after two of the firm's hedge funds collapsed because of bad bets on subprime mortgages. They demanded a near-junk yield 2.45 percentage points higher than the comparable Treasury, four times the risk premium Bear Stearns paid on a similar sale in January.
When Goldman raised $2.5 billion of 10-year debt on August 30, bond buyers considered it little better than a BBB borrower, even though the firm has a AA- rating. Goldman paid a premium, or spread, of 1.67 percentage points to sell the bonds, almost double what it cost the firm for a similar issue in January.
The explosion in credit spreads on Wall Street may take an even heavier toll on profit next year, when the five firms have almost $133 billion of bonds maturing, according to data compiled by Bloomberg. Bond indexes maintained by Merrill show that the cost of refinancing that debt has swelled by about $1.3 billion since the beginning of 2007, excluding the cushioning effect of any interest-rate hedges.
Goldman is the only firm to have distributed its refinancing obligations so there's no outsized amount of debt coming due in a single year.
Merrill has $42 billion of bonds maturing next year, the most on Wall Street and about 50 percent more than in 2009. Morgan Stanley is next at $34 billion.
Return on Capital
The securities industry has relied increasingly on borrowed money to boost profits and returns for investors. In the first quarter, Goldman had 24.7 times more in assets than it had in shareholders' equity, and the firm's return on the tangible portion of that capital was 44.7 percent. Five years earlier, in the first quarter of 2002, the leverage ratio was 16.8 and return on equity was 15.4 percent.
Following are 10-year bond yields for each of the five largest Wall Street firms:
Goldman Sachs 5.625% due in 1/2017: 5.818%
Morgan Stanley 5.45% due in 1/2017: 5.926%
Merrill Lynch 5.7% due in 5/2017: 6.110%
Lehman Bros 5.75% due in 1/2017: 6.297%
Bear Stearns 5.55% due in 1/2017: 6.448%