Friday, October 05, 2007

Banks use discounts to tempt ‘vulture funds’ / FT

If you now add news like this No Kidding.... More Off Balance Sheet Vehicles For Citigroup it should be clear that this is another way of "creative accounting" and is another blow to the quality of earnings & balance sheet. There is clearly a conflict of interest and i have the feeling that they are only delaying the ultimate solution. "Party on"....

Wenn man nun noch diese Meldung No Kidding.... More Off Balance Sheet Vehicles For Citigroup miteinbezieht wird ziemlich schnell klar das hier einmal mehr "kreative Buchführung" betrieben wird. Das hier ein klarer Interessenkonflikt besteht und damit das eigentlich Problem nicht gelöst sondern nur nach hinten verlagert wird düfte in den kommenden Quartalen und Jahren noch für einige unangenehme Meldungen sorgen und zeichnet einmal mehr ein wenig schmeichelhaftes Bild der Gewinn und Bilanzqualität. Bis dahin kann weiter die beste aller Welten abgefeiert werden.....

Banks use discounts to tempt ‘vulture funds’ / FT
Investment banks are offering finance to “vulture funds” on improved terms if the money is used to buy debt from them, according to bankers and managers of the funds.

Banks keen to shift a backlog of well over $200bn of leveraged buy-out debt are tying leverage for recovery, or vulture, funds run by hedge funds and private equity to the sale of the debt.

The financing amounts to a hidden discount, allowing the banks to minimise public discounts on LBO debt they are having to sell at below face value.

“The banks are offering different terms depending on whether you take their loans or other people’s loans,” said one hedge fund manager who has just raised a recovery fund.

“Most of the leverage being provided by banks is only being provided if you buy their loans,” said another.

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Anonymous Anonymous said...

Investment banks are offering finance to “vulture funds” on improved terms if the money is used to buy debt from them,...

It's similar to home refinancing, I would say -- exchanging one kind of debt for another, less risky kind. If the financing is attractive enough, the banks will no doubt find buyers.


1:53 AM  
Blogger jmf said...

Michael Panzner´s headline hits the nail on the head

Mr. Ponzi Would Have Been Proud

1:58 AM  
Anonymous Anonymous said...

US consumer confidence up

Jobs data due out today. Could be another big up day in the US, depending. This would fit the established pattern for this bull market: big moves up (even on no, scant, or unfavorable news), with a few small drips back down mixed in.


3:12 AM  
Blogger jmf said...

Dow vs Gold

Moin Eh,

Job growth rebounds to 110,000 in September

10 year is at 4.60


The annual benchmark revision will lower the level of employment by an estimated 297,000 as of March 2007. Surprisingly, the benchmark revision shows only a small overcount of 8,000 in construction jobs, with most of the overcount coming in manufacturing, hospitality and financial services.

Once a year, the payroll data, which come from a survey of about 400,000 business establishments, is "benchmarked" to actual tax records filed by companies. The actual revision occurs in February, but a preliminary estimate is given in October.
Last year, the benchmark revision added 752,000 to the payroll baseline, largely because the government's estimates of the number jobs created by newly formed firms was too low. This year, the estimates from the birth-death model were too high


CES Net Birth/Death Model

added 17k vs 13k in 06 and still assumes that financials added another 6k vs 3k in 06.

So one more these numbers are totally useless..... I think we will get a better picture how the job market was in 2007 when the next benchmark revision in 08 will come.... :-)

6:04 AM  
Anonymous Anonymous said...


The fine print won't matter; if you have money in play, all that matters is the direction of the tape. Futures up STRONGLY after the jobs report. We will most likely see another new high on the DJIA today, even if the markets do not manage to close there.


6:08 AM  
Blogger jmf said...

ML joins the parade

Write-downs of an estimated $4.5 billion, net of hedges, related to incremental third quarter market impact on the value of CDOs and sub-prime mortgages. These valuation adjustments reflect in part significant dislocations in the highest-rated tranches of these securities which were affected by an unprecedented move in credit spreads and a lack of market liquidity in these securities, which intensified during the third quarter. During the quarter, the company significantly reduced its overall exposure to these asset classes.

Write-downs of an estimated $967 million on a gross basis, and $463 million net of related underwriting fees, related to all corporate and financial sponsor, non-investment grade lending commitments, regardless of the expected timing of funding or closing. These commitments totaled $31 billion at the end of the third quarter of 2007, a net reduction of 42% from $53 billion at the end of the second quarter. The net losses related to these commitments were limited through aggressive and effective risk management, including disciplined and selective underwriting and exposure reductions through syndication, sales and transaction restructurings.

6:11 AM  
Blogger jmf said...


there is no better way to judge the "health" of the market than to judge how the ML and WM news are being treated today....

A nonevent.

Even the nonsense from Fed guys

Fed's Kohn: September's half-point cut might be enough
Kohn: Rate cut could be reversed if larger than needed
Kohn: Weaker dollar could put upward pressure on prices

didn´t hurt the futures pre market.

The same news just a few weeks ago would have caused the market to dive.

So for now it really looks like the last "Hurra" is in play.

I have just canceled my Fußball game tonight.

I´m tempted to place some shorts with some very tight stops. Let´s hope i can withstand my desire to bet against the crowd ;-)

6:25 AM  
Anonymous Anonymous said...

Merrill to write down $5.5 billion

Die Aktie ist zurzeit um ungefähr 2% gestiegen.


8:07 AM  
Blogger jmf said...

Moin Eh,

as we have said during the past days

good news is good news and bad news is good news, I want to add no news is also good news....

In the meantime.....

Carney's Goldman Years May Help Him at Bank of Canada

Carney will become the third Goldman veteran among the G-7 leadership. U.S. Treasury Secretary Henry Paulson led Goldman for eight years before taking office in 2006, and Bank of Italy Governor Mario Draghi also used to work at the New York-based firm.

8:24 AM  

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