Sunday, November 30, 2008

Number Of The Day " Percentage Of US Companies With A Junk Rating"

This at the start of a deep and long recession...... After the events of the last 3 month it is valid to wonder how much of this debt will get bailed out ( GM....) or will end up without much disclosure on the Fed´s balance sheet......I wonder how many companies are now on the brink of bankruptcy just because they decided to make big debt financed stock buybacks or megalomaniac takeovers & buyouts......

Diese Zahl bereits am Anfang einer schweren und langwierigen Rezession bedeutet nichts Gutes..... Nach den Ereignissen der letzten 3 Monate darf man wohl berechtigt fragen wieviel von diesem Junk entweder ein Bailout ( GM.... ) bekommen wird oder gar ohne großartige Transparenz in der immer weiter explosionsartig wachsenden Fed Bilanz verschwinden wird..... Tragischerweise befinden sich etliche dieser Unternehmen nur dank massiver schuldenfinanzierter Aktienrückkaufprogramme und größenwahnsinniger schuldenfinanzierter Übernahmen ( denke vor allem an Private Equity aber leider auch an den Fall Siemens VDO, Conti, Schaeffler ) in dieser wohl letzlich "tödlichen" Situation.......

WSJ Junk-Bond Market Has Closed the Door
Yields Upward of 20% Make It Too Pricey for Borrowers; Zero Deals Made It in November

About 50% of U.S. companies have below-investment-grade credit ratings, making the $750 billion junk-bond market a vital source of financing for car makers, airlines, retailers, utilities, restaurant chains and media companies

>The next chart is making things even scarier........ Within the "junk" label the remaining "quality" has deterioting fast and furious especially over the past few years..........

> Der nächste Chart macht alles nur noch erschreckender...... Innerhalb des "Junkuniversums" hat sich zudem die Qulität besonders im Laufe der letzten jahre massiv verschlechtert......

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Blogger jmf said...

Japan housebuilder failure hits confidence
FT Alphaville

Morimoto, a Japanese condominium developer, was on the brink of collapse Monday after it filed for protection from creditors with Y162bn ($1.7bn) of debt, bringing the number of bankruptcies among publicly traded companies in Japan to a postwar record, reports Bloomberg

10:49 PM  
Blogger jmf said...

Nice to see that Bernanke & Co have finally lost their mojo.....

I can hear helicopters......


Those declines came despite comments from Federal Reserve Chairman Ben Bernanke that further interest-rate cuts are "certainly feasible," and that the Fed is contemplating buying longer-term Treasury bonds, which would push Treasury prices higher and yields lower

9:26 PM  
Blogger jmf said...

Perfect fit......

Pilgrim's Pride Seeks Chapter 11 Protection

In its filing with the U.S. Bankruptcy Court for the Northern District of Texas, Pilgrim's Pride listed $3.75 billion of assets and $2.72 billion of liabilities.

The troubles at Pilgrim's Pride started two years ago, when the company paid $1.1 billion to buy rival Gold Kist Inc. and gained control of 26% of the nation's bird-slaughtering capacity, pulling ahead of Tyson Foods. The deal saddled Pilgrim's Pride with a debt load that became more difficult to manage as credit dried up, feed prices rose and a glut formed in the poultry market.

The Pilgrim Pride's bankruptcy is among the most dramatic financial fallout yet from the economic slowdown spreading across the Farm Belt. Ethanol producer VeraSun Energy Corp. filed for Chapter 11 bankruptcy protection in October. Like Pilgrim's Pride, VeraSun made an expensive acquisition -- the $700 million purchase of rival US BioEnergy Corp. -- just as soaring grain prices inflated its costs of doing business, and then made some grain trades that turned sour.

9:41 PM  
Blogger jmf said...

Corporate funding costs soar
FT Alphaville

Top companies are facing spiralling funding costs in Europe’s bond markets as banks rein in lending, raising concerns about the impact on corporate earnings. Over the past month European companies including National Grid and Daimler sold more than €23bn of bonds, with nearly €11bn sold in the past week, according to data provider Dealogic. On Monday National Grid, which describes itself as an “extraordinarily low-risk business”, sold €600m in six-year bonds at 3.3% above Libor, about seven times what it paid before the credit crunch hit for debt funding.

Daimler on Monday sold €1bn of three-year bonds at a spread of 600bp above Libor, nearly 20 times more than they did in 2005

No mercy.... They deserve it..... ) see
How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months......

Needless to say that they are now begging for some kind of bailout ( for their financing unit )......

10:15 PM  
Anonymous Anonymous said...

Hopefully, Soon the bankruptcy of a swawarma-bar in Denmark will trigger all of the CDS - while one of Propellerhead Ben & Paulson "facilities" holding them.

That would be fun to watch and get things over with quicker.

2:01 AM  
Blogger jmf said...

Moin Anon,

good example...... :-)

One of many reasons why i´m a big fan of gold......

2:24 AM  
Blogger jmf said...

More desperate attempts to postpone the unanvoidable....


Banks including London-based Barclays are negotiating a waiver of conditions for Ineos Group Holdings Plc, the U.K.’s largest chemical maker, on 5.8 billion euros ($7.3 billion) in debt

U.S. companies paid an average 240 basis points on their loans’ face value to waive conditions this year, S&P LCD data show. Trinity, North Carolina-based Sealy Corp., the world’s largest bedding manufacturer, paid a 75 basis-point fee plus a 300 basis-point increase to the interest margin in November for such waivers on $517 million of debt. European companies paid 30 basis points, according to Bloomberg calculations based on data compiled by Deutsche Bank AG.

Ineos, which had net debt of 7.29 billion euros as of Sept. 30, offered to pay its 233 senior lenders 50 basis points upfront, plus a fee of as much as 125 basis points a year, according to Chief Financial Officer John Reece.

The Lyndhurst, England-based chemical maker asked banks to waive loan conditions as sales slumped. Moody’s cut the company’s credit rating to eight levels below investment grade Nov. 18.

3:02 AM  

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