SNB Loses 14 Billion Swiss Francs On Euro's Fall

At least they have managed to make a few Hungarian home owners (temporarily) happy.... ;-)

Immerhin hat die SNB es geschafft etlichen ungarischen Immobilienbesitzern ( vorübergehend ) Freude zu bereiten.....;-)

Marketwatch

The Swiss National Bank on Wednesday said the sharp rise of the Swiss franc, particularly against the euro, resulted in exchange-rate losses of more than 14 billion Swiss francs ($13.3 billion)in the first half of 2010.

But income from foreign-currency and Swiss franc positions and the steep rise in the price of gold limited the central bank's first-half loss, which is expected to total around 4 billion Swiss francs, the SNB said.

The SNB, which had intervened heavily in an effort to brake the decline of the versus the Swiss franc, said it increased foreign-currency investments by around 132 billion francs in the first half of 2010, with the bulk placed in euro-denominated investments

Swiss National Bank Confirms Massive FX Intervention Losses, As Spike In M3 Reported via ZH

Following such a massive losses for the small country (nearly 2% of GDP) it was only a matter of time before the other 26 Swiss cantons, which share in the profits and losses of the SNB, said enough.

"The SNB said last month it had stopped intervention. Its official reason was because deflationary risks from the surging currency had declined, but most economists ascribed the move to growing concerns about the risks from the massive foreign currency holdings."

The "success" to weaken the Swiss Franc can be clearly be seen in this chart......

Der "Erfolg" den Anstieg des Schweizer Franken zu verhindern wird im nächsten Chart eindrucksvoll veranschaulicht......

If they continue to fight the inevitable the SNB is on track to beat even their ""GOLDen Masterpiece"....

Sollte die SNB weiterhin versuchen das Unvermeidliche durch Interventionen zu verhindern bzw zu verlangsamen bestehen gute Chancen selbst Ihr bisheriges "Meisterstück" in Sachen GOLD noch zu toppen....

Most Impressive Sovereign Funding Official 2009 Award Went To Spyros Papanicolaou ( Greece )

You cannot make this up......Very hard to hide a big deal of SCHADENFREUDE when you keep in mind that the awards were determined by a poll of bankers and borrowers .... On the other side it´s too bad that exact these same so called "sophisticated" investors ( not speculators! ) got once again bailed out for their ( ongoing ) very poor judgement.....The following quote from John "Anti Spin" Hussman "Prostituting the fiscal stability of an entire nation for the benefit of bondholders who made bad loans ?"( Hussman is really "upset"..... ) & this must see clip :-)! are unfortunately spot on... Go and read the entire link !

Kein Aprilscherz......Wenn man bedenkt das dieser Preis in einer Abstimmung von Bänkern und Investoren vegeben worden ist kann man sich eine gewisse Portion SCHADENFREUDE einfach nicht verkneifen...... Gleichzeitig wird die Wut darüber, das genau diese Investoren ( nicht Spekulanten! ) trotz Ihres offensichtlich zum wiederholten Male vernebeltem Urteilsvermögen erneut über immer größer werdende Bailouts rausgehauen werden, tagtäglich größer ......Leider handelt es sich beim nachfolgenden Zitat von John "Anti Spin" Hussman "Prostituting the fiscal stability of an entire nation for the benefit of bondholders who made bad loans?" ( Wer den ansonsten sehr besonnenen Hussman kennt kann erahnen das hier einer ziemlich "aufgebracht" ist ...) sowie diesem wunderbar humoristischen Clip :-)! um eine treffende Bestandsaufnahme und um keine Übertreibung......Empfehlen allen den kompletten Link zu lesen !


WSJ

Beware the lessons of history—especially when they involve Greece. The winner of Euroweek's 2010 award for most impressive sovereign funding official richly deserved it: Robert Stheeman, head of the U.K. Debt Management Office, steered through a whopping £185 billion ($268 billion) of gilt sales in the last fiscal year.

But Mr. Stheeman might not want to look too closely at the award's history: Last year's winner was one Spyros Papanicolaou, the former head of Greece's Public Debt Management Agency.

Rough times for GILTS & the POUND ahead.....

Sieht ganz so aus als wenn es für GILTS und das britische Pfund demnächst ruppig werden könnte......

Dubai World Seeks Debt Delay, Owes $59 Billion; Default Swaps Soar .... SCHADENFREUDE....

I have to repeat myself More Bad News For Dubai ...... I think after you have finished reading the follwing post & watching the clips it should be clear that the $ 60 - $ 80 billion from Dubai itself is only a fraction of all the bad loans sitting mainly on the regional bank balance sheets ( probably no coincidence that the supervisor aka regional lender of last resort gave some "prudent" accounting advice back in January > How Not To Restore Confidence....."United Arab Emirates Edition" ) .......

Muß mich da wohl erneut wiederholen More Bad News For Dubai ...... Ich denke das jeder der das folgende Posting gelesen und sich die Videos angeshen hat mit mir übereinstimmt das die jetzt im Raum stehenden bis zu 80 Mrd $ die Dubai selbst im Feuer stehen hat nur einen kleinen Teils der Summen ausmachen die ansonsten noch in den wohl überwiegend regionalen Bankenbilanzen ( obwohl man ja unsere Landesbanken nie unterschätzen sollte...;-) schlummern ( sicher kein Zufall das die Aufsicht bereits im Januar dazu aufgerufen hat sich bei der Bilanzierung "verantwortungsvoll" zu verhalten... > How Not To Restore Confidence....."United Arab Emirates Edition" ).....



Dubai World Seeks Debt Delay as Abu Dhabi Provides $5 Billion

Nov. 25 (Bloomberg) -- Dubai World, the government-owned holding company struggling with $59 billion of liabilities, is seeking to delay repayment on all of its debt, even after Abu Dhabi banks provided $5 billion for Dubai’s support fund.

Dubai World will ask all creditors for a “standstill agreement” as it negotiates to extend the maturities of its debt, including $3.52 billion of Islamic bonds due for repayment on Dec. 14 by its property unit Nakheel PJSC, the builder of Dubai’s palm tree-shaped islands, the company said in an e- mailed statement today.

The emirate, home to the world’s tallest tower and the biggest man-made islands, owes $4.3 billion next month and another $4.9 billion in the first quarter of 2010 through government and corporate debt, Deutsche Bank AG data show. Abu Dhabi government-controlled banks, National Bank of Abu Dhabi PJSC and Islamic lender Al Hilal Bank, bought all $5 billion of bonds from the government, Dubai’s Department of Finance said in an e-mailed statement today.

To understand how hyperinflated things are you should take a look at The Upcoming Skyscraper Tsunami & watch at least one of the YOUTUBE clips at the end of the post..........

Um zu verstehen wie größenwahnsinnig die Lage in Dubai ist empfehle ich dringend einen Blick auf The Upcoming Skyscraper Tsunami & zumindest auf einen der YOUTUBE Clips am Ende des Postings zu werfen.....

Dubai, the second biggest of seven sheikhdoms that make up the United Arab Emirates, set up a $20 billion Dubai Financial Support Fund after the credit crisis triggered the world’s worst property crash and hurt its finance and tourism industries. The emirate raised $10 billion by selling bonds to the U.A.E. central bank in February, with some of the money going to property developers.

What a difference a year makes ( see No Kidding.... Dubai May Need Help To Repay Debt....

Welch Unterschied doch ein Jahr ausmachen kann ( siehe No Kidding.... Dubai May Need Help To Repay Debt....

‘Shut Up’

Dubai ruler Sheikh Mohammed Bin Rashid Al-Maktoum said Nov. 9 the emirate’s bond program to raise a further $10 billion will be “well received,” and those who doubt the unity of Dubai and Abu Dhabi should “shut up.” Abu Dhabi, the U.A.E.’s capital, is owner of the world’s biggest sovereign wealth fund and holds almost all of its oil.

Home prices in Dubai plummeted 47 percent in the second quarter from a year ago, the steepest drop of any market, according to Knight Frank LLC. Property prices may drop further, a survey by Colliers International showed Oct. 14.

Let´s hope the following handsome "gesture" will be enough to please the new overlord.....;-)

Bleibt zu hoffen das die nachfolgende Geste genug sein wird um die neuen Herren im Hause zu weiteren Mrd. zu bewegen.... ;-)

Dubai Autonomy Fades as Crisis Strengthens Abu Dhabi

Nov. 24 (Bloomberg) -- Until last month, a billboard at one of Dubai’s busiest roundabouts featured one photo, of Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum. The new billboard says “Long live our Emirates union” and also shows United Arab Emirates President Sheikh Khalifa Bin Zayed Al Nahyan.

“For the general purposes of the Dubai Financial Support Fund…” FT Alphaville

As FT Alphaville noted the market was on Wednesday digesting news that the $5bn Dubai had raised from two Abu Dhabi government-controlled banks would not go to paying off Nakheel convert bond holders as expected. Instead the proceeds would go towards the general purposes of the Dubai Financial Support Fund (DFSF).

The likes of Barclays Capital, meanwhile, estimate the liabilities could be as much as $72bn, a figure that runs significantly beyond Dubai’s own ability to refinance without support from Abu Dhabi.

In other words, there’s no telling how big the total hole Dubai has to plug is, much less its strategy for doing so, and more importantly how Dubai World bond holders — the government-owned group which owns Nakheel — rank in the fund’s priorities.

On the latter, the indication from today’s news is that they don’t rank highly at all.

CDS report: All eyes on Dubai World FT Alphaville

The Dubai Government announced that it is restructuring Dubai World, an Investment company owned by the government, with immediate effect. It has asked creditors for a six-month standstill on its obligations until at least 30 May 2010.

Spreads throughout the region widened on the shock news. More
volatility can be expected as investors await details of the restructuring

LEX / FT

Dubai’s hopes of becoming a world financial centre are proving to be nothing more than an Ozymandian dream. Wednesday’s unexpected decision by Dubai World, the Gulf emirate’s largest state-owned conglomerate, to impose a six-month debt standstill has foreign creditors up in arms. Earlier this month, Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum publicly pledged his support for the group and its obligations. Investors, perhaps foolishly, took him at his word.

The consequences of the standstill, and possible eventual default, are far-ranging. The repayment of Dubai World’s $4bn Nakheel bond was seen as a litmus test for the emirate’s ability to deal with the $80bn owed by the sovereign and its state-controlled companies. The emirate’s willingness to do this is now in doubt, especially as only an hour earlier it raised $5bn from two state-controlled banks in Abu Dhabi. This was only half what had been expected, but followed $10bn of earlier support from the kingdom’s richer neighbour.

Foreign creditors are muttering darkly about taking legal action.

You really cannot make this up..... No Bailout, lets sue them.....

Den Satz muß man sich mehrmals durchlesen... Erst dann wird deutlich in welcher Welt die Bankster in erster Linie wegen der andauernden Hilfe durch den Steuerzahler noch immer leben.....

Dubai shock after debt standstill call FT

Standard & Poor’s and Moody’s Investors Service immediately downgraded the ratings of all six government-related issuers in Dubai following news of the repayment delay and left them on review for possible further downgrade.Moody’s cut ratings on some government-related entities to junk status, while S&P cut ratings on some entities to one level above junk.

UBS: support for Dubai may be less than assumed MW

Analysts at UBS said authorities will not have taken the decision to restructure Dubai World lightly and that there are three potential explanations for the decision. Firstly, UBS said, Abu Dhabi's support for Dubai might be less generous than assumed. "Perhaps Abu Dhabi has forced Dubai to tackle the problem of excessive corporate debt 'in-house' first before extending more financial support," the broker said.

A second possibility is that corporate-sector problems might be more severe than assumed, UBS said.

Thirdly, Dubai's debt might be higher than the generally assumed $80 billion to $90 billion due to potential off-balance sheet liabilities, it added

Just in time.....

NYT

CSI Dubai FT Alphaville



Some Dubai World Unit Creditors Form Group WSJ

Among options bondholders are exploring is the possibility of seizing Dubai land that is being used to secure the bonds. But Julian Lim, a London-based bond analyst at Nomura, says there are question marks over the value of the land backing the bonds. In addition, it is unclear whether bondholders would even be able to seize the property given that local courts may consider those assets sovereign entities of Dubai, he added.

Detailed Debt & Maturity Profile Dubai, Abu Dhabi & UAE ZH

A Financial Mirage in the Desert NYT

Quantifying External UAE And Dubai Loss Exposure ZH

"Kreditgetriebene Fata Morgana" Querschüsse

Dubai's dramatic boom over the last decade in pictures Telegraph

FACTBOX - What assets Dubai could be forced to sell Reuters

Total Eclipse At The Heart Of Dubai’s World Edward Hugh

The question is, of course, now that the emirate’s lop sided growth model has been shown to be completely dysfunctional, what are the viable long term business prospects in a city with so much excess capacity as far as property goes. According to the Dubai Statistics Center, the total population was 1,422,000 as of 2006, of which 1,073,000 were male and only 349,000 were females.

Evidently activity associated with the construction industry can offer some part of the explanation for this massive gender imbalance. Just under 20% of the population are estimated to be UAE nationals. Approximately 85% of the expatriate population (and 71% of the emirate’s total population) is thought to be Asian, chiefly Indian (51%), Pakistani (15%), Bangladeshi (10%). This impression of a large construction industry oriented population is reinforced by the economic data

Real estate and construction account for about 23% of GDP and financial services for another 11%.

Dubai Cartoon Telegraph :-)

Dubai Bubble Burst Youtube

Die Finanzkrise erreicht Dubai Youtube ( German/Deutsch)

Geschichte von Dubai / UAE ARTE via Youtube

Dubai Real Estate CrashYoutube

DUBAI = LAS VEGAS/SILICON VALLEY ON STEROIDS!

Ben, You Have A Problem......

So far the QE hasn´t worked.....Must be due to all the "Green Shoots..... :-) Enjoy the following images...... I wish everybody a nice weekend.....

Bisher hat das sogenannte Quantitive Easing ( also der Kauf von u.a. Staatsanleihen durch die Notenpresse ) keine Wirkung gezeigt. Böse Zungen könnten gar behaupten das das Gegenteil der Fall ist. Könnte natürlich auch an den täglich bejubelten "Green Shoots" liegen ( Meine Meinung hierzu dürfte bekannt sein....) Ich kann eine gewisse Schadenfreude nicht verhehlen. War aber auch wirklich irrwitzig zu glauben das man mit schlappen 300 Mrd. bei der gleizeichtigen Lawine von Billionen an neuen Anleihen nachhaltig Einfluß nehmen kann. Da auf Ben aber Verlaß ist können wir uns jetzt schon mal gedanklich darauf vorbereiten das die nächste Ankündigung des QE um einiges größer ausfallen wird. Bleibt zu hoffen das die Ausländer diese einmalige Gelegenheit nutzen um sich Ihrer Papiere zu entledigen.... Lasse die nachfolgen Bilder und Charts mal ohne weiteren Kommentar stehen und wünsche ein schönes Wochenende.....

Karl Denninger

Contrary Investor

How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months......

Just brilliant! I have nothing more to add that i havn´t already said at the time when the buybacks were introduced ( see Want My Buyback Back ..."Daimler Edition" & I Want My Buyback Back.....Daimler Is Doubling Down Again). All this has happened at a time when Dailmers net liquidity position ( in part due to the buybacks ) has worsened € 9 billion to almost € 46 billion ( see page 28 in Daimler Q3 Presentaion )

Das Daimlermanagement steht dem von diversen Banken in nichts nach...... Ich habe meinen Kommentaren zu diesem Thema zum Zeitpunkt der Rückkaufankündigung ( siehe Want My Buyback Back ..."Daimler Edition" & I Want My Buyback Back.....Daimler Is Doubling Down Again nichts mehr hinzuzufügen..... Hätte nur zu gerne Unrecht gehabt...... Das alles in einer Zeit während sich auch dank der Rückkäufe die Nettoliquidität binnen der letzten 9 Monate um satte 9 Mrd € auf nunmehr knapp 46 Mrd € verschlechtert hat ( siehe Seite 28 der letzten Daimler Q3 Präsentaion )


Daimler

Due to the current uncertainty in the markets Daimler temporarily suspends the further execution of its share buyback program as of October 24, 2008. Due to the suspension Daimler might not reach its initial target to buy back 10% of the outstanding shares.

I hope you can see the impact of the € 7.5 Billion buyback starting in August 2007.......

Der Effekt des Aktienrpückkaufes von € 7,5 Mrd ist klar zu erkennen, oder?

The company started its first share buyback program at the end of August 2007. By March 28, 2008, 99.8 million shares had been bought back for EUR6.2 billion.

Share Buyback based on the Authorization of the 2007 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	99,768,314	62.11	6,196,752,952.16
March, 2008	27,622,866	53.62	1,481,249,244.31
February 2008	22,185,448	55.69	1,235,524,406.33
December 2007	4,384,000	69.10	302,953,032.70
November 2007	16,366,000	69.05	1,130,005,849.60
October 2007	13,445,000	74.29	998,821,360.14
September 2007	14,390,000	66.72	960,165,710.94
August 2007	1,375,000	64.02	88,033,348.15

In exercise of the authorization granted by the Annual Meeting of April 9, 2008, the decision of the Board of Management allows for the buyback of 10% or approximately 96.4 million of the outstanding shares for a maximum amount of EUR6 billion

Share Buyback based on the Authorization of the 2008 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	37,283,831	38.86	1,448,922,311.86
Oct 2008	2,283,831	27.88	63,669,232.59
Sep 2008	7,690,000	39.43	303,203,682.07
Aug 2008	6,910,000	40.19	277,696,796.64
Jul 2008	13,850,000	38.14	528,276,120.47
Jun 2008	6,550,000	42.15	276,076,480.09

Trump Needs A Bailout.....

At least in Chicago....... This is one prominent example that the problems in the commercial real estate market are growing rapidly on a daily basis ( see .CMBS Indices )....It is probably no coincidence that once again Deutsche Bank is involved .... At least this time their exposure seems to be minor compared to their Vegas adventure ( see Deutsche Bank Is Doubling Down In Vegas..... ).... Maybe this very possible blow up in Chicago will keep Trump from bragging for the next quarter.... SCHADENFREUDE!

Zumindest was sein Portfolio in Chicago angeht..... Dieses sehr prominente Beispiel zeigt recht anschaulich wie extrem schnell sich im gewerblichen Immobiliensektor die Risiken auftürmen (siehe CMBS Indices )....Irgendwie bekommt man dsa Gefühl das die Deutsche Bank extrem oft in solche Geschichten verwickelt ist. Immerhin scheint sich der zu erwartene Verlust ganz im Gegensatz zu dem wahnwitzigen Vegas Abenteuer (Deutsche Bank Is Doubling Down In Vegas..... ) in Grenzen zu halten. Uns bleibt die Hoffnung das der kaum zu ertragene Herr Trump seine Prahlerei nach der sehr wahrscheinlichen Chicagobauchlandung zumindest mal für ein Quartal einstellen wird...... Meine Schadenfreude ist ihm in jedem Fall gewiss.....

In Chicago, Trump Hits Headwinds WSJ

Donald Trump's tallest construction project ever is facing some tall challenges.

Many real-estate developers are under pressure these days as lenders and investors rush to cut their exposure to the market. But Mr. Trump's 92-story Trump International Hotel & Tower in Chicago, which will be the tallest building constructed in the U.S. since the Sears Tower opened in 1973, may be especially vulnerable because it's getting hit by a triple whammy of colliding forces: the credit crunch, the reversal in the housing market and weak retail sales.

The shiny glass skyscraper is one of the few that the brash Mr. Trump developed without partners. The situation also puts pressure on one of the project's major lenders, Fortress Investment Group LLC.

So far, Mr. Trump has lined up buyers for a bit less than $600 million of condo units and condo-hotel units in a residential market that has virtually seized up. Yet he owes lenders as much as $1 billion when the loans are due, according to public records and several people familiar with the project. He has closed around $200 million in sales so far, with roughly $380 million still in contract. The retail portion of the giant building is for sale, at a time of rising vacancies for retail space in Chicago and one of the worst eras for retailers in years. .....

Most urgently, to stay current on the project's biggest piece of debt, a $640 million senior construction loan, originated by Deutsche Bank AG, Mr. Trump must negotiate by Nov. 1 to exercise an extension provision contained in the original loan that he took out in 2005. To extend the loan, Mr. Trump must prepay additional interest charges to Deutsche Bank. Deutsche Bank declined to comment other than to say it syndicated the loan to several other banks and that its exposure is less than $50 million. Mr. Trump is confident that the extension will be agreed upon.

Adding to Deutsche Bank's leverage in the talks, Mr. Trump agreed to a $40 million recourse completion guarantee on the loan. That means Deutsche Bank can both foreclose on the property and go after Mr. Trump personally for that amount in the event he doesn't complete the building. Mr. Trump discounts the importance of the completion guarantee and is confident that he will complete the building next year. Other than the completion guarantee, Mr. Trump has no personal recourse on the project and any problems in Chicago are unlikely to affect his other businesses......

The issues don't end with the Deutsche Bank loan, according to loan documents. Mr. Trump borrowed $130 million in a mezzanine loan originated by a lending unit of private-equity firm Fortress Investment. That loan contains stiff terms, including a $50 million "exit fee" to be paid when the loan is due, in addition to accrued interest. A loan document says Mr. Trump could have to pay Fortress as much as $360 million, depending on how long the loan accrues interest. Combined with the Deutsche Bank senior loan, he would owe more than $1 billion in total. Should Trump fail to sell more units, Fortress would be on the hook to take over the project and could see a loss on its investment. .....

> Here is more on Fortress / Hier mehr zu Fortress Plundered Fortress / Pump & Dump At Its Best & Hedge Fund Hilarity: Fortress Jokes About Leaving Public Markets

During the last real-estate collapse in the early 1990s, Mr. Trump was pushed to the brink of bankruptcy because he was personally on the hook for hundreds of millions of dollars of debt. He later restructured his debt with the banks and worked his way back to doing real-estate deals, product endorsements and reality television.

The Chicago project is different. He has no partners, he arranged the financing, and his family is managing the construction and marketing. (In 2004, Bill Rancic, the winner of Mr. Trump's reality-television show, "The Apprentice," worked on the Chicago project for a year.)

Gail Lissner, vice president at Appraisal Research Counselors, a Chicago real-estate tracking firm, says contract signings on condos in downtown Chicago were down 72% the first half of the year from a year earlier. And the supply keeps coming. Downtown Chicago will see nearly 10,000 new condo units delivered in 2008 and 2009, a substantial portion of which haven't been presold.

Mr. Trump recently began marketing to sell the 100,000-square-foot retail space in the building, which will be the last part of the building to open, at the end of 2009. But given the wretched retail climate, and the almost complete lack of real-estate financings, finding a buyer could prove challenging. Mr. Trump's son Eric Trump, who is running the retail portion of the project, is confident the project will eventually sign leases with high-end retail tenants. He says the Trumps will sell the retail portion of the project only if a buyer presents a good price.

The 339-room hotel, of which the Trumps still own more than half the rooms, has generated revenue. The Trumps sold around 150 rooms to buyers who can choose to earn room revenue after paying Mr. Trump various fees and assessments, according to marketing documents.

But the hotel business is in rough waters as travelers cut back. Among the neighborhood's 12 luxury hotels, including Mr. Trump's, the percentage of vacant rooms has increased each of the past three months, compared with the year-earlier period, according to data provider Smith Travel Research. And revenue per available room, a common-industry measure, is down three consecutive months.

Adding to the project's stress, Mr. Trump is now in competition with his own customers. At least 30 buyers of the hotel units have put those rooms back on the sales market at substantial discounts to what Mr. Trump is charging for similar units, according to local sales brokers.

Local real-estate broker Andrew Glatz, of Crown Heights Realty, is representing two dozen hotel units and six condo units for resale in the Trump project. He's sold three so far. "All our units are 30% below Trump. We can't compete with his marketing, so we compete with his prices," he says. "It's the most fabulous property in Chicago. They didn't spare any expense," he boasts. His clients can afford to sell below Trump's prices because they bought their units in 2003, before Mr. Trump raised prices substantially.

UPDATE : Trump Files Suit Against Lenders WSJ Mr.

Trump has put $77 million of his own equity into the tower, which he would stand to lose in a potential foreclosure. Other than a $40 million guarantee to complete the project, Mr. Trump has no recourse obligations to the project. A Trump spokesman declined to comment.

Deutsche Bank originated the construction loan in 2005 and sold off most of it to others, retaining less than $10 million of exposure on that loan. The suit alleges that Deutsche Bank compromised the senior construction loan by selling pieces off to "so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along," that the lending group is unable to come to a consensus on how to deal with the matter.

It also alleges Deutsche Bank created a "serious conflict of interest" by taking a separate stake in the project's so-called mezzanine loan that was originated by private-equity firm Fortress Investment Group. The mezzanine loan, which is junior to the senior construction loan, had an original principal of $130 million but will eventually accrue to $360 million. Deutsche Bank purchased roughly one-quarter of the mezzanine loan, according to people familiar with the matter.

No Kidding.... Dubai May Need Help To Repay Debt....

I have wondered about Dubai early on in 2007 ( see Dubai / Borrow To Build.....? ) what fundamentals are behind the boom in Dubai. It really looks like lots of the megalomaniac projects that have been anounced and are already under construction will face some serious "headwinds"........ In fairness it has to be mentioned that in 2007 only 7 percent of GDP was oilrelated and lots of the giant projects and investments are an attempt to transfrom the economy... It seems that the pace in recent years was too fast and it feels like an attempt to ramp things up with a crowbar...... SEE UPDATE AT THE END OF THE POST

Ich habe mich bereits in meinen bescheidenen Anfängen als Blogger im Anfang 2007 in Dubai / Borrow To Build.....? gewundert was genau in Dubai abgeht. Es sieht in der Tat so aus als wenn ein guter Teil der größnwahnsinnigen Projekte die angekündigt und die sich fast immer auch schon im Bau befinden in nächster Zeit in erhebliche Probleme laufen könnten...... Müßte lügen wenn ich nicht ein gewisses Maß an Schadenfreude verspüren würde...... Fairerwaise muß man erwähnen das Dubai nur noch 7% des BSP dem Öl zu verdanken hat und die gigantischen Projekte ein Versuch sind die Wirtschaft radikal zu transformieren..... Leider sieht es so aus als wenn hier das Tempo in den letzten Jahren doch erheblich zu hoch gewesen ist und das ganze evtl., doch einem Versuch mit der Brechstange gleicht....... BITTE DAS UPDATE AM ENDE DES POSTINGS BEACHTEN

Dubai May Need Help From Abu Dhabi to Repay Debts

Oct. 13 (Bloomberg) -- Dubai may depend on support from neighboring Abu Dhabi and the federal government of the United Arab Emirates to help pay for a surge in borrowing, Moody's Investors Service Inc. said.

Government-controlled companies owe at least $47 billion in total, more than Dubai's gross domestic product, according to Moody's data based on economic statistics from 2006.

``We believe that leverage raised primarily through state- owned corporations will continue to grow faster than GDP for at least the next five years, during which time the Emirate's susceptibility toward execution, financing and geopolitical risks will be at its most pronounced,'' Philip Lotter, Dubai- based senior vice president at Moody's, said in a report today.

Dubai has borrowed to fund real estate projects including Burj Dubai, the world's tallest tower, and to buy stakes in Deutsche Bank AG, European Aeronautic Defence and Space Co. and Standard Chartered Plc, as it seeks to reduce dependence on its dwindling oil reserves.

Abu Dhabi, by contrast, owns more than 90 percent of the U.A.E.'s oil reserves and nearly 8 percent of the world's total. The Abu Dhabi Investment Authority, its sovereign wealth fund, has assets of between $250 billion and $875 billion, according to the International Monetary Fund.

Dubai controls its economy through state-owned companies that dominate each major industry. Dubai Holding LLC, which groups assets belonging to Dubai Ruler Sheikh Mohammed bin Rashid al-Maktoum, owns hotel chain Jumeirah Group and Dubai International Capital, which unsuccessfully bid for Liverpool Football Club earlier this year.

Default Swaps
The cost of insuring Dubai Holding's bonds has increased nearly four-fold since May, according to traders of credit default swaps. Contracts protecting Dubai Holding Commercial Operations medium-term notes for four years traded at 679.3 basis points on Oct. 10, up from 172.99 at the beginning of May, CMA Datavision prices show.

Dubai World, a state-owned holding company, acquired almost 10 percent of Kirk Kerkorian's MGM Mirage last year for about $5.1 billion. MGM shares have since tumbled to $16.80 from $84 when the deal was agreed.

> The folling quote is from my post Deutsche Bank Is Doubling Down In Vegas.....

> Der nachfolgende Kommentar stammt aus meinem Post Deutsche Bank Is Doubling Down In Vegas.....

Deutsche will have to raise its bet with another $1 billion investment in the development, at the same time local operator Boyd Gaming has shelved a $5 billion project on the Strip. That looks like a risky double-down for a bank already exposed to MGM Mirage's cash-strapped $11 billion CityCenter project nearby.

> I´m not sure if they are already on the hook but when even Dubai World is late in raising as much as $3.5 billion for their $11.2 billion CityCenter project in Las Vegas it is not a very good sign.....MGM,Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Watch the folling clip and it is no wonder why they are falling behind..... (clip was deleted.... I wonder why....)

> Ich bin mir nicht sicher ob die Deutsche Bank hier schon im "Feuer" steht. Wenn aber selbst Dubai als Hauptinvestor momentan Probleme hat Kredite zu bekommen ist dies sicher kein gutes Zeichen..... MGM,Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Schaut Euch den Clip an und es ist wenig verwunderlich warum es Finanzierungsprobleme gibt....... Der Clip ist inzwischen gelöscht worden.... Leicht auszumalen warum.....

Deutsche Bank shares have fallen nearly 70 percent since Dubai government-owned DIFC Investments bought a 2.2 percent stake for about $1.8 billion in May 2007.

``In most countries there are identifiable delineations between the public and private sectors,'' Tristan Cooper, Moody's Middle East sovereign analyst, said in the statement. ``In Dubai, however, the state corporatist model plus the fact that the ruler and his closest relatives form the core of the government, make it difficult to draw such distinctions.''

`Implicit' Support
Abu Dhabi and Dubai are the two-largest emirates in the seven-member U.A.E.

While Dubai's economic model ``has proved successful to date, cumulative liabilities are currently rising faster than investments are able to generate returns, which increases Dubai's medium term susceptibility to execution risks and necessitates a clear understanding of wider implicit federal support when rating key government-backed corporations,'' Lotter said

UPDATE

Dubai World Has No Problem Borrowing, Chairman Says Bloomberg

``We don't have any problem raising money,'' Dubai World Chairman Sultan Bin Sulayem said in a telephone interview in Dubai today.

``Why would we announce a big tower if we can't afford to pay for it?''

> I´ve heard other people saying similar things way too often during the paste few years....

> Den Satz habe ich in den letzten Jahren schon einige Male gehört.......

Dubai's state companies have lost at least $6 billion on their five biggest public investments in the past two years, led by Dubai World's stake in casino operator MGM Mirage. Losses on undisclosed investments may be $30 billion, said Luis Costa, emerging-markets debt strategist at Commerzbank AG in London.

``About 80 percent of Dubai World is non-transparent, so it's a very tough game,'' said Costa. ``Deals such as the world's tallest tower may now need more capital injection from the state or may even fail.''

Ruler Sheikh Mohammed bin Rashid al-Maktoum has borrowed to replace Dubai's dwindling revenue from oil with earnings from tourism, finance and real estate. State-owned carrier Emirates has increased its fleet to the largest in the Middle East and has the most orders worldwide for the Airbus A380 superjumbo, as the government seeks to double tourists per year to 15 million by 2015.

Casino
Dubai World owns DP World Ltd., the third-largest international port operator, Istithmar World, a private equity firm that acquired Barney's New York Inc. last year, and Nakheel PJSC, builder of the manmade palm-shaped islands in the Persian Gulf. The developer is also building the Nakheel Tower, which will surpass the Burj Dubai, currently the world's tallest at 707 meters.

> I´ll bet that this Skyscraper ( see Nakheel Tower / Wikipedia ) won´t be build.... In hindsight Dubai should be grateful that the location had to be changed and the construction hasn´t started yet......

> Ich lehne mich mal aus dem Fenster und behaupte das dieser Turm zu Babel ( siehe Nakheel Tower / Wikipedia ) niemals gebaut werden wird... Im Nachinnein kann Dubai froh sein das sich durch einen veränderten Bauplatz die Konstruktion verzögert hat und der Bau noch nicht begonnen hat.....

Costs are rising on contracts to protect against a default by Dubai Holding LLC, which groups assets belonging to Sheikh Mohammed, including the Jumeirah Group hotel chain. Credit- default swaps rose almost four-fold in the past six months to 684 basis points, the highest in at least four years.

Dubai Holding Commercial Operations Co.'s 10-year bonds due 2017 fell 0.8 percent today, lifting the yield to a record 13.2 percent, Bloomberg data show.

``We are a very solid company and well diversified,'' bin Sulayem said. The notion of Dubai corporations having to rely on Abu Dhabi for funding ``is news to me,'' he said.

2nd. UPDATE

Dubai debt puts emirate at risk in slowdown FT

In a report obtained by the Financial Times, the ratings agency says Dubai would lack the financial muscle to cover its debt in the event of a systemic shock, such as a real estate collapse, making it reliant on Abu Dhabi to bail it out.

Publicly recorded debt levels have reached 103 per cent of 2006 GDP, the latest available figure, without including the leverage assumed by aggressive investment companies such as Istithmar and Dubai International Capital.

Number Of The Day "Stock Buybacks From Financials In 2007"

They really deserve the bailout........Sarcasm off....... At least Lehman has gone gone bust. There is no way i can hide my SCHADENFREUDE when reviewing their buyback orgy ( see I Want My Buyback Back....Lehman Edition )

Wer so sorgsam mit seinen Geldern hausgehalten hat verdient jeden noch so großen Bailout...... Immerhin hat es Lehman erwischt. Die haben sich in den vergangenen Jahren eine Aktienrückkauforgie der ganz besonderenArt geleistet ( siehe I Want My Buyback Back....Lehman Edition ). Ich probiere erst gar nicht meine Schadenfreude und Genugtuung darüber zu verbergen...... Ein aus deutscher Sicht besonders tragisches Beispiel an den Irrglauben des Aktienrückkaufes spielt sich gerade in Real Time bei Daimler ab ( I Want My Buyback Back.....Daimler Is Doubling Down Again ). Es bereitet fast körperliche Schmerzen mitanzusehen wie die einst gesunde Kapitalstruktur im Angesicht einer auf Jahre hinaus furchtbaren Automobilkonjunktur ohne Not durch den Schredder gedreht wird......


Marketbeat WSJ

Stock buybacks peaked in the third quarter of 2007, according to Howard Silverblatt, senior index analyst at Standard & Poor’s. Nearly $172 billion in shares were repurchased in the third quarter of 2007, right around when the market peaked, contributing to the one-year record of $589 billion in shares repurchased in 2007. The biggest contributor? Financials, which accounted for 20% of the buybacks in 2007.

Remnant Of A Bygone Era.......

Nice due dilligence...... If an investors pumps money to "Pirate Equity" under such "favourable" terms they deserve to get ripped off...... The same is true for most of the hedge funds out there ( UPDATE via Naked Capitalsim : Hedge Funds Continuing to Take It on the Chin & Ospraie to Close Flagship Hedge Fund After 38% Loss ) ..... Lets´hope that not too much pension fund money is involved...... The mother of all pump & dumps is probably the Fortess IPO Plundered Fortress / Pump & Dump At Its Best . Enjoy!

Da kann man wohl getrost von ganz genauer Due Dilligence sprechen... Wer Pirate Equity unter solchen Bedingungen Geld in den Rachen wirft hat es verdient so abgezockt zu werden...... Gleiches kann fast ausnahmslos für die Gebührenstrukturen der Hedge Fonds behauptet werden ( Passendes Update viw Naked Capitalism Hedge Funds Continuing to Take It on the Chin &Ospraie to Close Flagship Hedge Fund After 38% Loss ). Bleibt zu hoffen das nicht zu viele Pensionskassen involviert sind.....Die Mutter aller Deals in Sachen Pirate Equity is vermutlich der Börsengang von Fortress gewesen ( siehe Plundered Fortress / Pump & Dump At Its Best ). Glückwunsch den Altaktionären!


You Must Remember This? KKR Hopes Not WSJ
Pitching its initial public offering of stock, KKR portrays itself as a kind of new, enlightened capitalist. Fourteen times throughout its SEC filing, KKR mentions plans to align its interests with potential shareholders. It gleefully contrasts itself to rival Blackstone Group, stressing how its partners won't be cashing out in the ostentatious style of Blackstone's founders . There's even a pledge to serve the environment and other "stakeholders" tied to the KKR ecosystem.

Then there's the KKR that the firm would prefer you forget: That it already has two publicly traded investment vehicles. They've both performed miserably and have needed restructuring. KKR has proposed rescuing one of them, KKR Private Equity Investors, by folding it into its parent. The shareholders of the other, KKR Financial Holdings LLC, known as KFN, are being left to fend for themselves.

KFN was forged in the credit-slinging days of 2004 and 2005, as a vehicle to invest in the mortgage-securities market. It was supposed to show that KKR could do more than just plain leveraged buyouts, an important step for building its resume as a public firm.

KFN didn't do much to buff that resume. Outside investors have put $2.4 billion into KFN since 2004. Its market cap is now just over half that. Admirably, its two founders and other partners personally injected $57 million when the company ran into credit-market trouble a year ago. Yet last April the company had to issue still more shares, priced below their own book value, to forestall credit problems.

Despite switching away from mortgages and into the healthier market for top-rated corporate debt, KFN still trades at $9.38 per share, a deep discount to its book value of $12.71 per share.
Perhaps one reason for that discount is investors' continued worries about KFN's fee structure, which looks like a remnant of a bygone era.

For example, KFN investors pay a 1.75% management fee based on the size of KFN's equity. This takes away an incentive for KKR to buy back stock, even though this seems an obvious path for a company trading at such a discount to book.

..... of the other, KKR Financial Holdings LLC, known as KFN, has no high-water-mark feature, a typical hedge-fund provision which keeps the funds from earning incentive fees until they completely make up any investor losses. Those incentive fees, which can award up to 25% of profits above a 2% quarterly hurdle rate, are paid quarterly, so managers just need to post a good three month's performance to cash in. Most hedge-fund managers need to hold things together for a year to get paid. During 2007, when KFN lost $100 million, its managers made incentive fees of $17.5 million

That's not all, because these executives are paid again for, well, doing their jobs. On top of the management fee, KFN compensates its own executives for legal, accounting, due diligence and other services "that outside professionals or outside consultants would otherwise perform."

Deutsche Bank Is Doubling Down In Vegas.....

I´m pretty sure that the statement "Problem loans stable" at page 27 from their latest results won´t be repeated in the comming quarters...... Throwing good money after bad money has not often worked. This is especially true when you see the clip further down and watch the latest Las Vegas Statistics..... You really have to work at Wall Street or the financial complex to see light at the end of the tunnel..... I assume that the light is coming from a fast moving train ....

Bin mir ziemlich sicher das die Aussage "Problem loans stable" siehe Seite 27 letztes Quartalsergebnis in den nächten Quartalen sicher nicht mehr wiederholt werden kann..... Schlechtem Geld noch gutes hinterherzuschmeissen ist in den seltensten Fällen die richtige Entscheidung gewesen. Seht Euch den Clip zu dem im Feuer stehenden Projekt an und werft einen Blick auf die letzten Las Vegas Besucherstatistiken und man muß ziemlich "kühn" kalkulieren um hier auch nur ein kleines Licht am Ende des Tunnels zu sehen.... Ich tippe darauf das das Licht eher das eines heranrauschenden Zuges sein wird...... Hier noch ein passender Artikel der FAZ Ausgespielt in Las Vegas. Lesenwert!

Deutsche's Tarnished Rep WSJ

DEUTSCHE BANK dug itself into a $10 billion commercial-real-estate hole. So far, the German bank is doing a decent job clambering out. But the tale raises questions about Deutsche's judgment.

The bank's exit from its Manhattan hole is off to a fast start. Just last summer, Deutsche helped real-estate mogul Harry Macklowe buy seven office towers for $7.5 billion. Mr. Macklowe soon ran into trouble. But Deutsche persuaded him to surrender the buildings, avoiding painstaking foreclosure proceedings.

Three of the towers have already been sold, two are under contract and the last two are expected to go soon. True, they're selling for about 25% less than Mr. Macklowe paid, and Deutsche will lose money. But a swift exit at a modest loss is probably the best outcome that could have been achieved.

Las Vegas, though, is another story. Deutsche is foreclosing on the $3.5 billion Cosmopolitan Resort & Casino after developer Ian Bruce Eichner defaulted. Rather than sell the half-finished project into a depressed market, Deutsche will take possession.

> I especially like the somment " The concept that will stand the test of time"..... Impossible to suppress Schadenfreude while watching the clip..... :-)

> Besonders beeindruckend ist in diesem Zusammenhang der Schlußsatz "The concept that will stand the test of time"......... Zwecklos bei Ansicht des Clips nicht in Schadenfreude zu verfallen.... :-)

Deutsche will have to raise its bet with another $1 billion investment in the development, at the same time local operator Boyd Gaming has shelved a $5 billion project on the Strip. That looks like a risky double-down for a bank already exposed to MGM Mirage's cash-strapped $11 billion CityCenter project nearby.

> I´m not sure if they are already on the hook but when even Dubai World is late in raising as much as $3.5 billion for their $11.2 billion CityCenter project in Las Vegas it is not a very good sign.....MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Watch the folling clip and it is no wonder why they are falling behind.....

> Ich bin mir nicht sicher ob die Deutsche Bank hier schon im "Feuer" steht. Wenn aber selbst Dubai als Hauptinvestor momentan Probleme hat Kredite zu bekommen ist dies sicher kein gutes Zeichen..... MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan . Schaut Euch den Clip an und es ist wenig verwunderlich warum es Finanzierungsprobleme gibt.......

Project CityCenter - Las Vegas Luxury Condos

Even so, Deutsche's biggest hole may not be in Vegas, but in its reputation. It made the sucker's mistake of overlooking history, backing two racy developers with well-chronicled failures. It also was apparently blinded by the market's former momentum. In New York, it expected skyscraper rents to soar by 75%. In Las Vegas, it seems to have overestimated growth prospects and Sin City's resilience to a slowing U.S. economy.

Deutsche might be forgiven for failing to anticipate the full extent of the credit crunch. It has nevertheless revealed two weak cards in its hand: its ability to assess both borrowers and risk.

Cramer Jan 2008 "Ten Trillion $ Worth Of Good Calls"

With reassuring news out from Merrill "We Don´t Need To Raise Capital" Lynch i just couldn´t resist to post this piece from Cramer. I think his call from January 2008 for a "Housing & Bank Stock Shortage" is even by his standarts "outstanding" ......

Nachdem mal wieder beruhigende Meldungen aus dem Hause Merrill "We Don´t Need To Raise Capital" Lynch kommen kann ich es mir nicht verkneifen ein Video vom Chefeinpeitscher aus dem Hause CNBC Jim Cramer zu posten. Da lobe ich mir doch schon fast Förtsch, Prior und Co...... Viel Spaß beim selbst für seine Verhältnisse "aussergewöhnliche" Vorhersage.....

Chart Of The Day " CDS On 10yr US Treasuries

There is no free lunch..... Looks like some are questioning the AAA rating of the US..... :-) And with future liabilities from roughly $ 40 to 50 trillion ( growing $ 3-4 trillion p.a. - see If we are Rome, Wall Street's our Coliseum ) only the rating agencies and their bullet proof models are able to justify/create this rating ..... Got GOLD?

Ist das nicht herrlich.... Die Kreditabsicherung gegen einen möglichen Zahlungsausfall von US Staatspapieren ist im Zuge der ganzen täglichen Balioutaktionen geradezu explodiert. Sieht so aus als wenn einige Marktteilnehmer das AAA Rating der USA ernsthaft in Frage stellen... :-) Bei knapp 40 - 50 Billionen $ an zukünftigen Zahlungsverpflichtungen die zudem jährlich momentan ohne all die Bailouts mit ca. 3-4 Billion $ anwachsen ( siehe If we are Rome, Wall Street's our Coliseum ) ist die Sorge eigentlich kaum verständlich. Immerhin haben die Ratingagentuen in einem Ihrer unfehlbaren Modelle die AAA Einschätzung trotz dieser Daten etliche Male bestätigt . Hoffe man hat meinen Sarkasmus heraushören können..... Got GOLD?

Actual numbers: cost of protecting US government debt up 2 basis points to 22bp at close Tuesday, exceeding March all-time-high of 20bp. “In normal times, the spread [full stop] is less than 2bp.”

Hat tip HT Alea: & FT Alphaville

UPDATE: Here is more on this topic from Michael Panzner

The Beginning of the End for America's AAA Rating?

There is no doubt that talk of a bailout of Fannie Mae and Freddie Mac has spurred what could be a short-lived spike. Still, it makes you wonder if the market is starting to price in what many say is inevitable after years of profligacy and failed policies: a credit downgrade for the United States.

No Kidding....Mortgage trouble for the mortgage bankers association

You just cannot make this up..... Better than most of April Fools jokes i have heard this year.... SCHADENFREUDE !

Das kann man sich wirklich nicht besser ausdenken... Das stellt selbst die besten Aprilscherze die ich dieses Jahr gehört habe in den Schatten.....Ich hoffe das die Lobbygruppe der US Hypothekenbänker noch richtig lange auf der "Ruine" sitzen bleibt. Die Saat für zukünftig jahrelangen Leerstand hat nicht zuletzt die MBA selber in einer unsäglichen Art und Weise selber gesät. Selten war die Schadenfreude so angebracht wie in diesem speziellen Fall.


Mortgage trouble for the mortgage bankers association FT Alphaville !

A year ago the Mortgage Bankers Association - the lobbying group representing US mortgage lenders - started scouting around for new headquarters.

It found 1331 L St, Washington: “state of the art” office with a “superb” location near Franklin Park and Thomas Circle.

… [with] more than 170,000 square feet of space–approximately 65,000 square feet of which MBA will initially occupy–on 10 above-grade levels, including retail on the first floor.

The office even has its own fancy website, which you can view here.

…a crystalline glass tower element dominates the front corner, complete with crown, and is offset by a reveal, which connects to French limestone at the retail level. The white mullion and glass facades allow for an abundance of natural light and panoramic skyline views of the city.

Unfortunately, though, as the Washington Post reports, things haven’t quite worked out for the Mortgage Bankers Association. It’s having trouble with its mortgage:

The lobbying group is about to sign the final papers to buy the 12-story building on L Street NW for about $100 million. Like many of the companies it represents, the organization is facing a triple whammy of woes: Its financing costs are up, its income is down, and the leasing market is slow, leaving it, so far, without a single tenant.

The association is faced with a deposit 10 per cent higher than it had previously thought, with greatly increased interest charges to boot. “We’re looking at cutting expenses across the board” the MBA’s communications VP told the WaPo.

Some irony, of course, that all of this has been caused by the reckless lending orchestrated by the mortgage lenders the MBA represents and has stridently defended.

On the off chance that you are actually interested in leasing any Washington office space from the MBA (N.B. “the stunning entrance lobby exudes quiet elegance and warmth”), you can contact them here.

Porsche draws on €10bn pre-crunch loan / Porsche führt Hausbanken vor

Lets hope that this won´t backfire at some point in the future...... But nevertheless the story is just too good to be ignored and i would have like to see into the bankers face during the moment he received the call from Porsche :-) . With daily news like this Dresdner offers $ 18.2 billion support to K2 SIV the action designed and powered by Porsche is hurting bank balance sheets....

Ich bin mir nicht sicher ob sich dieses Verhalten in Zukunft nicht noch einmal rächen wird...... In jedem Fall ist das ein Posting wert und ich hätte zugerne das Gesicht der zuständigen Bänker gesehen als Porsche den Kredit in Anspruch genommen hat..... :-) . Wenn man das ganze dann noch mit Meldungen wie dieser Dresdner offers $ 18.2 billion support to K2 SIV anreichert kann man sich leicht ausrechnen das Aktionen wie die von Porsche ganz besonders weh tun....

Porsche draws on €10bn pre-crunch loan FT
Porsche showed it has as much financial opportunism as the bankers who buy its sports cars on Wednesday when it drew down a standing €10bn ($14.7bn) credit line that was about to see time called on its highly favourable terms.

Like a sharp-eyed arbitrageur, the German sports carmaker has spotted that the huge shifts in risk appetite that have rocked the credit markets since last summer means it can earn more from low-risk investment now than it costs to borrow the money.

The move could spell trouble for banks, some analysts believe, because they already face significant constraints on their balance sheets and the availability of funding – particularly if many other companies have negotiated similarly easy credit lines.

“This has to be a worrying thing for the banks involved,” said one London-based analyst.

“If others are also doing this it will be adding an extra strain to banks balance sheets, on top of which you’d have to ask – does Porsche know what it is doing with the investments its going to make?”

Porsche declined to comment on how it would invest the proceeds of the loan. Originally, €35bn in credit was provided by a consortium of ABN Amro, Barclays Capital, Merrill Lynch, UBS and Commerzbank to finance a complete takeover of Volkswagen but Porsche deliberately made a low-ball offer designed to fail. However, it kept open the €10bn credit line to help it finance lifting its stake in VW from 31 per cent to more than 50 per cent.

Porsche agreed to pay interest of 20 basis points, or 0.2 percentage points, more than the euro interbank offered rate for the loan, which matures on June 27, according to Bloomberg.

The move is another example of Porsche’s use of financial trades to hunt for profit, which led to it last year making more than three times as much money – €3.6bn – from trading share options as it did from building cars.

Porsche also made large amounts of money from currency hedging earlier this decade and some analysts have suggested that it is behaving more like a hedge fund than a carmaker.

Although Porsche denied its action had any bearing on its plans for Volkswagen – which have been thrown into confusion by the German government proposing a law protecting Europe’s largest carmaker – it will give it a war-chest on top of its considerable cash reserves to buy further shares when it pleases.

Porsche führt Hausbanken vor
Der Autobauer Porsche düpiert die Banken in deren Kerngeschäft. Das Stuttgarter Unternehmen teilte mit, eine Kreditlinie von 10 Mrd. Euro voll auszuschöpfen, um das Geld nun "risikofrei" und "gut verzinslich" anzulegen. Damit hatten die Geldhäuser nicht gerechnet.

Eigentlich hatten die Banken den Schwaben den Kreditrahmen gewährt, um einen möglichen Kauf von VW-Aktien abzusichern. Mit dem Deal tummelt sich der Sportwagenhersteller erneut jenseits seines Hauptgeschäfts, um stattdessen auf dem Finanzmarkt Geld zu verdienen. Bereits im vergangenen Jahr hatte Porsche mit Optionsgeschäften auf VW-Aktien 3,6 Mrd. Euro Gewinn gemacht. Finanzchef Holger Härter hatte bei den damaligen Wetten auf den VW-Kurs die Spezialisten der Finanzbranche geschlagen.

Wenn Porsche die günstig geliehenen 10 Mrd. Euro nun zu besseren Konditionen anlegt, bereichert sich der Konzern schon wieder auf Kosten der Banken - darunter die Frankfurter Commerzbank. Die Experten der Landesbank Baden-Württemberg (LBBW) schätzen, dass Porsche mit einem Zinsvorteil von 0,2 bis 0,3 Prozentpunkten rechnen kann - was in einem Jahr einen Gewinn von 20 bis 30 Mio. Euro ergeben würde. "Geld leihen und anlegen ist eigentlich Bankgeschäft und gehört nicht originär zu einem Autohersteller. Aber Porsche hätte Geld verschenkt, wenn sie das nicht gemacht hätten", sagte LBBW-Analyst Frank Biller.

Allerdings könnte der Deal das Klima zwischen den Stuttgartern und ihren Hausbanken belasten. "Das kann sich nur ein sehr solides Unternehmen mit guten Beziehungen zu seinen Banken leisten", sagte Willem Sels, Leiter der Kreditanalyse von Dresdner Kleinwort.

Die von Porsche jetzt gezogene Kreditlinie war im Frühjahr 2007 ausgehandelt worden - vor dem Ausbruch der internationalen Finanzkrise. Damals waren die Konditionen deutlich günstiger. Offenbar nutzen derzeit neben Porsche auch andere Unternehmen die Möglichkeit, einstmals günstig ausgehandelte Kreditgarantien zum Nachteil der Banken zu verwenden. "Von Investoren war zu hören, dass es Firmen gibt, die das Gleiche tun", sagte Sels.

Leidtragende sind die Banken: Sie müssen den Unternehmen Kredite zu Billigkonditionen gewähren, am Kapitalmarkt aber sehr viel höhere Zinsen bieten, um an Geld zu kommen. Angesichts des scharfen Wettbewerbs um gute Firmenkunden können sich die Institute kaum dagegen wehren - juristisch ohnehin nicht, aber auch nicht durch Nachverhandlungen.

Der Kreditrahmen von Porsche lag ursprünglich bei 35 Mrd. Euro. ABN Amro, Barclays Capital, Merrill Lynch, UBS und die Commerzbank hatten die Kreditlinie arrangiert. Mit dem Geld sicherte Porsche sein Pflichtangebot für VW-Aktien ab, nachdem die Stuttgarter ihren Anteil an VW Ende März 2007 auf 31 Prozent erhöht hatten. Durch das Überschreiten der 30-Prozent-Schwelle war die Pflichtofferte zwingend. Mit einer rechtlich zwar korrekten, de facto aber viel zu niedrigen Offerte hatte Porsche das Pflichtangebot absichtlich scheitern lassen, um nicht viele Milliarden auf einen Schlag ausgeben zu müssen.

Weil der Autobauer die 35 Mrd. Euro schwere Kreditlinie damit nicht mehr benötigte, senkte man die Garantien auf 10 Mrd. Euro herab. Dabei handelte Porsche mit den Banken eine Umwidmung auf "allgemeine geschäftliche Belange" aus; dadurch war das Darlehen nicht mehr an den Kauf von VW-Aktien gebunden.

Porsche hält derzeit 31 Prozent an VW, hat sich aber mit Optionen den Kauf weiterer Anteile gesichert. Bisher gibt es noch keinen Aufsichtsratsbeschluss, über die 50-Prozent-Schwelle zu gehen. LBBW-Analyst Biller glaubt nicht, dass die nun angelegten 10 Mrd. Euro für den Kauf von VW-Anteilen genutzt werden: "Porsche wird den jährlichen und risikofreien Gewinn mitnehmen und sich gegebenenfalls einen neuen Kredit holen."

I Want My Buyback Back ..."Daimler Edition"

Look at the chart what $ 3.5 billion have done for the stock.... They bought at an average price close to € 70...... This adds up to a loss of € 750.000.0000 in just 6 month..... Needless to say that they bought close to historic highs for the stock and the "return to sharholders" is a whopping negative 21 percent....... With the next € 4 billion now ready to "maximize share holder value" the averaging down can begin.......

Seht Euch den Chart an was satte 3,5 Mrd € zur Performance beigetragen haben....... Daimler hat zum Durchschnittskurs von 70 € zugekauft...... Das ganze sumiert sich binnen 6 Monaten mal eben zu einer Wertvernichtung von 750.0000.000 €...... Überflüssig zu erwähnen das ein Großteil der Käufe nahe der historischen Höchststände der Aktie praktiziert worden ist und die anvisierte Optimierung zugunsten der Aktionäre hat mit minus 21 Prozent nicht ganz die Erwartungen erfüllt....Mit den nächsten 4 Mrd € kann das Verbilligen jetzt ja losgehen........

Share buyback program Daimler

In order to optimize its capital structure, the Group initiated a share buyback program in August 2007. In this context, it was announced that up to €7.5 billion would be applied to buy back nearly 10% of the company’s own shares. By the middle of December 2007, 50 million shares had been acquired for €3.5 billion. These shares were canceled by the end of the year. The share buyback program will be continued today.

At least they hadn´t to issue new debt to finance this "smart" move.....

Immerhin muß Daimler im Gegensatz zu anderen diese Transaktion nicht mit neuen Schulden finanzieren....

$ 146 Billion - And Counting.......

Nice graph from the NYT. Í think the real number is much higher. Allianz / Dresdner has announced write offs over $ 1.5 billion during the past few weeks and hasn´t made it to the list. On top of this IKB & Sachsen LB would each have topped Bear Sterns in the ranking ...But with all the news hitting the wires on every hour it is almost impossible to catch every buck.

Die reale Nummer an Abschreibungen liegt sicher deutlich höher. Man bedenke nur das alleine die Allianz dank der Dresdner Bank Abschreibungen von einer knappen Mrd € avisiert hat und es nicht auf diese Liste geschafft hat. Man betrachte nur die besonders aus deutscher Sicht unsäglichen Vorfälle der IKB & Sachsen LB, die jeder für sich ausgereicht hätten um den Sprung vor z.B. Bear Stearns zu schaffen......Bei den ganzen Einschlägen die fast stündlich irgendwo vermeldet werden ist es aber auch unmöglich alle $ miteinzubeziehen.



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