Financial News from Applied Corporate Finance - Business finance, treasury consulting, financial training and financial writing services London

Applied Corporate Finance

News

	News 2009 H1 News 2010 H1
	News 2009 H2 News 2010 H2

Date	News	Subject

31/12/08	The Times reported shares in housebuilder, Bovis, fell further. Its interest bill will have soared on its new bank loan, which, it is thought, has merely delayed rather than avoided, a debt-for-equity swap.	debt for equity swap

31/12/08	The Times reported the UK FTSE 100 fell 31% in the year, its worst fall since the index began in 1984. Other stock markets fell sharply also, the greatest being China's 65% crash wiping off $3 trillion of its value. Various sectors fell, but pharmaceuticals was a rare riser. The Times separately reported £65bn has been wiped off UK FTSE 100 pension funds as a result of falling asset values. A 2 Jan article also discusses relative perfomance in 2008 Link to article Link to article Link to article	equity pension funds asset values

31/12/08	The Times reported on the dubious tactics of the board of oil explorer, Oilexco, which scrapped a planned share issue a day after its announcement triggered an investor backlash. The company is desperate to refinance its debt burden and its UK subsidiary is now in administration. Its business model has been questioned in light of the energy sector's turmoil and closed credit markets. Its market value has fallen from $2.5bn last year to just £112m now. The company had splashed out on an executive jet earlier in the year. Link to article	fiduciary duty funding debt financial distress

30/12/08	The Times reported GMAC has issued $5bn of pref shares at 8% dividend, and received a $1bn loan, both under the US Treasury's TARP programme, boosting its capital. Its shares rose 28% on the news.	funding pref shares capital

30/12/08	The Times reported on the dubious morality of some pre-packaged company administrations where the original owners cherry-pick assets and circumvent original creditors' claims. Link to article	pre-packs insolvency

30/12/08	The Times reported technology company, Dmatek, has been acquired by a private equity group in a cash offer per share that's 82% above its pre-announcement share price (a hefty premium).	premium private equity M&A

30/12/08	The Times reported silicon wafer supplier, Pure Wafer, has turned a profit of £3.6m last year into a £800K loss this year owing to oversupply in ithe silicon wafer market, which is not expected to turn soon.	markets

30/12/08	The Times reported troubled housebuilder, Bovis, has renegotiated its £220m bank loan facility sooner than expected, and with weaker covenants but at a higher interest rate.	debt covenants

29/12/08	The Times reported Lehman Brothers' liquidator estimated the bank's directors could have saved at least $50bn for unsecured creditors had they arranged an orderly wind down of the bank rather than its sudden bankruptcy which triggered the cancellation of 900,000 derivatives contracts some of which were valuable to Lehman. Further value was lost in sale of businesses that had been making $bns in profit but whose asset values had collapsed in the shock of the bankruptcy. Unsecured creditors owed $200bn are expected to recover 10 cents per $. Link to article	bankruptcy valuation fiduciary duty unsecured creditors

29/12/08	the Times reported GMAC is asking its bondholders to accept a $38bn debt for equity swap to bolster its capital structure with equity so it may get a banking licence and so access government aid (expected to be $6bn) plus issue $17.5bn of govt-backed debt.	funding capital structure debt for equity swap

29/12/08	The FT reported developed countries expect to issue $3trillion in 2009, potentially crowding out emerging market issuers who need to repay $7 trillion in bonds, loans, trade finance and interest, or face paying higher costs for limited credit.	refiancing risk debt markets

29/12/08	The Times reported chemicals company, Yule Catto, has scrapped its dividend as part of its capital restructuring strategy to reduce its debt from £170m to under £100m over 2 years. Its shares fell 4%	capital structure dividend

28/12/08	The Times reported the tough terms of a loan from commodities firm, Glencore, to a Congo mining firm, Katanga, that will give Glencore control if Katanga cannot refinance 75% of the loan by early Feb 2009. Katanga has lost 98% of its market value from the crash in commodity prices and without the loan could have collapsed. Link to article	financial distress debt

24/12/08	The Times reported subprime lender, Cattles, is trying to obtain a banking licence to tap the retail depositor market for £1bn and ease reliance on wholesale funding markets. It is close to breaching its banking covenants after mortgage portfolio losses, and is trying to renew its £500m bank facility. Link to article	funding covenants valuation

24/12/08	The Times reported 23000 companies have applied to take advantage of the UK govt. allowing companies more time to pay tax, though it will charge interest (at 4.5%) on the overdue amount.	cashflow tax

24/12/08	The Times reported UK retailers such as Next, who source their goods from the Far East (whose exports are linked to the US$), are likely to suffer from the effects of the £'s depreciation (a blow following on from the economy's adverse impact on sales). Next's shares have been downgraded to neutral from buy as a result.	exchage rates

23/12/08	The Times reported on the contrast in fortunes for capital markets: debt restructuring rose for the first time in 6 years (as might have been expected with Cos' excessive gearing and financial distress), whereas equity issues and M&A activities both decreased. Banks' underwriting fees on new equity deals have also fallen, to under 1%. Link to article	equity issues debt restructuring M&A

23/12/08	The Times reported Russian oligarchs could lose control of their companies and hence their fortunes, by accepting government bailout secured on their company shares and debt repayment terms that they are unlikely to meet but which they will accept to survive at least for now. Such terms could be a ploy by the govt. to regain control of previously state-controlled assets. See also 3 Jan 09 News Link to article	equity control funding

23/12/08	The Times reported the deputy governor of the BoE felt the UK banking sector was on the brink of collapse before it was bailed out by the govt. and admitted the BoE had not predicted the severity of the correction following rising asset prices (including the 225% rise in house prices from 1995-2007) and the seriousness of the rise in consumer debt to $1.4 trillion. Link to article	BoE asset prices economy consumer debt

23/12/08	City AM reported comments by the head of the OECD that in the build-up to the crisis there had been "a truly scandalous failure of regulation and supervision", adding it could cost 25m jobs globally and asking for more cuts in interest rates and more spending to kick-start economies.	economy regulation supervision

23/12/08	City AM reported £ has depreciated against a basket of trading nations' currencies by 23% this year, making its annual fall the largest since the height of the Great Depression in 1931, and the weakest against the € since it appeared in 1999. Link to article	exchange rates

23/12/08	The Times reported the UK's trade deficit with the EU has fallen from £4.4bn to just £0.6bn in the last quarter, owing to increased earnings on investments in the EU by UK companies and a reduction in the deficit on trade in goods, suggesting the depreciation of £ vs € is having an effect.	trade deficit exchange rates

21/12/08	The Times reported housebuilder, Taylor Wimpey, is expected to pay a higher charge on debt to its bankers for waiving a covenant it is likely to breach, and to give them an equity stake in the company in exchange for a debt refinancing. Link to article	covenants financial distress

20/12/08	The Times reported a classic case of insider dealing, in which fortunately the offenders were collared in a 'sting'. Link to article	insider dealing

20/12/08	The Times reported the resignations of the Chairman and the CEO of Anglo Irish bank following revelation they had hid €87m of loans by the bank to the Chairman, by temporarily transferring them off the bank's balance sheet to another bank (thereby hiding them from shareholders) prior to the financial year end and then returning on balance sheet prior to the other bank's financial year end. The Times also reported the resignation of the director-general, Rody Molloy, of the Irish training agency over excessive expense claims including hundreds of thousands of pounds on first class trans-atlantic air travel, golfing rounds, and visits to Florida nail bars.	corporate governance ethics

19/12/08	The Times reported Japanese and US banks that bailed out Sanyo and took a controlling share in its equity, have now sold out to rival Panasonic, highlighting the loss of control consequences for companies that get into financial distress. Link to article	control financial distress

19/12/08	The FT reported Hong Kong conglomerate, Citic Pacific, is to be rescued by its Chinese government shareholder, Citic Group, investing $1.5bn in relation to Pacific's unauthorised dealings in leveraged foreign currency derivatives that have generated realised and unrealised losses of HK$1.6bn and HK$17bn respectively. See News 20/10/08 Link to article	FX derivatives operational risk

19/12/08	The Herald reported on the illogical (from fundamental analysis) strength of the € versus the £ given Euroland's manufacturing and tourism sectors, both of which would prefer a weak €, and its financial services sector being in the same dilemma as the UK (lack of liquidity). Euor-rates are higher than UK base (2.5% vs 2.0%, and the UK is expected to cut further) which might be propping the currency up. Link to article	rational behaviour currency rates economy

19/12/08	IDD Magazine reported on drops in the prices of bonds issued by US cable TV operator,Charter Communications, in the wake of its looming bankruptcy. Link to article	distressed debt bankruptcy bond prices

19/12/08	IDD Magazine cites several rating downgrades with reasons. Link to article	ratings

19/12/08	The FT reported rating agency,S&P, had downgraded 11 major banks, citing: "lax underwriting standards due to excess competition"; “larger risk concentrations and weaker risk management than we had previously perceived” (UBS); “[asset quality] is likely to weaken materially and risk management to be weaker relative to risks” (Deutsche); concentraion in the UK and Spain which had potential for a severe slowdown (Barclays; earnings expected to remain severely under pressure (RBS). The downgrades were from AA- to A+ or A-. Morgan Stanley and Goldman Sachs were also downgraded because of their ability to thrive as commercial banks. Link to article	bank ratings risk

18/12/08	The Times reported the dubious tactics of the board of Indian IT company, Satyam, that voted to acquire 2 ailing construction companies owned by the chairman, for £1bn, six times their net worth, which would have depleted the IT company's cash resources and saddled it with $400m of debt, and would have netted the chairman $570m. Investors were outraged, Satyam's share price fell 30% and it pulled the deal the next day. Now it says it is considering a share buyback, when its rivals are hoarding cash to weather a global slowdown. Three months ago the World Council for Corporate Governance ranked Satyam as among the best run companies in the world!! Link to article	corporate governance share buyback

17/12/08	The Times reported cheesemaker, Dairy Crest, has converted its € debt to £ in case € appreciates further so aligning the nature of its debts with its operating profits. An analyst said it was not an ideal time to be converting the debt; €'s appreciation had added about £25m to the debt amount already. The share price fell 1.7% Link to article	currency risk

17/12/08	The Times reported OPEC (responsible for 40% of world crude oil production) has cut oil production by a record 2.2m barrels per day in an attempt to raise the oil price, which has fallen from a record high of $147per barrel in July to $40pb. The following day the price of oil fell.	crude oil

17/12/08	The Times reflects on the failings of private and institutional investors in the $bn Ponzi-scheme financial fraud by Madhoff: greed, laziness, and for accepting what was: 'too good to be true'. See also: News 17 Dec re: SEC's failure, and Articles/Quotes. Link to article Link to article	operational risk

17/12/08	The Times reported debt laden companies where covenants have been breached, are to exchange their debt for equity in a debt restructuring that will wipe out their equity stakes and cede control. Link to article	debt for equity swap

17/12/08	The Times reported shares in Ennstone fell 11% after it announced it was trying to sell assets to raise cash to enable a refinancing of the group's debt on which it has breached covenants.	cahflow covenants

17/12/08	The Times reported the $50bn Ponzi-scheme financial fraud by Madhoff could have been avoided if the US SEC had acted on numerous tip-offs it received over 10 years.	operational risk

17/12/08	the Times reported the US Fed has cut its official rate to 0-0.25%, the lowest on record, in an attempt to revive the economy and avoid deflation (inflation fell to 1.1%pa in nov vs 3.8% pa in Oct). It also committed to buying up mortgage debt to revive mortgage lending, and to buy up govt bonds to lower commercial interest rates. The $ depreciated by 3% against £ to $1.55 and against the € to $1.4052. The Dow Jones Ind Avg rose over 4% Link to article	interest rates currency rates deflation inflation share prices

17/12/08	the Times reported private UK pensions lose 40% in fees, making holders 66% worse off. Employers' schemes incur annual fees of 0.7% versus 1.5% for IFA-brokered personal schemes. Churning of portfolios loses holders a further 20% of value. Link to article	fees pensions churning

16/12/08	The Times reported energy supplier, Centrica, is considering buying gas and electricity suppliers to reduce its exposure to volatile wholesale energy prices. The depressed market values of companies offers it a buying opportunity and it has arranged equity (rights issue) and debt financing of £3-4bn for this. Link to article	commodity prices M&A

16/12/08	The FT reported commodities trader, Glencore, has been downgraded by S&P to BBB- owing to its asset portfolio (used as collateral for financing) falling in value (its 35% stake in Xsastra has fallen from $22bn in Jun to under $4bn), the crash in commodity prices, and its weak near-term outlook. The CDS premium on its debt has risen from 200bp in Sep to over 3100bp. The company said it was considering buying back its bonds partly from reduced working capital needs. Link to article	CDS rating collateral

16/12/08	The Times reported the French authorities have fined 11 steel trading companies €575m for running a cartel that set prices, shared contracts, blocked rivals and punished non-conformers, creating a virtual monopoly that cost the French economy hundreds of millions of €.	corporate governance operational risk

16/12/08	the Times reported Siemens has been fined €1.2bn for bribery to win government contracts overseas, and false accounting. It is alleged to have paid €1.3bn in bribes. Its CEO and chairman resigned (and are being pursued by Siemens for damages for failing to stop corruption), and 100 managers subsequently left. Link to article	corporate governance operational risk

16/12/08	The Times reported chemicals company, Hexion, has agreed to pay Huntsmann, which it had agreed to take over but then pulled out. The payment totals over $1bn and comprises a $325m break fee to be paid by Deutsche and Credit Suisse banks who also backed out and who are to be pursued by Huntsmann for further damages.	takeover damages

16/12/08	the Times reported an African country dictator is accused of money-laundering $26m through the Spanish property market, along with many criminal groups. Link to article	money laundering

16/12/08	The Times reported on the questionable ethics of company directors buying back their companies' shares to boost directors' income (through EPS-linked bonuses) rather than raising company value. In the current cash crisis such schemes have been abandoned. Link to article	share buybacks ethics

16/12/08	IDD Magazine reports on the uproar over continuing to use mkt value accounting in the US for securities whose value has plummetted, damaging banks' capital ratios and their credibility. Link to article	mkt value accounting

15/12/08	The Times reported aircraft makers are set to lend $billions to aircraft buyers to make up the shortage of available bank debt (vendor financing), but there's no mention of how or from where these makers are to get these funds. There is doubt that the buyers will actually place or might cancel orders given there is a global economic slowdown so less demand for and an oversupply of, aircraft equipment. Air freight fell 8% in Oct, risking orders for freight carrying 'planes. Link to article	vendor finance economic risk

15/12/08	IDD Magazine reports the view of a former chairman of US insurer, FDIC, on SEC rules that caused the financial crisis of 2007-08: introducing market value accounting, discouraging the creation of reserves instead of earnings, allowing banks to set their capital levels themselves, and removing the short-selling uptick rule. Link to article	regulation mkt val acctg short-selling capital ratios

14/12/08	The Times reported RBS bank could lose £28bn in its full financial year if it writes off much of its goodwill on the ABN AMRO acquisition in 2007.	goodwill write-off

14/12/08	The Times reported on the inadequate corporate governance structure that led to Lehman Brothers' collapse. Link to article	corporate governance

13/12/08	The Times reported HBOS Pension trustees are threatening Lloyds (who is to acquire HBOS) with trouble if Lloyds fails to match existing HBOS pension obligations. Lloyds is concerned given the HBOS fund is £3-5 billion short on its pension liabilities (up from £95m short just 2 years ago).	pension funding risk

13/12/08	The Times reported bondholders in Lehman Brothers are expected to recover around $10c in the $1 noting that the bank was described as "a toxic waste dump" and would have cost the government $100 billions if it had bailed it out. Link to article .	credit risk bonds

13/12/08	The Times recounts the disruption caused to financial markets in the wake of the collapse of Lehman Brothers in Sep. Link to article	funding risk markets

12/12/08	The Wall Street Journal's Market Watch reported GM's bond: 8.375% due 2033 is now worth just $0.105 per $1 face, and Ford's 7.45% 2031 bond is worth $0.215 per $1. The bonds have fallen 4-5% following the US Senate's rejection of the car industry bailout plan.	bonds distressed debt

12/12/08	The Times reported UK company Bunzl's debt is forecast to be £200m higher owing to it being denominated in € and $, constraining its acquisitions prospects and adversely affecting its balance sheet.	currency risk

12/12/08	The Times reported UK airline, BA, was fined A$5 million (£2.25 million) by the Australian competition authorities for price-fixing freight fuel surcharges between 2002 and 2006 with Qantas.	corporate governance

11/12/08	The Times reported Russia is set to act with OPEC to cut the supply of oil to raise its price, which has fallen to $47 per barrel from a peak of $147 in July. The two groups control half of global daily production. Recession has cut demand leading to a glut of 1m barrels per day. A cut in supply would take 6 weeks to take effect, if at all. Plus, some OPEC members over-produce. Link to article	commodities

09/12/08	The Times reported Rolls Royce had decided in Feb 2008 to reject its rumoured £500m share buyback programme to strengthen its balance sheet, a good decision given the current climate. It's share price however fell on the news, even though it also planned to raise its dividend by 33% (perhaps shareholders dumped shares to cash in). 2011 profits are forecast to rise by $600m owing to the current strength of the $ (in which it books sales) but it cannot benefit immediately owing to its $9bn FX hedges (damned if you do; damned if you don't, hedge). Profits should also benefit from cheaper nickel and titanium (on which it spends £200m pa). Link to article	cashflow commodity prices FX hedges

08/12/08	The Times reported the deputy chairman of mobile 'phone retailer, Carphone Warehouse, has resigned following news he had not declared his use of his shareholding as collateral for loans (a breach of FSA rules). He has also pledged his shareholdings in three other companies where he is either chairman or a NED. The share price of two of these fell 3-5%; Carphone's shares fell over 5% on fears he might dump his 19% holding (over 136m shares). The timing is bad given the company share price is at a 5-year low, the retail climate is depressed, and it is undergoing a strategy review. Link to article	corporate governance

07/12/08	The Times reported mining company, Anglo American, is to reduce its $9bn capex budget for next year by about half, and stop its $4bn share buyback programme, to conserve cash. Demand and prices, for its commodities have both gone from boom to bust in 12 months, and its share price has underperformed the FTSE All-Share by 40% in that period. Fortunately, 6 months ago it had agreed 2008-9 prices with Chinese & Japanese steel consumers at a time when prices had risen 80%. Next year's contracts however are expected to be at prices 20% lower. Link to article	commodity prices Capex cashflow share buyback

06/12/08	The Times reported Spanish property developer, Metrovacesa, has finally sold its HSBC building back to HSBC, netting HSBC a £250m profit. Metro had to sell because it could not repay HSBC'S £810m loan taken to buy the building. HSBC had sold and leased-back the building at a net yield to Metro of under 4% - confirming it had bought at the top of the market (for £1.09bn). Underlining Metro's debt-induced demise, it has sold a 55% stake to its bank in a debt for equity swap. See Aug and Sep News for more info.	debt for equity swap sale & leaseback funding

06/12/08	the Times reported mining companies had boosted production during the boom in commodity prices and demand but are now sitting on a pile of unsellable metals stock following the crash in commodity prices and global downturn in demand. Fears have been raised over their financial covenants and balance sheet strength and their share prices have been falling. Link to article	strategy commodity prices covenants

06/12/08	The Times reported food producers have out-performed the stock market by 50% since July and the sector now accounts for a fatter share of investors' portfolios, confirming its recession-proof and defensive appeal. Companies within the sector with relatively weak balance sheets have under-performed however, and there is the fear the sector will be sold to invest in cyclical stocks when the market turns. Link to article	shares recession

05/12/08	The Times reported telecoms company, Motorola, has been downgraded to junk status (BB+) by S&P on fears over its future free cashflow and profits. Credit risk has pushed up the CDS cost on its debt by almost 4.5% since Oct.	credit risk rating CDS cost

05/12/08	The Times reported the FSA is to require (from oct 2009) banks to hold a higher % of Gilts to buffer against retail bank runs such as those on Northern Rock. The higher buffer (from 4.6% to 6-10% of liabilities) could reduce bank revenue by £1-£5bn owing to the lower yield on Gilts, but it could lower bank funding costs owing to better capital ratios. Ironically, it might make banks cut back on lending when the Govt is trying to kick start it. However, the Govt is issuing much more debt now, and with UK interest and £ FX rates falling deterring overseas buyers, at least the FSA rule will provide a home for the extra Gilts.	capital adequacy Gilts

05/12/08	The Times reported Sheffield Utd is to delist from AIM citing excessive management time and costs, and expected lack of institutional investor funds in the current liquidity crisism making a listing unnecessary. It also said its shares are mostly tightly held. Its shares fell 3.5p to 5p	AIM illiquidity

05/12/08	The Times reported mining company, Xastra, could breach its bank debt covenants (which are based on a maximum multiple of 4 times earnings) if its earnings drop 75% owing to the collapse of commodity prices, forcing it to renegotiate its $16bn debt pile at much higher interest cost.	debt covenants gearing

04/12/08	The Times reported the £ fell against a basket of currencies on fears of a further cut in the Base Rate and a deteriorating economy. The BoE subsequently cut the Base Rate by 1% to 2%.	FX

04/12/08	The Times reported New Star Asset Management's debt will be swapped by a consortium of bank's acquiring most of £100m of convertible pref shares paying 10% over LIBOR (yes: LIBOR PLUS 10%), and the ordinary shares are to be delisted and will become worthless. A year ago the shares traded at 244p; today they closed at 1.50p. Buyers are circling to possibly buy the business from the consortium.	debt for equity swap

03/12/08	The Times reported share price of the minerals and metals trader, Wogen, fell almiost 30% after it announced it expected to make significant writedowns in the value of its stocks and reduced income expectations following a collapse of metal prices, and confidence in financial markets and the economies, affecting its trading.	valuation markets

03/12/08	The Times reported Rio Tinto Zinc's fight against a bid from BHP Billiton, is rumoured to have cost it $700m. The risk of asset writedowns in the current downturn in commodity markets could affect is future debt covenants. It also has an obligation to repay $9bn debtin Oct 2009 and $10bn debt in 2010. It has an unused $7bn overdraft facility. Rio's share price fell 48% in the week following BHP's withdrawal of its bid.	covenants valuation defence costs

02/12/08	The FT reported issuance of FDIC-backed bonds rose to over $30bn in a week. The facility, available until Jun 2009, allows banks and financial companies such as GE Capital, JP Morgan, M Stanley, and BoA, to issue debt at much lower cost than their own credit rating implies, and in multiple currencies. Foreign banks are likely to do the same with their own soveriegn guarantees.	guarantees bonds

02/12/08	The Times reported M&A activity from overseas buyers and UK buyers, of UK companies has fallen by 81% and 58% respectively from Q2 to Q3, and $90bn of M&As have fallen through since 1 Sep. Interest from buyers is present given the opportunity for distressed buys as the recession takes hold, though many are unrealistically optimistic about getting financing, but sellers are demanding valuation multiples seen in 2007's buoyant market.	M & A

01/12/08	The Times reported New Star Asset Management had raised its gearing last April to repay shareholders their capital (chairman John Duffield, got £155m from selling back part of his shareholding). The excessive debt burden and global credit crisis has led to its demise, forced it into a debt for equity swap with bank lenders, and talks with possible bidders for the company now its poison pill will be gone. Link to article	gearing share buyback poison pill

01/12/08	the Times reported Rio Tinto intends to conserve cash and reduce its debt pile by cutting back on projects and disposing of assets. Disposals were a part of its debt-laden acquisition of Alcan but they could take longer in the depressed commodity market and shortage of debt finance. Of $15bn of intended asset disposals, it has only realised $3bn so far. It is also under pressure from being heavily in debt ($40bn) and facing falling commodity prices.	cashflow asset sales commodity prices gearing

01/12/08	The Times reported that accountants BDO Stoy Hayward predict UK business failures will rise by almost 50% in 2009 and the same number will then fail in 2010, almost matching the number failing in 1992's recession. Construction and business service companies are predicted to fall under more than other sectors.	company failure

30/11/08	The Times reported GM is considering a debt for equity swap to avoid Chapter 11 bankruptcy. The move is expected to be better for unsecured creditors than bankruptcy, and would relieve part of GM's $2.9bn pa in interest paid on its debt pile of $43bn.	debt for equity swap

29/11/08	The Times reported Aurum Mining's shares rose 3.5p to 30p after it announced it had rejected bids for it and that it would seek to return cash to shareholders. Not sure why the share price would rise, unless its PV discount rate had included directors' reinvestment risk, or the risk had now reduced (the company intended to wind down the business) and so a lower discount rate would raise the PV.	reinvestment risk

29/11/08	The Times reported GM is trying to raise cash by sale and leaseback of its properties, a desperate measure in the current property market depression.	cashflow sale and leaseback

28/11/08	The Times reported that a fund manager at Blue Bay Asset Management has resigned over a breach of internal valuation policy on its £900m emerging markets hedge fund. The breach was discovered by internal systems.	operational risk

28/11/08	The Times reported less than a quarter of one per cent of RBS's rights issue was taken up by shareholders, leaving the government to subscribe £15bn for the left over shares. New shares were offered at 65.5p versus the then share price of 54p. The govt. has also committed to buying £5bn of RBS preference shares.	rights issues

28/11/08	The Times reported HMRC has lost a legal battle against BAT to tax foreign corporate dividends because to do so is against EU law, and it could face claims of £5bn in tax paid by many other companies. BAT could reclaim £1.2bn tax. In several rulings, the government has been criticised by judges for failing to take sufficient notice of EU law when devising UK tax laws.	tax operational risk

26/11/08	The Times reported Indian entrepreneurs are being forced to sell off their assets to fund their businesses as Indian banks have all but ceased lending in the wake of Lehman's collapse. Indian banks have relied on corporate deposits to finance corporate loans and as these deposits have been reclaimed to fund working capital because sales revenue growth has declined, bank lending has ceased. Link to article	cashflow markets

26/11/08	The Times reported SSL, maker of condoms and footwear, is regarded as a recession-proof stock, and its relative performance has been enhanced by its earnings growth from the appreciation of the € against the £ given its €-denominated sales income and £-denominated central cost base.	currency risk recession

26/11/08	The Times reported the profile of UK govt Gilts and Treasury bills issued to fund the recapitalisation of banks and related bailouts in the wake of the UK banking crisis. Link to article	Gilts

26/11/08	The Times reported advisory fees for the failed BHP Bilton-Rio Tinto merger were £291m (BHP's) and £100m (Rio's), including $75m fees to Citigroup that had committed $55bn in funding no longer needed. BHP's CEO Marius Kloppers, criticised for the 'ill-conceived merger', had dismissed the risks of having to sell assets and of commodity prices falling, both of which occurred. The opportunity cost of management's time is extra.	strategy

26/11/08	The Times reported Fitch has downrated Toyata's unsecured debt from AAA to AA owing to the global downturn in the auto sector and the outlook for sales income. Toyota's year's earnings forecast has fallen by 1 trillion Yen. The appreciation of the Yen over the last 2 months has eroded its profits by Yen 690bn, and similar hits have been felt by Sony, Honda, and Canon	rating

25/11/08	The Times reported retailers' share prices rose strongly following the Chancellor's VAT reduction, suggesting increased income to retalers from sales but about £11bn less VAT income for the government, offset by additional duties on alcohol, tobacco and petrol.	tax cashflow

25/11/08	The Times reported shares in BHP rose 7% after it announced it no longer intended to acquire Rio Tinto because it was no longer in the interests of BHP shareholders. Rio's shares fell over 36% on the announcement. Rio's share price had risen from £37.16 to £70.78 over the period of BHP's pursuit of Rio. Link to article	company valuation

25/11/08	The Times reported Belgian company InBev has announced a $10bn rights issue discounted by 70%, to refinance its $10bn bridging loan taken out when its takeover of American company Anheuser-Busch was postponed. The acquirer has hedged its €/$ exposure at $1.54 versus the current rate of $1.26. It also has a $45bn syndicated bank loan alongside the bridge.	rights issue

25/11/08	The Times rerported investor anger over Barclays' abandonment of shareholder preemption rights in its £7bn Middle East fund raising. However, the bank won sufficient support to press ahead with it.	preemption rights

24/11/08	The Times reported Standard Chartered bank is to raise £1.8bn equity via a deeply discounted rights issue to support its capital structure in case of further economic downturn. The bank will offer 30 new shares at 390p for every 91 held. The current market price fell 4% to 731p. Its tier 1 ratio is expected to rise from 6.1% to 7.4% as a result. The issue has been underwritten by banks. Link to article	rights issue

23/11/08	The Times reported the UK government is to reduce VAT to stimulate the economy, scrap proposals to raise SME corporate tax rates, and scrap proposals to tax foreign dividends of UK companies.	tax

21/11/08	The New York Times commented on the impropriety of the GM CEO travelling in a corporate executive jet to plead to the US government for a bailout. Ford, also asking for a bailout, has 3 executive corporate jets.	reputation risk

21/11/08	The Times reported: 'arrogance, ambition, hubris and a stubborn refusal to listen to more cautious counsel all contributed to the bank’s downfall' referring to the demise of RBS and its outgoing Chairman and CEO.	operational risk

21/11/08	The Times reported spread better, IG Group, has suffered a bad debt charge of £15m over the past 6 months, almost 4 times its entire 2007 figure, and mostly due to failed bets by clients on October's dramatic price moves on UK bank shares. IG was one of the few betting firms to allow credit on its client accounts rather than margin calls. It has now implemented a margining policy. Its shares fell 27%.	credit risk

20/11/08	The FT Short View reported the S&P 500 index has dropped to the same level as when the IT tech. bubble burst in 2002. Also, the yield on the 2yr US T bond is below 1%, indicating central bank rates are set to fall further to avoid deflation. The 30yr US T bond has fallen to under 4%, indicating poor prospects for economic growth. Both US bond rates are at their lowest for 30 years.	bond yields economy

20/11/08	The Times reported Spanish bank, Santander, has denied its UK shareholders their pre-emption rights to buy shares in the bank's £6bn rights issue. Instead it has sold those rights and paid the proceeds to them. The bank's reason for the denial was the logistics and short time period provided to accept the offer. Pre-emption rights is a relatively new concept in Spain.	pre-emption rights

19/11/08	The Times reported initiatives by companies such as Airbus and Siemens to provide finance to their customers (vendor finance) and suppliers (supplier finance) to support them in the current financially difficult times and for competitive reasons. Link to article	supplier finance vendor finance

19/11/08	The Times reported the Russian government spent almost $58bn in Sep and Oct to support its rouble; its foreign currency and gold reserves have fallen to around $475bn. It widened the rouble's allowed trading range against a basket of curencies and was allowing a soft devaluation of the rouble to 30 (currently it trades at 27.5 per $1) and to 35 by May next year. The report also remembered the rouble depreciated by 66% overnight when the country defaulted on its foreign debt in 1998.	currency devaluation

18/11/08	The Times reported Premier Foods will pay a £5m fee to postpone its bank covenant test until the spring, and will cancel its dividend. Its share price fell 13%. It has £1.8bn debt against £200m equity. Its chairman has said the group intends to establish a more appropriate long-term capital structure by reducing debt. Link to article	bank covenants capital structure

14/11/08	The Times reported fund manager, New Star Asset Management, has agreed to renegotiate its bank syndicate debt covenants resulting in a further 1.5% interest cost. It follows £500m of redemptions since 30 Sep from its funds by institutional, hedge, and mutual funds in the wake of market volatility. Its assets under management have fallen by about £3bn since 30 Jun. It has £238m of debt. It has decided to sub-let its surplus premises as part of a £20m pa cost cutting & restructuring exercise.	market risk covenants

14/11/08	The Wall Street Journal reported credit insurers Euler Hermes, Atradius and Coface are refusing to write policies for suppliers trading with General Motors and Ford.	credit risk

13/11/08	The Times reported the share price of the stock exchange, LSE, fell 12% on its announcement it has suspended its £500m share buyback programme to use the money to support its balance sheet, conserve cash and refrain from raising debt. LSE's shares have fallen 70% this year as it faces new competitors following the introduction of MiFID.	share buyback competitors

12/11/08	The Times reported UK investors and others have criticised Barclays' £7.3bn capital funding by Arab groups, claiming it is more expensive than UK govt funding and it breaches pre-emption rights. The deal includes paying a coupon of 14% for 10 years and warrants. The deal included £300m in fees (see News 2/11/08) including £40m to one broker.	capital pre-emption governance

11/11/08	The Times reported the Russian govt. has spent $100bn to support the Rouble since August, and has imposed a trading range to the US$. $50bn of foreign capital left the country in October on fears of govt. meddling, the TNK-BP dispute, and declining commodity prices. Russian financial markets have been pummelled by the falling price of crude oil..	currency commodity capital

12/11/08	The Times reported the EU has fined 4 car glass makers (who controlled about 90% of the market) €1.4bn for operating an illegal cartel for 5 years, in which they discussed target price, market share and customer allocations in secret meetings. Saint-Gobain's fine, a record at €896 million, was increased 60% because it was a repeat offender. See Articles for quote.	operational risk

11/11/08	The Times reported General Motors' share price has been valued at $0 over 12 months by a Deutsche bank analyst. The company said it will run out of cash early next year unless the economy improves, it sold assets, or the govt. bailed it out. If GM, Ford, and Chrysler halved output, 2.5m jobs would be lost and $100bn in govt. taxes, according to analysts.	cashflow

10/11/08	The Times reported the US government will reduce its existing $80bn loan to insurer AIG to $60bn and the interest rate from 8.5% to 3% over LIBOR, and it will now buy $40bn of its pref shares. It will also provide a total of $52.5bn to buy US securities from AIG, and structured debt obligations on which AIG has written default protection.	govt bailout

09/11/08	The Times reported owners of Spain's largest property company, Metrovacesa, has offered banks over 50% of the equity of the company in return for waiving their debt acquired to buy the company.	debt for equity swap

08/11/08	The Times reported the number of companies going bankrupt rose 26% in the quarter Jul-Sep compared to the same period last year, and by 50% for companies going into administration over the same period. The cause has been attributed to banks refusing credit, preferring to instead hoard cash or charge a higher rate for loans..	solvency

07/11/08	The Times reported law firm Allen & Overy, increased its half-year earnings to £548m owing to increased litigation work from lenders and investors in the wake of the collapse of banks and companies and their bailouts, and also mis-selling of financial instruments.	legal fees

07/11/08	British Airways announced its fuel cost rose 52% in the six months ended 30 Sep, compared to the same period last year, inclusive of hedging gains. The market price of fuel had risen 73% compared to the same period last year. Its full year fuel bill is expected to be around £3bn.	commodity prices

07/11/08	The Times reported the £'s trade weighted index changed little in response to the BoE's surprise 1.5% cut in Base, to 3% (the lowest rate in 54 years) and comments that the economy faced severe near term contraction. Economists had expected a 0.5% cut. The £'s steadfastness could be attributed to the cut's positive effect on the economy although a currency typically depreciates if its interest rates fall. Link to article	currencies

06/11/08	The Times reported private equity group PAI has hired Goldman Sachs to advise it on a €2bn debt restructuring of its Monier Group buyout to avoid covenant breaches. The PE firm might be forced to inject more equity to appease lenders. The 3 largest company restructuring firms are working on 20 UK private equity restructurings with dozens more to follow. 25 LBOs across europe are said to be heading for trouble over covenant breaches. Link to article	debt LBO covenants

06/11/08	The Times reported UBS has admitted its pay policy encouraged excessive risk taking by its bankers for short term gains. It has been obliged by the Swiss regulator to present a revised policy. UBS has considered clawing back bonuses from its former executives. Its former chairman was paid ChF27m in 2006 and his strategy led to $38bn in write-downs by the bank.	operational risk

06/11/08	The Times reported the price of steel billetts has crashed from $1100 to $300 per tonne on the London Metal Exchange, since August reflecting the change in demand from consumers (illustrated by the depressed outlook for the car industry). ArcelorMittal, one the largest steel makers, has cut back production by 35%.	commodity prices

05/11/08	The Times reported shares in Irish bank AIB fell almost 10% after it announced it would scrap its dividend to shore up its tier 1 capital. It reduced its eps forecast by 35% owing to higher funding costs, higher bad debt charges, and the cost of the government's guarantee scheme. Bad debt provisions rose by almost €400m.	dividend policy

04/11/08	The Times reported energy company Centrica has raised £2.2bn through a rights issue to enable it to acuire a stake in nuclear power generator, British Energy, and thereby give it a structural hedge that balances its energy sales business that outweighs its energy generation business. It is also exposed to the pricing mismatch of buying wholesale energy at relatively high forward prices and passing these on to consumers, whilst consumers have expected lower energy prices linked to the spot price of oil that has fallen sharply recently. Link to article	rights issue energy price

04/11/08	The Times reported claims by Howard Flight that the UK credit crisis was caused by consumption growth financed by unsustainable mortgage and consumer borrowing, going back to 2003, and that "...there was too much money around to lend cautiously..." Link to article	economics

03/11/08	The Times reported the cost of trade finance has risen sharply and its availability diminished, owing to the global credit crisis. E.g., the cost of discounting and confirming a LoC has doubled to 1% of the value of goods shipped. Exporters are also expressing concern about which bank is providing credit protection, given the state of many banks.	trade credit

02/11/08	The Times reported Barclays has paid a total of £300m in fees for its £7bn capital raising. This equates to about 4.3%, not bad compared to issuing share capital on a stock exchange (around 6%), though it has raised eyebrows in some quarters.	fees

31/10/08	The Times reported that 64% of the top 200 final salary pension schemes have a funding shortfall owing to £226bn wiped off their values in the past year from the collapse in equities and other assets. Companies face a risk that scheme trustees will demand additional funds (£45bn pa in cash) at a time when cash is scarce, leading to the risk of companies getting into financial distress. On 21 Oct, the Times reported some banks were threatening to withhold funds until companies made up deficits in their schemes, because in administration, pensioners are paid before banks. 85% of pension schemes are thought to require additional cash, and 53% of scheme assets are held in equities. Link to article	pensions deficit

31/10/08	The Times reported Soc. Gen's rogue trader could have been caught sooner (and its €5bn loss avoided) had a key operational control been applied - enforced holidays. He had to stay at his desk to cover his tracks.	operational risk

31/10/08	The Times reported broker Lazard Capital Markets (LCM) and its employees have been fined $3m for unethically inducing a trader at Fidelity to use its services. The trader was given gifts worth $600,000 including holidays, wine, strip club visits and $50K towards his stag party. Fidelity has been fined $8m for allowing its fund managers to receive unauthorised payments from brokers such as LCM.	operational risk

30/10/08	The Times reported German car maker, Porsche, made €1bn from car sales and €3.6bn from options trading, last year, making it look less like a car maker and more like a hedge fund. It also out-smarted hedge funds by secretly acquiring a stake in Volkswagen shares. It will, considerately, sell 5% of its VW shares to ease the shortage - a sale that will yield it a €6bn gain.	short selling

28/10/08	The FT reported a slew of new european debt issuance is scheduled for next year ($3.2trn) which could force coupons up to entice investor take-up. Higher rated issuers such as Germany and their bank-guaranteed bank issuers, are likely to fare better than weaker credits such as Italy, and corporates. Reductions in official interest rates and recession should put downward pressure on bond coupons.	debt

28/10/08	The Times reported the acquisition of Volkswagen (VW) by Porsche sent the former's share price up putting a squeeze on VW short sellers. Shorters had expected VW shares to fall but the Porsche acquisition sent the price the other way. Shorters scrambling to buy available VW shares, sent them up 73% today and 143% yesterday. Leveraged shorters will face the bigger losses. An analyst said no one but shorters would buy the VW shares at those prices so the rise definitely reflected covering of short positions.	short squeeze

27/10/08	The Times reported the value of defined contribution pension plans (whose value is based on investment performance not final salary) has fallen from £552bn to £395bn in the last year, reflecting the global equity market sell off.	equity

27/10/08	The Times reported Icelandic bank, Kaupthing, has defaulted on its Samurai bond by missing its 1.8% coupon payment.	credit risk

23/10/08	The Times reported the Yen carry trade has unwound. Investors who had borrowed Yen at low interest rates and invested in other currency assets had depreciated the Yen (favouring japanese exporters). As these investors sell their assets and buy back Yen (often forced asset sales), the Yen has appreciated (disadvantaging Japanese exporters). Another risk is repayment of Yen loans will cost investors more in foreign currency terms (e.g., €, £, or $). Link to article	exchange rates

23/10/08	Sony has revised its income forecast for 2009 from Y470bn to Y200bn, largely due to the appreciation of the Yen. Operating income is forecast to be lower by Y130bn owing to the Yen's appreciation against the $ and the €. The rates used in the previous forecast were Y105 per $1 and Y160 per €1. These have been revised to Y100 and Y140 respectively. The Times reported that the Sony CEO has cautioned that the company remains at the mercy of foreign exchange rates. See Articles for link to pdf of announcement.	exchange rates

22/10/08	The Times reported the £ depreciated to a 5-year low against the $, to $1.6331, following the pessimistic economic outlook by the BoE Governor. He said reduced wages, higher living costs, and reduced consumer credit meant a prolonged economic slowdown in the UK. The € depreciated to $1.2743 on fears interest rates would fall to support the european economies. The $ apprecieated on expectations of government spending increases rto stimulate the US economy.	exchange rates

21/10/08	The Times reported private equity groups, such as 3i, are in difficulty owing to lack of funding for financing their acquisitions, and a weak stock market to realise the intrinsic value of their holdings. Inability to realise cash could affect liquidity. Shares in 3i have fallen 44% in the last 3 weeks following a mark-down in the value of its portfolio.	private equity

21/10/08	The Times reported shares of lender to SMEs, Davenham Group, fell 75% after it said it would not make a profit this year and has scrapped its dividend following rising bad debts on its property loan portfolio.	credit risk

20/10/08	The FT reported funding spreads over US Treasuries have risen to 16% and 6% for non-investment and investment grade companies, respectively. Both are at record spreads according to Merrill. Companies' ability to refinance maturing debt is expected to be limited, and with a recessionary outlook, defaults are expected to spike. IBM recently issued $4bn at almost 4% over Treasuries.	debt

20/10/08	The FT reported Citic Pacific, a Chinese conglomerate, has reported mtm losses of $2bn from unauthorised currency derivative transactions. The company is committed to buying A$ and € against $ (A$9.1bn until 2010 at A$1:$0.87 whereas the $ is curently $0.70, and € at $1.44). The Chairman said he is 'sorry' and the FD and financial controller have left the company. Since July, the A$ has reversed its trend and depreciated 30% versus the $. The € has also depreciated, to €1:$.1.35. Under the currency contracts, the company has limited gains but unlimited losses. Trading in the company's shares was suspended pending an announcement of the exposure by the company (see Articles). See this link to FT article Link to article	operational risk

18/10/08	The Times reported that French bank, Caise d'Epargne, has suffered unauthorised equity trading loss of $600m following a bet that the French equity index, CAC 40, would rebound from its fall in the week of 6 Oct. It instead fell farther. In trying to unwind the position, the traders could find no buyers. The Chairman, CEO, and FD have resigned. Traders had been warned to keep within authorised ceilings during 'dangerous market conditions'.	operational risk

17/10/08	The Times reported Travis Perkins' shares fell 31% yesterday on fears it might breach its debt covenants (though these have been rejected by management). To conserve cash and reduce debt, it might have to cut its final dividend, accelerate cost cutting, and reduce capex. There has also been speculation it will resort to a rights issue.	covenants cashflow

16/10/08	The Times reported Goldman Sachs analysts predict companies who need funding in the next 1-2 years will fail to find it or will pay for it 'dearly'.	funding

16/10/08	The Times reported £50bn has been eroded in the last week off the value of pensions following the slide in share values, making it unlikely schemes will meet their liabilities fully.	funding risk

16/10/08	The Times reported the difficulty acquiring companies are facing in valuing their targets in the midst of volatile equity markets. Almost $90bn of acquisitions have been withdrawn following Lehman's collapse, and the dearth of available cash has also been a limiting factor. Link to article	valuations

15/10/08	The Times reported the price of Brent crude oil has fallen below $74 per barrel, from its peak in July of $147, owing to weaker demand. OPEC members (Iran & venezuela) could consider a cut in production to halt the price decline and so help balance their budgets.	commodity prices

14/10/08	The FT reported heightened bank credit risk has affected the volume of OTC oil derivative trading, and according to the FT 131008 more trades are being dealt via exchanges or clearing houses to mitigate such risk.	credit risk

14/10/08	The FT reported investors in hedge funds are selling their holdings at discounts of upto 40% or more in their desperation to circumvent lock-up periods enforced by hedge fund managers, and realise cash. Permal hedge fund is setting up the first fund to invest in such distressed sales. It has its own 2-yr lock-up period!	cashflow

14/10/08	The FT reported hedge funds investing in Russia are having problems valuing their funds owing to repeated market closures following share collapses, lack of liquidity, and wide bid ask spreads. Russian share price falls have been blamed on deleveraging, forced sales to pay back debt, and concerns over Russian govt. policy.	valuation

14/10/08	The FT reported Premier Foods (whose shares have fallen 75% in value and whose mkt value at £500m is well below the £1.82bn of debt on its bal. sheet) announced it is considering a possible capital injection. It had intended to offload the debt (acquired through acquisitions) through asset disposals but these have failed. Cap injections from issuing prefs or loans with warrants are regarded as expensive solutions that also dilute equity.	funding risk

14/10/08	The FT reported Virgin Media's share price rose 25% following its announcement that it has obtained its lending banks' agreement (only from almost 50% (by value) of its lenders to defer repayment of its £4bn debt from early 2010 to 2012 (it needs consent from 2/3)). Analysts had been skeptical of Media's ability to meet the repayments scheduled and the share price had fallen 74% in the past year. If the lenders agree, Media will pay an additional £50m in increased margins and £70m in fees to the lenders (massive cost if short-term financing uncertainty). Media said it had expected to begin refinancing its debt repayments nect year but the credit crisis has affected its plans and it decided to apply to postpone the repayment schedule until later).	funding risk

14/10/08	The FT reported CDS prices on emerging market governments have risen following the financial collapse of Iceland and the wider credit crisis. The CDS for Pakistan is 30% ($3m to insure $10m of debt over 5 yrs), 3 x the spread just before Lehman's collapse on 15 September. The JPMorgan EMBI+ (emerging market bond index including Brady bonds) spread rose from around 340bp Jan-Oct 08, to around 650bp over currently. Similarly, the MSCI Emerging market index has fallen from around 1150 in the first half of the year, to 600 currently.	sovereign credit risk

14/10/08	The Times reported GM and Ford (along with Chrysler) might be in merger talks. Shares in each leapt 33% and 24% respectively, a sign that as one company they could withstand the car market depression, better.	merger

13/10/08	The FT reported RBS is to raise £5bn by issuing preference shares to the UK government at an interest rate of 12% (yes, 12%). It is also withdrawing its dividend until these share are repaid. It is also to raise £15bn by issuing ordinary shares at 66.5p, under a 1/3 of the price of its rights issue in April. The capital will raise Tier 1 capital by 4% and the amount was determined by FSA stress tests, and is thought sufficient to withstand a severe recession.	capital

13/10/08	The FT reported european central banks have offered banks unlimited $ funds at fixed rate for 7, 28, and 84 day periods, against appropriate collateral, in a move to revive inter-bank liquidity. This follows the ECB's offer of unlimited € funding last week. The ECB is not authorised to buy CP in the way the Fed will. The article also noted banks deposited a record €155bn over the weekend with the ECB at a penal rate of interest, confirming their distrust of other commercial sector private banks.	funding

12/10/08	The FT reported cargo importers unable to obtain bank letters of credit (LoCs) are cancelling their cargo shipment contracts, disrupting global trade. The LoCs have been withheld by banks facing liquidity constraints. Limited supply of trade finance has meant trade finance costs have risen accordingly.	LoCs

11/10/08	The Times discusses the prospects of deleveraging by individuals and companies, causing lower dividends, cash conservation, and deferral of capital investment by companies. It also lists the stock exchanges around the world that closed because of extreme share price falls, and the MSCI global index suffered its steepest weekly fall since it began in 1970. It also looks at whether prices have bottomed. Link to article	shares

11/10/08	The Times reported car maker, GM, is facing a liquidity problem and could be seeking to sell of assets to raise cash, including a sale and leaseback of its headquarter building. It has $20bn of debt and all on negative credit by S&P, and its bonds are junk status, so it is less able to raise further debt. Its share price is at its lowest in 58 years and its market cap. is below that in 1929.	liquidity

11/10/08	The Times reported $2.7 trillion has been wiped off the value of shares globally this week. The FTSE 100 has lost 24% of its value and suffered its 2nd biggest points loss ever. Another Times article reviews the effects of the week's events on the wider economy Link to article	shares

10/10/08	The FT US Daily View said US equity market had its second worst week on record. Why? Fear has overtaken greed, successive government bailout plans have not revived credit markets, and some investors are forced stock sellers (hedge funds whose loans are being called); some investors (mutual funds) are pulling out of the stock market. Share price falls have not discriminated against company size, sector, or geography. Even recession-proof companies' shares have fallen.	shares

10/10/08	According to Wikipedia, the TED spread reached a new high today of 465bp versus a long-term average of 30bp. The wide spread indicates mistrust between banks (counterparty credit risk), i.e., they fear borrowing banks have assets worse than they are admitting to and so they cannot be trusted to lend to. A reduction in the spread will indicate a restoration of trust and a return of interbank liquidity.. Link to article	credit risk

10/10/08	The Times reported Lehman debt put up for auction was worth just 9.5 cents on the dollar, leaving its insurers liable for claims from holders totalling of $300bn. The insurers had issued CDS on $400bn of Lehman debt but most of its assets have been bought by Barclays. Presumably the insurers didn't check the strength of their charge over the debt's security, or perhaps they just didn't consider security.	CDS

08/10/08	The FT (UK Daily View) reported central banks globally have concertedly reduced their official rates (by 0.5% in the UK) to thwart global recession and stimulate economies. This does not however address the key and pressing issue of lack of lending interbank, to companies and to individuals by banks. It does however show that governments, at least the UK, have put inflation on the back burner for now.	official rates

07/10/08	The Times reported trade credit insurers have withdrawn cover to trade suppliers to High street retailer, JJB Sports (which is facing trading difficulties, and whose audit firm raised concern over its future as a going concern). Loss of cover could mean tougher terms by suppliers including upfront payments, affecting cashflow.	cashflow

07/10/08	The FT Short View reported the US Fed has set up its funding company to buy US commercial paper from non-bank issuers to ensure they cancontinue to use this market as a key source of day to day operations such as paying salaries. CP outstandings, already significantly lower, were at risk of falling further.	CP

06/10/08	The December Gilt future rose to 113.52 as investors chose the relative safety of government debt to stock markets. In morning trading, the FTSE100 fell 5%, Germany's DAX 4.5%, and France's CAC 40 almost 5%. The € fell to a 13-month low against the $ and a 7-month low against the £ as investors assimilated european banking market woes. The $ depreciated against the Yen (to less than Yen103 at one point), sending the share price of Toyota and Sony down on fears the strong Yen would hurt Japanese exports. More widely, the Nikkei average fell almost 5% to a 4-year low, and according to Reuters, in Asia-Pacific excl. Japan, by 6%. Link to article Link to article	currency Gilts liquidity

06/10/08	The Times reported UniCredit (Italy's 2nd largest bank) is to pay its dividend as shares to conserve cash. It has also announced a share and convertible issue. On 1 Oct, the Times reported the bank was to shift its property portfolio (into a closed end fund) in an attempt to increase its Tier 1 ratio. The bank has been affected relatively more by the global financial crisis owing to its international presence.	liquidity

05/10/08	The Times reported almost 2/3 of all hedge funds (of which there are approximately 10000 and worth $2 trillion) have performed negatively in the past year. A third of the industry is forecast to fold in the market correction occuring as credit dries up, broking costs rise, assets deteriorate, investors pull out, regulations are tightened, losses mount, and the finger of blame for the global financial crisis is pointed at managers. The industry is said to be Darwinian so survivors will emerge stronger. Link to article	hedge funds

05/10/08	The Times reported that Magnet Kitchens (Nobia UK) is asking its suppliers to take a 5% reduction in supply costs of the firm to mitigate price pressures the firm says it is not in a position to pass onto consumers.	input costs

03/10/08	The Times reported that telephone directory publisher, Yell Group, might be close to renegotiating its £3.8bn debt with its syndicate of 300 (yes, 300) banks. It needs a 2/3 majority to approve. In return for 'looser' covenants Yell will have to pay another 1% in interest and a 0.5% lenders' fee. Yell faces falling revenues and has cut its dividend.	syndicated debt

02/10/08	The Times reported the risk of industrial electricity consumers experiencing blackouts in November as the margin between electricity supply and demand was close to its limit (and less than 1/12th its margin in March). The reduced margin occurred because of maintenance work to power plants thereby incapacitated. The state of the country's ageing and sub-standard power stations is a cause for concern. Forward electricity price for November soared more than £10 to £133 per mega watt hour on the announcement, 4 times the price in france and 70% more than in Germany, according to a Times report on 6 Oct), raising fears about UK corporate competitiveness and viability Link to article	commodity prices

02/10/08	The Times reported a machine parts manufacturer in London that lamented the rise in gas by 50%, electricity by £30,000 in a year, solvent emissions legislation necessitating new equipment but no lender willing to lend in the credit crunch, and steel up by 100%. Link to article	commodity prices

02/10/08	The Times reported car manufacturers Ford, Bentley, Land Rover and Toyota have scaled down to a 3 or 4 day week or stopped overtime in the wake of weakened demand from buyers unable to get credit for their purchases, according to Ford.	credit

02/10/08	The Times reported a european political farce regarding a call from the French prime minister to establish a pan-european €300bn fund to bailout banks. Germany 'would not and could not' support it. France initially denied the call but then admitted it, but said the figure of €300bn came from the Dutch. Hague officials said they had no idea what the French were talking about.	farce

02/10/08	The FT reported USCP hasd fallen by $95bn this week, and according to Fed Reserve data, by $200bn in the last 3 weeks, putting pressure on banks and corporates' liquidity, including companies such as GE and AT&T. ABCP also fell by $29bn. Since Lehman collapsed 2 weeks ago, the spread between $ LIBOR and government rates has risen 300% to 260bp, an indication of heightened concern over bank credit risk.	CP

01/10/08	The FT Short View reported the Brazilian Real had depreciated 30% against the Yen in the last 2 months, indicating heightened global economic uncertainty. The Real is a barometer of the global economic outlook whereas the Yen is considered a haven during global uncertainty. Further evidence of the pessimistic global economic outlook and even recession globally came from purchasing managers' surveys in US, UK, Europe, and Japan, all of which have fallen sharply and below the threshold.	exch. rates

01/10/08	The Times reported that AIM listed Savile Row tailor, Hardy Amies, intends to file for administration because it cannot find funds for working capital. Its shares were suspended last week after failing to secure funds from an investor.	liquidity

30/09/08	The FT Short View reported the 1-day US ABCP rate rose to over 4.5% higher than the Fed Funds target rate (it has been well under 1.5% since 2007 at least), emphasising the liquidity problems of banks and possibly corporates also, and possibly because it is the quarer end.	liquidity

30/09/08	The Times reported the US had raised its $ currency swap facility with central banks such as the ECB and BiE, to $620bn in an effort to ensure local banks in corresponding jurisdictions could obtain $ funds unavailable through inter-banking channels. The BoE offered £40bn of 3-month funds, and the ECB offered £96bn equivalent of 38 day funds, and the US Fed increased its term auction facility for 3 month $ funds to banks, to $300bn. The central banks' auctions each indicate local banks' reluctance to lend to each other for longer than very short periods of time.	liquidity

30/09/08	The Times reported that shares in retailer, Jessops, rose about 40% as it announced a restructuring of its debt so that it matures later, costs less interest, and the financing fee payable is £2m less. In return, HSBC will receive further share warrants.	debt

29/09/08	The Times reported Glitnir of Iceland and Hypo real estate of Germany, had each experienced liquidity crises relating to short-term fuinding, and had to be bailed out by their governments. In the case of HRE, it has received € multi-billion short and medium term funding from a consortium of banks. HRE had relied heavily on wholesale funding (similar to Northern Rock) and on short-term funds. The latter source had dried up when the money markets dried up recently. Link to article	funding

29/09/08	The FT reported a wave of bail outs of distressed banks by corresponding governments in the continuing credit crisis: Citigroup has taken over Wachovia, supported by a $12bn investment by the US government in Citi; the Iceland government has bailed out the country's 3rd largest bank: Glitnir; three governments have bailed out Fortis; the UK government has nationalised B&B; the German government has provided a €35bn bailout of Hypo Real Estate.	banks

29/09/08	The Times reported the property group, Chelsfied, saying funds invested in from the 20% stake acquired in it by the Qatari soveriegn wealth fund, will enable it to "...capitalise on opportunities as prices fall"	property

29/09/08	The Times reported an analyst's view that the US bailout has crystallised losses on assets transferred 'at a massive discount' to the US Treasury and has not given banks what they need: cash so by Christmas they will be asking for solvency help.	solvency

27/09/08	The Times reported non-financial companies are having to borrow from banks at 1% higher than a month ago as they are unable to fund beyond a few days in the CP market owing to a dearth of investors in the 1-3 month period.	liquidity

27/09/8	the Times compared UK retailers at risk of withholding some or all of their dividends to avoid breaching loan covenants in the face of relatively high operational gearing and downward pressure on sales. Forecast dividend cover, based on estimated profits, is on average 2.1, above the 1.8 level of the 1990's recession. Link to article	operatnl gearing

27/09/08	The Times reported Alexon shares fell over 20% following cashflows fears: it has under £5m of cash but owes over £30m in rent and supplies, and also needs cash to stock for Christmas and to upgrade stores. An analyst cuts its profit forecast and warned the dividend might be waived entirely.	cashflow

25/09/08	The Times reported the spread between overnight and 3 month LIBOR rose to its widest margin (150bp) reflecting banks' fear to lend to each other except overnight. In the BoE's weekly auction, banks asked for £89bn though only £53bn was offered by the bank. A bank strategist said term lending markets have almost closed as banks continue to hoard cash. Lending rates rose in Australia, Singapore, and Japan amid concerns over the US bailout plan, and bailout concerns depreciated the $ against 13 out of 16 active currencies.	LIBOR

24/09/08	The Times reported private equity firm, Terra Firma, is being sued by UBS because it withheld agreement to the sale of £1.8bn LBO loans made by UBS to a Terra Firma company. Sale can be blocked by the borrower if there is a legitimate reason. Terra Firma blocked because the buyer was a competitor who would have gained access to commercially sensitive information. UBS said TF's reasons were invalid or illegitimate.	loan transfer

23/09/08	Associated Press (AP) reported a rise in oil prices as investors fled to buy crude oil futures as a safe haven from the threat of a weakening USD and inflation risk (which is a common strategy, though perhaps questionable given the current volatility of oil) triggered by concerns over the US Treasury's bailout plan. In another report, AP said the price of gold (another safe haven during turmoil) rose over $40, crude rose more than $16 breaking the record for a 1-day rise, and the USD depreciated against £, €, and the Yen. The Dow was down 3% yesterday. Link to article	markets

22/09/08	The Times reported the UAE central bank has put together a $14bn reserve of funds to support growth in case it falters as funding become scarce. The global credit crisis has forced banks to fund in their domestic markets, raising the cost of interbank lending, and lenders have warned local companies that they will find it difficult to secure loans if conditions persist. UAE 3-month lending rates have risen 170bp since June.	liquidity

22/09/08	The Times argued that the decoupling theory of emerging markets and the Anglo-Saxon markets, is not believable since the former have lost substantial value from the turmoil of the latter. The reason suggested is that emerging markets though wealthy, lack their own financial infrastructure so rely upon the Anglo-Saxon markets to park their wealth, so are not decoupled. Link to article	decoupling

22/09/08	The Times reported banks invested overnight £ with the BoE, the first time since Aug 2007, a sign that overnight interbank liquidity has returned. The 3 month LIBOR rate however was over 1% over Base, its highest margin in 9 months, and a sign that banks are still wary of lending to each other, even in the short term.	LIBOR

22/09/08	The Times reported Yell has suspended its dividend to reduce its £4bn debt burden. The shares rose 8% which is odd because halving its dividend in May caused the shares to fall over 20%. The different reaction could be that now the company says it is generating cash strongly, whereas before it said the outlook was "tougher economic conditions". Link to article Link to article	cashflow

22/09/08	The Times reported S&P has assigned Microsoft a AAA rating (the first for a company in a decade). Exxon Mobil, Gen Electric, Pfizer, Johnson & Johnson also have AAA ratings. Microsoft is sitting on $24bn of cash and has never had debt. It announced a share buyback programme of $40bn to raise its share price (which has fallen 30% this year). It has just completed a $40bn buyback programme started in 2004.	rating

22/09/08	The Times reported Goldman Sachs and Morgan Stanley yesterday ended their investment bank status and became more tightly regulated but also able to receive emergency funding on equal terms to commercial banks, their new peers.	banks

21/09/08	The Times sets out the milestones of the current financial crisis from its beginning last year. Link to article	markets

20/09/08	The FT reported the run on US money market funds last week pushed 1-month LIBOR 10 times wider than its historical average (versus the central bank rate?). The run was sparked by a US MM fund (Reserve Primary) failing to return $1 per $1 invested ('breaking the buck') owing to its investment in failed Lehman Brothers. So far, $8bn has been used by parent companies to bailout their MM funds, denting investor confidence in what is considered a very safe haven. Link to article	liquidity

19/09/08	The FT summarised the events of a milestone week in financial markets: the fall of Lehman, the takeovers of distressed Merril Lynch and HBOS, the banning of short selling, the support for MM funds, the bailout of AIG, the concerted provision of liquidity by central banks, and a wholesale bailout by the Treasury of US banks with bad assets. Link to article	bailouts

19/09/08	The FT reported the price of gold rose 11% on Wed 17 Sep, its biggest 1-day rise since 1980, as investors fled to it for safety from the financial markets. The report also said the US 3-month T bill yield had fallen to 0.02%, its lowest since 1941, confirming the flight to safety.	risk

19/09/08	The FT reported the US Fed is to provide $230bn for ABCP and $69bn for FNMA and FHLMC bills, held by the $3.4 trillion money market (MM) fund sector. These safety nets have been established in case investors panic and flee MM funds. See news item 20/09/08 above	liquidity

19/09/08	The Times reported the FSA has banned short-selling of UK financial institutions, until Jan 2009 '...to guard against further instability in the financial sector'. Another Times report said the US Attorney-General's office had received complaints about false rumours being spread by short-sellers	short-selling

18/09/08	The Times reported that the charity, Business Debtline, has seen a 57% increase in the number of small businesses calling for debt advice since the credit crunch began a year ago.	debt

16/09/08	The Times reported AIG is lending itself a $20bn bridging loan drawing on its subsidiaries' cash to support its cash crisis. AIG's downgrade is estimated to cause an additional $18-25bn in collateral calls, and occured because of concerns over its ability to meet collateral calls and res. mtg. losses. S&P was reported to have warned the rating would become BBB if the $20bn loan was not provided.. According to Fitch: widening credit spreads, difficult capital market conditions, and its falling share price, all made it dificult for AIG to raise capital. Link to article	cashflow market risk

16/09/08	The Times reported AIG's former CEO and other executives, have paid $115m to settle a lawsuit that the CEO failed in his fiduciary duty.	governance

16/09/08	The Times reported the BoE's £5bn injection of liquidity yesterday was 5 times over subscribed and the overnight interbank rate rose from 5.5% to 6.8%, reflecting the funding shortage. The BoE injected a further £20bn today as some banks were hoarding cash. The report aso noted HBOS has been downgraded by S&P primarily because of the credit risk of its loan assets. HBOS shares fell a further 40% today, presumably in part, because its earnings will be reduced by higher cost of funds. Its P/E ratio is 2.26	risk

15/09/08	The Times reported Shearson Lehman has filed for bankruptcy (chapter 11), and its UK arm is in administration, after failing to find a buyer or get a Treasury lifeline, and Merril Lynch will be bought by BoA. The BoE and ECB pumped £30bn into the financial markets in case banks stopped lending to each other amid raised concerns over credit risk.	banks

14/09/08	The Times reported that hedge fund, RAB Capital, has ousted its CEO following a crisis of confidence in the fund. Sales by a similar fund, Ospraie, that wound down it s holdings, marked down the value of some of RAB's holdings. RAB had to liquidate $1bn of assets to repay investors. RAB's assets were illiquid investments, so forced sales of significant amounts are likely to be at a discount. Link to article	market risk

14/09/08	The Times reported that banks and the legal profession oppose a proposal by the Treasury (the special resolution regime, SRR) that would allow it to cherry-pick assets of a failed bank, on the grounds it will raise banks' borrowing costs for the additional uncertainty lenders have over their ranking and rights if this proposal applies.	risk

14/09/08	The Times reported that airline XL Leisure was put into administration because it could not find cash to pay its fuel bill. The collapse affected 85000 travellers stranded overseas, and 240000 booked to travel. The airlift will cost £20m. Straumer and Landsbanki banks had declined the company's request for working capital funding, and no buyers were found. A report by the Times on 13 Sep noted that shares in XL's two bigger rivals, Thomas Cook and TUI Travel, rose on the news of XL's demise. Link to article	cashflow

10/09/08	International Financial Law Review (IFLR) reported that companies and banks are agreeing not to put failing company into insolvency and a restructuring as neither can afford it: the bank the loan loss and fees (gioven their already dented baance sheets), the company: the fees and there are no buyers of the distressed debt as hedge funds and vulture funds are holding back from investing, so far. The report noted that those companies that owe banks a lot of money,own the bank because the bank can't afford it to go bust, whereas if they owe a little, the bank owns the company.	restructuring

10/09/08	The FT reported shares in telecoms company, AT Communications, fell 30% when interim results showed its net debt exceeded its market capitalisation. BT is thought to be squeezing other telecoms operators making the outlook uncertain for AT.

10/09/08	The FT reported not one Indonesian bond has been issued in 2008 versus about 36 in 2007, though many companies have tried. The Rupiah has seen its sharpest fall for 15 months and the stock market has also fallen, both reflecting the credit crunch. The government withdrew its bond auction claiming it was not prepared to pay the high (13.5%) interest demanded by investors (it had offered 9.5-10.5%). Emerging market bond spreads have increased to Treasuries + 325bp.	debt

10/09/09	The FT reported the default rate on speculative grade debt rose to 2.7% in Azugust, up from 1.4% last year. The rate was expected to rise to 4.9% by tyear end and to 7.4% by Sep 09. The report also said a wave of corporate debt refinancings were expected to increase [debt margin?] spreads.	debt

10/09/08	The Times reported that Barratt Developments has refinanced its £1.7bn debt, raising debt costs to 9.75%. Its £80m privately placed notes were costing 7.49%. Its gearing and net worth covenants have been relaxed and its interest covenant replaced with a cashflow covenant. Its annual pre-tax profits fell 67%, it wrote off over £200m in developments, and withheld its final dividend.	debt

10/09/08	The Times reported an 18% rise in business insurance claims, citing claims relating to building materials (electrical cables and metal fittings) - reflecting the rise in the cost of these materials.	commodities

10/09/08	The Times reported housebuolder, Redrow, has arranged £450m of debt finance with banks, with covenants based on cashflow not profit. The company wrote down its land bank by £259m. Its annual revenue had fallen 22% and forward orders are down 45% year on year.	cashflow

09/09/08	The Times reported Citigroup has issued the biggest Samurai bond (Yen315bn) to restore its capital. Its 3.22% coupon is well above the 0.5% domestic rate so should appeal to individual investors it is being sold directly to. Many foreign companies have tapped the Samurai market, but the cost of the credit crisis is issuers are now paying a margin over Yen LIBOR well above that pre-crisis (10bp pre versus 100bp post) according to a June article in the Times. There is no mention of the FX risk issuers are facing in raising Yen debt. Link to article	samurai bond

04/09/08	The Times reported commodity hedge funds and insurance experts who expected insured losses of $7bn from hurricane Gustav in the Gulf of Mexico and a consequent rise in oil prices, were both wronged as the hurricane passed by and oil eased to $105 from a high of $116 hours before the hurricane arrived. The funds face big losses from their futures contract bets.	risk

04/09/08	The Times reported Southern Cross (SC) announced it has raised £52m from property sales to pay down debt, loan facilities have been secured until 30 Oct, and that its CEO is to leave. The property sales were at a loss of at least £9m and are part of a sale and leaseback programme. Earlier plans to sell off properties acquired in a debt-financed acquisition had fallen through and SC announced in June it had breached banking covenants. SC's share price rose almost 10% today.	debt

04/09/08	The Times reported sovereign wealth funds (SWF) have established a set of principles and practices on their activities to alleviate western governments' concerns over their opacity and their true intentions. The principles might do little to alter SWFs being perceived as 'secretive market manipulators' because of what they omit. An earlier report by the Times raising the US's concerns, also predicted the SWFs would hold 12 trillion of assets by 2016. Link to article Link to article	wealth funds

03/09/08	the Times reported Asian central banks have been buying their currencies to support their value, and selling $, citing Malaysia, Phillipines, India, and Indonesia. Imported inflation from higher oil and food prices would be exacerbated by a weaker domestic currency. South Korea has only given lip service, possibly choosing instead to allow its currency to depreciate to encourage exports. Political unrest, especially in Thailand, has raised the risk of an exodus of foreign capital. The baht has depreciated to a 1-year low, and the South Korean won to a 4-year low.	currencies

03/09/08	The Times reported the price of crude fell $10 after worries over hurricane Gustav's effect on oil production failed to materialise. Fears of weaking economies globally and demand for oil prompted Iran to call for a reduction in production to prevent the price falling under $100 per barrel.	commodities

03/09/08	The Times reported Punch Taverns' share price fell 11% after it withheld its dividend to conserve cashflow to support its licensees and paydown its debt to strengthen its balance sheet.	cashflow

03/09/08	the Times reported shares in SkyePharma fell 34% after it was found convertible bond holders had acquired 52% of the company in a debt for equity deal with new equity issued at just 1p against yesterday's price of 5.75p. The bondholders were owed £90m in May 09 - twice the company's 2007 revenue. The drug company has lost 80% of its value since a key drug failed to get approval. The debt renegotiation would buy time to complete further development of the drug. [See 020908 news]	debt

02/09/08	The Times reported shares in SkyePharma rose 40% amid rumours that its financial problems would be resolved. The company subsequently announced it is to alter the terms of its convertible bond (without which it faced bankruptcy) and to issue equity. [See 030908 news]. Conversely, shares in Jarlway fell 66% on news that it was forced to pay off its debts or cease trading, and it is to delist from AIM to conserve cash.	debt

02/09/08	The Times reported private equity group, Change Capital, sold fashion label Jil Sander, for €167m, having bought it just 2 years ago for a rumoured €60m and losses of €13m. Underlying earnings were €6m last year, and turnover this year is expected to be €470m. The PE group had planned a sale in 2010-11 but the price offered was too good to pass.	private equity

01/09/08	The Times reported the £ depreciated to £1:€1.2287 - its worst level since it was introduced in 1999, following comments by the Chancellor that the UK economy was in its worst downturn in 60 years. The possible reduction in Base rate to alleviate the downturn, was also a factor. One analyst said the cut was unlikely until it was clear unemployment and a subdued economy were dampening inflation - which was still rising.	inflation

31/08/08	The Times reported the plight of the giant Spanish property company, Metrovacesa, which bought the £1bn HSBC tower in Canary Wharf at the height of the UK property market last year only to find it falling in value by upto £300m today. The company is in financial danger because of its high gearing, loan to value covenants, and property assets which have depreciated sharply. One observer said it illustrated the error of taking easy money to buy assets that subsequently decline. HSBC loaned £810m to the company to buy the tower in a sale and leaseback, which yielded the company less than 4% pa, the lowest for 20 years, and earned HSBC double the £500m it cost to build six years ago. Link to article	property

29/08/08	Nestor Healtcare reported improved cashflow from reduced debtor days (down to 39 days from 43 days) has enabled the company to payback debt. Gains in the fair values of interest rate swaps (for which hedge accounting was not applied) of £461K, have been recognised in the P&L statement. The company is seeking to sell assets to raise cash to reduce debt (debt:equity is 1.06:1.0). According to the Times, the company could breach its loan covenants if cash is not found.	cashflow

28/08/08	The Times reported UK wheat farmers could lose financially owing to heavy rainfall that has delayed harvesting and potentially reduced its quality and hence selling price. Such losses are exacerbated by higher costs of fertilizer and fuel (fertilizer has risen from £150 last year to £350 per tonne). Wheat prices also face downward pressure from good harvests in Aust.lia and Argentina and more being grown to meet demand from growing economies such as India and China. Link to article	commodities

28/08/08	Interim report for SkyePharma shows it incurred a £2.4m professional charge (legal, tax, acctg. etc) to renegote its £89.6m convertible bonds. It has the effect of adding a further 5.4% pa to the cost of this debt, 82% of the annual interest charge. A further [?] is expected for H2 2008. See 02 and 03 Sep News items for more info.	debt

28/08/08	The Times reported a citrus disease that originated in China could devastate Florida's $9bn per annum citrus industry. Most farmers are not diversified so face financial ruin if their crops are destroyed. Farmers have allocated $20m of their marketing fund to find a cure.	commodities

27/08/08	The Times reported the price of crude oil rose amid fears the hurricane Gustav might reduce oil production in the Gulf of Mexico. Hurricanes in the region 3 years ago affected production and caused oil prices to soar. Today's price rise was also attributed to a depreciation of the $ following its appreciation to a six-month high.	commodities

26/08/08	The Times reported the € depreciated 2% against the $ to $1.4570 in response to a fall in the confidence indicator of German companies. Other european economies are also struggling, including the UK's causing the £ to depreciate to a two-year low of $1.8336. In contrast, the US consumer confidence index rose to its highest level since May.	currencies

24/08/08	The Times reported mortgage lenders have raised their arrangement fees significantly - upto 183% - whilst lowering their lending rates much less. Abbey's tracker mortgage rate has fallen 0.1%, a saving of £9 per month on a £200,000 loan, but its arrangement fee has risen 30% from £1499 to £1950. Similarly, the 2 year swap rate has fallen 50bp whereas 2-year fixed lending rates have fallen less than 20bp. Unsecured borrowers are also paying more interest, up 2.6% compared to 2006 when base rate was also at 5%.	debt costs

23/08/08	The Times reports a new film about the US debt mountain and blames Bush's tax cuts and 12 interest rate cuts since 2001 for it, plus the US population for borrowing excessively in 2005 and 2006.	US debt

22/08/08	The Times reported tensions between the US and Russia over the invasion of Georgia, pushed the price of oil up $6 a barrel -raising concerns over inflation and a delay in interest rate cuts by the ECB. Gas prices rose in the UK following a cut in supply from Norway. Oil prices also rose recently owing to sharper than expected falls in US oil reserves. Venezuela, an OPEC member, warned it would call for a cut in production to avoid further price falls.	commodities

21/08/08	The FT reported the growing concern over companies' covenants. It cites Barratt Developments' replacement of its interest cover covenant for a cashflow covenant, and relaxation of its gearing and net worth covenants, allowing it to writedown its land bank value. For other companies, loan financing covenants are to be stricter. There is also the concern that previously loose covenants will not trigger problems early enough. Headroom (the margin for error allowed in covenants) in relation to debt serviceability, has fallen by a third to 20%, heightening covenant risk.	covenants

19/08/08	The FT reports that the $1 -1.5 trillion synthetic CDO market could be facing major losses in value if the securities are marked to market. This might be unnecessary if they are held to maturity and the reductions are not considered permanent, or if rating agencies do not downgrade them. The loss in value is exacerbated because the CDOs were exposed to financial and mortgage related credits, both severely affected by the current credit crisis. Also, in a period of aggressive market growth in 2006-07, CDOs were structured with greater gearing, less diversification, longer maturities, and lower rated debt as collateral.	CDOs

18/08/08	The FT reported food and consumer goods companies have been caught out by the increases in raw material prices and are looking to hire traders from commodity houses such as Cargill, Bunge, and ADM, suggesting price volatility is "a structural [not short term] change driven by rising demand from emerging markets."	commodities

18/08/08	The FT reported the ethics and legality of PE groups buying debt of ailing companies in which they also hold equity, a move that could allow them to stall restructuring attempts such as D:E swaps. Some PE groups have bought their companies' debt at a discount and redeemed it, which means the original lender is not repaid at par so incurs a loss. Funds, such as Balckstone's GSO, can achieve 20-30% pa RoC by buying discounted LBO debt that capital-starved banks are forced into selling, and who are even providing loans to funds to buy their debt. Such opportunities caused by market dislocation are decreasing as the LBO debt overhang has fallen from $200bn to $50bn in July.	loan sales

18/08/08	The FT reported US banks have substantial amounts of their debt to refinance over the coming months and are likely see their cost of funds rise, raising the risk that such costs might be passed onto other economic sectors' funding costs. Citi, AIG, and JP Morgan raised about $20bn long term debt "paying some of the highest premiums ever in order to lock in funding".	debt

18/08/08	The FT reported that analysts expect "a rapidly worsening picture for European economies and credit markets versus the US" though such changes have yet to be factored in by credit markets according to the performance of derivative indices: the iTraxx and its US equivalent the CDX IG.	credit markets

16/08/08	The Times reported the ambivalent effects of the appreciation of the USD, such as adding another $5bn to InBev's bid for US company: Anheuser, reducing the attraction to foreigners of US exports, but making it cheaper for Americans to buy foreign goods (US import prices had risen 22% in 2008 until the USD appreciated)	currencies

15/08/08	The FT reported Merrill Lynch has charged its CDO-related losses of $29bn to its London subsidiary. Based on its record 2006 profits, the subsidiary will avoid UK corporation tax on its profits for the next 60 years.	taxation

12/08/08	The FT reported Citi has retained some exposure to billions of leveraged loans it sold, and which it lent money to the buyer. The loans were sold at an average discount of 15%, and financed with loans of $0.80 per $1 face value, with the buyer taking the first $0.20 loss. If the first loss is exhausted, the loans would be worth $0.65 per $1 of original face value. Citi says it has used total return swaps to hedge its exposure to further losses below $0.65. Such swaps can be more expensive than the exposure but are an easier explanation to pacify investors than incurring a a loan loss of the same amount. Link to article	loan sales

12/08/08	The Times reported the depreciation of the USD plus relatively strong economies elsewhere, has propelled US exports and helped improve the US trade balance and grow the US economy over the last year. An appreciating USD whilst reducing the risk of asset price declines, it might also end the two quarters of export-led US economic growth if world economies decline.	economics

11/08/08	The Times reported the Rouble depreciated against a basket of currencies and Russian shares fell against benchmark indices to their lowest since 2006, in response to fears that recent hostilities with Georgia would depress the affected countries' economies, and Russian eurobonds are expected to declne too. Hostilities ended the recent decline in the oil price as the supply of oil via Georgia was cut. The Russian central bank sold foreign currencies to support the Rouble. Russian 5-year credit default swaps widened 2bp to 119bp	markets

07/08/08	The FT reported an auction of $1.2bn of various types of SIV assets achieved an average of 44% of face value even though about 75% of the portfolio was rated AA or better. CDOs of ABS had a bid as low as 20 cents in the $1; monoline-wrapped RMBS achieved 40%; CMBS and CLOs were in the low 80s. Upto $50bn of further CDOs of ABS are expected to be liquidated in the next 6 months.	SIVs

07/08/08	The USD appreciated against many currencies whose economies are in or close to recession, including the Yen. Governments of such economies were expected to ease monetary policy (lower rates), in contrast to that of the US Fed since the US economy was not in recession. The € depreciated amid concerns the ECB would change from its hawkish stance on interest rates following fears that Germany's economy might be faltering.	currencies

07/08/08	The FT reported IPO issuance globally has decreased by over 50% in 2008 compared to the same period last year (by value and number), and to a 5 year low. The fall was blamed on: investor fear, illiquidity, and low valuations. The US market is more attractive since the SEC said it would allow foreign issuers to adopt IFRS rather than US GAAP	IPOs

06/08/08	The Times reported Drax, Europe's largest coal-fired power station, saw its cost of energy generation rise 86% in the first half of 2008, due to the rising cost of coal (rising 72% on the back of tight supply and strong demand) and its carbon allowance costs (increasing an average of 500%) for its CO2 emissions. Its half-year profits fell 45%. Link to article	commodities

05/08/08	The Times reported Michael Page shares rose 87% (to an 8-month high) on the day it confiormed it had received a possible takeover approach, from Addeco.	companies

05/08/08	The Times reported the BoE has converted £3bn of its loan to Northern Rock into equity in a debt for equity swap. The reason is to shore up the balance sheet,in the same way other UK banks have in the credit crunch. According to the Times, the swap is often a sign of a company in trouble, pushes the former debt holders lower in the ranking on repayment, and they might get nothing if the bank is liquidated.	swaps

05/08/08	The Times reported fears of economic slowdown in China and USA pushed the prices of commodities down, including oil, gold, and copper. The driver of commodity prices has turned from supply restrictions driving up prices to slowing demand from end user economies deflating upward pressure. China's manufacturing sector contracted for the first time since 2005; in the USA, car sales have fallen, and inflation has risen sharply leading to fears of reduced consumer demand. The fall in the oil price has caused the $ to appreciate and other currencies to depreciate (the depreciation is thought to be because governments are now able to ease their monetary policies (lower interest rates) causing their currency to be less valuable. The $ presumably has to also appreciate because of tight monetary policy (high interest rates) to contain the threat of inflation). Link to article	commodities

04/08/08	the Times looks back on the anniversary of the credit crunch. Link to article	markets

04/08/08	The Times reported that rating agency S&P expects the number of defaults on US high yield bonds to rise from 0.97% at the end of Dec 07 to 4.9% next year, and possibly as high as 8.5%. The rate rose to 1.9% in Jun 08. The agency said 118 bonds with a value of $118bn face default, compared to 64 a year ago, and expects Europe to follow the US.	junk bonds

03/08/08	The Times reported the demise of Dawnay Day following: expansion into new markets and overseas, short-term equity plays involving contracts for differences, and the commercial property market collapse. The directors, who amassed personal fortunes of £235m each, and over 500 directorships, tried to sell paintings worth millions to raise cash, but it was not sufficient. The company's value dropped from £1.3bn last year, to £320m today. Norwich Union has lent £650m. One commenter said: "Classic case of property guys thinking they are smart investors - when really it was just the whole market rising!" Link to article	companies

02/08/08	The Times reported the number of companies going into administration rose by 60% compared to the same quarter last year. Liquidations in the same period rose 15%, the highest since 2003, and were expected to rise. Failures were blamed on: higher costs, slower demand, and the credit crunch. Link to article	companies

01/08/08	The Times reported that inter-dealer brokers Tullett and GFI were in merger talks. Tullet trades conventional products such as bonds, FX and IR derivatives; GFI trades more modern products such as energy derivatives. Market volatility triggered by the credit and liquidity crises has benefitted such brokers' earnings, and their arch rival, Icap.	interdealer brokers

01/08/08	The Times reported British Airways' first quarter profit fell 88%. The chairman blamed unprecedented oil prices, economic slowdown and weaker consumer confidence. Fuel cost has risen to twice that of a year ago, and is expected to exceed £8bn [£3bn probably] in 2008.	profits

31/07/08	the Times reported Mitchells & Butler (M&B) and Whitbread (W) have agreed to swap assets valued at £70-80m. M&B will acquire 40 restaurants and sell 20 of its Holiday Inns. No cash will be exchanged. The shares prices of both rose between 3% and 6%.	asset swaps

30/07/08	The FT reported a study predicting that most of the UK CMBS rated by Fitch could be in default if the commercial property downturn is as great as that of the 1990s.	CMBS

30/07/08	The Times reported Merrill Lynch has sold $30.6bn of CDOs for 22% of their face value ($6.7bn), to private equity fund, Lone Star. According to rating agency, Egan Jones, the markdown reflects underlying asset values not market liquidity. The agency predicted widespread devaluation of other CDOs that have been insufficiently marked down since the CDO market deteriorated since March. Merrill's share price rose 8%, perhaps on the grounds the market felt such write-offs would be the end to sub-prime-related write-offs. Link to article	CDOs

28/07/08	The Times and money Marketing report that foreign banks are taking the lead where mainstream UK lenders have declined high value buy to let loans or their terms are relatively unattractive, citing Germany's Kleinwort Benson, Sweden's Handelsbanken, Israel's Bank Leumi, and Switzerland's EFG bank. Some UK private such as Coutts and HSBC Private bank were competing, but less aggressively. Link to article Link to article	buy to let

28/07/08	The Times reported Ryan Air's fuel bill had risen 93% and profits had fallen 85%. The company had taken advantage of a fall in the price of oil from a high of $147 a barrel, and hedged 90% of its Sep fuel at $129 and 80% of its third quarter's fuel at $124. The 4th quarter's fuel was so far unhedged.	hedging

27/07/08	The FT reported Reed Elsevier is offering $330m of vendor financing (at LIBOR+10%) to encourage the purchase by private equity investors of its publishing subsidiary, given the unfavourable economic outlook for the business and the credit crunch. A group of banks are offering $1.26bn of staple financing with a condition that investors invest at least 40% equity, a reflection of the greater difficulty in raising finance in the credit crunch.	debt

27/07/08	The Times reported that a credit analyst is being sued by a US bank it said was vulnerable following IndyMac's (a major sub-prime lender) downfall. The report said " most analysts kiss ass and are too afraid to stick their necks out. Those who do face a long tradition of bullying and worse." Link to article	credit analysts

27/07/08	The Times reported a study by Deloiites saying an export-led recovery due to a weak £ will not prevent a recession caused by the credit crunch and contraction in corporate spending. It predicted an economic slump like that of the 90s if unemployment and interest rates rise. It predicts the BoE will reduce interest rates to 3.5%, but this will not be sufficient to produce an early recovery.	economy

25/07/08	The Times reported inflation in Japan is of the bad 'cost-push' type, i.e., costs of raw materials and energy are forcing production costs up and hence the cost of manufactured goods. Such goods' prices are not rising because of good 'demand-pull' inflation, where increasing sales drive prices up. Japan imports almost all of its energy and metals (and 40% of its food) prices of which are rising. The economic situation is exacerbated by falling exports and a hold on wages. Consumer spending reprsents 55% of GDP and exports are considered the 'engine room' of the economy. Link to article Link to article	inflation

24/07/08	The Times reported Vodafone plans to buy back £1bn of its shares because the board believes them to be undervalued. Two days earlier the shares had fallen 14%, following an announcement of a lower revenue forecast, wiping almost £11bn off the company's value.	share buybacks

24/07/08	The Times reported the FSA is set to launch its second prosecution for insider trading, since it received such power in 2004.	insider trading

22/07/08	The Times reported that according to the Halifax, house prices have fallen in the last two months at the fastest rate in 50 years. The report suggested lenders raised rates to stem demand for loans they could not meet following the liquidity cirisis and Northern Rock's demise, which undermined house prices which then fell. The falling prices is prompting buyers to hold off in the hope prices will fall further, with the added incentive of possibly lower mortgage lending rates too.	mortgages

21/07/08	The Times reported large companies are exploiting smaller companies by delaying the payment of their invoices, by as much as 105 days and charging a settlement fee. Small companies are waiving their right to charge interest on late payments for fear of losing business. Many companies are using the credit crunch to instal permanent extensions of payment terms. Link to article	cashflow

18/07/08	The Times reported the UK government's income will reduce by £5bn owing to fewer house sales (stamp duty). Lower City bonuses, and reduced corporation tax and VAT will also reduce revenues. Revenues have been boosted by the price of oil. Link to article	Govt Revenue

17/07/08	The Times reported Pakistani shares fell 11% after stabilisation controls to (artificially) prop up share prices, were removed, wiping £2.5bn off their value. The country is facing rising inflation, depreciating currency, and a weak coalition government.	efficient markets

17/07/08	The Times reported the depreciation of the Indian Rupee (against USD), the worst in 10 years, had helped to boost Indian company Infosys' profits. The company depends on the US for its revenues.	exchange rates

17/07/08	The Times reported one of B&B's largest shareholders, Standard Life, has demanded that the board of B&B respect shareholders' pre-emption rights, in future. It had previously not done so by offering TPG shares on terms not offered to existing shareholders. Link to article	pre-emption rights

16/07/08	The Times reported Spain's largest property developer, Martinsa-Fedesa, has filed for bankruptcy, owing €5 billion in debt. An analyst blamed the fall on the fast pace at which companies grew in an era of easy bank credit. Banks have made provisions for at least €540m of Fedesa's debt	companies

14/07/08	The Times reported fears that the ethical foundation of microfinance could be damaged through high lending rates, RoE, and inappropriate use of loans granted. The industry is forecast to be worth £250bn - 10 times the amount currently lent and become a mainstream business for Citigroup and HSBC. Link to article	microfinance

14/07/08	The Times reported that BAA, the airports operator with about £12bn of debt, is asking bondholders to swap their unsecured debt for £4.5bn of new bonds with sweeteners. The swap is expected to raise the rating on the bonds which will receive 70bp more in interest and offer a 25bp acceptance bonus. No mention was made of the effect on the remaining unsecured debt holders or shareholders.	bonds

10/07/08	The Times reported the BoE has kept the base rate at 5% to stem inflation, even though a survey revealed that sales, orders, and confidence in the service sector (which covers 75% of the economy), are at their lowest since the last recession.	economy

10/07/08	The Times reported a poll of insolvency practitioners unexpectedly under-worked suggests companies are in denial that they are facing insolvency or they have not realised it because early-warning triggers had been irresponsibly kept out of loan agreements. 2009 is expected to be deafening reality wake-up call that might push some straight into administration because practitioners are over-worked. Link to article	insolvency

09/07/08	The Times reported a case illustrating the possible cost - to the tune of £23m - of relying on advice in favour of the small print and disclaimers, when investing. A group of 75 investors, including heavy weights Guy Hands and the former CEO of EMI, are suing Baker Tilly and a barrister for alleged negligence in an investment that failed.	investment

09/07/08	The Times reported that the 2-year fixed rate mortgage is now at its highest since 2000, potentially creating a payment shock for the 1.5m borrowers coming to the end of their term this year, and likely to dampen further the mortgage market. Also, house prices had fallen for 8 consecutive months to June.	mortgages

08/07/08	The Times reported that Europe's chief financial regulator, Charlie McCreevy, is intending to appoint an external supervisor to monitor rating agencies' policies and procedures, and press for reforms on ratings content, and the quality and remuneration of analysts, and implement 'an appropriate corporate culture'. The draft legislation will need to be tabled by October to be approved before next June's parliamentary elections.	rating agencies

08/07/08	The Times reported B&B's latest attempt at a rights issue would cost 13.75% (£55m) to raise £400m, vastly more than the £384m and £122m costs to raise £12bn and £4bn by RBS and HBOS respectively for their rights issues. The extra cost was attributed to 'increasing complexity' forcing up the cost of legal and other advice. The issue's underwriters are sitting on a paper loss of £94m since the current market share price of 42p is below the subscription price of 55p, if retail investors do not subscribe.	rights issues

08/07/08	The International Financial Law Review (IFLR) reported that an unusual material adverse change (MAC) clause enabled TPG to walk away from its investment deal following B&B's second downgrade. A partner close to the deal said the FSA had told underwriters who had the same get-out clause but who had disrupted B&B's first rights issue and so were under pressure to stay put: 'Look, you've thrown your toys out of the pram once, don't do it again'. Link to article	MAC clause

05/07/08	The FT reported the French regulator has fined Soc Gen €4m for serious failings in its internal control procedures. The bank had breached its rules on: separation of trading and control staff; computer system security; enforcing trading limits; providing sufficient qualified staff to monitor trading; being too focussed on market risk versus risk of fraud and day to day operations; not following up system flaws or delaying action. Managememnt were reprimanded for allowing failings in its control system to persist in spite of warning signs.	risk

05/07/08	The FT reported the IPD UK Forestry Index returned 32% in 2007, 5 times more than bonds and equities and in contrast to the fall in commercial property, owing to rising demand and prices.	commodities

05/07/08	The FT reported the FSA has brokered a lifeboat rescue in which banks have stepped in to support B&B following the departure of TPG in response to B&B's second downgrade by Moody's, and prevented a Northern-Rock style run on the bank.	banks

04/07/08	The FT reported that open interest in oil call options has increased 600% since Jan 08 - owing to consumer hedging and investors. Oil companies are buying oil put options to capture record oil prices, buying 2-year puts at $110-120 a barrel.	options

04/07/08	The Times reported HMRC had lost its £2bn case against Vodafone in which it levied, under CFC legislation, the UK corporation tax rate on a vodafone subsidiary in Luxembourg (where local tax rates are lower). The case was lost according to the judge because CFC legislation was incompatible with European law. HMRC intends to appeal. Link to article	tax law

04/07/08	The FT reported that CDS prices do not always reflect debt issue pricing. The discrepency is thought be due to illiquidity of the issuer's CDS so that comparable cash instruments are a better guide to issue pricing. The article also noted the 10,000% increase in the CDS market since 2000 to $62 trillion.	CDS

04/07/08	The FT reported that the ECB has raised interest rates to 4.25%, but the € depreciated against the $ - possibly because the market revised its expectations of further rate rises, which the ECB said might not occur.	interest rates

03/07/08	The FT reported that BT's €1 billion 7-year eurobond priced at 155bp over mid-swaps, compared to 90bp over its 6-year bond issued in Nov 07. Similarly, BMW's 7-year bond priced at 70bp over, compared to 37bp over its 5-year bond issued in Oct 07. Possible explanations for the marked hike in margins: investors are being more selective and there has been recent heavy supply. Link to article	bonds

02/07/08	The Times reported UK manufacturing input prices (raw material and energy costs) and manufactured goods prices, both rose to record levels since 1992 and 1999 respectively, stoking fears that the BoE would raise rates to curb inflation. Industrial output and orders in June showed their sharpest falls for almost a decade. The combination of inflation and depressed economic output is indicative of stagflation.	economy

01/07/08	The FT reported that Southern Cross's business model of high operating leverage from sale and leaseback of properties rather than their ownership, is under strain in the current credit crisis, and needs to be on a longer-term basis.	companies

01/07/08	The FT reported that Pendragon, the car distributor, is unable to forecast its profits because of unpredictable trading, yet just two months ago it was saying its profit would be at the top-end of market expectations. Its shares fell 23%.	companies

01/07/08	Trinity Mirror's shares fell 28% following its announcement that its profit forecast would be 10% below expectations. Its dividend was expected to be cut and, not surprisingly, it has cancelled its outstanding £175m share buy-back programme. Property and car advertising had both fallen.	companies

01/07/08	The FT reported the margin between LIBOR and Base has risen to 72bp and the cost of insuring investment-grade companies (in the US) is at its highest in the last 3 months - both indications that credit fears persist.	markets

30/06/08	The Times reported inflation in the Eurozone had risen to 4% - the highest since the introduction of the €, making it almost certain ECB rates will rise this week, and probably again thereafter. The combination of high rates, tight credit, a strong €, and weak growth are expected to curb and then weaken inflation over the coming months.	inflation

30/06/08	The FT reported the MSCI-Asia Pacific Index has fallen 13% this year, the biggest half-year fallen since the Japanes economicv bubble burst of 1992. A number of Asian countries have stabilisation funds to intervene and support their stock markets in times of volatility.	markets

30/06/08	The Times reported care home operator, Southern Cross is considering selling properties to repay £46m of debt it has failed to repay on schedule. Banks have granted a 4-week extension. A renegotiation of unpaid debt is likely to prove expensive. The shares dived 75%	companies

28/06/08	The Times reported that the housebuilder Berkeley Group is taking a contrarian view and buying up land that has fallen in price by 25% where many others fear to, hoping that funds that would otherwise have been returned to shareholders will be later with a substantial addition from the recovery in market prices. Link to article	property

27/06/08	The Times reported poor UK economic growth, reduced investment by businesses, and the prospect of a consumer retreat from spending, all suggested the BoE will not raise interest rates for a few months	economy

26/06/08	The Times reported that HSBC is charging upto £9,999 as an arrangement fee on its mortgage products. Such fees have risen upto 7 times. HSBC blamed the rises on the higher cost of funding mortgages. Ironically, their 'rate-matcher' mortgage is, they say, intended to help borrowers remortgaging at a higher rate.	mortgages

26/06/08	The Times reported that so-called payday loans - short term loans that are paid off shortly after payday - were becoming more prevalent, even though their APRs are over 1300% (compared to 20% for credit cards and 18% for overdrafts). Link to article	debt

25/06/08	The Times reports a variety of sources that paint a picture of the buy to let market that is at odds with many readers' opinions. Who is to be believed? Is this an example of irresponsible journalism and marketing by those who have a commercial interest? Link to article	buy to let

24/06/08	The Times reported the US Fed is to monitor investment banks, and the SEC is to monitor commercial banks, to provide integrated and more effective regulation of the US markets and so avoid another Bear Stearns scenario. Link to article	regulation

23/06/08	The Times reported that upholsterer ScS is in talks to receive a working capital facility from a potential buyer that will enable it to continue to operate. Earlier in the month, a credit insurer had refused insurance. The company's shares were suspended today and their value could be negligible upon sale, according to the company. Land of Leather has similar problems, and is being rescued by a refinancing package involving distressed debt investor, Agilo. Link to article	companies

22/06/08	The FT reported concern among European CEOs of the ECB raising interest rates to curb inflation, the € appreciating further against the $ if the Fed did not raise rates also, and the risk of stagflation. Raising consumer prices and expanding production facilities in emerging markets, to offset rises in production costs, were being considered.	economy

20/06/08	The Times reported a surge of planned issuance of Samurai debt by foreign banks in the Japanese domestic debt market - attracted by relatively low debt costs and liquidity (JGBs offer a coupon of just 1%), but there is no mention in the report of currency risk and the cost of hedging this.	debt

19/06/08	The Times reported views by Goldman Sachs and Credit Suisse that: the housing market was at the start of a "deep downturn" that could last upto three years, and that commercial property companies' shares could fall 26%, on top of the 18% fall since June last year.	shares

19/06/08	The FT reported that theTreasury and FSA are to review Rights Issues rules in response to recent short-selling-related problems encountered by UK issuers. One possibility is to reduce the time allowed for shareholders to accept their rights from three to one or two weeks. Another, more drastic move, is to remove pre-emption rights altogether as in the US.	rights issues

18/06/08	The Times reported that the BoE's governor has informed the Chancellor that inflation is unlikely to fall below 3% until well into 2009 (the target is 2%). He ruled out an abrupt rise in interest rates owing to the adverse effect this would have on economic output and jobs. He said the rise in inflation would be ended by an economy slowed down by the effects of rising household costs on household income, and the credit crunch.	inflation

17/06/08	The Times reported the average 2 year fixed mortgage is 6.75% pa, the highest in 10 years (but Base was 7% then versus 5% now). 148,000 houses are being built, the lowest number since 1945, and far short of the government target of increasing available homes each year by 240,000.	property

16/06/08	The Times reported that a survey by BDO Stoy Hayward that says this year, the greatest number of companies will go bust (18,000) since the 2002 dot.com bubble burst, and blamed the credit crunch for it. The smallest percentage (24%) since 2002 of companies surveyed by LLoyds TSB in May expect their trading situation to improve over the next 12 months; in April the percentage was 42%.	companies

15/06/08	The Times tells the tale of German yacht builder, Bavaria yachtbau, and the treacherous waters it has been steered into by its managerment, Private Equity investors and bankers. Goldman Sachs, one of the banks that lent to PE group Bain Capital to buy the company, offloaded €100m of its €450m loan at 65% of face value. In the UK, Foxtons, Crest Nicholson, McCarthy & Stone, and Countrywide (all PE deals) have all seen their debt relegated to distressed debt status. Link to article	distressed debt

14/06/08	The FT Weekend reported that SMEs are seeking more mezzanine finance and asset-based financing such as invoice discounting, as bank lending becomes scarce or linked to the higher LIBOR rate not Base.	SMEs

13/06/08	The Times reported a move by the FSA to control short-selling of shares of companies undergoing a rights issue. The FSA announcent was prompted by HBOS's share price being driven below its rights offer price of 275p by traders, and it sent the price up almost 10%, to 311p	equity

12/06/08	The FT reported research by Fitch that US LBOs were downgraded three times more than companies in the high yield market, a reflection of LBOs over-leveraging, earning less revenue from consumers, and cov-lite loan agreements that lack early-warning triggers that might have avoided financial distress and a downgrade.	LBOs

12/06/08	The Times reported HBOS's shares had fallen below the rights issue price, leaving the underwriters potentially holding the entire £4bn issue. Whilst hedge funds short-selling the shares for speculation is understandable, what is not is the possibility that sub-undwriters had done so, but as a hedge. Link to article	equity

11/06/08	The Times reported over 30,000 homeowners had taken out 100% LTV (loan to value) mortgages since last January, many of whom are now likely to have fallen into the negative equity trap.	mortgages

10/06/08	The FT reported that £ rose against the $ owing to expectations that £ interest rates would not fall owing to record producer price inflation. The Times reported that the $ strengthened against the £ owing to expectations that $ interest rates would rise to stem inflation. The price of gold - a typical hedge against a weakening $ - fell over 2%.	currencies

10/06/08	The FT reported that BIS research suggested the high $ LIBOR versus central bank rate was due to US banks funding through the money markets (MM) and on-lending $ to European banks. As the credit crunch spread, MMs ceased to lend and invested in safer Treasuries, prompting US banks to cease lending to European banks. This would explain why the ECB's $25bn auction was oversubscribed ($65bn) by banks. A further explanation for a high $ LIBOR was because most of the banks that set it were $-starved European banks.	markets

10/06/08	The FT reported that some banks and hedge funds (including Lehman and GLG and Fortress Investment) had experienced earnings losses owing to inefficient hedges - the prices of the securities being hedged diverging from that of the corresponding hedging instrument.	risk

10/06/08	The FT reported banks have $6 trillion in undrawn loan committments to corporates - the highest for over 10 years. This is unwelcome when banks' capital is stretched, and will become more so when the loans are drawn down, plus the loan terms might be less than favourable for banks.	loans

09/06/08	The FT reported Weis Development of the US is seeking £75m on AIM to acquire heavily discounted development land from distressed housebuilders and lenders, in the US sunbelt states from California to Florida. It intends to develop the land when the market returns.	companies

09/06/08	The FT reported concern that housebuilders' recent land bank additions would be revalued downwards significantly - dashing hopes of a positive ROI from subsequent development. Additional concerns were: reduced labour resource as migrants emigrated, rising input costs, and material risk of breaching gearing covenants, especially at Barratts..	companies

06/06/08	The Times reported markets were factoring in a strong probability of a rise in the UK Base rate by December, following the surprisingly aggressive stance announced by the ECB on euro-zone interest rates.	markets

05/06/08	The Times reported the BoE's MPC has decided today to leave the base rate at 5%, defying calls to ease the burden on consumers saddled with mortgages and rising bills, but attempting to stem inflation.	economy

05/06/08	The Times reported the OECD's pessimistic outlook for UK growth over the next two years, and warned of the consequent risk of the Chancellor increasing taxes, reducing spending and increasing Government borrowing, but the OECD supported the BoE's likely decision to withhold further rate cuts owing to inflationary pressures.	economy

05/06/08	The Times reported the Council of Mortgage Lenders forecasts 45,000 homes will be repossessed in 2008, the highest since 1995, but below the 75,500 repossessed in the 1991 housing crash.	mortgages

04/06/08	The Times reported analysts' pessimistic outlook for the UK house building sector, which sent the sector's shares farther south - the market value of Britain's 7 largest housebuilders dipping to under £5bn compared to £18.5bn just a year ago. Barratt was singled out owing to its high gearing and a potential rights issue.	property

03/06/08	Reuters reported Ferrovial has won backing for a $15bn loan to refinance its acquisition of airports operator, BAA. The refinancing plan includes servicing bondholders' claims via a securitisation of BAA's airports.	bonds

02/06/08	The FT reported that private equity firm TPG is to acquire a 23% stake in Bradford & Bingley, the troubled mortgage lender, for £179m. Such a move could signal the bottoming of equity prices of mortgage lenders and might deter a takeover.	banks

01/06/08	The Times reported Tesco is to buy-out RBS's 50% stake in Tesco Personal Finance for £1 billion - a move that will involve Tesco seeking its own banking licence.	banking

30/05/08	The Times reports that Northern Rock intends to double its debt management staff, a sign that rising food and energy costs and falling house prices will bite. The report noted that Morgan Stanley expects close to 400,000 borrowers will be in negative equity if house prices fall by a further 5% (around as much as they have already fallen this year).	mortgages

29/05/08	The Times reported the Nationwide house price index run of consecutive falls was the longest since 1992 and May's fall the greatest in the index's 17 year history. However, prices are still 5% and 10% higher than they were 2 and 3 years ago, Link to article	housing

28/05/08	The FT reported a property fund is to raise £300m of equity via a deeply discounted rights issue to avoid a breach of its debt facility loan-to-value (LTV) covenant. Continued declines in value of the fund has raised its LTV to 58.8%, just short of the 60% limit allowed under the covenant. The funds major investor is underwriting the issue. Link to article	property

28/05/08	The Wall Street Journal reports increasing pressure from buyers on mortgage lenders to repurchase defaulting mortgage loans. Countrywide Financial, the USA's largest mortgage lender, has seen its repurchase estimated liability rise from $365m to $935m in a year.	mortgages

28/05/08	The Times reported that Foxtons estate agents have lost an appeal to claim fees in a joint agency where they introduced the buyer but the buyer bought through the other joint agent.	property

26/05/08	The Times reports that over 90% of UK companies surveyed expect an economic slowdown.	economy

26/05/08	The Times reports banks are discriminating against mortgage brokers by offering better rates to direct mortgage applicants, apparently to control lending volumes. The number of brokers, already down 15%, is expected to decline by another 10%. Independence of advice and choice offered by brokers, are likely to also fall - to the potential detriment of homebuyers.	mortgages

25/05/08	The Times reports an HSBC report that UK companies are planning to raise a record £22bn through rights issues. Collins Stewart predicted 39 companies might need to do so to avoid dividend cuts. Unsurprisingly, those affected include banks and house builders, but also some retailers e.g.,WH Smith and Dixons. Cash receipts from takeovers, dividend receipts, and cash-hoarding by fund managers, are likely to satisfy rights cash calls in the short-term.	equity

23/05/08	The Times revealed the Nationwide Building Society has marked down the value of its Treasury assets by £726m owing to - the society's CEO said - market liquidity reasons rather than a deterioration in asset quality.	mortgages

23/05/08	The FT reported that sub-prime car buyers are being denied finance by lenders. Cattles' Welcome Car Finance has withdrawn funding 'from hundreds of car dealerships' - a move that would affect an estimated 3000-4000 car buyers a month. Link to article	car finance

22/05/08	The FT has reported findings of a survey on commercial property bank lending in 2007 that interest rate margins and arrangement fees reached record highs, and loan-to-value ratios record lows. Failure to securitise loans has left bank balance sheets bloated - a worrying prospect given falls in property values in some parts of 20% and the risk of loan defaults. Link to article	property

22/05/08	Reuters reported UBS has launched a $16bn rights issue, taking its total capital raising to CHF37bn - almost the same as its total $37bn write-offs from the subprime mortgage fiasco. The bank - whose share price has fallen 36% this year - has agreed to offload $15bn of these mortgages to US fund manager: Blackrock	banks

21/05/08	The Council of Mortgage Lenders forecasts UK house prices will be down 7% in the 4th quarter this year compared to that in 2007, and mortgage approvals and house sales to be each down by 35%.	mortgages

20/05/08	The FT reported that Imperial Tobacco surprised some observers with a higher than expected cash call to refinance its acquisition of Spanish rival Altadis last year. A 19% appreciation of the Euro since the acquisition or conservative gearing pressure from rating agencies might explain the need for additional cash.	equity

19/05/08	The Times reported that the Royal Institute of Chartered Surveyors has warned that house prices could fall 7% over the next year (2% in 2009). Savills predicted a fall of upto 25% over the next two years. [Take your pick!]. RICS also warned house sales will fall by 40% this year owing to the lack of mortgage funding. Despite unsold houses apparently piling up at estate agents, the report revealed house owners are actually demanding more for their properties.	property

19/05/08	The FT reported findings of a study on directors' dealings in their UK banks' shares, that over 80% have lost money (on paper) over the past year's dealings. Perhaps their insider advantage was insufficient in the light of dislocated and nervous financial markets, or perhaps the equity markets are becoming strongly efficient.	markets

19/05/08	The Times reported counties and London boroughs that are leaders and laggards in property price rises. Top place goes to Oxfordshire and City of Westminster respectively. Link to article	property

18/05/08	The FT reported that Appollo - the private equity fund - is considering buying up some of the estimated $40bn of unwanted debt on banks' balance sheets that they could not securitise, at a discount. The move indicates a change of direction for private equity funds away from harder-to-find LBOs to potentially rich pickings in the distressed debt market.	distressed assets

16/05/08	The FT reported that UK banks are looking to repackage £80- £90bn of mortgages as securities to be exchanged for bills under the swap facility announced by the UK government in April - far higher than the £50bn initial size of the facility. The report highlighted concerns that the ECB's liquidity-enhancing facility is being exploited by some banks offloading their ineligible assets, or deliberately creating them to swap for Treasuries. Link to article	liquidity

15/05/08	Reuters reported comments by the FSA's CEO Hector Sants, that the credit crisis had moved on from its initial phases affecting liquidity and solvency, to the third phase affecting the real economy.	markets

15/05/08	The FT reported that Blackrock (the private equity firm) is to buy $7bn of distressed debt offloaded by banks, most of which is loans that financed its and its competitors' buyouts. Blackstone president, Tony James, noted that such loans “were sold by banks because of regulatory and capital pressure, not because such sales were an economically sensible thing to do”. Link to article	distressed assets

14/05/08	The Times reported that the UK inflation rate has surged to 3% owing to sharp rises in the cost of food and fuel, dampening hopes of further base rate cuts.	Inflation

14/05/08	Reuters reported a surprising U turn by Bradford & Bingley in announcing a rights issue. Other banks could follow B&B, HBOS, and RBS with a rights issue to prop up their dented equity following asset write-downs. Also on Reuters, Panmure Gorden reckon further bank asset write-downs are possible, and estimate 30% of mortgages will have negative equity if house prices fall 20%.	mortgages

11/05/08	The FT reported a £200m fund is being set up to exploit the housing market downturn and demographics of London and the 2012 Olympics. Link to article	property

29/04/08	The Times reported that abnormal price movements in the two days prior to a takeover were observed in 29% of takeovers in 2007, higher than 2006 and 2005. The FSA used such data as an indication of the level of insider trading, but acknowledged the abnormality could also be caused by leaks by the company, analysts' commenst, and traders responding to other trades.	insider dealing

01/04/08	Savills reported continuing pessimissm among developers in the UK commercial property market, its commercial acitivity Index declining in March to its lowest level since 2003 (-16.4%). The outlook over the next quarter is also gloomy, developers attributing the gloom to weak demand and rising costs of borrowing. For the full report, contact ACF.	commercial development
17/03/08	The Times reported calls for middle eastern countries to end their currency pegs to the US$ as the latter depreciates and US interest rates are kept low, preventing Gulf states from raisng interest rates to curb high inflation. Costs of imports are rising; foreign labour is deterred because earning power is eroded by the currency peg. Instead of the $, pegging to a basket of currencies, as Kuwait has done, is predicted, in addition to monetary union in the region. opposing movements in US and middle eastern economies strengthens the currency decoupling argument. Link to article	currency pegs