LBO Funds Collapse: Bear Stearns, WaMu, Blackstone
Spoken with "The Crying Game" playing in the background.... 08/23/07: The Nattering Naybob:
"This is no longer a liquidity issue, its a solvency problem that's gonna hit hard in the next 120 days."
And we Nattered numerous times about leveraged buyouts that would fail...
The Cash Starved Crying Game... Bear Stearns plunged 8.2% on negative talk regarding the company
and a Dow Jones report that Moody's cut its rating on Bear's Alt-A deals. The 2nd biggest underwriter of mortgage backed bonds,
suffered its largest decline since 1999, on speculation the company lacks sufficient access to capital.
Dead Pool Rising... Friday, Merrill reiterated its "sell" rating on WaMu a day after S&P cut the bank's long-term credit rating to ``BBB'' from ``BBB+.''
Today, Fitch ratings lowered WaMu's long term issuer default rating (IDR) to BBB from A-. Analyst Kenneth Bruce:
"We continue to forecast heightened losses at Washington Mutual which are likely to significantly overwhelm Washington Mutual's current reserve."
Closed end bond funds trapped... Joe Mysak tells us why if you own preferred shares sold by a closed end bond fund, you might have to hold them for a long, long, time.
The shares have been caught in the freeze-up of the auction-rate securities market and there are no takers at any price.
LBO fund plunge... manager of the world's largest buyout fund, said Q4 profit plunged 89%.
Blackstone Group had a Q4 net loss of $170 million, vs net income of $1.18 billion a year earlier. Blackstone, which has lost 55% of its market value since the IPO,
hasn't completed a takeover of more than $2 billion in five months as credit costs doubled and the LBO market shut down.
The company will continue to post net losses during the next five years because of the IPO vesting expenses. W
all Street analysts base their estimates on what the firm calls "economic net income," which doesn't conform with
generally acceptable accounting principles for net income and
excludes compensation costs related to the vesting period for Blackstone executives' ownership stakes in the firm.
"This is no longer a liquidity issue, its a solvency problem that's gonna hit hard in the next 120 days."
And we Nattered numerous times about leveraged buyouts that would fail...
The Cash Starved Crying Game... Bear Stearns plunged 8.2% on negative talk regarding the company
and a Dow Jones report that Moody's cut its rating on Bear's Alt-A deals. The 2nd biggest underwriter of mortgage backed bonds,
suffered its largest decline since 1999, on speculation the company lacks sufficient access to capital.
Dead Pool Rising... Friday, Merrill reiterated its "sell" rating on WaMu a day after S&P cut the bank's long-term credit rating to ``BBB'' from ``BBB+.''
Today, Fitch ratings lowered WaMu's long term issuer default rating (IDR) to BBB from A-. Analyst Kenneth Bruce:
"We continue to forecast heightened losses at Washington Mutual which are likely to significantly overwhelm Washington Mutual's current reserve."
Closed end bond funds trapped... Joe Mysak tells us why if you own preferred shares sold by a closed end bond fund, you might have to hold them for a long, long, time.
The shares have been caught in the freeze-up of the auction-rate securities market and there are no takers at any price.
LBO fund plunge... manager of the world's largest buyout fund, said Q4 profit plunged 89%.
Blackstone Group had a Q4 net loss of $170 million, vs net income of $1.18 billion a year earlier. Blackstone, which has lost 55% of its market value since the IPO,
hasn't completed a takeover of more than $2 billion in five months as credit costs doubled and the LBO market shut down.
The company will continue to post net losses during the next five years because of the IPO vesting expenses. W
all Street analysts base their estimates on what the firm calls "economic net income," which doesn't conform with
generally acceptable accounting principles for net income and
excludes compensation costs related to the vesting period for Blackstone executives' ownership stakes in the firm.
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