ABCP Rises, LBO Debt Plunges, Equityless Merrill Flounders
ABCP increases... Commercial paper backed by mortgages, credit card loans and other assets rose 3.5% or $26.3 billion to a seasonally adjusted $773.8 billion for the week ended Jan. 2.
This is the first increase since the ABCP market froze in August, and the largest in 7 years. The broader commercial paper market rose $13.2 billion in the most recent week to $1.8 trillion.
The rise in asset backed commercial paper, which matures in 270 days or less, broke a 20 week decline of $447.6 billion, or 37%, that began after the market reached a peak on Aug. 8 of $1.2 trillion.
Make em an offer they can't refuse... The New Jersey Casino Control Commission revoked Tropicana's gaming permit last month, citing
"lack of business ability, a lack of financial responsibility and a lack of good character, honesty and integrity."
Tropicana borrowed $3.1 billion a year ago to help fund the takeover of its parent Aztar Corp. by Columbia Sussex.
Tropicana's lenders agreed on Dec. 21 to delay a declaration of default on $1.34 billion of loans in return for a $7 million payment and a 3.6 % increase in the interest rate to 10.5%, costing about $48 million more a year.
The company pledged to sell the Tropicana in New Jersey and casinos in Indiana and Mississippi to repay the debt. They better or else...
Caryle paid and keeps paying more, or the Leveraged Buy Out LBO Blues...
Carlyle bought LifeCare, the third largest long term health care operator in the U.S., for $555 million in August 2005.
Carlyle was forced to invest an additional $6 million in November after LifeCare broke a covenant limiting debt to less than 8.5 times earnings before interest, tax, depreciation and amortization, or Ebitda.
LifeCare asked their banks to change the loan terms to allow Carlyle to invest more money in November.
The banks demanded a $2 million payment and raised the interest rate on $250 million of loans by 1 percentage point to 4.25% more than Libor.
The increased interest will cost LifeCare an extra $2.5 million a year. Libor is 4.68%, putting the LifeCare loans at 8.93%, not cheap.
Falling LBO values... LifeCare's term loan trades at about 88 cents on the dollar, compared with 93 cents two months ago.
The $150 million of 9.25% notes due in 2013 have fallen to 66 cents on the dollar from 74.5 cents on Oct. 31.
$551 billion of leveraged loans tracked by S&P have fallen below 95 cents on the dollar, from 100 cents before June.
Falling value or more CDO than they are worth...
In September 2006, with their stock at $79, Merrill's investments and financing related to subprime mortgages and CDOs totaled...
about $72 billion more than the company's stock market value at the time.
The Nattering One muses... since then Merrill has written down the value of all of its mortgage backed holdings, including CDOs...
by $7.9 billion or 11% and declared a loss for the third quarter.
Today, Merrills stock is priced at $52, 34% less than in Sept 2006 and 47% less than its Jan 07 $98 peak.
Q4 profit will be wiped out by $10-15 billion in additional write downs. Wonder how "safe" the stock or "non" equity holders feel these days?
FYI Bear Stearns purchased the now famous plunging CDO's that started the markets "price" discovery and freeze from Merrill, and did so on 90% credit.
When Merrill called Bears margin, Bear balked, Merrill seized and was able to liquidated very little at 20 cents on the dollar.
This "blowing up of the skirt" exposed the crotch rot in this financial house of cards, and the rest is history.
This is the first increase since the ABCP market froze in August, and the largest in 7 years. The broader commercial paper market rose $13.2 billion in the most recent week to $1.8 trillion.
The rise in asset backed commercial paper, which matures in 270 days or less, broke a 20 week decline of $447.6 billion, or 37%, that began after the market reached a peak on Aug. 8 of $1.2 trillion.
Make em an offer they can't refuse... The New Jersey Casino Control Commission revoked Tropicana's gaming permit last month, citing
"lack of business ability, a lack of financial responsibility and a lack of good character, honesty and integrity."
Tropicana borrowed $3.1 billion a year ago to help fund the takeover of its parent Aztar Corp. by Columbia Sussex.
Tropicana's lenders agreed on Dec. 21 to delay a declaration of default on $1.34 billion of loans in return for a $7 million payment and a 3.6 % increase in the interest rate to 10.5%, costing about $48 million more a year.
The company pledged to sell the Tropicana in New Jersey and casinos in Indiana and Mississippi to repay the debt. They better or else...
Caryle paid and keeps paying more, or the Leveraged Buy Out LBO Blues...
Carlyle bought LifeCare, the third largest long term health care operator in the U.S., for $555 million in August 2005.
Carlyle was forced to invest an additional $6 million in November after LifeCare broke a covenant limiting debt to less than 8.5 times earnings before interest, tax, depreciation and amortization, or Ebitda.
LifeCare asked their banks to change the loan terms to allow Carlyle to invest more money in November.
The banks demanded a $2 million payment and raised the interest rate on $250 million of loans by 1 percentage point to 4.25% more than Libor.
The increased interest will cost LifeCare an extra $2.5 million a year. Libor is 4.68%, putting the LifeCare loans at 8.93%, not cheap.
Falling LBO values... LifeCare's term loan trades at about 88 cents on the dollar, compared with 93 cents two months ago.
The $150 million of 9.25% notes due in 2013 have fallen to 66 cents on the dollar from 74.5 cents on Oct. 31.
$551 billion of leveraged loans tracked by S&P have fallen below 95 cents on the dollar, from 100 cents before June.
Falling value or more CDO than they are worth...
In September 2006, with their stock at $79, Merrill's investments and financing related to subprime mortgages and CDOs totaled...
about $72 billion more than the company's stock market value at the time.
The Nattering One muses... since then Merrill has written down the value of all of its mortgage backed holdings, including CDOs...
by $7.9 billion or 11% and declared a loss for the third quarter.
Today, Merrills stock is priced at $52, 34% less than in Sept 2006 and 47% less than its Jan 07 $98 peak.
Q4 profit will be wiped out by $10-15 billion in additional write downs. Wonder how "safe" the stock or "non" equity holders feel these days?
FYI Bear Stearns purchased the now famous plunging CDO's that started the markets "price" discovery and freeze from Merrill, and did so on 90% credit.
When Merrill called Bears margin, Bear balked, Merrill seized and was able to liquidated very little at 20 cents on the dollar.
This "blowing up of the skirt" exposed the crotch rot in this financial house of cards, and the rest is history.
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