Merrill L., Citigroup, UBS, Morgan S. etc. & il credit crunch - 3

[giveme5]

Si proviene da qui

obbligazioni Mellyl Lynch, Goldman Sachs, L. Brothers Tomo 2

e da questa istantanea di fine 2007
.

[giveme5]

Il nuovo boss di Merrill prosegue di ramazza: via 2 top-manager della precedente gestione.

From The Times
January 29, 2008

Two more pay price for Merrill's sub-prime woes
Tom Bawden in New York

Merrill Lynch’s woes claimed another two senior jobs yesterday as it emerged that Lang Gibson, the director of research at the division responsible for about $24 billion (£12 billion) of losses, had quit along with Ahmass Fakahany, the co-president.
The bank confirmed late last night that Mr Fakahany, who oversaw bond risk management between March 2005 and May 2007, would step down on Friday.
John Thain, who in December replaced Stan O’Neal, the first leading Wall Street chief executive to resign because of the credit crunch, has been tightening Merrill’s risk management as he seeks to restore the bank’s reputation and to minimise further losses.
Mr Gibson was director of research for collateralised debt obligations (CDOs), the complex pools of bonds and other mortgage-backed securities that have accounted for the bulk of the industry’s sub-prime losses.

He was central to the group’s move into CDOs as Merrill Lynch went from being a relatively small player in the market in 2000 to the biggest underwriter of CDOs between 2004 and mid-2007, when the market began its meltdown. Mr Gibson was not thought to have lined up another job. Merrill Lynch declined to comment on the position of Mr Gibson.
Analysts said that Mr Fakahany should also bear some of the blame for Merrill’s writedowns, since he backed the appointment in 2006 of the executives who oversaw the loss-making bond investments. He was promoted to co-president in May 2007.

Mr Thain, a former president of Goldman Sachs, has hired Noel Donohue, head of risk management at Goldman for ten years before joining Dune Capital, the hedge fund, as chief operating officer in 2005. Since his appointment, Mr Thain has arranged about $12.8 billion of capital injections from groups such as Mizuho, the Japanese bank, and Temasek, the Singaporean Government’s investment fund.

Analysts fear that Merrill Lynch could take further multibillion-dollar losses before it can draw a line under the sub-prime crisis. About $3.1 billion of the more than $16 billion of losses that Merrill took in the fourth quarter related to its bond insurance.
Insurers of mortgage bonds guarantee to pay the interest and principal on the securities, but they face enormous claims, which they are expected to struggle to meet.

[i98mark]

La vera storia dell'acquisizione di Countrywide da parte di Bank of America: un deal dettato dalle esigenze di approvvigionamento di liquidità e dalle pressioni dei regolatori. Dal WSJ online.

Countrywide Deal Driven by Crackdown Fear
By JAMES R. HAGERTY and JOANN S. LUBLIN
January 29, 2008; Page A3

The fear of potential regulatory crackdowns helped drive Countrywide Financial Corp. into the arms of acquirer Bank of America Corp., people familiar with the situation say.

Though the big home-mortgage lender faced large and unpredictable losses on defaults, the more immediate danger was pressure from regulators, politicians and rating firms, these people say. That realization helped spur Countrywide co-founder and Chief Executive Angelo Mozilo to call Bank of America in December and start talks that led to the Charlotte, N.C., bank's $4 billion deal to acquire Countrywide, which was announced Jan. 11.

Countrywide, due to report fourth-quarter results today, faced "a cascading series of regulatory issues" as it pondered whether to try to stay independent, says one person briefed on the situation. A Countrywide spokeswoman declined to comment.

After falling home prices and mounting mortgage defaults rattled investors in mid-2007, Countrywide could no longer raise money through short-term borrowings in the capital markets or sales of mortgages other than those that could be guaranteed by government-sponsored investors Fannie Mae and Freddie Mac. That forced Countrywide to rely much more heavily on two other sources of funding: deposits at its savings-bank unit and borrowings -- so-called advances -- from the Federal Home Loan Banks system. But the sustainability of those funding sources was increasingly in doubt by late last year.

In late November, Sen. Charles Schumer, a New York Democrat, wrote to regulators of the 12 regional Federal Home Loan Banks, cooperatives that lend money to banks and other financial institutions. Mr. Schumer argued that a surge in Countrywide's home-loan bank borrowings to $51.1 billion as of Sept. 30 from $28.8 billion three months earlier might "pose a risk to the safety and soundness of the FHLB system as a whole."

Countrywide already was near a cap on the amount of FHLB borrowings it could obtain under rules that limit those to 50% of assets held by the borrower. Ordinarily, FHLB borrowings equal no more than about 15% to 25% of a bank's assets, a former bank regulator says, and much higher levels would tend to make regulators jittery.

Sen. Schumer says Countrywide now has reduced its FHLB borrowings by about $4 billion. The next quarterly disclosures on those borrowings are due in late March.

A spokesman for Countrywide says the FHLB borrowings declined "primarily because of growth in customer deposits, which reduced our need" for funding from the home-loan banks. "This decline was not driven by any action taken by the FHLB of Atlanta," the spokesman says.

Countrywide's deposits from consumers, attracted by unusually high interest rates of more than 5% on certificates of deposit, grew rapidly in recent months, expanding by $2.3 billion in December alone. Countrywide could attract that money, despite its financial problems and $1.2 billion third-quarter loss, because the deposits are insured by the Federal Deposit Insurance Corp.

But advisers to Countrywide's board -- including representatives of Promontory Financial Group, a Washington consulting firm headed by Eugene Ludwig, a former U.S. bank regulator -- saw the risk that the FDIC would start asking tougher questions about the safety of funding Countrywide's large mortgage holdings through those insured deposits, people familiar with the discussions say. These people viewed the FDIC's chairman, Sheila Bair, as a tough regulator willing to take on the big players.

An FDIC spokesman declined to comment on Countrywide. There is no indication that the FDIC plans any action that would jeopardize its insurance of Countrywide deposits.

Another threat to the deposit base was that further cuts in Countrywide's credit ratings could prevent it from placing funds from custodial accounts at its savings-bank subsidiary, the company has disclosed.

Meanwhile, Countrywide was dealing with investigations of its lending practices by attorney-general offices in California, Illinois and Florida and facing suits from shareholders, borrowers and employees. The Securities and Exchange Commission has been investigating share sales by Mr. Mozilo as well as Countrywide's accounting. Mr. Mozilo has denied wrongdoing

[giveme5]

Mark, riguardo i bond di Countryw. ci hai capito qualcosa ?
Tenendo conto di quanto riportava qui http://www.finanzaonline.com/forum/s...5&postcount=15 il buon Davide8, Bank of America se ne assume piena responsablità o no ?

Poi: non ho mai acquistato titoli che richiedano un investim. min. di 50.000€, come funziona ? Si acquista 50.000 nominale che (quotando il titolo 78) comporta un esborso di 39.000€ o devo proprio sborsare 50.000 € ?

P.S.
di quei bond si parla qui Countrywide Fin.05/10 Flr Isin: Xs0236024310

[i98mark]

Originalmente inviato da giveme5

Mark, riguardo i bond di Countryw. ci hai capito qualcosa ?
Tenendo conto di quanto riportava qui http://www.finanzaonline.com/forum/s...5&postcount=15 il buon Davide8, Bank of America se ne assume piena responsablità o no ?

Poi: non ho mai acquistato titoli che richiedano un investim. min. di 50.000€, come funziona ? Si acquista 50.000 nominale che (quotando il titolo 78) comporta un esborso di 39.000€ o devo proprio sborsare 50.000 € ?

P.S.
di quei bond si parla qui Countrywide Fin.05/10 Flr Isin: Xs0236024310

Ciao Giveme5, non ho letto il documento: volevo farlo, ma poi ho dimenticato...

Se acquisti un titolo che ha un nominale di 50k e quota a 50 (per esemplificare) paghi 25k più il prorata, come al solito...

[i98mark]

Sul tema, riprendendo timori che Bank of America possa non rispondere dei bond di Countrywide anche a seguito dell'acquisizione, un interessante articolo del WSJ...

Countrywide Bonds Stir Angst As BofA Avoids Voicing Support
By DAVID REILLY and PETER EAVIS
January 28, 2008; Page C1

Countrywide Financial Corp. bondholders saw Kenneth D. Lewis as a knight in shining armor when the Bank of America Corp. chairman and chief executive announced a takeover of the mortgage lender.

Now some are having doubts that he will ride to their rescue.

The reason: The largest U.S. bank in stock-market value has given few details about what will happen to about $25 billion in Countrywide bonds as part of the deal. As a result, some bondholders are worried that Bank of America will structure the agreement so that it doesn't fully back the mortgage lender's debt obligations. If that happens, Countrywide's debt may not rise in value to levels more in line with Bank of America bonds.

"For somebody who holds Countrywide debt, you would love to see Bank of America assume all of the obligations of Countrywide," said Sean Jones, managing director of Egan-Jones Ratings Co., an independent credit-rating firm. "But it's not clear that this is going to happen."


Terms of the deal are crystal-clear for Countrywide shareholders. They get 0.1822 Bank of America share for each Countrywide share, valuing the Calabasas, Calif., company at about $4.2 billion, or $7.19 a share, based on Bank of America's stock price of $39.48 in 4 p.m. New York Stock Exchange composite trading Friday. That, of course, is if the deal goes through, and worries about that explain why Countrywide stock closed at $6.02 a share Friday.

Bondholders are concerned about deal consummation, too. They face the additional mystery of how that debt will be treated after the merger, announced Jan. 11. In a conference call that day, Mr. Lewis deflected questions about how Countrywide's debt obligations would fit into the post-deal capital structure.

The mortgage lender is "a separate legal entity that has had their obligations and we have no incremental obligations around that," he said.

Deal documents filed Jan. 17 outlined a preliminary structure in which Bank of America would merge Countrywide Financial into a new subsidiary called Red Oak Merger Corp. Mergers often involve special vehicles such as this, but bondholders then look for companies to say they will implicitly back the debt -- something Bank of America has so far declined to do.

"It's not uncommon to create a shell company to merge with that first, but in this case it's certainly peculiar when they won't come out on a conference call and answer a question about whether they're going to assume the obligations," said Christopher Whalen, managing director at Institutional Risk Analytics, a banking research firm. "They're creating uncertainty."

Asked about its planned legal structure for the deal, a Bank of America spokesman said Friday it "is premature to discuss this because we've just begun to plan the transition." Bank of America previously said it expects the deal to close sometime early in the third quarter.

Besides worrying that the deal might not close, the fact that Countrywide shares are trading about 20% below the implied deal value also reflects jitters that the transaction price could be renegotiated. One concern is that the mortgage turmoil might have caused far more damage to Countrywide than is currently visible from the outside.

To bondholders, changes in the price of a deal typically don't matter. What counts is that it gets done -- with the new owner committing to back the target company's outstanding debt.

When the Countrywide deal was announced, the cost of insuring against a default at Countrywide plunged. Since then, though, the cost has surged to about $425,000 annually for protection on $10 million of Countrywide bonds from $342,000 the day the merger was announced, according to data provider Markit.

The increase is "abnormal," said Matthew Burnell, a bank-credit analyst at Wachovia Capital Markets. He attributes the rise to questions triggered by the Jan. 17 filing. "If there's nothing to it, why don't they say something?" he added.

Countrywide is scheduled to report fourth-quarter results tomorrow, but said last week it isn't holding a conference call with analysts and investors, citing the pending takeover.

Bank of America has said it isn't likely to begin integrating Countrywide's operations until 2009 because the Charlotte, N.C., bank first needs to digest Chicago's LaSalle Bank, which was acquired for $21 billion last year. To skeptics, this is another sign that Bank of America wants to distance itself from any lurking problems.

Other investors expect Bank of America to quickly provide new funding to Countrywide to help lower its costs and improve profits, even if the lender's operations aren't absorbed until later. Such a move might inspire enough confidence in the market to be seen as an "implicit" guarantee of Countrywide's debt.

"In my heart of hearts, I fully expect this deal to go through," said Kevin Murphy, fund manager at Putnam Investments, which holds Countrywide debt. Craig Emrick, a bank analyst at Moody's Investors Service, said the ratings firm is waiting to see the deal's final legal structure before "seeing if it raises any concern."

Mr. Emrick added that in recent days, "I've got a lot of calls about the structure of the deal." Until that is cleared up, bondholders are likely to remain on edge, and the value of Countrywide's debt could stay under pressure

[giveme5]

Grazie Mark, me lo leggo.
Qui la storia bisogna capirla bene, come postava l'ottimo Massimo S. questo titolino qui da uno yield di oltre il 30% !!!!!!!

[i98mark]

Riassumendo: il deal non è chiaro nei suoi elementi di dettaglio (sebbene in questi casi la regola sia quella della responsabilità per il debito, intendiamoci... ) in quanto le stesse affermazioni di BOA tenderebbero a non accreditare la tesi di una responsabilità de facto, al di là dei meccanismi formali adottati per la fusione, per il debito della società acquisita; le azioni di Countrywide quotano sotto il valore del deal, ad esprimere un certo margine di incertezza circa il fatto che esso venga realmente concluso.

Questo sembrerebbe a prima vista lo stato dell'arte e spiega tutto sommato il perché i bond Countrywide scambiano a quei livelli di prezzo...

[Massimo S.]

Originalmente inviato da giveme5

Qui la storia bisogna capirla bene, come postava l'ottimo Massimo S. questo titolino qui da uno yield di oltre il 30% !!!!!!!

Errore mio. Avrei dovuto postare le quotazioni non su Francoforte, dove lo spread è imbarazzantemente elevato, ma sull'ICMA.

[giveme5]

Uhmmmm ..............

Originalmente inviato da i98mark

Sul tema, riprendendo timori che Bank of America possa non rispondere dei bond di Countrywide anche a seguito dell'acquisizione, un interessante articolo del WSJ...

Countrywide Bonds Stir Angst As BofA Avoids Voicing Support

.......................................
When the Countrywide deal was announced, the cost of insuring against a default at Countrywide plunged. Since then, though, the cost has surged to about $425,000 annually for protection on $10 million of Countrywide bonds from $342,000 the day the merger was announced, according to data provider Markit.

The increase is "abnormal," said Matthew Burnell, a bank-credit analyst at Wachovia Capital Markets. He attributes the rise to questions triggered by the Jan. 17 filing. "If there's nothing to it, why don't they say something?" he added.

Countrywide is scheduled to report fourth-quarter results tomorrow, ( QUINDI OGGI) but said last week it isn't holding a conference call with analysts and investors, citing the pending takeover.

Bank of America has said it isn't likely to begin integrating Countrywide's operations until 2009 because the Charlotte, N.C., bank first needs to digest Chicago's LaSalle Bank, which was acquired for $21 billion last year. To skeptics, this is another sign that Bank of America wants to distance itself from any lurking problems.
.......................