Thursday, June 10, 2010

European banks facing difficulty selling corp bonds GS – faces ~$1B lawsuit over Timberwolf CDO $GS $DB-- $DB Maybe the Next Lehman

· GS – faces ~$1B lawsuit over Timberwolf CDO (this lawsuit hit around noon on Wed); an Australian hedge fund filed suit against Goldman on Wed seeking ~$1B+ in damages from the firm.  The HF accused Goldman of fraudulently selling Timberwolf.  WSJ    
· SEC probe into Wall St and CDO practices stepping up – SEC  is probing a number of mortgage-related deals created by Goldman, Morgan Stanley and other major Wall Street firms.  The agency recently asked Goldman for additional documents and is interested in deals such as a collateralized debt obligation called Hudson Mezzanine Funding (WSJ)
· DB – the stock slumped ~3% early on in European trading (although now off 1%) following a newspaper report Thursday discussing how one of its U.S. units, Taunus Corp, may need fresh capital and has drawn the attention of U.S. regulators (keep in mind that his Taunus story was first talked about over this last weekend in a WSJ Heard on the Street column but was raised again Thurs morning in Handelsblatt).  Taunus could need between $4.4 billion and $12.6 billion in extra capital depending on how regulators approach the issue. A source close to the bank said that Deutsche's operating units in the United States were "very well capitalized". (Reuters) 

· European banks facing difficulty selling corp bonds - Banks sold $11.7bn of corporate bonds in the six weeks to last Friday, 15 per cent of their 10-year average for this period and far short of the $145bn they raised this time last year (FT)
· C – the company is having trouble selling off a ~$50B credit card receivable portfolio and might wind up retaining the asset for several yrs according to Reuters; buyers are reluctant to purchase the assets in the current uncertain regulatory environment (Reuters) 
· C – HF manager B Ackman makes pos. comments on C shrs in Pershing’s latest investor letter; Ackman recently bought 146.5MM shrs in Citi; Ackman thinks Citi has ~$50B of assets not appreciated by investors (inc. ~$21B of DTAs and ~$24-30B supporting the wind-down of Citiholdings.  DJ/Marketwatch
· ABK – this hit during trading on Wed – a group of the co’s unsecured creditors is considering banding together to force a prepackaged restructuring (Reuters)
· Equity underwriting – the UK OFT said it would open an inquiry into equity underwriting (Bloomberg)
· IVZ - reported preliminary month-end assets under management of $430.0 billion, a decrease of 5.9% month over month. Given the increased volatility in financial markets, we experienced long-term net outflows largely in the lower fee ETF and Passive category. Further, during the month depreciating global currencies against the US Dollar contributed approximately $6 billion to the overall decline in assets under management month over month.
· CSE - announced the completion of the sale of 63 long-term care facilities to Omega Healthcare Investors Inc. (NYSE: OHI), in accordance with the terms of the securities purchase agreement between the parties executed in November of 2009.
· AIG – a Congressional watchdog says US taxpayers could still face “severe” losses on its AIG exposure; the Congressional Oversight Panel says the US will prob. remain a sig shareholder in AIG in ’12 and its not clear if taxpayers will ever be repaid in full.  WSJ 
· Banks - Banks face a new asset value crunch as tens of billions of pounds of property loans come up for refinancing as soon as this year, raising the prospect of a further wave of write-downs – London Telegraph 
· Neuberger Berman – execs are considering an IPO (Reuters) 
· ORI, PMACA - Old Republic will acquire all of PMA's outstanding common stock. Under the terms of the agreement approved by the boards of directors of both companies, Old Republic will issue 0.55 shares of Old Republic common stock in exchange for each outstanding common share of PMA.

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