Financials--Corporate bond coupons hitting record lows amid surging demand by investors “Wall St. Faces Specter of Lost Trading Units”

Financials

·         Corporate bond coupons hitting record lows amid surging demand by investors for supply - Debt sales reached $35.9 billion this the week, the most since March 26, when issuance totaled $39 billion; IBM sold a bond this week w/the lowest coupon on record; “Books have been multiple-times oversubscribed…It’s not uncommon to have deals five to eight times covered. Given the depth of demand, this is a very benign environment for spreads.” – Bloomberg 

·         “Wall St. Faces Specter of Lost Trading Units” – the NYT discusses how Wall St’s largest firms are grappling to comply w/the new fin reg reform, inc. potentially spinning out their “prop” desks; the article doesn’t really offer anything too incremental; more discusses all the recent talk in the market this week (inc. how Goldman could be making an announcement imminently).  NYT  http://www.nytimes.com/2010/08/06/business/06wall.html?_r=1&ref=business   

·         BAC – the co wants to be removed a MOU forced upon it during the height of the financial crisis; the sanction imposes restrictions on what moves the co can and cannot make (like raising its dividend); so far, regulators have been reluctant to set BoA free, wanting to ensure it first made permanent adjustments to certain business practices (WSJ)   http://online.wsj.com/article/SB10001424052748704657504575411602370266826.html?mod=WSJ_hps_LEFTWhatsNews 

·         Fannie Mae - reported today a net loss of $1.2 billion in the second quarter of 2010, compared to a net loss of $11.5 billion in the first quarter of the year.  Including $1.9 billion of dividends paid on its senior preferred stock held by Treasury, the company’s net loss attributable to common stockholders was $3.1 billion, or ($0.55) per diluted share.  Credit-related expenses, which are the total provision for credit losses plus foreclosed property expense, were $4.9 billion, down from $11.9 billion in the first quarter of 2010.  Almost all of the company’s realized credit losses in 2009 and 2010 on single-family loans are attributable to single-family loans that it purchased or guaranteed from 2005 through 2008. While these loans will give rise to additional credit losses that it has not yet realized, the company estimates that it has reserved for the substantial majority of these losses.  Fannie to ask the Treasury for another $1.5B. 

·         Fannie Mae – housing forecast - The company expects home prices to decline slightly for the balance of 2010 and into 2011 before stabilizing, and that home sales will be basically flat for all of 2010. Residential mortgage debt outstanding is expected to decline for the third year in a row. 

·         Mortgage rates - The 30-year fixed-rate mortgage averaged 4.49% for the week ended Thursday, its lowest point since Freddie Mac began tracking it in 1971 (WSJ) 

·         AIG - Chartis, the property and casualty unit of AIG, has stopped slashing commercial-insurance rates (DJ)

·         AIG - Taiwan regulators said they had started a final review of the stalled $2.2 billion deal for AIG’s Nan Shan Life unit, as the buyer group led by China Strategic had submitted all required paperwork – Reuters 

·         CNS - the Company's Board of Directors declared a special cash dividend in the amount of $2.00 per share of common stock. This special dividend will also be payable on September 27, 2010 to stockholders of record at the close of business onSeptember 7, 2010