KKR declined to agree to increase in interest rate on loan. From such heights of arrogance, the capitalist system will bring even this Icarus to the ground. When the banks set the rate, that's the market rate. Banks are just asking to lose money to accept KKR's terms. No bank in their right mind would accept it unless each KKR partner puts a personal guarantee on the entire amount for the transactions. KKR doesn't have the balls to put "their money" where there mouth/analysis is. They just want shareholders of public companies to foot "their bill." Screw them. If I was a shareholder of one of their funders, I would be screaming bloody murder to the board room. PE firms are like weeds now. Kill one and another will come up and replace them. It's the funders that make PE firms viable, PE firms don't make the funders viable. That is capitalism and competition.
None of this seems to have dampened KKR's appetite for risk. It is raising $2.5 billion in new financing for one of its hedge funds. The fund is promising an "unprecedented opportunity to invest in current corporate credit 'meltdown' and earn estimated gross returns in excess of 20 percent," according to an investor who received one of its brochures.
The fund will seek to buy at a discount the debt that was generated by KKR's own deals -- the same loans that other investors consider too risky to buy.
FDIC - Leter to Stakeholdes
Second Quarter 2007 (Our Priorities)
At the bottom I noted "on board staff 4,465 and target staff year end 2007: 4,723 finally some movement upwards in staffing for the coming banking crisis.
Re: recent comments about how other central banks will respond if the US lowers rates, consider what Joseph Tainter said at the conclusion of his 1988 book The Collapse of Complex Societies:
"Collapse, if and when it comes again, will this time be global. No longer can any individual nation collapse. World civilization will disintegrate as a whole. Competitors who evolve as peers collapse in like manner."
(This was written prophetically, before the Asian meltdown, the Russian default, and LTCM.)
His argument being that the global economic fabric is so interwoven that no significant nation can be allowed to completely fail. It will be, must be, rescued by those other nations to which it is bound by trade and monetary interaction.
Following his dictum, if the US$ (and thus the US society) collapses, Japan and China and Europe will go down with it in the process, no matter whether they are trying to save the US or disengage themselves from its death throes.
This strikes me as a bit of fancy footwork. The claim is made that this deal is a canary, and that should it fail all the others will too. This has the ring of extortion to it. In reality, where strawmen are seen for what they are, other deals with more reasonable terms may still go through if this one fails. KKR is just trying to muscle their way by claiming their deals' successes to be the benchmark for everyone's else liquidity.
For landlords, it's a vicious cycle," said Joseph Cosenza, vice chairman of the Inland Real Estate Group of Cos. in Oak Brook. The more landlords lower rents, the more property values sink.
Then, "if a landlord can't sell a building and can't afford to pay the 95 percent leverage on it plus operating expenses, they're likely to default," he added. " If they give buildings back to the lender that could cause credit problems throughout the country."
The main culprits walking away from leases mortgage lenders:
Earlier this year, one tenant, a failed subprime lender, walked away from a lease that was to run through 2011. Prime rented half of the space a few weeks ago. Only a few months ago, when things looked brighter, that might have seemed disastrous. "We only got half stung," said Jeff Patterson, president and chief executive of Prime Group, a subsidiary of the Lightstone Group of New York. "Last month we were able to convince Argent [Mortgage Co. LLC] to consolidate its remaining operations in Continental Towers but the vacancy rate went from 8 to 18 percent in the blink of an eye."
Golub & Co., a Chicago-based office developer and landlord, wasn't so lucky on one of its major leases.
A few months ago, Argent Mortgage vacated one of Golub's suburban office buildings before its lease expired. Golub is still trying to rent about 230,000 square feet in the Meadows Corporate Center in Rolling Meadows, a building now 85.5 percent vacant.
"You manage your risk and reward and work though it," said a philosophical Michael Newman, Golub's chief executive.
By the way, what the hell does "sleeves on the vest." mean?
OT- The dollar is tanking this morning. Anyone know the immediate effects this would produce on interest rates, the carry trade, and the stock market-here is the link: 3-day chart
Even my financial pea brian knows this chart is scary.
We are reminded that Arthur Andersen invented EBITDA, and wonder if this 'concession' may be the beginning of the end of that utterly ridiculous "measure" of corporate viability.
Also of the cynical re-work of the acronym:
Earnings Before Indictment, Trial, Disposition, And (incaceration.)
What I took away from this bit of news is that the covenant requires that certain earnings targets are met, and that translates into cutting expenses if revenues can't keep up. Revenues can miss targets if the economy sours. The easiest way to cut expenses in such an environment is to begin layoffs.
If I'm KKR, I've got these banks over a barrel. The banks have committed. Why should I give in now?
Here's my prediction . . . KKR is going to try and bring these guys to their knees for the purpose of either extracting direct economic payment to improve the debt terms or KKR will try to destroy them and take over their business by getting directly into I-Banking.
The I-Banks are getting wise to KKR's motiviation and are going to bring try and bring them down by starting to cough up information to the Feds regarding past price collusion by KKR and other PE firms on recent LBO deals. The only reason the I-Banks have been hesitant to go to the Feds sooner is worry that they would be implicated as well.
Does anyone here know where I can find historic foreclosure rates for California?
What I want to do is track the foreclosures relative to price decreases. It seems to me, historically foreclosures followed price decreases. But in California right now, foreclosures are preceding price decreases, or perhaps concurrent.
Does that mean foreclosures will move that much higher once prices start to fall significantly?
Cash flow and Free Cash Flow (FCF) is much more important when servicing debt.
Earnings are good for press releases but they are subject to unbelievable legal accounting manipulation. Credit analysts must thoroughly read the MD&A portion of the financial statements.
The big implication for a tanking USD is foreign capital flight - any returns they generate in investments held in USD are wiped out by adverse currency moves - and we need tens of billions per week (anyone got that stat handy?) of foreign capital inflows to fund our dual deficits.
Ultimately results in higher interest rates as the market for US Treasuries declines and bid price declines...anyone else want to chime in on this one? It is a BIG DEAL IMNSHO.
jt,
In the profession, we like to call it "interpretation", not "manipulation".
99% of people skip right over the Statement of Cash Flows. It is the most important financial statement; the straw that stirs the drink.
to self "I might be mixing my metaphors here....hope Tanta's not reading this morning."
OT, I was working next door to ground zero last week. They are actually building something there now, not just arguing over who's going to get rich off the project.
lama, and six years on OBL still remains at large and more Americans have died in the fiasco in Iraq than were murdered by that criminal. For me that summarizes the complete breakdown of honest and effective leadership in the U.S.
KKR's loan concession may kill First Data bond sale KKR's loan concession may kill First Data bond sale
| Reuters
...
KKR's surrender on the $16 billion loan portion of the financing is emboldening bondholders to demand higher yields and other protections for planned high-yield bonds after the current global credit squeeze sapped investor appetite for junk bonds.
KKR, the leveraged buyout firm known for refusing to budge on lending terms, may not be willing to bend further, putting the junk bond sale at risk, investors say.
...
"If KKR is going to be inflexible, it's never going to come to high yield," said Eric Misenheimer, who manages $500 million worth of high-yield debt at J&W Seligman in New York. "There's a high probability they will scrap the bond sale entirely."
The junk bond market has been frozen for about two months without a sale, the longest stretch Misenheimer can recall in his 18-year career, he said.
...
There is almost no end to the list of potential legal targets, analysts say, because so many players share a piece of the blame for the mortgage meltdown. There are the home buyers who overstated their income to obtain risky loans, the mortgage lenders that made the loans and the Wall Street securities firms that repackaged the loans into tradable securities. There are the credit agencies that assigned ratings to those hard-to-value securities, the hedge funds and institutional investors that bought those assets to get an extra boost in returns and the individuals who invested in those fund managers.
I think this KKR-First Data deal is almost a done deal. Why people are waiting to see if the banks will take the bite, in my opinion there are just way too many connections between these two for this deal not to go down. For example, the founder of KKR, Henry Kravis, is a director at the CFR. Joan Spero, a director at First Data, is also a director at CFR. If you think these two are not using their connections to their advantages than you are flat out wrong. Check out this web site I found called News Visual The page cannot be found They map out connections between companies and executives and they did an article on the KKR-First Data deal this morning. Some really cool inside info in this site.
It will get done but the bank won't like the price. Needs a big OID as the spread sucks.
Fleetwood Mac - Tell Me Sweet Little Lies
YouTube
- Broadcast Yourself.
Washington Post 9/11/2007
Mortgage Mess Unleashes Chain Of Lawsuits
Mortgage Mess Unleashes Chain Of Lawsuits - washingtonpost.com
KKR Buyouts to Test the Stretched Credit Market
KKR Buyouts to Test the Stretched Credit Market - washingtonpost.com
KKR declined to agree to increase in interest rate on loan. From such heights of arrogance, the capitalist system will bring even this Icarus to the ground. When the banks set the rate, that's the market rate. Banks are just asking to lose money to accept KKR's terms. No bank in their right mind would accept it unless each KKR partner puts a personal guarantee on the entire amount for the transactions. KKR doesn't have the balls to put "their money" where there mouth/analysis is. They just want shareholders of public companies to foot "their bill." Screw them. If I was a shareholder of one of their funders, I would be screaming bloody murder to the board room. PE firms are like weeds now. Kill one and another will come up and replace them. It's the funders that make PE firms viable, PE firms don't make the funders viable. That is capitalism and competition.
None of this seems to have dampened KKR's appetite for risk. It is raising $2.5 billion in new financing for one of its hedge funds. The fund is promising an "unprecedented opportunity to invest in current corporate credit 'meltdown' and earn estimated gross returns in excess of 20 percent," according to an investor who received one of its brochures.
The fund will seek to buy at a discount the debt that was generated by KKR's own deals -- the same loans that other investors consider too risky to buy.
KKR Buyouts to Test the Stretched Credit Market
Though I must say that I love lightdemand's outrage and share it, my day has been brightened extraordinarily by the delightful expression,
sleeves on the vest
May I be permitted to say that that says it all.
FDIC - Leter to Stakeholdes
Second Quarter 2007 (Our Priorities)
At the bottom I noted "on board staff 4,465 and target staff year end 2007: 4,723 finally some movement upwards in staffing for the coming banking crisis.
FDIC: Error 404 - Page Not Found
Re: recent comments about how other central banks will respond if the US lowers rates, consider what Joseph Tainter said at the conclusion of his 1988 book The Collapse of Complex Societies:
"Collapse, if and when it comes again, will this time be global. No longer can any individual nation collapse. World civilization will disintegrate as a whole. Competitors who evolve as peers collapse in like manner."
(This was written prophetically, before the Asian meltdown, the Russian default, and LTCM.)
His argument being that the global economic fabric is so interwoven that no significant nation can be allowed to completely fail. It will be, must be, rescued by those other nations to which it is bound by trade and monetary interaction.
Following his dictum, if the US$ (and thus the US society) collapses, Japan and China and Europe will go down with it in the process, no matter whether they are trying to save the US or disengage themselves from its death throes.
This strikes me as a bit of fancy footwork. The claim is made that this deal is a canary, and that should it fail all the others will too. This has the ring of extortion to it. In reality, where strawmen are seen for what they are, other deals with more reasonable terms may still go through if this one fails. KKR is just trying to muscle their way by claiming their deals' successes to be the benchmark for everyone's else liquidity.
unirealist,
I think your comment is accurate.
And I think it is why the Fed just can't pop a 0.5% lowering.
I guess that the, now muted, calls for abandoning the Fed's independence will grow.
The euro is climbing into uncharted territory.
I would hate to be Bernanke right now. He must have an effigy of Greenspan that you can't see for the pins.
arbogast, we can bet he doesn't call his mentor for advice!
San Diego foreclosures soar to 900/month, an all time high, by far.
San Diego Source | San Diego Daily Transcript
Set the start year to 1982.
Dear CR,
Chicago Tribune reports on some difficulties in the commercial/office leasing business in the Chicago suburbs this morning.
Empty offices leave landlords high and dry As the credit squeeze from escalating residential loan defaults takes atoll on real estate services companies, the owners of commercial buildings arealso experiencing pain - Chicago Tribune
Interesting quotes
For landlords, it's a vicious cycle," said Joseph Cosenza, vice chairman of the Inland Real Estate Group of Cos. in Oak Brook. The more landlords lower rents, the more property values sink.
Then, "if a landlord can't sell a building and can't afford to pay the 95 percent leverage on it plus operating expenses, they're likely to default," he added. " If they give buildings back to the lender that could cause credit problems throughout the country."
The main culprits walking away from leases mortgage lenders:
Earlier this year, one tenant, a failed subprime lender, walked away from a lease that was to run through 2011. Prime rented half of the space a few weeks ago. Only a few months ago, when things looked brighter, that might have seemed disastrous. "We only got half stung," said Jeff Patterson, president and chief executive of Prime Group, a subsidiary of the Lightstone Group of New York. "Last month we were able to convince Argent [Mortgage Co. LLC] to consolidate its remaining operations in Continental Towers but the vacancy rate went from 8 to 18 percent in the blink of an eye."
Golub & Co., a Chicago-based office developer and landlord, wasn't so lucky on one of its major leases.
A few months ago, Argent Mortgage vacated one of Golub's suburban office buildings before its lease expired. Golub is still trying to rent about 230,000 square feet in the Meadows Corporate Center in Rolling Meadows, a building now 85.5 percent vacant.
"You manage your risk and reward and work though it," said a philosophical Michael Newman, Golub's chief executive.
By the way, what the hell does "sleeves on the vest." mean?
Best regards,
OT- The dollar is tanking this morning. Anyone know the immediate effects this would produce on interest rates, the carry trade, and the stock market-here is the link:
3-day chart
Even my financial pea brian knows this chart is scary.
Premarket shows up day for US stocks
Pre-Market: Stock Trading Before the Markets Open from CNNMoney.com
Asia Europe mostly green
World Markets - CNNMoney.com
We are reminded that Arthur Andersen invented EBITDA, and wonder if this 'concession' may be the beginning of the end of that utterly ridiculous "measure" of corporate viability.
Also of the cynical re-work of the acronym:
Earnings Before Indictment, Trial, Disposition, And (incaceration.)
What I took away from this bit of news is that the covenant requires that certain earnings targets are met, and that translates into cutting expenses if revenues can't keep up. Revenues can miss targets if the economy sours. The easiest way to cut expenses in such an environment is to begin layoffs.
I hope I'm wrong
"KKR declined to agree to an increased interest rate on the loans."
No repricing? Well, again: no repricing, no real problem. Crying 'wolf' for the Fed is the game, until true repricing demonstrates otherwise.
If I'm KKR, I've got these banks over a barrel. The banks have committed. Why should I give in now?
Here's my prediction . . . KKR is going to try and bring these guys to their knees for the purpose of either extracting direct economic payment to improve the debt terms or KKR will try to destroy them and take over their business by getting directly into I-Banking.
The I-Banks are getting wise to KKR's motiviation and are going to bring try and bring them down by starting to cough up information to the Feds regarding past price collusion by KKR and other PE firms on recent LBO deals. The only reason the I-Banks have been hesitant to go to the Feds sooner is worry that they would be implicated as well.
Does anyone here know where I can find historic foreclosure rates for California?
What I want to do is track the foreclosures relative to price decreases. It seems to me, historically foreclosures followed price decreases. But in California right now, foreclosures are preceding price decreases, or perhaps concurrent.
Does that mean foreclosures will move that much higher once prices start to fall significantly?
Cash flow and Free Cash Flow (FCF) is much more important when servicing debt.
Earnings are good for press releases but they are subject to unbelievable legal accounting manipulation. Credit analysts must thoroughly read the MD&A portion of the financial statements.
Colin,
The big implication for a tanking USD is foreign capital flight - any returns they generate in investments held in USD are wiped out by adverse currency moves - and we need tens of billions per week (anyone got that stat handy?) of foreign capital inflows to fund our dual deficits.
Ultimately results in higher interest rates as the market for US Treasuries declines and bid price declines...anyone else want to chime in on this one? It is a BIG DEAL IMNSHO.
jt,
In the profession, we like to call it "interpretation", not "manipulation".
99% of people skip right over the Statement of Cash Flows. It is the most important financial statement; the straw that stirs the drink.
to self "I might be mixing my metaphors here....hope Tanta's not reading this morning."
OT, I was working next door to ground zero last week. They are actually building something there now, not just arguing over who's going to get rich off the project.
lama, and six years on OBL still remains at large and more Americans have died in the fiasco in Iraq than were murdered by that criminal. For me that summarizes the complete breakdown of honest and effective leadership in the U.S.
KKR's loan concession may kill First Data bond sale
KKR's loan concession may kill First Data bond sale
| Reuters
...
KKR's surrender on the $16 billion loan portion of the financing is emboldening bondholders to demand higher yields and other protections for planned high-yield bonds after the current global credit squeeze sapped investor appetite for junk bonds.
KKR, the leveraged buyout firm known for refusing to budge on lending terms, may not be willing to bend further, putting the junk bond sale at risk, investors say.
...
"If KKR is going to be inflexible, it's never going to come to high yield," said Eric Misenheimer, who manages $500 million worth of high-yield debt at J&W Seligman in New York. "There's a high probability they will scrap the bond sale entirely."
The junk bond market has been frozen for about two months without a sale, the longest stretch Misenheimer can recall in his 18-year career, he said.
...
I found my stats. Things started falling in California in 1991-1992, prices hit their nadir in 1996, and that's when foreclosures peaked.
If this were to play out similarly this time, prices will fall until about 2011, and that's when foreclosures would also peak....
That's not a prediction.
You gotta love the lawsuit action:
from FFDIC's link here's a list of potential targets:
washingtonpost.com - nation, world, technology and Washington area news and headlines
wp...7091002327.html
There is almost no end to the list of potential legal targets, analysts say, because so many players share a piece of the blame for the mortgage meltdown. There are the home buyers who overstated their income to obtain risky loans, the mortgage lenders that made the loans and the Wall Street securities firms that repackaged the loans into tradable securities. There are the credit agencies that assigned ratings to those hard-to-value securities, the hedge funds and institutional investors that bought those assets to get an extra boost in returns and the individuals who invested in those fund managers.
I think this KKR-First Data deal is almost a done deal. Why people are waiting to see if the banks will take the bite, in my opinion there are just way too many connections between these two for this deal not to go down. For example, the founder of KKR, Henry Kravis, is a director at the CFR. Joan Spero, a director at First Data, is also a director at CFR. If you think these two are not using their connections to their advantages than you are flat out wrong. Check out this web site I found called News Visual The page cannot be found They map out connections between companies and executives and they did an article on the KKR-First Data deal this morning. Some really cool inside info in this site.
Dallas Business Journal
TXU gets Nuke commission's approval
TXU gets Nuke commission's approval - Dallas Business Journal: