PrefBlog

The credit markets have renormalized sufficiently that third-quarter issuance was normal, as a lot of catch-up was done following the Fed easing on September 18. Of particular interest this week was a 10-year Bear Stearns issue: they paid up to get it done, 187.5bp over Treasuries, but USD 2.5-billion that won’t have to be refinanced for a while should do a lot to ease any fears their clients – they do a lot of prime brokerage for hedge funds – may have regarding liquidity.

And it looks like the banks and the vultures are close to agreement on prices:

Investment groups such as Los Angeles-based Oaktree Capital, which oversees $47 billion, and BlackRock in New York see a chance to profit because banks are stuck with loans they made before demand for below-investment-grade debt dried up in the past three months.

The mortgage market is still in pretty rough shape according to Mortgage Insurance underwriters:

The number of PrivateMI applications received in August by MICA members was 206,445 or 14.3% more than the 180,561 received in July. The dollar volume of primary insurance written on newly originated 1-to-4 family conventional mortgage loans totaled $27,257.3 million in August, a 2.6% increase from the previous month’s $26,573.1 million. Traditional primary insurance totaled $23,793.9 million and bulk primary insurance totaled $3,463.4 million in August. In that same month, primary insurance in-force totaled $757,333.3 million. MICA members reported 33,811 cures and 58,441 defaults during August.

And in late new … a US Thrift has failed!

NetBank Inc., an online bank with US$2.5 billion in assets, was shut down by the U.S. government on Friday because of an excessive level of mortgage defaults.
…
The FDIC said Friday that $1.5 billion of NetBank’s insured deposits will be assumed by ING Bank, also a major online bank that is part of Dutch financial giant ING Groep NV. ING will pay $14 million for the deposits and receive 104,000 new customers.
…
The FDIC insures bank deposits of up to $100,000.

NetBank had $109 million in deposit accounts that exceeded the FDIC limit. Those customers will become creditors in NetBank’s receivership, the FDIC said.

According to their most recent financial statements they had a Tier 1 ratio of 4.83% at Dec 31/06 and a total capital ratio of 9.07%, although these are listed as “estimated”. Shareholders’ equity at that time was $4.32/share after a 2006 loss of $1.86/share. They were attempting to jettison all activities except mortgage servicing but didn’t make it.

And that’s it for me! Sorry to leave you all in the lurch again … but such is life. I will post the daily market action … later. Let’s just say that today was not one of the market’s biggest up days and leave it at that, shall we?

Update, 2007-10-01

There were twelve other index-included $25.00-equivalent issues trading over 10,000 shares today.

This entry was posted on Friday, September 28th, 2007 at 7:48 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.