PrefBlog

After CIBC’s earnings release this morning, Moody’s announced that it had:

affirmed the ratings of Canadian Imperial Bank of Commerce (CIBC) and rated subsidiaries and changed their rating outlooks to negative from stable. CIBC is rated B- for bank financial strength, Aa2 for long-term deposits, and P-1 for short-term obligations. This rating action follows CIBC’s earnings report for the fourth quarter of 2007 in which it disclosed details of a hedged portfolio of Collateralized Debt Obligations (CDO). 

The change in outlook is based on Moody’s view that this exposure highlights weaknesses in the firm’s strategic risk management. Moody’s concern centers on the concentration of counterparty risks to which it has exposed itself via a rapid and recent build-up of its CDO activities. Though Moody’s believes that any losses related to these particular exposures are manageable for CIBC, risk management weaknesses may expose the firm to further risks. Moody’s is also concerned that it has cited CIBC in the past for risk management weaknesses, and despite expected improvements, it now appears the bank has not fully addressed appropriate risk-taking at a senior, strategic level.

In other words … Moody’s is saying that CIBC got away with it this time, but they’ve been more lucky than smart.

In Super-Conduit/MLEC news, yet another bank is acting immediately:

Rabobank [RABN.UL] is taking the remaining assets of its structured investment vehicle (SIV) Tango Finance onto its balance sheet, the unlisted Dutch bank said on Thursday.

Rabobank, which manages Tango with Citigroup (C.N: Quote, Profile , Research), said the SIV has only 5.2 billion euros ($7.6 billion) in cash assets, down from 9.7 billion in July. Rabobank had warned on Wednesday that Tango’s size had almost halved as it has been selling off assets.

And the Northern Rock auction is running into trouble:

U.S. buyout firm J.C. Flowers’ offer to buy British bank Northern Rock (NRK.L: Quote, Profile , Research) was in doubt late on Thursday as people familiar with the matter said its interest had cooled.

J.C. Flowers remains interested in buying Northern Rock but is finding it increasingly difficult to meet the requirements of shareholders and the government, Bank of England and regulators, all of whom are involved in the auction, a person familiar with the matter said.
…
A consortium led by Virgin Group [VA.UL] has been picked as preferred bidder, but Flowers was considered its nearest challenger.

A consortium led by investment group Olivant is expected to submit a revised offer for the bank by Friday, sources have said.

And that’s all the colour for today! There wasn’t too much of interest anyway, other than the American Sub-Prime Plan, which has attracted considerable comment, not to mention buying.

But how about them PerpetualDiscounts, eh? Holy smokes … if they can keep up this performance every day for a couple of months, it’ll be a good year.

I didn’t understand it on the way down … I don’t understand it on the way up.

I feel reasonably confident when I say “on the way up”, because this looks just as much like a buying frenzy as anything else I’ve seen in the past … um … year, but who knows? Maybe everything will reverse itself tomorrow … and finding out is what makes it interesting to get up in the morning.

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

This entry was posted on Thursday, December 6th, 2007 at 11:02 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.