{"id":7266,"date":"2009-07-15T19:47:13","date_gmt":"2009-07-15T23:47:13","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=7266"},"modified":"2009-07-15T19:47:13","modified_gmt":"2009-07-15T23:47:13","slug":"july-15-2009","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=7266","title":{"rendered":"July 15, 2009"},"content":{"rendered":"

Apparently there has been a “credit line run” on CIT<\/a>:<\/p>\n

Regulators tried to craft a rescue package late yesterday as CIT customers, prompted by reports of possible bankruptcy, drained $750 million from credit lines on Monday and Tuesday, the Wall Street Journal reported, citing people familiar with the matter.<\/p>\n

The U.S. may let CIT transfer assets to its bank in Utah, and the Federal Reserve would let CIT pledge some assets at its discount window while the company tries to refinance debt, the newspaper said.<\/p><\/blockquote>\n

This type of run was discussed in the post A Question of Liquidity: The Great Banking Run of 2008<\/a><\/p>\n

At the company’s request, the NYSE halted trading<\/a>, “pending news”. Reuters had no news<\/a>, but plenty of speculation:<\/p>\n

U.S. officials are considering giving CIT Group Inc (CIT.N) a temporary loan as part of an aid package to help the lender avoid collapse, a source familiar with regulators’ thinking said on Tuesday.<\/p>\n

The temporary loan is one option being considered to give CIT room to strengthen its balance sheet by raising additional capital through debt or equity, said the source who requested anonymity because the plans could change.<\/p>\n

Other options include access to the U.S. Federal Reserve’s discount window and asset transfers, the source said. The source said there was no guarantee a plan would be reached.<\/p><\/blockquote>\n

But just after 6pm, CIT aanounced everything had fizzled<\/a>:<\/p>\n

CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has been advised that there is no appreciable likelihood of additional government support being provided over the near term.<\/p>\n

The Company\u2019s Board of Directors and management, in consultation with its advisors, are evaluating alternatives.<\/p><\/blockquote>\n

And in California they’re singing Whoops! I did it again<\/a>:<\/p>\n

Moody\u2019s Investors Service yesterday lowered California\u2019s credit rating two steps to Baa1 from A2 and said its evaluation may be reduced further unless legislators quickly solve the cash crisis.<\/p><\/blockquote>\n

The BofA\/Merrill investigation continues<\/a>:<\/p>\n

Former Treasury Secretary Henry Paulson said letting Bank of America Corp. scuttle its takeover of Merrill Lynch & Co. last year was \u201cunthinkable,\u201d and his remarks about ousting management were \u201cappropriate.\u201d<\/p>\n

Paulson \u201cintended to deliver a strong message\u201d to Chief Executive Officer Kenneth Lewis in December \u201cthat it would be unthinkable for Bank of America to take this destructive action for which there was no reasonable legal basis and which would show a lack of judgment,\u201d the former official said in remarks prepared for a congressional hearing tomorrow. The text was obtained today by Bloomberg News.
…<\/b>
Paulson told Lewis on Dec. 21 that backing out of the deal \u201cwould show a colossal lack of judgment and would jeopardize Bank of America, Merrill Lynch, and the financial system,\u201d according to the testimony. Paulson confirmed he had told Lewis the Fed might remove management and the board of the Charlotte, North Carolina-based bank if they failed to complete the takeover of New York-based Merrill Lynch.<\/p><\/blockquote>\n

Seems to me that Paulson is preparing to talk out of both sides of his mouth. If backing out would have showed misjudgement, why is Treasury presenting an insurance bill for $4-billion<\/a>?<\/p>\n

Bank of America Corp., the largest U.S. bank by assets, benefited from implied federal backing on about $118 billion of Merrill Lynch & Co. assets and owes the government compensation, the chairman of a House of Representatives committee studying the purchase of Merrill said.<\/p>\n

\u201cIf you or anyone at Bank of America made a commitment, verbal or otherwise, to enter into this deal with the United States government, I urge you to honor that commitment,\u201d Edolphus Towns, a New York Democrat, said in a letter yesterday to Chief Executive Officer Kenneth Lewis that was obtained by Bloomberg News. \u201cIt is the right thing to do.\u201d<\/p>\n

Regulators say Bank of America owes at least part of a $4 billion fee it agreed to pay in January because the company benefited from U.S. backing on Merrill assets such as mortgage- backed bonds, Bloomberg News reported on July 13, citing people familiar with the matter.
…<\/b>
The U.S. provided the bank $20 billion in capital plus the asset guarantees to keep Lewis from abandoning the takeover of Merrill Lynch. <\/p><\/blockquote>\n

The discussion in the US regarding the regulatory approach to the size of banks is getting more heated<\/a>, but there’s nothing really new:<\/p>\n

The FDIC will propose slapping fees on the biggest bank holding companies to the extent that they carry on activities, such as proprietary trading, outside of traditional lending. The idea goes beyond the Obama administration\u2019s regulation-overhaul plan, which would have the Fed adjust capital and liquidity standards for the biggest firms, without any pre-set fees.<\/p>\n

\u201cWhat we have suggested is financial disincentives for size and complexity,\u201d Bair said in a July 9 interview. Fed Chairman Ben S. Bernanke told lawmakers last month that restricting size is a \u201clegitimate\u201d option.<\/p><\/blockquote>\n

PerpetualDiscounts closed today with a median bid-YTW of 6.27%, equivalent to 8.78 interest at the standard equivalency factor of 1.4x. Long Corporates<\/a> remain at around 6.4% – well, maybe just a smidgen higher – and so the pre-tax interest-equivalent spread has narrowed in a little over the week, to about 235bp; still in excess of levels seen throughout most of the Credit Crunch.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
Current
Yield
(at bid)<\/td>\n		Median
YTW<\/td>\n		Median
Average
Trading
Value<\/td>\n		Median
Mod Dur
(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.3630 %<\/td>\n1,159.0<\/td>\n<\/tr>\n
FixedFloater<\/td>\n7.25 %<\/td>\n5.47 %<\/td>\n35,355<\/td>\n16.67<\/td>\n1<\/td>\n-0.6623 %<\/td>\n2,118.3<\/td>\n<\/tr>\n
Floater<\/td>\n3.29 %<\/td>\n3.87 %<\/td>\n74,956<\/td>\n17.71<\/td>\n3<\/td>\n0.3630 %<\/td>\n1,447.9<\/td>\n<\/tr>\n
OpRet<\/td>\n4.98 %<\/td>\n-3.07 %<\/td>\n131,275<\/td>\n0.09<\/td>\n15<\/td>\n0.1701 %<\/td>\n2,217.9<\/td>\n<\/tr>\n
SplitShare<\/td>\n6.10 %<\/td>\n4.21 %<\/td>\n97,584<\/td>\n4.15<\/td>\n4<\/td>\n0.1413 %<\/td>\n1,920.0<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.1701 %<\/td>\n2,028.1<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.4090 %<\/td>\n1,772.9<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n6.25 %<\/td>\n6.27 %<\/td>\n160,573<\/td>\n13.53<\/td>\n71<\/td>\n0.4090 %<\/td>\n1,632.8<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.56 %<\/td>\n4.29 %<\/td>\n556,091<\/td>\n4.25<\/td>\n40<\/td>\n-0.0271 %<\/td>\n2,067.5<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
HSB.PR.C<\/td>\nPerpetual-Discount<\/td>\n-1.44 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 20.56
\nEvaluated at bid price : 20.56
\nBid-YTW : 6.27 %<\/td>\n<\/tr>\n
MFC.PR.B<\/td>\nPerpetual-Discount<\/td>\n-1.31 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 18.81
\nEvaluated at bid price : 18.81
\nBid-YTW : 6.26 %<\/td>\n<\/tr>\n
BMO.PR.J<\/td>\nPerpetual-Discount<\/td>\n1.05 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 19.20
\nEvaluated at bid price : 19.20
\nBid-YTW : 5.96 %<\/td>\n<\/tr>\n
POW.PR.B<\/td>\nPerpetual-Discount<\/td>\n1.10 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 20.22
\nEvaluated at bid price : 20.22
\nBid-YTW : 6.67 %<\/td>\n<\/tr>\n
CM.PR.P<\/td>\nPerpetual-Discount<\/td>\n1.15 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 21.66
\nEvaluated at bid price : 21.91
\nBid-YTW : 6.29 %<\/td>\n<\/tr>\n
GWO.PR.F<\/td>\nPerpetual-Discount<\/td>\n1.16 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 23.32
\nEvaluated at bid price : 23.58
\nBid-YTW : 6.31 %<\/td>\n<\/tr>\n
CU.PR.B<\/td>\nPerpetual-Discount<\/td>\n1.18 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 24.60
\nEvaluated at bid price : 24.90
\nBid-YTW : 6.11 %<\/td>\n<\/tr>\n
PWF.PR.E<\/td>\nPerpetual-Discount<\/td>\n1.21 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 21.81
\nEvaluated at bid price : 21.81
\nBid-YTW : 6.33 %<\/td>\n<\/tr>\n
BAM.PR.B<\/td>\nFloater<\/td>\n1.29 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 10.23
\nEvaluated at bid price : 10.23
\nBid-YTW : 3.87 %<\/td>\n<\/tr>\n
SLF.PR.B<\/td>\nPerpetual-Discount<\/td>\n1.30 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 18.77
\nEvaluated at bid price : 18.77
\nBid-YTW : 6.46 %<\/td>\n<\/tr>\n
BAM.PR.N<\/td>\nPerpetual-Discount<\/td>\n1.36 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 15.66
\nEvaluated at bid price : 15.66
\nBid-YTW : 7.68 %<\/td>\n<\/tr>\n
PWF.PR.F<\/td>\nPerpetual-Discount<\/td>\n1.36 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 20.10
\nEvaluated at bid price : 20.10
\nBid-YTW : 6.56 %<\/td>\n<\/tr>\n
RY.PR.E<\/td>\nPerpetual-Discount<\/td>\n1.44 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 19.03
\nEvaluated at bid price : 19.03
\nBid-YTW : 6.02 %<\/td>\n<\/tr>\n
ELF.PR.F<\/td>\nPerpetual-Discount<\/td>\n1.63 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 18.76
\nEvaluated at bid price : 18.76
\nBid-YTW : 7.12 %<\/td>\n<\/tr>\n
PWF.PR.L<\/td>\nPerpetual-Discount<\/td>\n1.64 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 20.40
\nEvaluated at bid price : 20.40
\nBid-YTW : 6.28 %<\/td>\n<\/tr>\n
RY.PR.D<\/td>\nPerpetual-Discount<\/td>\n1.99 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 19.51
\nEvaluated at bid price : 19.51
\nBid-YTW : 5.87 %<\/td>\n<\/tr>\n
CM.PR.D<\/td>\nPerpetual-Discount<\/td>\n2.17 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 22.86
\nEvaluated at bid price : 23.10
\nBid-YTW : 6.24 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
Traded<\/td>\n		Notes<\/td>\n<\/tr>\n
BNS.PR.P<\/td>\nFixedReset<\/td>\n188,605<\/td>\nNesbitt crossed 100,000; Scotia crossed 17,900; Nesbitt bought 16,700 from Scotia; and RBC crossed 20,000; all at 25.65.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-05-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.65
\nBid-YTW : 4.20 %<\/td>\n<\/tr>\n
TD.PR.O<\/td>\nPerpetual-Discount<\/td>\n141,452<\/td>\nNesbitt crossed 100,000 at 20.10.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-07-15
\nMaturity Price : 20.18
\nEvaluated at bid price : 20.18
\nBid-YTW : 6.03 %<\/td>\n<\/tr>\n
BMO.PR.O<\/td>\nFixedReset<\/td>\n93,004<\/td>\nRBC sold 10,000 to Nesbitt and crossed 50,000; both blocks at 28.01.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-06-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 28.01
\nBid-YTW : 4.30 %<\/td>\n<\/tr>\n
BNA.PR.D<\/td>\nSplitShare<\/td>\n84,601<\/td>\nRecent new issue<\/a>.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2014-07-09
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.00
\nBid-YTW : 7.32 %<\/td>\n<\/tr>\n
BMO.PR.P<\/td>\nFixedReset<\/td>\n83,143<\/td>\nScotia crossed blocks of 28,900 and 25,000, both at 26.25.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2015-03-27
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.20
\nBid-YTW : 4.52 %<\/td>\n<\/tr>\n
ACO.PR.A<\/td>\nOpRet<\/td>\n76,401<\/td>\nRBC crossed 75,700 at 26.50.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2009-08-14
\nMaturity Price : 26.00
\nEvaluated at bid price : 26.36
\nBid-YTW : -3.16 %<\/td>\n<\/tr>\n
There were 56 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Apparently there has been a “credit line run” on CIT: Regulators tried to craft a rescue package late yesterday as CIT customers, prompted by reports of possible bankruptcy, drained $750 million from credit lines on …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-7266","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/7266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7266"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/7266\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}