"Wall Street bond underwriters called off a $1.15 billion sale of junk bonds on Tuesday that would pay for a leveraged buyout of ServiceMaster Co., a lawn-care and pest-control company. Instead, ServiceMaster received its financing from a bridge loan directly from the underwriters, which they hope to replace in the coming months."You hope, says I. Or is that "you dream"? We shall see!
"Office rents are skyrocketing across the nation, driving up costs for businesses large and small, thanks to a dearth of space in some major markets and a new breed of deep-pocketed landlords who can afford to hold out for premium tenants."The problem with this, of course, is that driving up the price of office space inevitably will crimp profit growth and that heads directly to your P&L. Decreased profit growth means multiple contraction. But it is, by the way, why commercial R/E isn't - yet - exploding in people's faces.
"Bank of England policy makers raised interest rates for the fifth time since August and said they're concerned inflation will stay above their target, adding to investor speculation that another move is likely this year. "I wonder if they're looking at real inflation instead of the fraud called "core" here in the US? The ECB declined to follow suit, but left in place a bias towards higher rates - which I expect we'll see here soon from them.
""The mortgage brokers are the wild, wild West of mortgage finance," Sen. Charles Schumer, a New York Democrat, says in an interview. "We need to bring a sheriff to town.""That'd be a leading Democrat - you know, the party in control of both houses of Congress? Yeah. While I'm no fan of Chucky Schumer on this he's right -we need serious reform - and regulation - in that part of the industry. I know this will pizz off a lot of people, but facts are facts, and the predation in the "serial refinancing" forcing that has gone on the last couple of years is a big part of the mess we're in now. One suggestion - ban YSP under federal law. Another - put a fiduciary standard on mortgage brokers. The latter would open the door for recovery by homeowners who get roped into the "serial refinancing" game and have their equity siphoned off. Perhaps we'd see some of those broker BMWs end up in the driveways of duped homeowners. IMHO, that would be an improvement.
Only one problem with that byline - "good name"? Not in my opinion! S&P in particular has admitted that its models did not take into account home prices that failed to rise significantly every single year. Yet have they gone back and re-evaluated all of these deals with new model data now reflecting actual market conditions? HELL NO! Neither has Moody's or Fitch.
"While Bear Stearns is the most recent financial institution to find itself caught up in the subprime-mortgage quagmire, the three credit-rating agencies - Standard & Poor's, Moody's and Fitch - may be the next ones to see their good names dragged through the mud.
The reason? Ohio attorney general Marc Dann is building a case against them based on the role he believes their ratings played in the marketing of risky mortgage-related securities."
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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