Countrywide Financial Corp shares closed down almost 2 percent on Tuesday following a report the largest U.S. mortgage lender was working on a strategic investment similar to the deal with Bank of America Corp last month in which it received a $2 billion injection.
GMAC, the finance unit once controlled by General Motors Corp, said on Tuesday Citigroup will double its asset-backed funding facilities to $21.4 billion as it struggles with subprime mortgage losses.
SunTrust Banks Inc, the seventh-largest U.S. bank, on Tuesday said it may need to write down the value of some mortgage-related assets, reducing third-quarter earnings by 20 cents per share.
H&R Block Inc, the largest U.S. tax preparer, said on Tuesday it will fire 575 workers at its Option One Mortgage Corp subprime lending unit, on top of 615 job losses announced on May 15.
British billionaire investor Joseph Lewis has acquired a 7 percent stake in brokerage Bear Stearns at a time when the troubled firm has suffered significant losses due to the subprime mortgage crisis.
Concessions made to banks financing the $26 billion leveraged buyout of First Data Corp (FDC.N: Quote, Profile, Research) by private equity group Kohlberg Kravis Roberts & Co. may signal the death of its planned junk bond sale.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.Bond investors considering buying the high-yield corporate bonds say the size may be scaled back to $6 billion or canceled altogether in favor of bank debt, and a decision is expected as soon as this week. A May filing by First Data said financing for the deal may involve up to $8 billion in junk bonds.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.The sale also may be delayed until the market knows what the Federal Reserve intends to do to alleviate the credit squeeze that has gripped world capital markets in recent weeks after losses suffered by banks and hedge funds on U.S. mortgage-related securities.The Fed next meets on September 18, when the central bank is widely expected to cut it federal funds rate target, its main monetary policy lever, to protect the economy from a sharp housing market downturn.Interest rate futures show investors are betting on a quarter-percentage cut from the current federal funds target rate of 5.25 percent. Some economists predict as much as a half-percentage point cut.If they do try to do it, they might try the bonds on a wing and a prayer after the Fed meeting, said Misenheimer, who believes the junk bonds must offer yields of 10 percent or more to entice buyers.KKR in a rare move has agreed to a covenant that places performance criteria on First Data's debt, according to a source familiar with the deal. Adding a covenant makes it easier for the investment banks to sell the debt to investors worried about risks tied to the deal.KKR declined to comment on details of the financing.The market's really changed in the last several months and this will pressure the rates, said Ken Karwowski, a high yield portfolio manager at Allegiant Asset Management in Chicago. They'll likely pay a higher rate and have more stringent covenants to offer better protection for debt investors.Given the way conditions have changed, it's going to take a little more time to put together, Karwowski said on Monday.The debt burden KKR is taking on to complete the buyout has affected demand, according to James Cusser, a portfolio manager at Waddell & Reed Investment Management in Overland Park, Kansas. That has begun to result in a growing pipeline of bond sales that are waiting to see how the First Data sale performs before coming to market, he said.The banks are on the hook and they're trying to get the deal done, Cusser said. It's leveraged to the gills and they seemingly can't find a clearing price. Until this gets done, a lot of deals are backing up.
Britain's Barclays said its investment bank arm traded profitably last month and its prospects remain strong, despite the credit market turmoil, but the bank's offer for ABN AMRO could be beaten.
Mortgage finance giants Fannie Mae and Freddie Mac are abiding by rules that require them to avoid buying risky subprime loans, the companies' regulator said on Monday.
Toyota Motor Corp. should hit its target of 5-percent U.S. sales growth this year despite a recent slowdown and building concerns about the knock-on effect of the subprime mortgage crisis, the automaker's chief financial officer said on Monday.
L'Oreal, the world's largest cosmetics group, has launched legal action against eBay, alleging the online auctioneer does not do enough to combat the sale of counterfeits, the company said on Monday.
Kohlberg Kravis Roberts & Co. is close to making a concession to the banks financing its $26 billion leveraged buyout of payment processor First Data Corp, a source said on Monday.
Blackstone Group has agreed to buy 20 percent of chemical maker China National BlueStar (Group) Corp for up to $600 million, the private equity groups said on Monday, marking its first major investment in the fast-growing market.
Joseph C. Lewis, who became a billionaire trading currencies, has taken a 7 percent stake in Bear Stearns Cos Inc, snapping up about $860 million worth of the investment bank's stock over the past two months. He became one of the company's biggest shareholders, if not the largest. Shares shot up more than 3 percent.
Walt Disney Co. has announced that it will start its own testing of toys featuring Disney characters in the wake of recalls of millions of Mattel Inc. toys that were found to have unsafe levels of lead paint.
Nippon Steel Corp. and Toyota Motor Corp. have agreed to price rises of more than 10 percent for car-use steel, media said, raising the prospect of steelmakers' earnings upgrades later this year.
China's booming economy is creating more than 70 millionaires a day, but foreign banks don't have enough products, client managers or offices to tap into the market for top-end private wealth services.
The U.S. Senate voted 79-12 on Friday to slash government subsidies to student loan firms and use the money saved to boost student aid by $20 billion and reduce the federal deficit.
Exchange owner OMX wrote to a Swedish regulator saying it had not tried to interfere with Borse Dubai's takeover bid, according to a copy of the letter.
JPMorgan Chase & Co, which has one of the largest U.S. student lending operations, said on Friday it will hire up to 150 Indianapolis-based workers from Nelnet Inc to expand its loan-origination operations.
IndyMac Bancorp Inc, one of the largest independent U.S. mortgage lenders, plans to cut 1,000 jobs and halve its dividend, and may report a third-quarter loss, as loan volumes decline and credit markets remain tight.
Chrysler has lured another high-profile executive, this time from Asia, into its ranks on Friday, following a similar move a day earlier as the company seeks to revive its struggling operations.
Leap Wireless International Inc said on Friday it will review MetroPCS Communications Inc's unsolicited offer to buy Leap for about $5.4 billion in stock.
Motorcycle manufacturer Harley-Davidson Inc said on Friday that 2007 earnings would come in 4 percent to 6 percent lower than last year because of tough times for U.S. consumers, sending its shares down 7 percent.
Clothing company Jones Apparel Group Inc said it expects after-tax proceeds, net of transaction expenses, of about $840 million as it completed the sale of its Barneys New York Inc unit.
PepsiCo Inc said on Friday it was launching new drinks, including the caffeinated Propel Invigorating Water and a lighter version of the Gatorade sports beverage.
Home builder Beazer Homes USA Inc said on Friday it received purported default notices related to some senior notes from the bank that serves as trustee for the notes, sending shares down as much as 15 percent.
The U.S. Congress is looking into Mattel Inc's procedures for alerting federal regulators about hazardous toys, The Wall Street Journal reported in its online edition on Friday.
Advantage Partners is closer to winning regulator's approval for its $2.5 billion acquisition of regional lender Tokyo Star Bank Ltd after several breakthroughs in recent weeks, according to sources familiar with the matter.
Chrysler added Toyota's top American executive to its ranks on Thursday, hiring James Press as its new vice-Chairman and President in a bid to steer the newly private, but struggling company as it attempts a comeback.
Lehman Brothers Holdings Inc said on Thursday it will fire another 850 workers, or about 3 percent of its work force, as it scales back its mortgage lending efforts globally.
The commercial paper market has shrunk 13 percent in the past month as U.S. companies struggle to raise short-term capital, according to data released on Thursday.
Auto parts maker Delphi Corp said it would file a reorganization plan on Thursday that lays out a definitive agreement with former parent General Motors Corp and a path to exiting bankruptcy by the end of the year.
