Catastrophe bond capacity is maturing, and not much of it is coming back. In the first quarter, $1.8 billion in cat bond risk capital matured, and only $508 million returned in the form of new issuances, according to Thomson Reuters. This quarter, $2.77 billion is maturing, and the absence of first-time issuers makes it unlikely that the market will replace it all. More than a billion of it was from State Farm's Merna Re transaction. The successor to it has already been issued, cleverly named Merna Re II, at only a fraction of the previous bond.

Continue reading Catastrophe Bond Issuance Gap Is upon Us

Catastrophe Bond Issuance Gap Is upon Us originally appeared on BloggingStocks on Mon, 12 Apr 2010 17:00:00 EST. Please see our terms for use of feeds.

After months of speculation and years of underperformance, the New York Times Company (NYSE: NYT) has decided not to sell the Boston Globe and related businesses. The company claims that the changes made at the Globe to slash expenses and right the ship financially have made it worth holding on to the newspaper. This comes after two parties submitted their final bids (similar financially) for the beleaguered 137-year-old property.

The NY Times Co. picked up the Globe in 1993 for $1.1 billion. Since then, it's watched the paper's revenue and circulation plummet, a situation worsened by the advent of the internet and the newspaper industry's generally slow response to it. Now, it's apparently worth just under 10% of NYT's original purchase price, with the offers pushed higher by both parties' willingness to assume $59 million in pension liabilities.

Continue reading NYT pulls Boston Globe off the block

NYT pulls Boston Globe off the block originally appeared on BloggingStocks on Thu, 15 Oct 2009 08:00:00 EST. Please see our terms for use of feeds.

Consumers are finally spending more, with September posting the first gain in more than a year. The International Council of Shopping Centers and Goldman Sachs (NYSE: GS) found that retail sales inched 0.1% higher last month. It doesn't seem like much, but a gain when you anticipate a fall is good news magnified. But, it came at the expense of great deals and other tools to entice somewhat hesitant customers into stores.

Kohl's (NYSE: KSS) and Limited Brands (NYSE: LTD) reported sales increases in September for stores open more than a year. J.C. Penney (NYSE: JCP), Macy's (NYSE: M) and Target (NYSE: TGT) posted declines, but they were better than expected. Delayed school openings thanks to a late Labor Day helped push to September sales that might have occurred in August otherwise.

Of course, all eyes are on the coming holiday season. The National Retail Federation forecasts U.S. consumer spending of $437.6 billion - up only slightly from $433.7 billion four years ago. So, we still have a lot of ground to make up before we can celebrate a recovery. As long as the situation is staying steady, though, we'll at least have a solid starting point.

Consumers' wallets peeking open originally appeared on BloggingStocks on Fri, 09 Oct 2009 16:20:00 EST. Please see our terms for use of feeds.

A look at the lives of the Forbes 400 implies that the most important attribute is the ability to sift through ambiguity. Contradictions abound, meaning that shades of gray hold the answer to your burning desire for riches. Should you go to a great school? Well, yes ... but only if you're going for an MBA and plan to work for a major financial firm. But, you can still go to an Ivy League school if you're not studying finance but join Skull and Bones. Of course, dropping out of Harvard can be a great way to launch a career in the technology field.

It's tricky. There are no easy answers. But, the road to billions is littered with the corpses of aspiring magnates who thought it wouldn't be difficult. So, don't just read the seven attributes after the jump. Understand them. Read them twice. Then, your future financial situation will be assured.

Or, you can just do one of those chain e-mails and wish for wealth.

[Thanks, Forbes and MSNBC]

Continue reading Seven characteristics of the rich and famous: A blueprint to uber-wealth

Seven characteristics of the rich and famous: A blueprint to uber-wealth originally appeared on BloggingStocks on Mon, 05 Oct 2009 17:00:00 EST. Please see our terms for use of feeds.

And now what could become history's biggest transfer of tax dollars to bail out bad lending begins. Last month Congress passed a bill that gave the Treasury Department $800 billion to bail out Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). And while it is unclear how much money will be used to bail them out, the general outlines of the soon-to-be-announced terms are becoming clearer than they were last night.

The New York Times and The Washington Post report on five key features as follows:

• Government bankruptcy. Fannie and Freddie will be taken under a conservatorship -- which is similar to a bankruptcy wherein a trustee operates the company so it can be fixed and ultimately sold back to public investors. The bailout would reduce the value of their common and preferred shares "to little or nothing," according to the Times.
• Taxpayers bailout defaulted mortgages. Some share of the $800 billion in taxpayer funds will be used to pay "any losses on mortgages [Fannie and Freddie] own or guarantee," according to the Times.
• Payouts on a quarterly basis depending on reported results. Treasury is trying to dribble the bailout over time. "Instead of giving each company a big capital infusion up front, the government could make quarterly injections as the companies' losses warrant. This would be an attempt to minimize the initial cost of the rescue," according to the Washington Post.

Continue reading Government to wipe out Fannie/Freddie shareholders by Sunday

Government to wipe out Fannie/Freddie shareholders by Sunday originally appeared on BloggingStocks on Sat, 06 Sep 2008 08:48:00 EST. Please see our terms for use of feeds.

Now eight large brokerage firms have settled with Auction Rate Securities (ARS) investors. This afternoon Bloomberg News reports Goldman Sachs (NYSE: GS) and Deutsche Bank settled with state regulators. Merrill Lynch & Co., Inc. (NYSE: MER) announced another prong of its settlement earlier in the day.

What are the terms of the settlement for the latest two? Bloomberg writes that "Goldman will buy back $1.5 billion of the securities and pay a $22.5 million fine. Deutsche Bank will redeem $1 billion of debt and was fined $15 million." In addition to the rogues gallery of big ARS issuers who have yet to settle, investigators are targeting medium-sized brokers -- Charles Schwab (NYSE: SCHW), Fidelity Investments and E*Trade Financial Corp. (NYSE: ETFC).

This leaves major ARS issuers lagging behind their peers. Here are three holdouts (with their 2007 municipal ARS issuance in parentheses):

• Bank of America (NYSE: BAC) ($3.7 B)
• RBC Capital Markets ($1.2 B)
• Lehman Brothers (NYSE: LEH) ($1.1 B)

What are they waiting for?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Goldman and Deutsche Bank join Auction Rate Securities settlement bandwagon originally appeared on BloggingStocks on Thu, 21 Aug 2008 19:20:00 EST. Please see our terms for use of feeds.

Wall Street has a habit of riding its booms a bit too long. And that leads to collapse, layoffs, and hand wringing about the future. But it looks like Wall Street is already moving forward. And that means exporting its future by taking its finance franchise to cash rich countries and out of the canyons of Wall Street.

Wall Street's boom and bust cycles tend to eclipse a decade. In the 1980s, junk-bond fueled takeovers created massive amounts of wealth -- and also led to the collapse of junk-bond issuer Drexel Burnham. Wall Street licked its wounds for a few years and by the mid-1990s it had reinvented itself as the headquarters for Internet initial public offerings. That bubble burst in 2000. Then the Fed cut rates to 1% and Wall Street reemerged as a packager of mortgages -- along with servicing hedge funds and private equity moguls.

That all ended last August and the collapse of that bubble led to the demise of Bear Stearns and Countrywide and the loss of about $8 trillion worth of wealth. The New York Times reports that the latest collapse has cost 80,000 finance jobs as well. But Wall Street is already mapping out its future by following the money. And the Times pinpoints where Wall Street thinks that money resides -- based on the growth in the number of Wall Street people moving to various global money centers.

Continue reading Wall Street exports its future

Wall Street exports its future originally appeared on BloggingStocks on Tue, 12 Aug 2008 10:45:00 EST. Please see our terms for use of feeds.