The WSJ’s “Heard on the Street” column out saying that even as the credit crunch and weak housing mkt cause problems for the nation's banks, there is another goblin lurking in the wings: The basic business of collecting deposits and lending money is becoming less profitable. Many banks that are gearing up to report 4Q results in the next couple of wks are likely to report narrowing in net interest margins, already at the lowest level since ‘91. Much of the pinch is being attributed to a scramble for deposits. Even though the Federal Reserve has been cutting interest rates, many banks are still offering attractive rates for deposits. A qrtrly survey released last wk by Citigroup (C) found that "the competition to raise new deposits" via certificates of deposit and money-mkt funds "remains intense." The survey noted that while some banks have followed the Fed's lead and trimmed rates, others have been offering promotions that are well above the federal-funds tgt rate of 4.25%. CFC, ETFC, BAC, WB.
“Ahead of the Tape” column out saying that the next test for corporate debt mkts starts this wk. On Thu, banks arranging the buyout of Harrah’s (HET) by 2 private-equity shops are expected to begin trying to sell as much as $9bn of loans tied to the takeover. The banks, including Bank of America and Deutsche Bank, have agreed to supply about $20bn of debt financing to pay for the casino operator's takeover by Apollo Mgmt Group and TPG. B/c investors have become wary of holding this debt, the banks will likely need to carry most of it themselves. Wall St. bankers had hoped that easy credit, which disappeared more than 6mo ago, would have reappeared by now. Last year, they promised to underwrite hundreds of billions of dollars of buyout debt, with the expectation of passing that debt on to investors. Then the credit mkts went awry and the banks got stuck holding much of the debt. "There's more pain in store for arrangers," says Chris Donnelly, of Standard & Poor's Leveraged Commentary & Data.
Fund manager holds CNX, MEE, PXP, ACI, BTU, NFX, PVA, RIG, SWN and WFT – Barron’s Online.
“Inside Scoop” section reports that one insider has opted to sell nearly 50% of his holdings in Dell (DELL). On Wed longtime Director Michael Miles sold 284K shares for $6.9m. The sale represented 48.3% of his holdings in the co. Jonathan Moreland, of Ladenburg Thalmann Asset Mgmt, notes that when the stock was trading in the low $20s previously Miles not only stopped selling, but also acquired shares through options exercises, showing his belief that the stock would make a recovery. "This time it looks as if [Miles's] optimism is out the door, along with about half of his direct holdings," says Moreland.
“Ahead of the Tape” column out saying that the next test for corporate debt mkts starts this wk. On Thu, banks arranging the buyout of Harrah’s (HET) by 2 private-equity shops are expected to begin trying to sell as much as $9bn of loans tied to the takeover. The banks, including Bank of America and Deutsche Bank, have agreed to supply about $20bn of debt financing to pay for the casino operator's takeover by Apollo Mgmt Group and TPG. B/c investors have become wary of holding this debt, the banks will likely need to carry most of it themselves. Wall St. bankers had hoped that easy credit, which disappeared more than 6mo ago, would have reappeared by now. Last year, they promised to underwrite hundreds of billions of dollars of buyout debt, with the expectation of passing that debt on to investors. Then the credit mkts went awry and the banks got stuck holding much of the debt. "There's more pain in store for arrangers," says Chris Donnelly, of Standard & Poor's Leveraged Commentary & Data.
Fund manager holds CNX, MEE, PXP, ACI, BTU, NFX, PVA, RIG, SWN and WFT – Barron’s Online.
“Inside Scoop” section reports that one insider has opted to sell nearly 50% of his holdings in Dell (DELL). On Wed longtime Director Michael Miles sold 284K shares for $6.9m. The sale represented 48.3% of his holdings in the co. Jonathan Moreland, of Ladenburg Thalmann Asset Mgmt, notes that when the stock was trading in the low $20s previously Miles not only stopped selling, but also acquired shares through options exercises, showing his belief that the stock would make a recovery. "This time it looks as if [Miles's] optimism is out the door, along with about half of his direct holdings," says Moreland.
BAC is offering me 0.1% over their MM fund NSHXX for a checking account, offer good through June.
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