Bob Pisani's Trader Talk: More Problems in Financing Buyouts
CNBC's Bob Pisani reports on what traders are telling him this morning:
LBO Troubles. Yesterday, it wasExpediadrastically lowering its Dutch tender offer after Barry Diller said buyers of the bonds were trying to impose "unacceptable" terms (read: they wanted higher interest).
Today, sources say that GM's Allison Transmission deal has been postponed. The deal involved selling $3.1 billion in bonds to finance the LBO of the company to Carlyle and Onex.
Not clear if deal itself will be postponed, or banks will provide some kind of bridge financing and try to sell the debt later. If they do, the debt will likely carry a higher yield.
As a result of all this, the cost of credit default insurance (swaps) went to the highest level since Aug '05 and the LCDX index, an index which measures a basket of corporate loans, closed at a new low.
Meanwhile, the Detroit Free Press says a deal to finalize Cerberus'acquisition of Chrysler could occur next Monday or Tuesday. Bankers have already had to sweeten the loan package. We're talking $20 billion in debt.
Countrywide's report disappointing. Earnings miss, guidance lowered. Delinquencies and defaults continue to rise "across all mortgage product categories."
Dollar at new lows, again. Yen rally continues. Gold up.
It keeps going, and going...BHP Q4 production report, with strong results from iron ore, petroleum production, and coking. No sign of slippage in world demand from this commodities giant. China was 18% of sales.