Deutsche Bank

Bank views GM shares as worthless

Molly Bernhart — Mon, 10 Nov 2008 17:03:37 -0500

If you have been following the hedge-fund numbers, thinking the state of the U.S. economy couldn't get any grimmer, shift your gaze to the U.S. automotive industry and you will be proven wrong. Deutsche Bank has downgraded General Motors Corp. to sell from hold, with a price target of $0. The bank predicts the car maker will struggle to fund its U.S. operations beyond December, unless there is a government intervention.

"Without government assistance, we believe that GM's collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailer, and sectors of the U.S. economy," the broker said.

For more:
- read the MarketWatch article

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Deutsche Bank news from FierceFinance

Lehman update: Pessimism spreads, firm for sale?

Jim Kim — Thu, 11 Sep 2008 13:06:34 -0400

No one's buying the Lehman Brothers story anymore. It's big day has come and gone--and people are even more pessimistic than before. Some analysts had been recommending the stock on a valuation basis. But Citigroup, Deutsche Bank and Goldman Sachs all downgraded the bank to hold. The capital raising plans have done little to raise hopes. As of now, the idea of a takeover--more likely a take-under--is again gaining currency. Richard Bove told MarketWatch, "It is increasingly evident that outside intervention in the form of a hostile takeover is a necessity." Hostile may not be the right word. CNBC reports that CEO Richard Fuld is shopping the whole firm. He suggested as much when he emphasized earlier that he was open to all strategic alternatives. One would guess that price will be the sticking point.

For more:
- here's a MarketWatch article
- here's the CNBC article
- Time for Fuld to quit? Article
- Lehman CDS spreads wider than Bear Stearns's. Article

Another hedge funds bites the dust

Jim Kim — Tue, 19 Aug 2008 12:52:20 -0400

The gravestone of hedge fund SageCrest Done might read "done in by its creditor." Apparently, Deutsche Bank told its client to sell assets at a discount to pay off a $7 million credit line, reports the Financial Times. That left Chapter 11 as the only option. The Greenwich, CT fund specializes in asset-backed financing for smaller companies. This is just one in a string that SageCrest has suffered. The fund ran into trouble when several big loans soured, including ones to finance art purchases in New York. One question is whether hedge funds are in for more turbulence. SageCrest is something of a special case, but July and August have been bad months. The FT says some funds are under pressure because of long energy positions combined with short financial positions.

For more:
- here's the FT article

Citi feeling pressure to take more writedowns?

Jim Kim — Tue, 29 Jul 2008 21:51:30 -0400

While Merrill Lynch has moved to puts its collateralized debt obligation woes behind it, Citi still has about $23 billion in net exposure to such securities. It's doubtful CDOs are going to magically recover in value anytime soon, so the bank will likely be pressured to follow the lead of Merrill Lynch. Deutsche Bank analyst Michael Mayo predicts Citi will take third-quarter writedowns of about $8 billion, reports TheStreet.com. The bank may take another $1 billion due to monoline exposure. So this raises an obvious question: Will Citi need to raise capital once again? The answer would appear to be yes if it takes another big writeoff. The issue is how to raise capital. No doubt, it's very actively shopping assets--a given. But we may see a big investment or equity issue, despite the dilutive effects. And of course, there's always the possibility of dividend action.

For more:
- here's the article

Could anyone buy Lehman Brothers right now?

Jim Kim — Wed, 16 Jul 2008 12:25:46 -0400

The news that Lehman Brothers CEO Dick Fuld is considering a leveraged buyout highlights to some just how unattractive the firm has become to potential buyers right now. JPMorgan Chase would be a logical fit, but it is digesting Bear Stearns. Bank of America is digesting Countrywide, which will likely give it gas. Citigroup is in no position to make a major (or even minor) acquisition. The sovereign wealth funds are gun shy right now. Some have seen their investments in U.S. financial services companies tank. A MarketWatch article suggests that Deutsche Bank may be an outside candidate, along with Barclays and HSBC. Hey, the dollar is cheap right now, so why not? I doubt any bidders will emerge. So the stakes are high for Fuld. Perhaps we'll hear more about an LBO soon, though the firm can only bear so much debt.

For more:
- here's the MarketWatch article

Recovery in leveraged loan market?

Jim Kim — Thu, 10 Jul 2008 15:29:50 -0400

IDD reports that the syndicated loan market is still struggling. A big part of that is the on-going drought in leveraged loan issuance, which reflects largely the slowdown in LBO activity. New issuance of loans backing buyouts fell 86 percent in the second quarter to $7.9 billion. That compares with $57.7 billion in the second quarter of last year. But there are some signs that more deals might get done sooner than expected. Smaller deals for targets with good prospects will get some looks, no doubt. IDD reports that Deutsche Bank priced a $515 million term loan coupled with a $50 million revolving facility and $200 million in high yield bonds last week for Oak Hill Capital Partners, which is buying eight television stations. The real pain is at the mega-deal level. Apparently, a deal involving top banks arranging financing for Thomas H. Lee Partners and Bain Capital's acquisition of Clear Channel Communications is struggling as of now.

For more:
- here's the IDD article (For FierceFinance readers)

John Devaney finally packs it in

Jim Kim — Wed, 09 Jul 2008 23:32:40 -0400

The fall of John Devaney has been chronicled in bits and pieces. First came news that his yacht, the 142-foot Positive Carry, was up for sale. Then came news that his Aspen home was on the block. Turns out he also was forced to sell his Renoir and his Gulfstream. He opened up a bit to the New York Times, and at least is not making excuses. This week, after a painful attempt to keep his Horizon Strategy fund in business, he finally bowed to reality and shut it down. It's unclear how many of his funds have been shuttered. The final straw was a margin call from Deutsche Bank that he couldn't make. He says he tried to hang on for so long to save his investors from massive losses. He ultimately failed, and went down with his funds. He's vowing to come back.

For more:
- here's the New York Times article

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Another hedge fund in trouble

Merrill Lynch leaning toward sale of Bloomberg?

Jim Kim — Tue, 08 Jul 2008 13:54:31 -0400

We've noted that top banks and brokerages are pondering all kinds of asset sales. Few will do so in an environment as trigger-happy as the one in which Merrill Lynch now exists. Speculation is heavy that it will sell either its stake in Bloomberg or BlackRock. The conventional wisdom now seems to be that the strategic nature of its BlackRock stake limits the likelihood of such a sale. That leaves Bloomberg. With the likelihood of a $5 billion writeoff looming, Deutsche Bank star analyst Mike Mayo told clients that a sale might generate offsetting proceeds, MarketWatch notes. The danger in this is that it reduces the capital cushion against future losses. If the writedowns keep coming, the firm may be forced to sell its BlackRock stake. Hopefully, it will not get to that.

For more:
- here's a MarketWatch brief on Mayo's comments
- Wachovia's analyst expects a $5 billion writedown. Article

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More asset sales to come

Big test of leveraged loan market coming up

Jim Kim — Tue, 17 Jun 2008 07:48:57 -0400

The leveraged loan market has been whipped recently. Obviously, it went into the doldrums as the credit crunch reached its nadir. But then the vultures moved in, including a lot of private equity firms, and it looked like the debt was heading back to par. Now, it's a mixed bag. We may get a clearer view of the market when Citigroup, Deutsche Bank and others try to sell about $12 billion in loans in support of the Clear Channel Communications deal. Which, as you may recall, was hotly contested between the banks and private equity buyers Bain Capital and THL Partners. The New York Post reports that the debt may sell at a steeper discount than the average leveraged loan, given the fundamentals in the radio industry.

For more:
- here's the Post article

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