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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: shades who wrote (65865)	7/11/2006 7:03:30 PM
From: shades	Read Replies (1) of 110194

BoE To Give Risk Warning About Corporate Debt (destruct the enterprise before you let khan take it) DOW JONES NEWSWIRES The Bank of England will warn on Wednesday that U.K. companies facing pressure to take on more debt to fend off possible takeovers is one of the main threats to the nation's financial stability, The Financial Times reported on its Web site Tuesday. The BoE's annual review of the risks facing the U.K.'s financial system comes as companies seem to be reviewing their debt levels after BAA PLC (BAA.LN) and Associated British Ports Holdings PLC (ABP.LN) became victims of highly leveraged takeovers. Even though few companies have so far decided to significantly ramp up their debt, and there hasn't been all that much takeover activity in the U.K., the BoE is worried that a sharp change in the attitude to debt could increase risks for companies, the FT reported. "The threat of buyouts and the relatively low cost of capital may be encouraging other companies to re-leverage. If these patterns continued, they would increase the vulnerability of global corporate balance sheets to a change in the future financial environment," the BoE warned in its report. According to the FT, the central bank's report listed five other possible economic risks to the U.K.: high household debt; the low risk premiums attached to assets around the world; the economic imbalances between the U.S. and other large economies; the growing importance of large cross-border financial institutions; and the dependence of U.K. banks on infrastructure such as the clearing and payments systems. Newspaper Web site: ft.com (END) Dow Jones Newswires July 11, 2006 18:18 ET (22:18 GMT)

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