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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (9937)	7/28/2004 11:34:27 AM
From: Roads End	Read Replies (1) \| Respond to of 116555

KT, I would be willing to bet all your money that, if Kerry is elected, that the deficit will come in much higher than the projections. -g-

To: Knighty Tin who wrote (9937)	7/28/2004 11:42:20 AM
From: ild	Read Replies (3) \| Respond to of 116555

How long can California continue borrowing 10% of the money it spends? OTOH why not borrow if you can? http://www.latimes.com/la-me-budget27jul27,1,882660.story Budget Deal Ends Weeks of Stalemate The $103-billion state plan calls for no new taxes, few spending cuts and more borrowing. Some payments were about to be withheld. EDIT: I get it. Greenspan will save everyone. EDIT2: Is Buffett still Schwarzenegger's adviser?

To: Knighty Tin who wrote (9937)	7/28/2004 1:22:17 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. junk bond market sees surge in buyout deals Wednesday July 28, 11:34 am ET By Dena Aubin NEW YORK, July 28 (Reuters) - Low-cost financing and prospects for solid, although slowing, U.S. economic growth are spurring a bumper crop of high-yield bond sales for corporate acquisitions, and the trend could pick up speed, analysts say. Acquisitions account for about half of high-yield bonds slated to be sold in coming weeks, up from about one-fifth in the first half of the year, according to Merrill Lynch. Falling defaults and economic growth have made banks and bond investors more willing to lend, but some worry that plentiful cash is leading to riskier deals that are increasingly top-heavy with debt. "Individual transactions are showing a far more aggressive stance," said Chris Donnelly, a director at Standard & Poor's Leveraged Commentary & Data. "Lenders that have been conservative for the last couple of years are probably more willing to go out on a limb." Upcoming high-yield bond sales linked to acquisitions include a $1.01 billion issue for the leveraged buyout of satellite operator PanAmSat Corp.(NasdaqNM:SPOT - News), plus smaller deals from Chesapeake Energy Corp.(NYSE:CHK - News), Nortek Inc., US Oncology Inc.(NasdaqNM:USON - News), Borden Chemical Inc. and others. INTEREST RATE FEAR SUBSIDES "Acquisitions and leveraged buyouts are now pretty well dominating the forward calendar, and that marks a real shift," said Christopher Garman, head of high-yield strategy at Merrill Lynch. Previously, refinancings accounted for most high-yield issuance, he said. With corporations selling assets and LBO sponsors looking to put cash to work, acquisitions will remain a key driver of high-yield bond sales, said David Flannery, head of high-yield capital markets at Deutsche Bank. "A strong economy helps, because it gives the buyer confidence in what they're buying and often times gives the seller some strong footing to negotiate," he said. Worries that strong growth would fuel inflation and higher interest rates hurt high-yield bonds earlier this year, but the market rebounded in June and July. "People are refocusing on the economy, thinking we're going to have good growth, but not the type of growth that causes the fixed-income market to panic," said Kingman Penniman, president of high-yield research firm KDP Investment Advisors. LEVERAGE CREEPS HIGHER Buyout shops are making the most of the improved sentiment, increasing the debt used to fund acquisitions and cutting back on the equity they contribute, potentially boosting their returns. According to S&P's Donnelly, the percentage of equity in leveraged buyouts has shrunk from about 41 percent in 2001 to 32 percent in the second quarter this year. A lower percentage of equity relative to debt on a company's balance sheet generally raises default risks as more cash is consumed by interest payments. The $4.6 billion acquisition of PanAmSat by Kohlberg Kravis Roberts, Carlyle Group and Providence Equity Partners is expected to include just $550 million of equity, or 12 percent of the deal, marking a new low among recent LBOs, by S&P's count. Bank loans, existing debt and new bonds will fund the remainder of the purchase. A spokesman for the equity sponsors declined to comment. biz.yahoo.com