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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (31525)	5/1/2005 2:39:11 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

Doubts on big buy-outs as banks battle to sell loans for $11.3bn SunGard deal By James Politi in New York and Peter Smith in London Published: April 28 2005 03:00 \| Last updated: April 28 2005 03:00 Investment banks financing the purchase of US data storage group SunGard, the largest leveraged buy-out since the 1980s, are struggling to find buyers for the debt, raising fears that the downturn in high-yield markets threatens a new class of large private equity deals. Deutsche Bank, JPMorgan and Citigroup recently began syndicating a $4bn (£2.09bn) bank loan, part of the financing of the $11.3bn deal, to hedge funds and other preferred investors before moving on to a formal roadshow. But early indications of interest in the bank loan and a $3bn bridge loan that will also soon be marketed, have been lukewarm, according to people familiar with the matter. "The SunGard deal is signed, but the financing is not done by any means. Fingers crossed," said one. The deal, in which seven private equity groups joined forces for the largest buy-out since Kohlberg Kravis Roberts bought RJR Nabisco in 1989, was seen as a for future deals. Nervousness about the SunGard financing comes as investors in high-yield markets, a main driver of LBOs, have become wary of taking on risk. If the banks fail to refinance the loans for SunGard, bought in March, they would be left with a large exposure. A high-yield banker said: "If investors won't take it up, that will make the banks absolutely panic. You never want to be stuck with a bridge loan . .. all the institutions will get very concerned." The difficulty selling the debt will raise doubts about similar deals such as the $6.6bn purchase of Toys R Us by Bain Capital, KKR and Vornado Realty. People close to the SunGard banks said they were confident the loans would be sold, partly because of SunGard's stable cash flow. They insisted the high-yield market was not shut but had only temporarily softened. But private equity deals have already suffered from the waning appetite for risk. Deutsche Bank recently pulled the sale of $825m of high-yield paper to fund KKR's $2.6bn takeover of Masonite International, the Canadian door-maker. Silver Lake, which led the SunGard consortium, Deutsche Bank, JPMorgan and Citigroup declined to comment. Find this article at: news.ft.com

To: mishedlo who wrote (31525)	5/1/2005 2:42:32 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 110194

mish his theory is correct but it has it's flaws = reporting of GDP in the US and EZ are not identical. We have hedonics! HOw much this adds ot GDP ? I am not sure, Fact is that the trade deficit with the EZ is growing even with a cheaper USD and IMHO it is in large part due to the "New Europe". IMHO there is to much fixation with Germany and to little with the rest of the EZ countries whose growth are much higher and in certain regions surpass the US

To: mishedlo who wrote (31525)	5/1/2005 7:48:54 PM
From: Taikun	Read Replies (3) \| Respond to of 110194

The USD represents good value here. I'd be wary of these calls for a big drop in the USD or a big spike in the value of the RMB. I posted this a couple of days ago: I posed this question the other day. How can the USD be overvalued compared to where? The UK? The UK is frighteningly uncompetitive and have a paucity of major companies compared to the US. People like the Swiss Franc. Switzerland is amazingly high cost. Some investors like the Euro, but the Euro zone has low growth, terrible bureaucracy and high debt. Those same investors try to tell me US debt is too high. The Euro zone has been breaking their benchmarks. Then there is Japanese debt, the highest of the OECD. How can the USD fall against the Yen? I am not sure this is possible. Japan is still hugely expensive. The US remains a very cheap place to do business, with good laws and low taxes. China only supplies a fraction of US goods. Those goods may be visible because they are at WalMart, but the #1 US exporter is Boeing, and Boeing is made in the US (and Japan) Boeing is going gangbusters, with the Euro up high and $20bn in Dreamliner orders in the last two weeks from Air India and Air Canada. How can the USD go any lower? Airbus will be out of business and so will Japan. I would tend to agree with Jay. I don't think we're going to get a rout in the USD even with financial industry problems (GM, FNM etc) because they will be contained. Message 21280179