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

To: ild who wrote (60228)	5/3/2006 4:23:08 PM
From: shades	Read Replies (1) \| Respond to of 110194

Yield-Starved Investors Clamor For Swiss Re USD Hybrid . By Aparajita Saha-Bubna Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Fixed-income investors are lining up for a slice of insurance behemoth Swiss Reinsurance Co.'s (RUKN.VX) offering of hybrid securities, despite concerns triggered by a recent decision that makes hybrids less popular among some buyers. Investors have put in orders to the tune of $2 billion for the U.S. dollar denominated portion of the hybrids - securities that carry features of bonds and common stock. The tranche is expected to total between $500 million to $750 million in size, according to market participants familiar with the offering. "In a market starved of supply and yield, this is attractive," said Scott MacDonald, co-head of research at Aladdin Capital, a Stamford, Conn. hedge fund which manages about $10 billion in assets. The deal, which includes a euro portion that will probably be larger in size than the U.S. dollar tranche, may total as much as $2 billion equivalent. Thanks to the demand, yield on the fixed-rate junior subordinated debt offering is expected to be at the lower end of price guidance of 170 basis points to 175 basis points over comparable U.S. Treasurys. Still, this is well above the 80 basis points or so a comparable investment-grade corporate bond would yield. The U.S. portion of the offering is likely to price by Thursday in a Rule144A private placement through Banc of America Securities, JP Morgan and UBS Investment Bank. Private placement offerings are sold to qualified investors only. "I thought there would be a bigger concession on pricing, given the uncertainty" around hybrids, said Sid Bakst, a senior portfolio manager at Weiss, Peck & Greer Investments in New York, with around $9 billion in fixed-income assets. Since a landmark decision by an association of insurance regulators in March, investors have questioned whether insurers, which have represented up to a quarter of the hybrid buyer base, will continue to snap up new hybrids. Yet, the relatively small size of the dollar-denominated portion coupled with the strong demand from yield obsessed investors means the underwriters should have little difficulty placing the new securities even if the insurers don't show up, market participants reckon. According to those familiar with the deal, the U.S. dollar-denominated portion comprises preferred stock, which ranks below the issuer's existing senior debt, such as loans and bonds, and senior subordinated notes, but above common stock. The hybrids carry no maturity, that is, they are perpetual. The issuer has the option to buy back the securities from buyers after 12 years. If they aren't repurchased, the coupon payments increase by 1.0 percentage point. As part of the deal, under certain circumstances, the borrower has the option to suspend coupon payments but may have to make them up later. The notes are rated single-A by S&P and A1 by Moody's Investors Service. Proceeds of the proposed sale will finance a portion of the $6.8 billion acquisition, announced in November, of GE Insurance Solutions, a unit of General Electric Co. (GE), according to a press release from Swiss Re. Strong Demand But What About Insurers? While the Wall Street banks behind the deal have been tightlipped so far, market participants suspect that insurers may sit out this offering due to the uncertainties around hybrids. At the heart of the matter is whether these hybrids will eventually be categorized as common stock instead of debt by the National Association of Insurance Commissioners, an organization of insurance regulators. Such a classification would make it more costly for insurers to hold these hybrids. "I would think that insurers would choose to stay out of the sector until there is more clarity" around the decision from the NAIC, said Bakst at Weiss, Peck & Greer Investments. -By Aparajita Saha-Bubna, Dow Jones Newswires; 201-938-2248; aparajita.saha-bubna@dowjones.com (END) Dow Jones Newswires May 03, 2006 16:16 ET (20:16 GMT) Copyright (c) 2006 Dow Jones & Company, Inc.- - 04 16 PM EDT 05-03-06

To: ild who wrote (60228)	5/3/2006 5:16:32 PM
From: Wyätt Gwyön	Respond to of 110194

Companies found to have charged unfair prices for energy would face penalties as high as $150 million great way to encourage more investment in the US energy sector... sounds like grandstanding by the politico-ignorami. what are the chances they actually find somebody guilty of this, and that somebody has to pay? Exxon still hasn't paid $4.5 billion in punitive damages stemming from Exxon Valdez... # $300 million: Paid by Exxon in actual damage claims # $2.3 billion: Spent by Exxon in cleanup # $4.5 billion: Punitive damages against Exxon # $25 million: What Exxon claims it owes in punitive damages # $36 billion: ExxonMobil 2005 profit # 32,000: Remaining plaintiffs # 11 million: Gallons of crude spilled # 1,300: Miles of coastline fouled # 2,800: Number of sea otters killed by spill* *Estimate by Exxon Valdez Oil Spill Trustee Council