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To: tejek who wrote (443176)	12/29/2008 7:25:19 PM
From: Road Walker	Respond to of 1586772

Speculative-Grade Distress Ratio Rises to 85 Percent Dec. 29 (Bloomberg) -- More than 85 percent of the debt of speculative-grade companies is in distress, their bonds show. The percentage of bonds with yields at least 1,000 basis points more than Treasuries of similar maturity climbed from 67 percent in mid-November, New York-based Standard & Poor’s said today in a report citing data as of Dec. 15. That compares with about 1 percent in the first half of 2007, S&P said. The level of distress, at the highest since S&P began reporting the data in October 2002, signals companies are having trouble raising cash and default rates may climb. The worst recession in 26 years has made it harder for companies to borrow in the bond market. Sales of high-yield debt this quarter were the least since at least 1998, according to data compiled by Bloomberg. “A rising distress ratio signals an increased need for capital, and it could be a precursor to more defaults if accompanied by a market disruption,” S&P analysts led by Diane Vazza wrote in the report. “Recovery prospects for this month’s list of distressed issues remain dim.” About 55 percent of the distressed issues fall into S&P’s lowest two rating categories, with only a “modest to negligible” recovery expected in a default, S&P said. Companies in media and entertainment, oil and gas exploration and production and telecommunications accounted for almost 40 percent of the total debt, according to the report. The 12-month trailing default rate, which rose to 3.15 percent in November, may climb to 9.6 percent by September 2009, according to S&P’s “pessimistic scenario, which is growing ever more likely,” according to a separate report published today. High-Yield Sales Companies have sold $3.4 billion of high-yield bonds this quarter, including conversions from bridge loans to debt, compared with $32.3 billion in the corresponding period last year, Bloomberg data show. The extra yield investors demand to own high-yield bonds rather than Treasuries of similar maturity widened to a record 21.82 percentage points on Dec. 15, compared with 2.41 percentage points in June 2007, according to Merrill Lynch & Co.’s High- Yield Master II index. Spreads have since narrowed to 19.55 percentage points. High-yield bonds are rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s. The U.S. economy shrank in the third quarter at a 0.5 percent annual pace, according to the Commerce Department. The U.S. has been in a recession since December 2007, according to the National Bureau of Economic Research. To contact the reporter on this story: Bryan Keogh in New York at bkeogh4@bloomberg.net Find out more about Bloomberg for iPhone: bbiphone.bloomberg.com

To: tejek who wrote (443176)	12/29/2008 7:27:18 PM
From: Road Walker	Read Replies (2) \| Respond to of 1586772

Scenic Pakistani valley falls to Taliban militants By NAHAL TOOSI Published: 16 minutes ago ISLAMABAD, Pakistan (AP) - Taliban militants are beheading and burning their way through Pakistan's picturesque Swat Valley, and residents say the insurgents now control most of the mountainous region far from the lawless tribal areas where jihadists thrive. The deteriorating situation in the former tourist haven comes despite an army offensive that began in 2007 and an attempted peace deal. It is especially worrisome to Pakistani officials because the valley lies outside the areas where al-Qaida and Taliban militants have traditionally operated and where the military is staging a separate offensive. "You can't imagine how bad it is," said Muzaffar ul-Mulk, a federal lawmaker whose home in Swat was attacked by bomb-toting assailants in mid-December, weeks after he left. "It's worse day by day." The Taliban activity in northwest Pakistan also comes as the country shifts forces east to the Indian border because of tensions over last month's terrorist attacks in Mumbai, potentially giving insurgents more space to maneuver along the Afghan frontier. Militants began preying on Swat's lush mountain ranges about two years ago, and it is now too dangerous for foreign and Pakistani journalists to visit. Interviews with residents, lawmakers and officials who have fled the region paint a dire picture. A suicide blast killed 40 people Sunday at a polling station in Buner, an area bordering Swat that had been relatively peaceful. The attack underscored fears that even so-called "settled" regions presumptively under government control are increasingly unsafe. The 3,500-square-mile Swat Valley lies less than 100 miles from the capital, Islamabad. A senior government official said he feared there could be a spillover effect if the government lost control of Swat and allowed the insurgency to infect other areas. Like nearly everyone interviewed, the official requested anonymity for fear of reprisal by militants. Officials estimate that up to a third of Swat's 1.5 million people have left the area. Salah-ud-Din, who oversees relief efforts in Swat for the International Committee of the Red Cross, estimated that 80 percent of the valley is now under Taliban control. Swat's militants are led by Maulana Fazlullah, a cleric who rose to prominence through radio broadcasts demanding the imposition of a harsh brand of Islamic law. His appeal tapped into widespread frustration with the area's inefficient judicial system. Most of the insurgents are easy to spot with long hair, beards, rifles, camouflage vests and running shoes. They number at most 2,000, according to people who were interviewed. In some places, just a handful of insurgents can control a village. They rule by fear: beheading government sympathizers, blowing up bridges and demanding women wear all-encompassing burqas. They have also set up a parallel administration with courts, taxes, patrols and checkpoints, according to lawmakers and officials. And they are suspected of burning scores of girls' schools. In mid-December, Taliban fighters killed a young member of a Sufi-influenced Muslim group who had tried to raise a militia against them. The militants later dug up Pir Samiullah's corpse and hung it for two days in a village square - partly to prove to his followers that he was not a superhuman saint, a security official said on condition of anonymity. A lawmaker and the senior Swat government official said business and landowners had been told to give two-thirds of their income to the militants. Some local media reported last week that the militants have pronounced a ban on female education effective in mid-January. Several people interviewed said the regional government made a mistake in May when it struck a peace deal with the militants. The agreement fell apart within two months but let the insurgents regroup. The Swat insurgency also includes Afghan and other fighters from outside the valley, security officials said. Any movement of Pakistani troops from the Swat Valley and tribal areas to the Indian border will concern the United States and other Western countries, which want Pakistan to focus on the al-Qaida threat near Afghanistan. On Friday, Pakistani intelligence officials said thousands of troops were being shifted toward the border with India, which blames Pakistani militants for terrorist attacks in Mumbai last month that killed 164 people. But there has been no sign yet of a major buildup near India. "The terrorists' aim in Mumbai was precisely this - to get the Pakistani army to withdraw from the western border and mount operations on the east," said Ahmed Rashid, a journalist and author who has written extensively about militancy in the region. "The terrorists are not going to be sitting still. They are not going to be adhering to any sort of cease-fire while the army takes on the Indian threat. They are going to occupy the vacuum the army will create." Residents and officials from the Swat Valley were critical of the army offensive there, saying troops appeared to be confined to their posts and often killed civilians when firing artillery at suspected militant targets. The military has deployed some 100,000 troops through the northwest. A government official familiar with security issues estimated that some 10,000 paramilitary and army troops had killed 300 to 400 militants in Swat since 2007, while about 130 troops were killed. Authorities have not released details of civilian casualties, and it was unclear if they were even being tallied. The official, who insisted on anonymity because of the issue's sensitivity, disputed assertions that militants had overrun the valley, but said a spotty supply line was hampering operations. He said the army had to man some Swat police stations because the police force there had been decimated by desertions and militant killings. A Swat militant boasted that "we are doing our activities wherever we want, and the army is confined to their living places." "They cannot move independently like us," said the man, who was reached over the phone and gave his name as Muzaffarul Haq. He claimed the Swat militants had no al-Qaida or foreign connections, but that they supported all groups that shared the goal of imposing Islamic law. "With the grace of Allah, there is no dearth of funds, weapons or rations," he said. "Our women are providing cooked food for those who are struggling in Allah's path. Our children are getting prepared for jihad." ___ Associated Press writers Zarar Khan in Islamabad and Riaz Khan in Peshawar contributed to this report.