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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (9127)	11/23/1997 8:49:00 PM
From: Rational	Respond to of 18056

Zeev: I am expecting Korean and Japanese banks to require highly leveraged borrowers to restructure if the net-worths of these borrowers have fallen below thresholds pre-specified in bond indentures. BOJ, IMF, and other international financial institutions will force regulators to have the banks do so in a less painful way. Softbank's networth must have sunk heavily for the strock price to fall 30% below the IPO price. Asking Softbank to sell its recent acquisitions will be hard. But, asking them to sell YHOO stock is easy. Thus, companies with high leverage and illiquid assets will take a lot of time to restructure. But, the ones like Softbank with both liquid and illiquid assets, can be easily forced to divest their liquid assets, IMO. It is like when you have bought a house using a mortgage and the price of the house has fallen, the bank gives you a lot of time to restructure. But, if you have borrowed on margin to buy stocks, the bank/broker gives you a day's notice to sell your stocks to take your account back to the required margin (leverage). It is an opinion, not an investment advice. <VBG> Sankar