Tuesday, August 28, 2012

Wednesday August 29 Housing and Economic stories



TOP STORIES:

No Criminal Case Is Likely in Loss at MF Global - (www.cnbc.com) A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case. The hurdles to building a criminal case were always high with MF Global, which filed for bankruptcy in October after a huge bet on European debt unnerved the market. 

Muni Defaults May Be 36 Times More Frequent Than Reported - (www.bloomberg.com)  Municipal bond defaults occur with a frequency at least 36-fold greater than reported by credit raters, Federal Reserve Bank of New York researchers say. When including unrated debt not covered by the firms, 2,521 issuers in the $3.7 trillion market for state and local bonds defaulted from 1970 to 2011, authors Jason Appleson, Eric Parsons and Andrew Haughwout wrote today in a blog posting. That compares with 71 reported by Moody’s Investors Service for issues it rated over the period. “Although the low default history of municipal bonds has played a key role in luring investors to the market, frequently cited default rates published by the rating agencies do not tell the whole story,” the researchers wrote.

Spain Said To Speed EU Bank Bailout On Collateral Limits - (www.bloomberg.com) Spain is about to receive an emergency disbursement from the 100 billion-euro ($123 billion) bailout of its financial system because of restrictions the European Central Bank imposed on bank borrowing, according to a person familiar with the matter. The ECB last month imposed limits on how much it will lend banks against government-guaranteed bonds. The rule change meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurt-based central bank, said the person, who asked not to be named because the matter is private. Bankia group, formed in 2010 from the merger of Spain’s troubled savings banks, will now get the first portion of the country’s European Union cash imminently, the person said. The rescue program always included a 30 billion-euro tranche to be paid out first and “mobilized in any contingency,” according to the agreement document dated July 16.

Risk Builds as Junk Bonds Boom - (www.nytimes.com) Money market funds pay next to nothing. Interest rates on United States Treasuries are dismal. The volatile stock market has been dead money for more than a decade. But on Wall Street — as the old saying goes — somewhere, someone is making money. And these days, that somewhere is junk bonds. The market for junk bonds, risky corporate debt that pays high interest rates, is red hot. Such debt, also known as high-yield bonds, has returned 10.2 percent year-to-date, according to a JPMorgan high-yield index. Junk bond funds are on a pace to take in a record amount of money this year. Companies with less than stellar credit are issuing hundreds of billions of dollars of bonds. Fueling this frenzy are investors of all stripes — including individuals, mutual funds and state pensions — who are desperate for returns in their bond portfolios and willing to take more risk to get them. Demand is insatiable, even as analysts warn that the market has become overheated and is ripe for a fall.

'Cliff' Hanger: US Companies Putting Everything on Hold - (www.cnbc.com) Company executives are postponing decisions such as hiring and plant-building until they can get some clarity from Washington on the looming “fiscal cliff” and possible higher taxes, according to an analysis of earnings conference calls by Goldman Sachs. “Regulatory direction and political uncertainty remain key concerns to corporate leaders,” wrote David Kostin, a Goldman strategist, in the note. “Firms expressed a uniform desire for regulatory clarity.”






No comments: