Tech Startups Feel an IPO Chill - (online.wsj.com) Dropbox
Inc. had no trouble boosting its valuation to $10 billion from $4 billion early
last year, turning the online storage provider’s chief executive into one of
Silicon Valley’s newest paper billionaires. But the euphoria has begun to fade.
Investment bankers caution that the San Francisco company might be unable to go
public at $10 billion, much less deliver a big pop to recent investors and
employees who hoped to strike it rich, according to people familiar with the
matter. BlackRock Inc., which led the $350 million deal that more than doubled Dropbox’s
valuation, has cut its estimate of the company’s per-share value by 24%,
securities filings show. Dropbox responds that it is continuing to increase its
business, added 500 employees in the past year, including senior executives, and
has no need for additional capital from private or public investors.
China State Steel Firm to Default After
Government Said to Help - (www.bloomberg.com) A
Chinese state-owned steel trader is set to default on a bond payment even
after the government was said to have stepped in to help, highlighting
worsening corporate finances as an economic slowdown deepens. Sinosteel Co.
will delay an interest payment due Tuesday on 2 billion yuan ($315 million) of
5.3 percent notes maturing in 2017, according to a statement on Chinabond’s
website Monday. The firm is doing so as it plans to back the bonds with stock
of unit Sinosteel Engineering & Technology Co., and that may affect issues
related to interest payment, it said without elaborating. The failure to pay
interest on time constitutes a default, said Industrial Securities Co., Haitong
Securities Co. and China Merchants Securities Co. More Chinese firms are
struggling to repay obligations after the yuan’s fall, a stock rout
and speculation that the bond market is overheating. Government-backed
companies aren’t immune, and defaults this year had already included two
state-owned enterprises, according to China International Capital Corp. The
weakest economic growth in a quarter century has also taken a toll on
commodities companies, with coking-coal importer Winsway Enterprises Holdings
Ltd. defaulting on
dollar notes earlier this year.
JPMorgan: The Stock Market Still Has $90
Billion in Short Sales Left to Cover - (www.bloomberg.com) Here’s
an awkward fact for anyone attributing the three-week climb in the
Standard & Poor’s 500 Index to bearish investors unwinding trades: over
that stretch, short interest hasn’t budged. That’s according to JPMorgan Chase
& Co. analysts, who compared the amount of stock that traders have borrowed
-- the first step in a short sale -- with the total available at institutions
to lend. The level is almost 7 percent, near a three-year high. Separate data
compiled by Markit Ltd. tells the same story: short interest is about 3 percent
of all shares outstanding, roughly the same as at the bottom of the August
selloff. The research is at odds with theories that the only thing driving
American equities higher since September has been purchases by traders who got
so rich in the meltdown that they were content to take profits. While showing
bearish sentiment hasn’t dissipated, it also suggests more buying power exists
should the pessimists really capitulate. “What this means is we can reasonably
infer that any tailwind from short covering hasn’t really been occurring and
hasn’t been driving the October rally,” JPMorgan strategists said. “It
doesn’t tell you when or to what degree it will happen but it tells you it’s
not been entirely technical and that’s a positive.”
The Hottest Deal for Commodity Traders: Buying
Their Own Bonds - (www.bloomberg.com) Forget
oil, copper and wheat. Commodities traders are crowing about the money to be
made in the bond market. On the cocktail party circuit at the industry’s LME
Week earlier this month, at least a dozen traders and executives said that the
surest profits these days was in debt issued by their employers and their very
own rivals: Glencore Plc, Louis Dreyfus Commodities BV, Trafigura
Pte Ltd. and Noble Group Ltd. Take $1.25 billion of Glencore notes
maturing this month: the yield surged to a record 32.3 percent on Sept. 29, up
from less than 2 percent in early September. Buying $1 million worth of the bond
that day may generate in excess of $35,000 in profit in less than four weeks if
Glencore repays the notes by maturity on Oct. 23. Bonds got sucked into the
same vortex that sent Glencore shares plunging 30 percent in a matter of hours
on Sept 28. Even as yields surged, traders said the turmoil hadn’t shaken the
backing of the lenders who financed the industry, suggesting the bonds were a
safer bet than the markets had priced in. "The bonds of the trading houses
were extremely cheap," said Graham Sharp, an adviser to consultants Oliver
Wyman & Co. and co-founder of oil and metals trading house Trafigura.
"This was an anomaly."
US junk debt regains high-yield status - (www.ft.com) After
years of investor enthusiasm, US high-yield debt is once again living up to its
name. Yields on lower quality rated securities have soared since January as
investors ask a pivotal question: are they being paid enough for the risk of
owning junk-rated bonds? Junk bond yields, which move inversely to price, rose
above 8 per cent in October for the first time since 2012 as investors retreated from funds focused on speculative debt, accelerating
a four-month sell-off fueled by fears of weaker growth hitting highly indebted
companies in the sector. Investors who in years past eagerly sought exposure to
the sector against a backdrop of low global interest rates and easy central
bank policies, are now heading for the exit. The junk market in the past has
often signaled big turning points in risk appetite among investors, and lowly
rated companies are finding difficulty securing financing as investors demand
greater compensation in the form of higher yields.
Canada's Trudeau sweeps to victory, toppling Harper in election - (www.reuters.com)
Brazil's Opposition to File Key Request to Impeach Rousseff - (www.bloomberg.com)
For Hedge Funds, a Can’t-Miss Trade Goes Bust - (online.wsj.com)
The Hottest Deal for Commodity Traders: Buying Their Own Bonds - (www.bloomberg.com)
Skeptics suggest China's slump deeper than acknowledged - (finance.yahoo.com)
Leveraged Loan Investors Demand Steepest Discount Since 2011 - (www.bloomberg.com)
No comments:
Post a Comment