Chicago
Schools In "Dramatic Trouble": "They're Looking At A
Disaster," Illinois Governor Warns - (www.zerohedge.com) Back in September, we noted that
Chicago’s schools are in trouble. Deep trouble. Amid Illinois’ intractable
budget crisis, the city’s public school system opened with a budget shortfall
of nearly a half billion dollars. Borrowing and trimming the proverbial fat
helped close some of the $1.1 billion hole but once the board reached the point
where “further cuts would reach deep into the classroom” (to quote system chief
Forrest Claypool), the schools asked Springfield to make up the difference
which amounts to $480 million. The Chicago Public School (CPS) system has
nearly 400,000 students and more than 20,000 teachers. Around 1,400 jobs were
eliminated in an effort to save money and more layoffs may be just around
the corner if Springfield - which is mired in budget gridlock - doesn’t step
in. One problem is the CPS pension liability. As WSJ noted four
months ago, “the district’s pension costs have more than doubled in recent
years after the board took a partial 'holiday' for three years from paying the
amount needed to put the retirement system on a path to long-term solvency.”
Exclusive: Billionaire Lasry's junk fund stops
reporting asset levels amid turmoil - (www.reuters.com) A junk bond fund run by billionaire Marc
Lasry's Avenue Capital Management, which has experienced heavy investment losses
and investor withdrawals, has stopped voluntarily reporting daily asset figures
to the mutual fund industry's top two tracking firms. Research chiefs for
Morningstar and Lipper said on Monday they had not received daily asset under
management figures from the Avenue Credit Strategies Fund (ACSBX.O)
since about mid-December. The fund is not required to report the figures, but
not doing so is "very unusual," said Jeff Tjornehoj, head of Americas
research for Lipper, a Thomson Reuters unit. Avenue Capital's decision to stop
reporting asset levels to the widely followed research firms happened on the
heels of the biggest blow up in the mutual fund industry since the 2008
financial crisis.
Chicago
Moves Toward Borrowing $2.65 Billion More in 2016 - (www.bloomberg.com) Chicago
moved toward authorizing as much as $2.65 billion of borrowing in 2016, as the
Windy City prepares to sell half a billion dollars of general-obligation debt. The
city council’s finance committee approved the bond offerings late Monday. The
deals still need to be authorized by the full council and are expected to be
considered during Wednesday’s meeting. Chicago is scheduled to sell $500
million of general-obligation bonds on Tuesday. “What we’re bringing before you
all today is our planned issuances for the entire year,” Carole Brown,
Chicago’s chief financial officer, told aldermen. “It allows me the opportunity
to work with our underwriters and with our finance team to figure out the most
appropriate time to access the market.”
Oil Plunge Sparks Bankruptcy Concerns - (online.wsj.com) Crude-oil prices plunged more than 5% on Monday
to trade near $30 a barrel, making the specter of bankruptcy ever more likely
for a significant chunk of the U.S. oil industry. Three major investment banks— Morgan Stanley, Goldman Sachs Group Inc. and Citigroup Inc.—now expect the price of oil to crash
through the $30 threshold and into $20 territory in short order as a result of
China’s slowdown, the U.S. dollar’s appreciation and the fact that drillers
from Houston to Riyadh won’t quit pumping despite the oil glut. As many as a
third of American oil-and-gas producers could tip toward bankruptcy and
restructuring by mid-2017, according to Wolfe Research. Survival, for some,
would be possible if oil rebounded to at least $50, according to analysts. The benchmark price of U.S.
crude settled at $31.41 a barrel,
setting a 12-year low.
All That Commercial Lending by Banks Suddenly
Isn't Looking so Hot - (www.bloomberg.com) Commercial
and industrial lending, the engine of banks' loan book growth in recent years,
is showing signs of cracking, thanks to the dramatic fall in the price of oil
and weakness in non-consumer-related things. On Tuesday, Deutsche Bank
analysts cautioned that losses on C&I portfolios could end up as high
as 90 basis points in 2016, more than the 20bps loss-rate currently
expected by the Wall Street bank, and far more than the 15bps loss rate
reported for last year. "Credit concerns are rising given continued
pressure on oil prices (and commodities more broadly) as well as mixed
U.S. economic data. If credit does weaken more than expected, many think
it will show up in C&I given strong growth (+57 percent at large
banks since 2010 vs. total loans +30 percent), loosening
of underwriting standards and the risk liquidity declines for certain
borrowers," Deutsche Bank analysts led by Matt O'Connor said in a note published
on Tuesday.
China
steadies yuan’s fixing as officials seek to calm markets - (www.themalaymailonline.com)
Japan Stocks Fall for Sixth Day as Markets Reopen After Holiday - (www.bloomberg.com)
Half of US shale drillers may go bankrupt: Oppenheimer's Gheit - (www.cnbc.com)
Japan Stocks Fall for Sixth Day as Markets Reopen After Holiday - (www.bloomberg.com)
Half of US shale drillers may go bankrupt: Oppenheimer's Gheit - (www.cnbc.com)
No comments:
Post a Comment