TOP STORIES:
Puerto Rico’s $72 Billion Distress Mess Reunites Lehman-Era
Foes - (www.bloomberg.com) For the hedge funds
and money managers that pick over the credit market’s scrap heaps, Puerto Rico
has become the new ground zero. Some of the same distressed-debt buyers that
started battling seven years ago over the remains of Lehman Brothers Holdings
Inc. are now girding for a rematch over the U.S. territory’s $72 billion of
debt. That’s likely to pit investors such as Fir Tree Partners -- among firms
that snapped up $4.5 billion of bonds the island has to pay before other
obligations -- against creditors including Angelo Gordon & Co. and
Knighthead Capital Management. Those firms own a majority of the more than $8
billion of debt owed by the U.S. territory’s power agency. The conflict is
heating up after the Puerto Rico Electric Power Authority, known as Prepa, met
with the financial adviser to its creditors Monday to restart talks toward a
restructuring that may ask bondholders to take a loss or wait longer to be
repaid. Hedge funds now hold as much as 30 percent of the obligations of Puerto
Rico and its agencies, Barclays Plc municipal-debt strategist Mikhail Foux
estimates. “It’s extremely disorderly and nasty,” said Joseph Rosenblum,
director of municipal credit research at AllianceBernstein Holding LP. This
“messy approach to trying to resolve something with no clear structure or
guidance doesn’t give a bondholder any kind of confidence,” he said.
Troubled Hanergy’s Debt Web Snags State Banks to Shadow Lenders
- (www.bloomberg.com) One of the many
mysteries behind the share price collapse of the solar panel maker controlled
by Li Hejun is this: Which of the Chinese billionaire's many creditors risk
losing every yuan they put into his company? A plethora of Chinese lenders are
exposed to Hanergy Thin Film Power Group Ltd. and its parent company, including
Industrial and Commercial Bank of China, which is owed tens of millions of
dollars. On May 20, 47 percent of Hanergy Thin Film’s market value vanished in
minutes and it’s now under probe by the Hong Kong
Securities & Futures Commission. Creditors are nervous: A group of 11
lenders have asked for a meeting to voice their concerns and discuss their
$82 million loan, say people familiar with the matter. “The interesting thing
with Hanergy is that so much is happening with the parent company that
investors know nothing about,” said Charles Yonts, an analyst with CLSA
Asia-Pacific Markets in Hong Kong. “The opacity about parent finances and
billings is extraordinary.”
New-car loans keep getting longer - (www.usatoday.com) New-car sales are
running at near-peak levels, partly because many consumers are
financing their purchases for longer terms. The average new car loan has
reached a record 67 months, reports Experian, the Ireland-based
information-services company. The percentage of loans with terms of 73 to 84
months also reached a new high of 29.5% in the first quarter of 2015, up from
24.9% a year earlier. Long-term used-vehicle loans also broke records with loan
terms of 73 to 84 months reaching 16% in the first quarter 2015, up from 12.94%
— also the highest on record. "While longer-term loans are growing, they
do not necessarily represent an ominous sign for the market," said Melinda
Zabritski, Experian's senior director of automotive finance. "Most
longer-term loans help consumers keep monthly payments manageable while
allowing them to purchase the vehicles they need without having to break the
bank.
US dealmaking hits $243bn monthly record - (www.ft.com) US dealmaking hit
an all-time monthly record in May, surpassing the previous highs seen during
the peak of the dotcom bubble and the zenith of the debt boom that led to the
2008 financial crisis. The overall value of deals in US-bound mergers and
acquisitions activity amounted to $243bn in May compared to $226bn during the
same month in 2007 and $213bn in January 2000, the previous biggest and second
biggest months respectively, according to Dealogic data. The data underline how
frenzied US dealmaking has become as cheap debt and bullish boardrooms fuel an
M&A boom of a size not seen since just before the last two equity market
crashes. The main drivers were mega-transactions such as Charter’s three-way $90bn acquisition of cable
companies Time Warner Cable and Bright House
and Avago’s $37bn deal to acquire Broadcom, the largest tech deal since the
dotcom boom. Bankers and lawyers said they expected 2015 to be a record year
with chief executives under pressure to expand their businesses and deals
constituting the fastest and easiest way to achieve that growth.
Greek Insolvency Could Be 'Gigantic' – (www.nasdaq.com) The
political consequences of a Greek insolvency would be "gigantic,"
German Vice-Chancellor and Economics Minister Sigmar Gabriel said Tuesday,
calling on the left-wing Greek government to be willing to compromise. His comments
come after German Chancellor Angela Merkel, French President Franç ois
Hollande, European Commission President Jean-Claude Juncker, European Central
Bank President Mario Draghi and the head of the International Monetary Fund,
Christine Lagarde, met in Berlin Monday evening to discuss ways to break up the
deadlock of the Greek debt crisis. "I think it's absolutely right that
Germany and France once again try to find a solution, because the political
consequences of Greece's insolvency within the eurozone would of course be
gigantic," said Mr. Gabriel at a conference.
European Leaders Deciding On Greece's Fate Agree That Talks Must Intensify - (www.bloomberg.com)
Greek PM says sent comprehensive proposal to lenders on Monday - (www.reuters.com)
Greek Standoff Takes Another Twist as Dueling Plans Are Drafted - (www.bloomberg.com)
Spanish Bond Declines Push 10-Year Yield to Most Since November - (www.bloomberg.com)
Glut of Chinese Goods Pinches Global Economy - (online.wsj.com)
China Debt Markets Show Stress Amid Duck Supplier's Default - (www.bloomberg.com)
Chinese ETF Buyers Whipsawed Amid Widest Price Swings Since 2010 - (www.bloomberg.com)
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