Thursday March 31 2016 Housing and Economic stories

TOP STORIES:

Oil and gas: Debt fears flare up - (www.ft.com) The $3tn debt mountain following the sector’s borrowing binge threatens further destabilization. About 600 people packed on to the Machinery Auctioneers lot on the outskirts of San Antonio, Texas, last week to pick up some of the pieces shaken loose by the oil crash. Trucks, trailers, earth movers and other machines used in the nearby Eagle Ford shale formation were sold at rock-bottom prices. One lucky bargain hunter was able to pick up a flatbed truck for moving drilling rigs — worth about $400,000 new — for just $65,000. Since the decline in oil prices began in mid-2014, activity in the Eagle Ford, one of the heartlands of the shale revolution, has slowed sharply. The number of rigs drilling for oil has dropped from a peak of 214 to 37, and businesses, from small “mom and pop” service providers to venture capital companies, are trying to offload unused equipment.

Exclusive: Hedge fund Luxor Capital alters terms of withdrawal plan - (www.reuters.com) Luxor Capital, a $3.8 billion hedge fund that has been losing money for months, said on Monday it will not be returning exiting investors cash in full, keeping a portion locked up until some illiquid investments can be sold. Instead of returning all exiting clients' assets in cash, investors will receive 88 percent of their money back while 12 percent of the investments will be held in a so-called special purpose vehicle, Luxor's founder, Christian Leone, wrote in a letter seen by Reuters. The announcement comes before a critical March 31 redemption deadline and aims to treat all investors "fairly," the letter said. "For those investors in the Fund that have submitted withdrawal requests for March 31, 2016 and for subsequent withdrawal dates, we will transfer a pro rata share of the applicable assets into a special purpose vehicle (SPV)," Leone wrote.

Chicago's Rating Cut by Fitch After Pension Overhaul Dashed - (www.bloomberg.com) Chicago had its credit rating cut to the lowest investment grade by Fitch Ratings after the Illinois Supreme Court tossed out Mayor Rahm Emanuel’s plan for dealing with the mounting debt to its workers’ pension plans. The two-step downgrade on Monday to BBB-, one rank above junk, affected $9.8 billion of general-obligation bonds and $486 million of debt backed by sales taxes. The company said the outlook is negative, indicating that the rating could be lowered further. The step follows the March 24 decision by the state’s top court to strike down Emanuel’s plan, which required the city and employees to boost contributions to the municipal and laborers retirement funds and cut future cost-of-living increases. 

Barclays Warns Commodities May Slump on `Rush for the Exits'  - (www.bloomberg.com) Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits. Copper may slump to the low $4,000s a metric ton, from $4,945 in London last week, while oil could fall back to the low $30s a barrel, analyst Kevin Norrish said in a note. The risk for raw materials is that investors seek to liquidate bets on gains quickly and in unison, with potentially highly negative consequences, Norrish wrote in the note entitled “Buffalo Jump,” a term that describes a cliff where Native Americans herded bison to their death.

Lenders ‘Freaking Out’ Over London Luxury Home Woes - (www.bloomberg.com)  Lenders are charging higher interest rates for development loans for London luxury homes as slumping commodity prices and increased taxes deter overseas buyers, fueling concern the market is oversupplied. Debt funding construction of the costliest homes has increased by about 75 basis points to 3.75 percentage points over benchmarks since January, said Randeesh Sandhu, chief executive officer of residential development lender Urban Exposure Real Estate Plc. For large projects in central London, financing costs have risen the most since 2012 over the past six months, said William Newsom, a senior director at broker Savills Plc. A basis point is 0.01 of a percentage point. “Everyone is freaking out,” Sandhu, whose firm has loaned close to 1 billion pounds ($1.4 billion) to developers, said in an interview. “There has been nervousness for a while in the super prime market and there is also now nervousness in prime."

OTHER STORIES:

Atlanta Fed sees first quarter U.S. GDP growth of less than 1 percent - (www.reuters.com)
Shocker cuts to Q1 growth pace show faltering economy - (www.cnbc.com)
US IPO market set for weakest quarter since ‘09 - (www.ft.com)
U.S. consumer spending tepid, inflation moderates - (www.reuters.com)

Steelmaker Becomes Latest Chinese Company to Miss Bond Payment - (www.bloomberg.com) - (www.bloomberg.com)
Brazil Analysts Forecast Slower Inflation and Deeper Recession - (www.bloomberg.com)
China bank profits flat-line as bad debts continue to soar - (www.reuters.com)
Saudi Economy Shows Deepening Signs of Strain as Spending Drops - (www.bloomberg.com)