Fed, Treasury launch $1,000bn Talf plan The US Federal Reserve and Treasury on Tuesday launched a $1,000bn consumer loan financing plan, with the first loans aimed at boosting the availability of credit for auto loans, credit cards and student loans to be made on March 25. The so-called term asset-backed securities loan facility (Talf) is a core plank of the US government's efforts to give consumers access to credit. Under the plan, the Fed will lend money to investors such as hedge funds to encourage them to buy the securities backed by car loans and credit cards and other types of lending. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53177/fed-treasury-launch-
| AIG still facing huge credit losses AIG still faces billions of dollars in potential losses on credit guarantees it provided for complex subprime mortgage securities, on top of its $62bn Q4 loss and regulatory efforts to unwind its holdings, company filings show. The US government's problems dealing with AIG were highlighted on Tuesday as Ben Bernanke, Fed chairman, expressed anger with the company in an appearance before the Senate budget committee. AIG filings this week show the insurer retains $12bn in exposure to credit insurance on positions mostly involving subprime mortgages. Bernanke testimony here. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53176/aig-still-facing-hug
| S&P cuts BofA credit rating Bank of America's credit rating was cut by S&P for the second time in three months Tuesday, amid concerns that the weakening economy and the acquisition of Merrill Lynch will hurt the bank's earnings. S&P said BofA's creditworthiness had deteriorated because the bank's exposure to assets such as consumer credit had approached or exceeded stress tests used in December. The agency said further writedowns associated with BofA's acquisitions of Countrywide and Merrill were also a possibility. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53175/sp-cuts-bofa-credit-
| Call for new crackdown on tax havens France and Germany on Tuesday proposed a fresh crackdown on tax havens and offshore financial centres, insisting that banks that use them be forced to set aside extra capital to offset risks to the financial system. Christine Lagarde, French finance minister, and Peer Steinbrück, her German counterpart, said they wanted leaders at the G20 summit on April 2 to endorse the idea that banks and insurers be required to disclose their use of tax and regulatory havens in their annual regulatory filings. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53174/call-for-new-crackdo
| StanChart bucks downturn Standard Chartered on Tuesday said it was benefiting from the withdrawal from emerging markets by other western banks as it revealed it had shrugged off the crisis to report record profits. Peter Sands, chief executive, said the bank had increased its market share among corporate customers. He spoke as StanChart reported 2008 pre-tax profits of $4.8bn, up from $4bn in 2007 and a record for the bank. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53173/stanchart-bucks-down
| GM warns EU states Posted at 04:52 by Gwen Robinson General Motors said on Tuesday that its European arm could run out of money by as early as next month, putting up to 300,000 jobs on the continent at risk. Fritz Henderson, GM's chief operating officer, said GM would face a liquidity crunch "early in the second quarter" if it does not get emergency funds from European countries. GM has asked German states for €3.3bn worth of bailout funds in exchange for shares in what will become a semi-autonomous European arm. It has also held talks with governments of the UK, Spain, Poland and other European countries about providing aid. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53172/gm-warns-eu-states
| Toyota seeks $2bn crisis loan Toyota, the world's biggest carmaker by sales, is seeking up to $2bn in Japanese government-backed emergency loans as it struggles to obtain funding. The company, facing its first net loss in six decades, is likely to become the top beneficiary of a scheme announced Tuesday to channel up to $5bn of Japan's forex reserves into low-interest loans to companies affected by the credit crisis. Toyota Financial Services, its wholly owned US car loans unit, said it was talking with state-backed Japan Bank for International Co-operation over a possible $1.2bn loan. Bloomberg adds on Wednesday that Toyota suffered a record 40% drop in US sales last month. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53171/toyota-seeks-2bn-cri
| BP signals dividend freeze BP expects to freeze its dividend this year for the first time since 1999, Tony Hayward, its chief executive, told the FT, as it struggles to adjust to the oil-price plunge to about $45 a barrel. The company paid out more in dividends than any other British company last year, accounting for £6.7bn of the £58.6bn paid out by the constituents of the FTSE All-Share index. Fears about the dividend helped drive BP shares down 4% on Tuesday, outpacing a falling market. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53170/bp-signals-dividend-
| Blockbuster pursues new financing Posted at 04:48 by Gwen Robinson Blockbuster, the US film rental chain, said Wednesday it was working to replace expiring credit facilities but did not plan to file for bankruptcy, despite hiring law firm Kirkland & Ellis to aid its restructuring effort. Blockbuster, which owns more than 7,600 stores worldwide, has a $28m term loan and a revolving credit facility due in August. It aims to put another bank credit facility in place this year, but has said that if necessary, it could fund its own business through 2009. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53169/blockbuster-pursues-
| MGM Mirage warns of debt default MGM Mirage, the US-based casino operator, warned on Tuesday that it could default on its debt, underscoring the steep downturn in the global gaming sector. In a regulatory filing about the delayed release of its Q4 earnings, MGM Mirage – which counts billionaire Kirk Kerkorian as its biggest shareholder – said it was "still in the process of assessing" its liquidity needs. The group, which owns casinos in Las Vegas and Atlantic City among other places, is trying to complete construction of CityCenter, a $9bn gaming and hotel complex in Vegas that is the costliest such development ever. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53168/mgm-mirage-warns-of-
| Rock's bad-loan impairments treble Impairments on bad loans at Northern Rock have more than trebled to £894m as mortgage arrears grew by more than 50% in the autumn, the UK state-controlled bank announced on Tuesday as it reported full-year losses of £1.36bn. The losses come despite increased conservatism at the group, which has slashed the amount it owes the taxpayer by £18bn as it continues to shrink its mortgage book and bolster its depositor base. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53167/rocks-bad-loan-impai
| UK's William Hill in £350m rights issue William Hill drew up a new banking facility and launched a £350m rights issue as the UK bookmaker sought to resolve the debt problems that have damaged its share price. The shares fell another 10½p to 236¼p because of the fundraising but analysts welcomed the refinancing and the operational performance of the business. With bookmakers proving relatively resilient to the downturn, William Hill reported that its gross win for the year to Dec 30 – the amount retained after paying out on winnings – rose 3.8% to £1.02bn. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53166/uks-william-hill-in-
| Australian economy shrinks 0.5% The Australian economy is expected to enter recession after contracting for the first time in eight years as a result of the global economic downturn. Australia on Wednesday reported that GDP dropped a quarterly 0.5% in the December quarter – far exceeding concensus forecasts. Annual growth rose by 0.3%. Economic data weakened across the board with the only positive contribution coming from net exports of goods and services. The figures fuelled debate on Wednesday about whether the central bank should have cut rates on Tuesday instead of holding them – see FT Alphaville. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53165/australian-economy-s
| Brussels to approve reforms The European Commission is on Wednesday expected to approve fast-tracking reforms of Europe's financial system to put in place by 2010 a new structure for supervising banks and insurers and monitoring systemic risks. EU commissioners are expected to broadly endorse more than 30 recommendations for overhauling the patchy supervisory structure presented last week by a group headed by Jacques de Larosière, the former French central banker. The Commission's conclusions will then feed into the European Council meeting, when EU leaders gather in Brussels in two weeks' time. See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53164/brussels-to-approve-
| Overnight markets: Mixed Most Asian stocks rose on Wednesday as optimism that governments will widen efforts to bolster growth offset plunging US auto sales and a contraction in Australia's economy. The nervous mood in the markets mirrored cautious comments from Fed chairman Ben Bernanke, who warned that policymakers might need to provide further aid to the banking system beyond the $700bn already approved, and urged further aggressive action to bolster the economy. Asian markets (Wed)
04:23am GMT
Nikkei up 21.72 (0.3%) to 7,251.44
Topix down 0.10 (-0.01%) 726.70
Hang Seng up 60.72 (0.5%) at 12,094.60 US markets (Tues)
DJIA down 37.27 (-0.55%) at 6,726.02
Nasdaq down 1.84 (-0.14%) at 1,321.01
S&P500 down 4.49 (-0.64%) at 696.33 European markets (Tues)
FTSE100 down 113.74 (-3.14%) at 3,512.09
Eurofirst 300 down 12.67 (-1.86%) at 669.64 Currencies
04:25 GMT
€/$ 1.2486 (1.2615)
$/¥ 98.47 (97.48)
£/$ 1.4016 (1.4073) Commodities (updated)
04:30 GMT
Brent Crude (Apr09) down $0.34 at $43.36
Light Crude (Apr09) down $0.15 at $41.50
100 Oz Gold (Apr09) down $0.90 at $912.70
Copper (3M 24hr) down 35.00 at $3,545.00 10-year government bond yields (%)
US 2.93 (2.92)
UK 3.56 (3.55)
Germany 3.06 (3.04)
Japan 1.30 (1.28) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/03/04/53130/overnight-markets-mi
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