Obbligazioni societarie CIT Group, SLM, GMAC e le finanziarie USA che (forse) si salveranno diventando banche

[paologorgo]

Breaking Down the Government’s Loss in CIT

November 2, 2009, 2:28 pm

The CIT Group’s prepackaged bankruptcy filing may well end up minimizing the potential harm to its bondholders and to its core customers, millions of small to mid-sized businesses across the nation.
But that’s cold comfort to those outraged that the government’s $2.3 billion investment in the company, made last fall as part of the Troubled Asset Relief Program, will be wiped out through the Chapter 11 process.
Linus Wilson, a finance professor at the University of Louisiana, broke down for DealBook the costs of the CIT’s bailout last fall, and according to his analysis, the government’s investment was in the red from the get-go.
Here’s how Professor Wilson puts the government’s $2.3 billion investment into perspective. If private investors bought an equivalent amount of preferred stock on Dec. 22, the day before CIT was named as a recipient of TARP money, they would have paid only $805 million at that day’s market price.
As The New York Times previously reported, finance experts say the government overpaid for the bank assets it bought, because its chief priority was to stabilize the teetering financial system, not to maximize profit.
But Professor Wilson says that the signs were clear even early on that CIT was a company with severe financial troubles. Furthermore, he added that it was not “too big to fail” and didn’t pose any systemic risk.
“There was no reason why CIT Group should have received the TARP Capital Purchase Program funds for ‘healthy banks,” he told DealBook. “Anybody that looked at CIT Group could have seen from the prices of its securities that it was not healthy.”
He also highlighted the danger of the government receiving preferred stock, which is treated like common equity in bankruptcy — that is, at the bottom of a company’s capital structure, below secured debt and bonds. The government chose preferred stock because it would count toward boosting a company’s capital ratios, which was the primary concern at the time. But little downside protection was instituted.
“Preferred stock is a risky security,” Professor Wilson said. “CIT Group is a hard lesson in the risks taxpayers took investing in the nation’s banks.”

Breaking Down the Government’s Loss in CIT - DealBook Blog - NYTimes.com

tra le poche soddisfazioni del pagare le tasse da noi, il non dovere leggere articoli del genere sapendo che parlano dei tuoi soldi...

 

[Fufu]

Sembrerebbe che il mercato abbia maturato la stessa convinzione di paologorgo: il titolo quota intorno a 68 (era intorno a 60 fino all'annuncio del chapter 11). Qualche commento dagli esperti? Sono tentato di vendere e non pensarci piu'...

 

[Imark]

Sembrerebbe che il mercato abbia maturato la stessa convinzione di paologorgo: il titolo quota intorno a 68 (era intorno a 60 fino all'annuncio del chapter 11). Qualche commento dagli esperti? Sono tentato di vendere e non pensarci piu'...

Potrebbe non essere una cattiva idea...

 

[Imark]

Trimestrale di GMAC, in perdita per 767 mln $, con i finanziamenti all'auto tornati in leggero utile e le perdite generate dall'unità che si occupa dei mutui, della quale ResCap (con 649 mln $ di perdite) costituisce la maggior parte.

Il ritorno all'utile operativo dell'auto è stato aiutato dal programma del "cash for clunkers", che ha incrementato i finanziamenti alla clientela GM e Chrysler.

Peraltro la società si è rifiutata di dare indicazioni circa le sorti di ResCap e le negoziazioni per un terzo bailout dal Governo USA, con accordi attesi per il 9 novembre prossimo.

Gli analisti hanno criticato GMAC per aver cessato la diffusione pubblica dei risultati di ResCap, che la società ha attribuito ad una decisione diretta a ridurre i costi (e francamente non si capisce per quale ragione) facendo presente che una scelta circa le sorti di ResCap verrà presa entro la fine dell'anno.

Il problema con GMAC è che ha debito complessivo per oltre 52 mld $ in debito emesso, oltre la metà di questo debito scade entro il 2012 e la società ha già emesso nuovo debito garantito dallo Stato nei limiti del massimale concordato con la FDIC per 7,4 mld $.

La buona notizia sono i depositi presso la ex GMAC bank, oggi Ally Bank, saliti a 15,9 mld $ (e garantiti anch'essi dalla FDIC).

Moody's ha posto il rating sotto revisione per un upgrade, attendendo fra l'altro di valutare le decisioni che verranno prese con riguardo a ResCap, il cui sostegno limita la flessibilità finanziaria dell'intero gruppo.

GMAC Reports Third-Quarter Loss Tied to Loan Defaults (Update3)

Nov. 4 (Bloomberg) -- GMAC Inc., the auto and mortgage lender negotiating a third round of government aid, reported a third-quarter loss tied to mortgage defaults.

The net loss from continuing operations was $671 million, compared with $2.5 billion a year earlier, Detroit-based GMAC said in a statement. GMAC’s net loss was $767 million; the auto finance unit swung to a profit, while mortgage operations posted a smaller deficit.

Chief Executive Officer Alvaro de Molina is struggling to return the lender to profitability amid losses at its home mortgage operations, which include the Residential Capital LLC unit. GMAC’s loss was the eighth in nine quarters. Analysts including Adam Steer at CreditSights Inc. have called on the company to put ResCap into bankruptcy.

“Our focus is on growing operations where we can leverage our strengths,” de Molina said in the statement.

The Obama administration regards the lender as crucial to the survival of the U.S. auto industry. General Motors Co., its former parent, and Chrysler Group LLC rely on the firm to finance their vehicle buyers. GMAC received $13.5 billion in two rounds of government bailout funds and was negotiating a third infusion last month with federal regulators. An agreement is expected around Nov. 9, the company told analysts today during a conference call.

The mortgage unit’s pretax net loss from continuing operations narrowed to $747 million from $1.95 billion a year earlier; ResCap cut its deficit to $649 million from $1.91 billion. Originations dropped compared with the second quarter as refinancing slowed, GMAC said.

Auto Finance

The auto finance unit earned $395 million before taxes on continuing operations, compared with a $379 million loss a year earlier. Originations were lower than the third quarter of 2008 and 26 percent higher than this year’s second quarter, aided by the “cash-for-clunkers” incentive program and an increase in business from Chrysler.

GMAC handled more than $720 million in retail loans for Chrysler customers, more than triple the second quarter’s $200 million, for a 21 percent share of all retail sales.

“A big piece of the balance sheet is starting to shift to the auto side,” Chief Executive Officer Robert Hull said on the conference call. “It will continue to grow.”

Filing Costs

The company’s statement and subsequent conference call didn’t include decisions on the fate of ResCap and the size and timing of the government’s third bailout. Both topics drew repeated inquiries from analysts, who criticized GMAC’s decision to stop public filings of ResCap’s quarterly results. GMAC said holders could get results from the company.

Hull said the change was a “cost-saving measure, pure and simple,” citing the burden of preparing the filing for a shrinking number of investors. The decision doesn’t imply anything about ResCap’s future, which will be decided by the end of this year, he said. The company ranked among the biggest U.S. subprime lenders during 2006, according to trade journal Inside Mortgage Finance; defaults on such mortgages were among the highest in the industry.

Analysts on the call, including Kevin Eng of Columbus Hill Capital Management, said the lack of transparency would alarm current and potential bondholders. The U.S. holds a 35.4 percent stake in GMAC.
The next infusion by the U.S. could total $5.6 billion, and a decision may take a few days longer than the government’s Nov. 9 deadline, Hull said.

Home Prices

Housing prices in 20 U.S. cities fell 11.3 percent in August from a year earlier and foreclosures rose 22.5 percent in the third quarter, according to the S&P/Case-Shiller home-price index and RealtyTrac.com. Not counting the third quarter, ResCap has lost $10.8 billion since 2007, CreditSights Inc. analysts led by Steer wrote Oct. 29.

“The question on the earnings front is how big a drag will ResCap be on earnings going forward,” Steer said in an interview before the results were announced.

The lender’s 6.875 percent notes maturing in 2011 fell $1.50, or 1.6 percent, to 95.5 cents on the dollar yesterday to yield 9.57 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They’ve climbed 25 percent this year.
The company has $52.6 billion in bonds outstanding with more than half coming due by 2012, according to Bloomberg data. GMAC doesn’t have publicly traded stock.

‘Miserable’ Results

“GMAC is probably too important to fail,” analysts at Egan-Jones Rating Co. wrote Oct. 28. “Recent operating results are miserable, but will be trumped if federal support covers the bulk of the losses.”

GMAC, which became a bank-holding company in December, is boosting deposits at its Ally Bank unit to help fund new loans. The bank, whose accounts are insured by the Federal Deposit Insurance Corp., held $15.9 billion in retail deposits at the end of the quarter, up from $14.5 billion last quarter.

Rival banks have said GMAC boosted deposits at the bank by advertising some of the highest rates in the country. As of Nov. 2, Ally bank’s 1.95 percent rate on a 12-month certificate of deposit ranks fourth among lenders on bankrate.com.

GMAC relies on government-guaranteed debt. The lender sold $2.9 billion in debt last week guaranteed by the FDIC. It has issued the full $7.4 billion approved under the agency’s program.

Moody’s Investors Service said it’s reviewing GMAC’s credit rating for a possible upgrade. Moody’s assigns a Ca rating, below investment grade.

“Moody’s will also examine GMAC’s plans regarding further support of ResCap,” Moody’s analysts led by Mark Wasden wrote in the Nov. 2 report. “ResCap’s string of large quarterly losses and consequent need for capital support has significantly limited GMAC’s financial flexibility.”

 

[Fufu]

Per cortesia, se qualcuno che ha Bloomberg mi potesse indicare i prezzi che vede a schermo per 'sto benedetto titolo CIT (XS0201605192), sto cercando di togliermelo di torno e la mia banca non e' che stia brillando per collaborazione..... grazie in anticipo!

 

[Imark]

Il commento di Moody's, che reputa che il rating di GMAC possa essere elevato di più livelli se si risolvono i due fattori che limitano la flessibilità finanziaria della società: la incapacità di rafforzare il Tier 1 sui livelli contemplati dallo stress test dopo l'acquisizione dello status di holding bancaria e il continuo supporto necessario per ResCap.


Moody's continues review of GMAC's Ca rating


New York, November 02, 2009 -- Moody's Investors Service said today that it is continuing its review of GMAC Inc.'s ratings for possible upgrade. GMAC's senior unsecured rating was upgraded to Ca and placed on review for further possible upgrade on June 10, 2009. Moody's outlook on the ratings of Residential Capital LLC (ResCap; senior at C), GMAC's mortgage finance subsidiary, remains stable.

Moody's review of GMAC's ratings will include an assessment of the firm's capital adequacy, taking into consideration the requirement by banking regulators that the lender raise as much as $5.6 billion of additional capital by November 9. The $5.6 billion figure represents the remaining amount of new Tier 1 common equity that GMAC requires, based upon the results of the U.S. government's Supervisory Capital Assessment Program (SCAP) conducted earlier this year.

Moody's will also examine GMAC's plans regarding further support of ResCap as it services its portfolio of troubled residential mortgages to liquidation. ResCap's string of large quarterly losses and consequent need for capital support has significantly limited GMAC's financial flexibility, in Moody's view.

"Two factors weighing on GMAC's credit profile today are its remaining capital deficiency from the SCAP exercise and the continuing support requirements of ResCap," said Moody's senior analyst Mark Wasden. "A resolution of these concerns could result in a multi-notch improvement in the firm's long-term ratings," he added. Moody's noted that other long-term concerns, such as GMAC's business concentrations with GM and Chrysler, could limit the potential for ratings upgrade.

Moody's believes that the amount of capital GMAC is required to raise could be less than $5.6 billion if regulators determine that the company's risk of loss has improved since the SCAP process was completed. Additionally, GMAC has indicated that it has experienced relatively modest losses associated with the bankruptcy of General Motors to date, which could also be the basis for a downward revision of the firm's requirement for additional capital. Given GMAC's limited access to private sources of capital, Moody's continues to believe that any additional required regulatory capital would come from the U.S. Treasury.

Moody's said that GMAC faces continuing challenges that constrain its long-term ratings, including execution risks as it pursues its transition to a bank operating and funding model, revenue concentrations with GM and Chrysler, and an eventual need to reduce its reliance on the U.S. government's support and ownership.

"GMAC's ratings will be constrained as long as recovery in the auto industry remains elusive, particularly as it relates to the operating prospects of GM and Chrysler," said Wasden.

Moody's said that support from the U.S. government has strengthened GMAC's capital and liquidity positions and business prospects, which is the source of upward pressure on the firm's ratings. The U.S. government currently owns 35.4% of GMAC, has injected $12.5 billion including investments through the U.S. Treasury's Troubled Asset Relief Program (TARP), and has guaranteed $7.4 billion of the firm's long-term debt through the FDIC's Temporary Liquidity Guarantee Program (TLGP).

Underscoring GMAC's role in the revival of the U.S. domestic auto industry, regulators also granted the firm expanded funding flexibility in GMAC Bank (a/k/a Ally Bank), via expanded 23A exemptions under the Federal Reserve Act. Regulators also endorsed GMAC's agreements with Chrysler to become the preferred provider of dealer floorplan financing to Chrysler dealers and a provider of subvented retail auto financing to buyers of Chrysler vehicles.

In its last rating action on June 10, 2009, Moody's upgraded GMAC's senior unsecured rating to Ca from C and placed its ratings on review for further possible upgrade.

The principal methodology used in rating GMAC was Analyzing the Credit Risks of Finance Companies, which can be found at OpenDNS in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Rating Methodologies sub-directory.

GMAC Inc. is a global provider of auto finance, residential mortgage finance, and related products and services.

 

[Imark]

Le dimissioni a sorpresa del CEO di GMAC durante le trattative con il Governo per una ulteriore tranche di aiuti alla società...

GMAC CEO Alvaro de Molina steps down

GMAC CEO de Molina steps down amid talks for more gov't aid, Michael Carpenter is new CEO


NEW YORK (AP) -- GMAC Financial Services says Alvaro de Molina has stepped down as CEO, a surprise departure that comes as the troubled auto lender remains in negotiations with the government over its third round of taxpayer aid.

GMAC director Michael A. Carpenter will take over as CEO.

A person familiar with the situation said De Molina was asked to step down by GMAC's board of directors. The person declined to be named because the reasons behind De Molina's exit have not been made public.

Treasury Department officials stressed that they had nothing to do with Molina's departure, calling the decision "100 percent GMAC's." That's in contrast to the Obama administration's ouster earlier this year of GM CEO Rick Wagoner, who was pressured to step down as a condition for taxpayer aid.

In an interview, Carpenter affirmed that no government entity had any say in De Molina's departure.

"To the contrary, the board reached its own conclusions," Carpenter said. "As the board looked forward, it decided that it really wanted some more strategic skills. It wanted more turnaround skills, more operations skills. So that is, in short, the basis I believe for a change."

De Molina's resignation comes as the lender is negotiating with the Treasury Department over additional taxpayer aid. GMAC is instrumental to the operations of automakers General Motors Co. and Chrysler Group LLC, but its finances have been haunted by bad loans it made during the housing boom.

GMAC, which became a bank holding company late last year, has received $12.5 billion in taxpayer money and is 35 percent owned by the federal government. The FDIC also took the rare step earlier this year of allowing the junk-rated company to gain access to its debt-guarantee program, called the Temporary Liquidity Guarantee Program. It agreed to guarantee up to $7.4 billion in GMAC-issued debt in case the company defaulted on payment.

But results of the federal government's "stress tests" earlier this year demanded that GMAC raise an $11.5 billion capital cushion to help it weather further economic decline. Of 10 banks asked to raise additional cash, GMAC was the only one that failed to be able to raise the funds privately.

The Detroit lender has asked the government to postpone any decision on additional taxpayer aid until Carpenter and the company's management assess GMAC's situation and are able to advise Treasury on the amount needed.

Carpenter told The Associated Press that the company would need no more than $5.6 billion in aid. Senate Banking Committee Chairman Chris Dodd has said the company would receive between $2 billion and $5 billion more in aid.

De Molina's exit ends a tenure that lasted less than two years. GMAC declined to make him available for interviews, but he said in a statement it was a "good time for me to move on to my next chapter."

"I came to GMAC thinking that it was a short-term assignment working through a liquidity crisis. That crisis lasted two years," he said. De Molina did not say what his next move would be.

De Molina was named CEO in April 2008 by private-equity firm Cerberus Capital Management LP, which held an ownership stake in the lender at the time. He was recruited the year before as GMAC's chief operating officer after spending 17 years at Bank of America Corp.

Bank of America has been seeking a new CEO since announcing Ken Lewis would step down. A Bank of America spokesman declined to comment on speculation that De Molina could fill the role. Richard Bove, a banking analyst at Rochdale Securities, said de Molina would be a good successor to Lewis, but his appointment is unlikely.

"He took like 150 people out of Bank of America to help him at GMAC. He left a really bad taste in the mouth of the board and managers," Bove said.

Carpenter, 62, has been on GMAC's board since May. He was previously CEO of Citigroup's Global Corporate and Investment bank from 1998 to 2002. He headed investment bank Salomon Smith Barney until it merged with Citigroup and also held leadership positions at Travelers Group Inc. and Kidder Peabody Group Inc.

GMAC said Carpenter has resigned from the board of commercial lender CIT Group, which is operating under bankruptcy protection, to devote his full attention to GMAC.

GMAC provides the financing for dealers and customers of GM and Chrysler and its survival is a crucial part of the Obama administration's restructuring of the auto industry. Carpenter said in an interview that providing auto financing is the company's No. 1 priority. Paying back the federal government ranks No. 2.

The lender has been hammered by the downturn in the mortgage and automotive industries. Earlier this month, it said it lost $767 million during the third quarter, as bad loans in its mortgage division, ResCap, weighed on its books. Its auto lending division, however, posted a profit.

Carpenter acknowledged ResCap's finances have weighed on the company and said GMAC is exploring ways to address the division's woes. He said "everything is on the table" and would not rule out a bankruptcy filing for the unit.

A bright spot for GMAC has been Ally Bank, its online consumer banking unit. The bank has offered some of the highest interest rates on CDs in the industry, helping bring in billions of dollars in new deposits this year. But the rates have also irked rivals and drawn the attention of regulators, since as the rebranded banking unit of GMAC, Ally has the backing of billions of government dollars loaned to GMAC.

Federal regulators have since intervened, after an industry group expressed concerns about Ally's ability to afford to pay such rates for deposits. Company executives have said that Ally's rates remain competitive.

 

[negusneg]

Nubi dense su ResCap...

GMAC’S New CEO Focuses on Autos, ‘Solution’ at ResCap (Update1)
By Dakin Campbell

Nov. 17 (Bloomberg) -- GMAC Inc., the lender seeking a third taxpayer bailout, must focus on auto financing and find a “solution” to its money-losing mortgage business, newly appointed Chief Executive Officer Michael Carpenter said.
“The first priority is we have to make GMAC the premier auto-finance company,” Carpenter, 62, said in an interview yesterday. Secondly, “the mortgage business has been a drag on the company and we need to find a solution,” he said.
Carpenter’s goal for auto finance matches government policy, which deemed Detroit-based GMAC necessary for the survival of General Motors Co. last December. The U.S. financed two GMAC bailouts totaling $13.5 billion and had been negotiating another injection worth as much as $5.6 billion. As for the Residential Capital LLC mortgage unit, investors, analysts and even GMAC have been speculating about bankruptcy.
“The government is running into bailout fatigue and GMAC is realizing it can’t rely on this pool of support from the taxpayers,” said Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania. “The easiest group of assets to jettison, if you want to call them assets, is ResCap. They’ve been a source of a huge amount of embarrassment and pain.”
Carpenter, who ran Citigroup Inc.’s alternative investment unit until he quit in 2006, replaced Alvaro de Molina, 52, who resigned yesterday. GMAC also said it asked the Treasury to delay a new injection from the Troubled Asset Relief Program until Carpenter assesses GMAC’s needs.

New Infusion

The new CEO doesn’t see “any need for the maximum amount of capital that Treasury was anticipating putting in,” he told the New York Times. “The $5.6 billion is off the table. What the exact number is, I don’t know.”
The U.S. is the biggest owner of GMAC, with a 35.4 percent stake. GMAC’s former parent, General Motors, holds a 9.9 percent stake; the U.S. controls the Detroit-based automaker. Cerberus Capital Management LP, the New York-based investment firm, holds 22 percent. GMAC doesn’t have publicly traded shares.
GMAC Chairman Franklin W. Hobbs asked de Molina to leave during a midday meeting yesterday, the Wall Street Journal reported, citing people familiar with the matter. The government had cited GMAC’s management last year, when de Molina was running the company, as one reason for approving the bailout. The U.S. didn’t play a role in his dismissal, said Andrew Williams, a Treasury spokesman.
“Everyone is very respectful of what Al has done, and the priorities are different going forward,” Carpenter said. “The company needs a very strong strategic direction, a turnaround orientation and an operational orientation.” De Molina declined to comment via e-mail.

Carpenter’s History

Carpenter was named to the board in May as part of the lender’s agreement to become a bank holding company. At the time, he was chairman of Southgate Alternative Investments, a firm he founded in 2007. Carpenter was CEO of Citigroup’s investment bank until he was reassigned to the alternative investment unit in 2002 amid claims the bank published biased research. He’s quitting the board of CIT Group Inc., the bankrupt commercial lender, the statement said.
De Molina was named GMAC’s chief operating officer in August 2007 and became CEO in April 2008, following a career at Bank of America Corp. and a stint at Cerberus Capital Management. Cerberus, whose chief Stephen Feinberg holds a seat on GMAC’s board, owned a controlling stake in GMAC before the U.S. bailout. The Journal reported Feinberg pushed for de Molina’s ouster.
It would be “categorically incorrect” to suggest that Feinberg forced out de Molina, Carpenter said. Feinberg “was not running the board,” he said.

Losses Mount

GMAC and Minneapolis-based ResCap were already racking up losses on home loans by the time de Molina arrived. ResCap was one of the nation’s biggest suppliers of subprime mortgages, or home loans made to people with the weakest credit.
Defaults have since set records nationwide, topping 25 percent and driving almost all the top subprime lenders out of business. GMAC reported losses in eight of the past nine quarters, driven in part by defaults on home loans. The deficits totaled about $13.2 billion, and ResCap lost $9.2 billion in those eight periods.

‘Losing Gobs of Money’

“You cannot have a company losing gobs of money without getting rid of the people in charge,” said Egan at Egan-Jones Ratings.
Standard & Poor’s Ratings Services said today the switch didn’t change its view of GMAC. “Yesterday’s announcement continues the churning of management at the company, which we already factor into our ratings,” said a statement from S&P, which assigns a CCC/Developing/C” grade for GMAC and ResCap.
A third U.S. infusion would represent the last of the capital needed to close a potential shortfall found by the Federal Reserve’s stress tests of 19 lenders in May.
“A possible solution could be if GMAC chooses to file ResCap,” said Adam Steer, an analyst at CreditSights Inc. in New York, referring to a bankruptcy. “A substantial amount of the losses in the stress test are at the ResCap entity.”
GMAC has said it would continue to support ResCap as long as it was in the interest of its stakeholders. Analysts have been speculating about a bankruptcy for at least a year and GMAC said in November 2008 that ResCap might not survive. In its most recent quarterly filing, GMAC included a discussion of the financial impact from a ResCap bankruptcy.
Carpenter said he hasn’t talked with the board or Kenneth Feinberg, the Obama administration’s special master for executive compensation, about his pay. Feinberg said Carpenter is covered by limits he’s imposed at other lenders.
“He’s CEO, so he’s subject to my jurisdiction for the top 25,” Feinberg told reporters after a speech in New York.

To contact the reporter on this story: Dakin Campbell in San Francisco at [email protected]
Last Updated: November 17, 2009 10:51 EST

 

[stockuccio]

CIT CDS Auction Final Recovery Closes At 68.125 | zero hedge

 

[Imark]

Due settimane e mezzo di silenzio tombale su GMAC e ResCap.

Semplicemente, le negoziazioni con il Governo USA sui nuovi fondi TARP, che avrebbero dovuto concludersi nella prima decade di novembre, sono scomparse... lost in the mist, e non è venuta fuori una riga.

La decisione sarà adottata durante le vacanze di Natale e praticata immediatamente dopo, così da non pesare sui conti del 2009....