CreditSights’ Analysis of Recent Financial Deals
CreditSights has several reports on the fallout of the financial deals of the last few days.
European Financials: Lehman Exposure Round-up offers a handy compilation of European exposure to Lehman Brothers (NYSE: LEH) and finds that “So far, no single company stands out as excessively exposed.
UBS (NYSE:UBS), however, has given a surprisingly contained figure of US$300 million as the maximum cost of closing-out its direct and counterparty exposures to Lehman Brothers, net of hedges.
Lehman Brothers: - Barclays Buys Investment Bank and NY Headquarter: CreditSights’ initial read on Barclays‘ (NYSE:BCS) purchase of Lehman’s investment banking and capital markets operations is that “the deal has minimal impact on the recovery value.”
We believe the asset sale fails to clear up the two largest hurdles to recovery at Lehman Brothers Holdings, mainly the recovery on Level III assets and on the intercompany borrowings.
In AIG: Steps Back from DEFCON 1, CreditSights is relatively positive on the outlook for AIG (NYSE: AIG): “While AIG’s franchise value has been impaired by recent developments, we continue to believe its longer term prospects remain solid.
Based on its core fundamental strengths we expect the company will in time rebound from recent weakness.
In HBOS/Lloyds: Black Horse Riding To the Rescue, CreditSights is more negative on the survival prospects of HBOS (NYSE: HBOS) if its discussions to merge with Lloyds TSB (NSYE: LYG) fall apart.
This would be a merger of two similar institutions that would have to be predicated on potentially large cost synergies to make sense, but it could be the last throw of the dice for HBOS: if talks break down, it is in real trouble.
And in Bank of America: “The Big Bank” Daddy Buys Mother Merrill, CreditSights says it believes Bank of America (NYSE: BAC) “can cover hot stove capital shortfalls remaining at Merrill and still have very strong capital ratios”
We downgrade BofA to low AA given the deal integration challenges and difficult environment despite our view that the big bank can deal with its various hot stove exposures
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.