Bear Stearns Plans $3.2 Billion Fund Rescue to Halt Fire Sale

Discussion in 'Wall St. News' started by ASusilovic, Jun 22, 2007.

  1. Let me guess, that´s why Wall Street is hiring distressed-debt bankers ???

    Source : BLOOMBERG, May 30

    http://www.bloomberg.com/apps/news?pid=20601087&sid=as4IgwxvySmQ&refer=home

    The biggest winners from the global buyout boom are hiring distressed-debt bankers in Europe at the fastest pace in five years.

    Goldman Sachs Group Inc., the world's most profitable securities firm, hired Andrew Wilkinson, the lawyer who advised creditors in the bankruptcies of Eurotunnel Plc and Parmalat Finanziaria SpA, to help lead its restructuring business in London. Morgan Stanley, the third most-active merger adviser this year behind Citigroup Inc. and Goldman, added seven bankers in the past year, boosting its group to 61. Blackstone Group LP, poised to become the world's largest publicly traded buyout firm, is starting a corporate restructuring group in Europe.

    ``When the turn does come, it will be unlike anything we have ever seen before,'' said Iain Burnett, 43, managing director of Morgan Stanley's special situations unit in London. ``The scale of it could be considerable because of the size of some of these leveraged deals,'' said Burnett, who began his career in London a month before the October 1987 stock market crash.
     
  2. Under that proposed deal, Bear said it would serve as the counterparty to $3.2bn in repurchase agreements between the banks to the less leveraged of the two troubled Bear hedge funds.

    In return, the banks would have to agree not to seize and sell collateral held in the highly-leveraged fund for 90 days. It remained unclear last night whether any banks would accept any version of that deal.

    Jack McCleary, head of asset-backed securities syndication at UBS said: "The market does good job of sniffing out leverage. Dealers will look at funds with similar positions to ensure valuations are appropriate.":D
     
  3. ion

    ion

    This is incredible...

    Not too long ago in 1998, it took 14 of the most powerful banks in Wall Street to bail out LTCM, costing $3.6 bln...

    These days, Bear Sterns can do a similar size bail out alone...

    These banks has really become big the last decade thanks to all these liquidity floods...
     
  4. Why is that a surprise? They couldn't sell the assets at prices they were hoping for so they didn't. That's what LTCM did too. They figured they'd wait and turn profit rather than bail.

    Bear can't flash everything they have because the market will just pull all bids off the table. Bloomberg story mentioned thins.

    Are you stock_turder's cousin? Seriously, you have no actual thoughts? Just one-line comments. :p
     
  5. They will probably find foreign buyers; Japan; China or others and try to keep the game going;

    "This is a wonderful opportunity to purchase American's hard assets; come on people! this asset are all backed by American's land!"

    :D
     
  6. There has to be a bail out, otherwise a lot of big CDO boys would need to reprice theirs assets and this will open flood gates that had not been seen for a while and everybody is scared do death if this happens. Chase decided not to sell his collateral because they could not get the price that they wanted and if they sold at the price that they would get it would send CDO market to death spiral.

    The scary thing is that no one wants to recalculate their CDOs values, and everyone can keep their heads in the sand for now.
     
  7. Exactly. This isn't nearly over yet and selling new CDOs won't be easy. Means those who were selling CDOs before are going to be hanging on to them now probably because the market will suck.

    I'm betting that Bear is fucking themselves by trying to borrow to "wait" this out. It's a timebomb no one wants.

    :D
     
  8. Sponger

    Sponger

    Illiquid securities - gotta love 'em. Back in the day, this is exactly what happened with the toxic waste tranches of CMO's. Nothing ever changes, they just find a new way to slice and dice securities.
     
    #10     Jun 22, 2007