yen broke 115 very fast. Shorting $ will indirectly push hard on LBO debt, especially those hedge funds barely hanging on.
LBO debt market doesn't clear....BX will not rise much higher. Interest rates don't matter, but market access does.
The recent gold run up is higher because of speculation. The dollar lost about 1-3 % against the major currencies since the rate cut, gold rallied around 5%... I believe the dollar may be oversold at this point but again that is ok as long as inflation stays in check. Within 6 months we will know....
BX is definitely top notch even compared to the other biggies. I've been consistent from day 1 with that belief.
I'm pretty sure they have deals lined up in the pipeline, for when the debt market re-opens for business. And BX mgmt is smart enough to prioritize type of buy-outs based on financing feasibility.
AS Wenchfighter said, BX maybe able to tap China as debt investor.
I'm not concerned with financing of deals already announced.
The PHH mortgage deal, in my opinion, is just price renegotiation. If it fall through, I don't think anyone's going to cry.
Enough said about this near term issue.....just didn't want investors to buy in too much for their risk appetite.
If the Yen gains steam then the carry trade unwinds which forces the hedge funds to cover by selling everything... however, a this point in time I do not believe that they are heavily leveraged....
thanks WF. I get in a hurry during the day at times, and get pretty cryptic....bad habit.
I don't believe BX, itself is over levered in any way. I think Q3 earnings will be fine, but access to debt market is crucial to future earnings.
New money is buying everything but LBO debt. Very little of the old debt has surfaced, and ther's a whole lot more coming on. LEH, MER and BSC are all booking 5-8% losses on current holdings but no one is buying them.
There is some good buzz tonight on FDC initial sales, but that is only $5B out of $24B, and this is the good stuff (at libor+2.75% or just shy of 8%). The junk is in the trunk.
Here's the kicker, the FDC debt underwriters are financiing up to 80% of the price of the debt at libor.....yeah, they are lending money for people to buy their debt, on top of the 5% discount. Think about the implications.
Can't predict what tomorrow brings, but a significant portion of BX's future earnings depends on the access to a liquid debt market...kind of like saying a painter needs paint to do his job.