Haha I am not so sure I would want to do that ever. I am young Im going to load up on GKK on these good prices (in my opinion) and wait out the storm. Hopefully this will return to 34.
Also Im not so sure that I liked McCain or the "Republican" party. I do however believe in small government, free markets etc. Not to turn this into a political discussion.
Just my two cents.
rating agencies downgrade / upgrade on prices observable in the market. if your debt trades at 50%, they adjust their rating to that default spread in the market.
let's see the two sides of having a low credit rating. on one hand, new financing becomes relatively more expensive. given the current low interest rates, new investments and refinancing of existing ones should still be OK. on the other hand, retirement of the debt gets cheaper. the profit gkk makes on debt retirement when they buy back their debt at 50 cent on the dollar or less they can defer. to my knowledge, they have no immediate refinancing needs (before 2011) . the bottomline: retirement of the old debt at a steep discout is good rather than bad. chances to write new businesses in the current situation seem poor even for firms with top ratings. long-term GKK will win their market-share back.
Disclosure: I am long GKK.
Let me add this: directly from Fitch's website, here is how Fitch defines the ratings of 77.9% of the book value of Gramercy Real Estate CDO 2007-1. Is it really that bad, relative to the ratings of other CDOs in the market right now?
High credit quality. 'A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. Rating applied to $703,933,197 class A-1 notes (or 66.5% of the total)
Good credit quality. 'BBB' ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category. Rating applied to $121,000,000 class A-2 notes (11.4% of the total)
Here's some good news re: Atlantic Yards project. The projects environmental impact statement, which had been assailed as totally incorrect by opponents of the project in court was deemed completely proper by the courts. This removes a major hurdle in the go ahead for the project. As reported on WPIX channel 11 in NYC this morning.
From the Fitch report:"The two cross-defaulted whole loans (collectively, 6.3% of the pool) are secured by two full-service hotels located in Miami and Orlando, Florida, that defaulted in January 2008 due to the sponsor's non-compliance with the Sheraton franchise agreement at the Miami property. In May 2008, the sponsor filed for Chapter 11 bankruptcy protection. Since last review, the sponsor obtained a subordinate debtor-in-possession financing package totaling $8.2 million for capital improvements and continued operations."
This financing from BOM DIA TRADING owned solely by Zaczac and formed the same month as the financing arrangement for CF Hospitality.
Zaczac needs to be investigated thoroughly, CF hospitality's books need a thorough examination, the hotels need to be in receivership NOW, and the source of the $9mil needs to be investigated.