E46 BMW Social Directory E46 FAQ 3-Series Discussion Forums BMW Photo Gallery BMW 3-Series Technical Information E46 Fanatics - The Ultimate BMW Resource BMW Vendors General E46 Forum The Tire Rack's Tire Wheel Forum Forced Induction Forum The Off-Topic The E46 BMW Showroom For Sale, For Trade or Wanting to Buy

Welcome to the E46Fanatics forums. E46Fanatics is the premiere website for BMW 3 series owners around the world with interactive forums, a geographical enthusiast directory, photo galleries, and technical information for BMW enthusiasts.

You are currently viewing our boards as a guest which gives you limited access to view most discussions and access our other features. By joining our free community you will have access to post topics, communicate privately with other members (PM), respond to polls, upload content and access many other special features. Registration is fast, simple and absolutely free so please, join our community today!

If you have any problems with the registration process or your account login, please contact contact us.

Go Back   E46Fanatics > Everything Else > The Off-Topic > Money Matters

Money Matters
Financial, Stock, Investment etc. posts here.

Reply
 
Thread Tools Search this Thread Rate Thread Display Modes
Old 07-10-2012, 07:08 AM   #1
phrozen06
Registered User
 
phrozen06's Avatar
 
Join Date: Mar 2004
Location: 39°27'33"N 77°58'04"W
Posts: 7,543
My Ride: E46, E92 M3, R32 VW
Send a message via Yahoo to phrozen06
Libor Scandal Threatening to Turn Companies Off Syndicated Loans

http://www.businessweek.com/news/201...ndicated*****s

Quote:
The scandal surrounding the London interbank offered rate is threatening to undermine confidence in syndicated loans and hasten companies’ flight to bonds.

“What corporate treasurers are concerned about is the damage this Libor problem will do to market confidence,” said John Grout, the policy and technical director at the Association of Corporate Treasurers in London, which has about 4,500 members. “If people lose trust in banks and Libor, which is indexed to a huge amount of debt and derivatives instruments, market liquidity could be reduced and borrowing costs could rise for corporates.”

Corporate loans typically pay interest pegged to Libor or its equivalents in other currencies, and the rate-rigging scandal is spreading uncertainty about whether the benchmarks reflect lenders’ true cost of funding. At least a dozen banks are being investigated for manipulating Libor, prompting Barclays Plc (BARC) Chief Executive Officer Robert Diamond to quit last week after the U.K.’s second-biggest lender was fined a record $451 million.

Loans are already on the wane as a funding option for companies in the U.S. and Europe. More stringent capital requirements introduced by regulators to prevent the risky lending practices that exacerbated the financial crisis have made it more expensive for banks to extend loans, and prompted lenders in Europe to pledge more than $1 trillion of balance- sheet cuts.

Loans Decline
Non-financial companies in the U.S. borrowed $483 billion through syndicated loans and credit lines this year, a 13 percent drop from the same period of 2011, while in Europe volumes fell 25 percent to $322 billion, data compiled by Bloomberg show.

Loans were overtaken by bonds for the first time in Europe this year, according to Fitch Ratings. Bond issues made up 52 percent of the 467 billion euros ($574 billion) of new corporate funding in the first half, compared with 29 percent for the whole of 2011, the New York-based firm said in a July 3 report.

“Before 2007 our borrowings were linked to base rate not Libor, but then banks insisted we move to a Libor-rated margin as we were told it was market practice,” said Ben Whawell, the chief financial officer at Warrington, England-based trucking and warehousing company Stobart Group Ltd. (STOB)

‘Any Opportunity’
“The last week hasn’t changed anything as far as banks are concerned,” he said. “They’re all in it to make money and they’ll take any opportunity they can to charge you a fee.”

Clare Dawson, the managing director of the Loan Market Association in London, said Libor would continue to be the benchmark for the syndicated loan market.

“Libor is only one factor that people are looking at when they look at a loan, either as a means of raising finance or as an investment,” said Dawson, whose group represents 486 banks, investors and law firms. “I see no reason why a floating-rate debt product won’t continue to be a key component of the financing market, and clearly most floating rate loans are based off Libor or Euribor.”

Libor is calculated from a daily survey carried out for the British Bankers Association in London, in which the world’s biggest lenders are asked the rate they’re charged to borrow over a variety of short-term maturities in currencies including dollars, euros and yen. Banks are accused of massaging down submissions for the benchmark for $360 trillion of global securities during the financial crisis and artificially increasing them before it.

The so-called lowballing may have more impact on lenders’ returns in Europe than in the U.S., where they’ve been quicker to adopt Libor floors that set a minimum level for the benchmark. The main three-month dollar Libor rate tumbled to 0.458 percent yesterday from 5.724 percent in September 2007.

“In the wake of this scandal, we’re worried that more banks will stop submitting rates to BBA because of the legal cost and controversy involved,” said Grout, formerly finance director of Cadbury Schweppes. “That won’t be helpful.”

To contact the reporters on this story: Stephen Morris in London at smorris39@bloomberg.net; Patricia Kuo in London at pkuo2@bloomberg.net

To contact the editors responsible for this story: Faris Khan at fkhan33@bloomberg.net; Paul Armstrong at parmstrong10@bloomberg.net
__________________


phrozen06 is online now   Reply With Quote
Old 08-24-2012, 06:20 PM   #2
CMT1729
Registered User
 
Join Date: Jul 2008
Posts: 41
The entire libor probe is a joke, the ultimate irony is that BARC is paying for it too.
__________________

"What's all this I hear about a brownie in motion?" - Accountant
CMT1729 is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Censor is ON





All times are GMT -5. The time now is 11:44 PM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2014, vBulletin Solutions, Inc.
(c) 1999 - 2011 performanceIX Inc - privacy policy - terms of use