WSF Headline Roundup - 12/22/08 - RE bailout?; Stock investors losing faith; China cuts rates; AIG asset sale; Oil rises; GM readies negotiation; Hedge funds' TALF; Japan exports plunge; GLG buys SocGen UK asset mgt; Barclays spin-off?; Toyota loss?

• Developers Ask U.S. for Bailout as Massive Debt Looms
• Stock Investors Lose Faith, Pull Out Record Amounts
• China Cuts Key Rates for Fifth Time in Three Months
• Munich Re to Buy AIG’s HSB Division for $742 Million
• Oil Rises as OPEC Announces Resolve to Implement Output Cuts
• GM Prepares Ground for Post-Holiday Talks With UAW
• Ford, Others Still Must Negotiate Rough Road
• Hedge funds gain access to $200bn Fed aid
• Japan Exports Plunge Record 27% as Recession Deepens
• U.S. Retail Gasoline Falls to $1.66 a Gallon, Lundberg Says
• GLG boosts assets by $8bn with SocGen deal
• Barclays looks at BPE spin-off
• Mizuho to Sell $3.9 Billion in Preferred Securities
• Toyota Forecasts Its First Operating Loss in 71 Years
• Warner Pulls Music From YouTube

Developers Ask U.S. for Bailout as Massive Debt Looms - Wall Street Journal

With a record amount of commercial real-estate debt coming due, some of the country's biggest property developers have become the latest to go hat-in-hand to the government for assistance.

They're warning policymakers that thousands of office complexes, hotels, shopping centers and other commercial buildings are headed into defaults, foreclosures and bankruptcies. The reason: according to research firm Foresight Analytics LCC, $530 billion of commercial mortgages will be coming due for refinancing in the next three years -- with about $160 billion maturing in the next year. Credit, meanwhile, is practically nonexistent and cash flows from commercial property are siphoning off.

Unlike home loans, which borrowers repay after a set period of time, commercial mortgages usually are underwritten for five, seven or 10 years with big payments due at the end. At that point, they typically need to be refinanced. A borrower's inability to refinance could force it to give up the property to the lender....

Stock Investors Lose Faith, Pull Out Record Amounts - Wall Street Journal

One of the hallmarks of the long market downturns in the 1930s and the 1970s has returned: Rank-and-file investors are losing faith in stocks.

In the grinding bear markets of the past, huge stock losses left individual investors feeling burned. Failures of once-trusted firms and institutions further sapped their confidence. Many disenchanted investors stayed away from the stock market, holding back gains for a decade or more.

Today's investors, too, are surveying a stock-market collapse and a wave of Wall Street failures and scandals. Many have headed for the exits: Investors pulled a record $72 billion from stock funds overall in October alone, according to the Investment Company Institute, a mutual-fund trade group. While more recent figures aren't available, mutual-fund companies say withdrawals have remained heavy.

If history is any guide, they may not return quickly.....

Munich Re to Buy AIG’s HSB Division for $742 Million - Bloomberg

Munich Re, the world’s biggest reinsurer, agreed to buy American International Group Inc.’s Hartford Steam Boiler unit for $742 million, about a third less than the U.S. insurer paid for it eight years ago. 

Munich Re will fund the cash purchase of HSB Group entirely from “existing resources,” the Munich-based company said in a statement today. HSB Group Inc.’s Chief Executive Officer, Douglas Elliot, will stay on to run the unit. 

AIG’s CEO Edward Liddy is dismantling what was once the world’s biggest insurer to repay loans tied to the company’s $152.5 billion government rescue. AIG has also put its airplane- leasing subsidiary and global life insurance businesses up for sale. The New York-based insurer bought Hartford Steam Boiler for $1.2 billion in stock in 2000.....

Oil Rises as OPEC Announces Resolve to Implement Output Cuts - Bloomberg

Crude oil rose above $43 a barrel after OPEC restated its commitment to enact record production cuts announced last week in the face of a global economic slowdown. 

The Organization of Petroleum Exporting Countries is “determined” to stabilize oil markets, Saudi Oil Minister Ali al-Naimi told reporters in Doha, Qatar, yesterday. Oil is poised for the first annual decline in seven years, falling 55 percent in New York so far in 2008. 

“OPEC is lining up all its big guns to tell the world that the action taken in recent days will push prices higher,” said Rob Laughlin, senior broker at MF Global Ltd. in London.....

GM Prepares Ground for Post-Holiday Talks With UAW - Wall Street Journal

General Motors Corp., while holding preliminary discussions now with key constituents, is expected to wait until early January to begin deep talks with the United Auto Workers union, bondholders and the coming Obama administration, in an effort to work out agreements to comply with the terms of the bailout President George W. Bush announced last week.

GM and Chrysler LLC are supposed to get $13.4 billion in coming months, but are required, among other things, to cut labor costs and reduce their debt. If they make progress on their restructurings, they could get an additional $4 billion in February.

Following the Bush announcement, the two ailing auto makers got another shot in the arm from north of the border on Saturday, as the Canadian government and the province of Ontario said they will provide at least US$3.29 billion in loans to the Canadian units of GM and Chrysler.....

China Cuts Key Rates for Fifth Time in Three Months - Bloomberg

China cut interest rates for the fifth time in three months to support the world’s fourth-biggest economy after trade growth collapsed because of recessions in the U.S., Europe and Japan. 

The one-year lending rate will drop by 0.27 percentage point to 5.31 percent and the deposit rate by the same amount to 2.25 percent from tomorrow, the People’s Bank of China said on its Web site. The central bank also reduced the proportion of deposits lenders must set aside as reserves by 0.5 percentage point. 

Exports fell for the first time in seven years last month, imports plunged and manufacturing contracted by a record. China’s slowdown will deepen before a 4 trillion yuan ($584 billion) stimulus package kicks in from the second quarter of next year, Liu He, a senior policy official, said Dec. 12....

Ford, Others Still Must Negotiate Rough Road - Washington Post

Ford Motor may have passed on the $17.4 billion auto bailout plan, but analysts say the automaker is still fighting for its survival along with every other company in the American auto industry.

At the end of September, Ford reported to Congress that it had about $30 billion on hand, including $19 billion in cash and $11 billion of available credit lines. But the cash-intensive operations of a car company means that money could be quickly eaten up, analysts say. 

"They don't have an endless supply of cash," said Pete Hastings, an analyst at the investment banking firm Morgan Keegan. "If GM and Chrysler are in the emergency room, Ford is in the waiting area next to go in."....

Hedge funds gain access to $200bn Fed aid - Financial Times

Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.

The asset-backed securities to be funded under the programme are pools of credit card receivables, automobile loans and student loans....

Japan Exports Plunge Record 27% as Recession Deepens - Bloomberg

Japan’s exports plunged the most on record in November as global demand for cars and electronics collapsed, signaling more factory shutdowns and job cuts are likely as the recession deepens. 

Exports fell 26.7 percent from a year earlier, the Finance Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 22.3 percent decline. The drop was the sharpest since comparable data were made available in 1980. 

The Bank of Japan lowered its benchmark interest rate to 0.1 percent last week after business sentiment dropped the most since 1975 and the yen surged to a 13-year high against the dollar. Honda Motor Co. said last week that it may shift manufacturing overseas if the currency strengthens further.

U.S. Retail Gasoline Falls to $1.66 a Gallon, Lundberg Says - Bloomberg

The average price of regular gasoline at U.S. filling stations fell to $1.66 a gallon as the nation’s recession sapped demand. 

Gasoline slipped 9 cents, or 5.1 percent, in the two weeks ended Dec. 19, according to oil analyst Trilby Lundberg’s survey of 7,000 filling stations nationwide. 

“It is not high price any longer, obviously, that is cutting into our gasoline demand,” Lundberg said in a Bloomberg Radio interview. “It is in fact the weaker economy and fewer people working.” 

Crude oil, which accounts for about 59 percent of gasoline’s pump price, has tumbled 77 percent from a record $147.27 a barrel reached July 11 on the New York Mercantile Exchange....

GLG boosts assets by $8bn with SocGen deal - Daily Telegraph

Hedge fund GLG Partners has taken over Society Generale’s UK asset management business for a nominal sum in a deal that will boost its assets under management by $8bn.

GLG, one of the largest European hedge funds and a darling of the sector, is believed to have been in talks with the French bank for the past six months. 

In November, GLG reported a 27pc drop in net assets during the third quarter to $17.3bn (£11.5bn) from $24bn after it suffered $2.2bn of investor withdrawals. 

Its debt covenants with Citi, from which it had borrowed $570m, stipulated that assets under management could not fall below $15bn, but industry insiders have been speculating that the fund had slipped under the watermark....

Mizuho to Sell $3.9 Billion in Preferred Securities - Bloomberg

Mizuho Financial Group Inc., Japan’s second-biggest bank by revenue, will sell 355 billion yen ($3.9 billion) of preferred securities to replenish capital depleted by rising bad loans and losses on stock investments. 

The securities, which won’t be convertible into common stock, will have an annual dividend ratio of 4.78 percent, Mizuho said in a statement to the Tokyo Stock Exchange today. 

Global stock markets have fallen 48 percent this year, cutting the value of investments at Tokyo-based Mizuho and rival lenders. Japanese financial firms have announced plans to raise at least $37 billion in capital as the nation’s first recession since 2001 also fuels an increase in bad-loan costs.....

Barclays looks at BPE spin-off - Financial Times

Barclays has held discussions over plans to spin off Barclays Private Equity or sell some of the bank’s holdings in the unit’s funds with some of its investment partners.

Roger Jenkins, who oversees the bank’s principle investments, and Paul Goodson, co-head of BPE, broached a possible sale with co-investors last week as Barclays comes under pressure to free capital tied up in the division.

Barclays is thought to be looking at a number of options, including spinning off 40 per cent of the group and selling its investments in BPE funds.

Barclays would not comment, but those close to the group said the topic comes up regularly for discussion and a deal is not imminent.....

Toyota Forecasts Its First Operating Loss in 71 Years - Bloomberg

Toyota Motor Corp., the world’s second-largest automaker, forecast its first operating loss in 71 years on plummeting demand, prompting Moody’s Investors Service to consider downgrading the company’s top-rated credit. 

The carmaker will post a 150 billion yen ($1.7 billion) loss in the year through March, it said in a statement today, scrapping a previous forecast of a 600 billion yen profit. 

“The environment we’re in is extremely tough,” President Katsuaki Watanabe told reporters today in Nagoya. “We’re facing an unprecedented emergency situation. Unfortunately, we can’t see the bottom.”...

Warner Pulls Music From YouTube - Wall Street Journal

Warner Music Group Corp. said it began removing its songs and videos from Google Inc.'s YouTube videosharing site this weekend, after the two sides failed to renegotiate a licensing deal.

For now, the decision doesn't appear likely to escalate into a broader battle between YouTube and the music industry, as people close to the other major labels said they didn't anticipate taking down their content in the immediate future. Still, the dispute reflects frustration within media companies over how little ad revenue is generated by their deals with YouTube....