Archive for JP Morgan Chase
Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) have been hired, along with Barclays Plc and Deutsche Bank AG, to manage the sale of $3 billion in bonds, which will be the largest corporate bond sale in about a month.
In a prospectus filed with the Securities and Exchange Commission, Abbot Laboratories said they’ll use the funds to pay down it commercial paper, which stands at $3.6 billion. General business purposes was the other reason cited for the issuance.
The bond offering includes $750 million of 5-year notes, with a potential yield of 70 basis points over similar Treasury offerings. There is also $1 billion in debt for 10 years, which could yield up to 90 basis points over their government competitors, and another $1.25 billion of 30-year bonds, which could pay a point spread of 122 basis points over Treasury bonds.
Those above figures aren’t confirmed yet, but an insider close to the situation said it’s close to what will be issued.
Corporate bond volume around the world has plunged in May, dropping from $183 billion in April to only $47 billion so far. Most of that is thought to be the result of the sovereign debt crisis in Europe.
Concerns of Moody’s are the debt load after the acquisition of Piramal Healthcare for $3.72 billion will cause the company to carry a “substantial” amount of debt in the short term.
Abbott was upgraded from “Hold” from “Sell” today by Citigroup (NYSE:C) analyst Mathew Dodds, basing it on the emerging markets strategy of the company.
Abbott is set to license a minimum of 24 products for sale in emerging markets in May.
Even so, Dodd did revise his target price on Abbott from $50 to $47 a share.
This article (Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) Hired by Abbott (NYSE:ABT) for $3 Billion Bond Issue) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
Goldman Sachs (NYSE:GS) upgraded Citigroup (NYSEC) from “neutral” to “buy,” while maintaining buy ratings on J.P. Morgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC). In light of the current economic conditions, which are deteriorating in Europe and China, it does generate the question of whether the assessment of Goldman is far too optimistic.
Much of the positive mood of Goldman is related to the quality of credit at the banks, which could maintain their ratings, resulting in less expensive loans and operating costs. The winding down of debate on regulations, and the assumption lawmakers probably won’t ban derivative trading, which would be devastating to the large banks.
Speaking of that, volatile economic times are back, and in that scenario, the giant banks thrive, as the huge price swings brings them strong revenue and earnings. That has been the primary driver of revenue since the recession began, and it looks like it will be in the future as well, assuming they are able to continue to trade derivatives.
With business largely holding back from borrowing, and lenders not really wanting to lend, it shows that their faith in the sustainability of the recovery is very low, and until that changes from real changes in demand, we’ll continue to see that.
It seems Goldman’s assessment of the situation is primarily based on stronger defensive positions, and the belief derivatives will remain a part of the banking investment arsenal.
If that’s true, Goldman is probably right about the banks, although the question of Europe continues to weigh on those banks with heavy exposure there, and that could become as big as, if not larger than, the banking crisis in America.
To me, Goldman is a little too optimistic in their outlook, and it’s based on some assumptions, which while probably true, aren’t assured yet.
But to not include China and Europe in their outlook for the banking industry seems to leave out a huge, potential negative for the industry that will definitely have an impact, and that impact will have to be looked at from the perspective of individual banks.
This article (Is Goldman Sachs (NYSE:GS) Too Optimistic for Citigroup (NYSEC), J.P. Morgan (NYSE:JPM) and Bank of America (NYSE:BAC)?) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
If the proposed new government regulations on derivatives remains in the financial reform bill passed on Thursday, large financial institutions like JP Morgan (NYSE:JPM), Goldman (NYSE:GS), and Morgan Stanley (NYSE:MS) could have earnings demolished by up to 20 percent, according to the banks.
Assuming that’s close to being accurate, it’s going to be extremely challenging for banks to generate profits, as a number of other revenue and profit streams have been eliminated from them already by new regulations, especially connected to former banking fees and credit card fees.
Adding it all together, it is a strong attack on the financial health of the companies, in the name of, well, financial health of the companies.
At this time the regulations passes aren’t a given, as it’ll have to be reconciled with the House bill, which has already passed.
The problem with the derivatives legislation is it treats all derivatives the same, and some are more risky than others, while some are necessary for hedging and risk protection, which if eliminated, could have the opposite of the desired regulations: creating more risk.
Obviously this is politically motivated, but it’s questionable as to whether or not the lawmakers actually want the legislation to remain intact as passed, or only want to be able to point out they voted for it in future elections.
Either way, this is interesting times for the banking industry, and politicians do need to be careful they don’t run with public sentiment too much and cause more damage from the new rules than the practices of the industry which led them to where we are today.
This article (JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) Could Get Crushed by New Derivative Regulations) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.