Daily Archives: August 2, 2014

Argentina default scandal: Gov’t to investigate ‘speculative moves’ in ‘vulture case’

The Economy Ministry today denounced New York judge Thomas Griesa has benefited “vulture funds” during negotiations over Argentina’s defaulted debt with holdouts and asked the National Value Commission (CNV) to start an investigation over alleged “speculative moves”.

“The judge’s attitude towards the case so far reveals he does not intend to build equal conditions between the parts, but looks to favor vulture funds instead,” a press release by the Economy Ministry reads.

The Ministry asked the CNV to solicit information on Argentine bond exchanges to the US Securities and Exchange Commission (SEC).

“We ask to investigate if this trial is in fact a façade to hide a speculative move,” the press release concludes.

Source: Buenos Aires Herald

Suddenly, Wall Street Is Bailing On Housing

Among this week’s most notable moves was the decompression of high-yield credit spreads to near 9 month wides (and continued outflows). What went notably-under-reported by the mainstream media, however, was an even bigger selloff in US mortgage bonds. While JPMorgan is unable to see “any fundamental reason” for the plunge in prices, the worrying indication from the magnitude of the drop relative to volumes is that liquidity has evaporated. As Bloomberg notes, with dealer inventories sold down (due to new regulations that make repo and agency securities unpalatable), they have no way to ‘smooth’ the selling when investors want to exit positions. Weakness of this magnitude when the 10Y gained only 2bps on the week is a big wake-up call that traders are looking for the exits from housing debt and the door is very narrow.

Bloomberg warns, prices of a new type of U.S. mortgage bonds are plunging this month, teaching investors a lesson on the risks to markets wrought by the growing constraints on Wall Street banks.

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Here’s why…

Thanks to the Fed, turnover and volume in Agencies has been crushed…

Read on.

 

Obama : Ex-Im Bank Fight Hurts U.S. Companies

WASHINGTON–President Barack Obama on Friday called for Congress to reauthorize the U.S. Export-Import Bank, saying the political impasse is hurting U.S. companies as they compete against foreign firms.

Mr. Obama’s comments, which came at a news conference in response to an unrelated question, illustrate how pressing the Obama administration is starting to view the gridlock over the relatively arcane agency now at the center of a fierce political fight.

He used the analogy of running a Ford dealership, and he said he would be at a competitive disadvantage if a Toyota dealership across the street were allowed to offer financing for its automobiles but he was prevented from offering loans. This is essentially one of the services the Ex-Im Bank offers, though some of its loan guarantees can be for more than $1 billion.

A number of prominent Republicans, including House Financial Services Committee Chairman Jeb Hensarling (R., Texas), House Majority Leader Kevin McCarthy (R., Calif.) and House Budget Committee Chairman Paul Ryan (R., Wis.) have said the bank’s charter shouldn’t be reauthorized when it expires at the end of September. They have criticized the bank as representing “crony capitalism,” allowing the government to help a select number of companies win business overseas.

Read on.

Nationstar faces challenges as Wall Street turns skeptical on nonbank MSRs

Nationstar (NSM) isn’t facing quite the level of pushback or regulatory targeting as its counterpart Ocwen Financial (OCN), but it is having a devil of a time lately and it was reflected in reports and on the market boards Friday.

Nationstar will report its second-quarter earnings on Wednesday, August 6.

Nonbanks snapping up mortgage servicing rights have been fighting against a flurry of regulatory pushback and scrutiny, not so much for anything they have done, but because of their growing share of the MSR servicing space.

TheStreet Ratings team rated Nationstar as a “hold” with a ratings score of C-. TheStreet Ratings Team had this to say about their recommendation:

We rate NATIONSTAR MORTGAGE HOLDINGS (NSM) a HOLD. The primary factors that have impacted our rating are mixed – some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself.

Read on.

Freddie Mac sells $659 million in “deeply delinquent” loans to unknown buyer

 

Freddie Mac is set to offload $659 million in seriously delinquent loans to a single, undisclosed buyer. The transaction marks Freddie’s first sale of seriously delinquent loans.

According to Freddie, the sale was conducted via a competitive auction that took place at the end of July and was executed indirectly through Bank of Americaaffiliates.

Freddie selected the winning bidder “on the basis of economics” from a pool of 22 prospective buyers that took part in the auction.

When contacted, Freddie declined to identify the winner of the auction.

“The transaction was well received by the market and Freddie Mac will continue to look for opportunities to reduce exposure to less liquid assets in its investment portfolio,” Freddie said in a statement.

Bank of America Merrill Lynch and Credit Suisse Securities acted as co-advisors for the transaction.

Read on.