What are Broker's Exposure to Carlyle Capital ?
Broker's trading exposures to Carlyle Capital's soon to be defaulted fund -- rumored to be leveraged at an astonishing 32 X! -- has been the big question circulating street desks today.
Here's one set of numbers currently circulating on the potential exposure (analyst unknown):
-Citibank (C) $4.7B
-Lehman (LEH) $3B
-BoA (BAC) $2B
-UBS $1.8B
-Bear Stearns (BSC) $1.7B
-ING $1.5B
-JPMorgan (JPM) $1.4B
-Calyon $1.3B
-Merrill Lynch (MER) $760m
-BN Paribas $600m
-Credit Suisse $500m
I cannot vouch for the accuracy of these numbers, but this is what is getting pinged around Wall Street trading desks . . .
>
UPDATE: March 14, 2008 1:15pm
FT is reporting this list was culled from CCC’s annual report, and is therefore out of date.
The only question is whether it got better or worse . . .
>
Thanks, JD.
UPDATE: March 13, 2008 11:15am
Standard & Poor's comments on subprime write-downs, via Briefing.com:
Standard & Poor's Ratings Services believes that the bulk of the write-downs of subprime securities may be behind the banks and brokers that have already announced their results for full-year 2007. "There may be some additional marks to market as market indicators have shown deterioration in the first quarter. However, when we dissect the percentage of write-downs taken against various types of exposures, in our opinion the magnitude of some write-downs is greater than any reasonable estimate of ultimate losses... The write-downs of collateralized debt obligations (CDOs) of subprime asset-backed securities (ABS) by large banks and investment banks (referred to as banks) in North America and Europe to-date total approximately $110 bln. To this amount we add approximately $40 bln in write-downs of insurers (financial guarantors and other insurers) and banks in the Gulf States and Asia to arrive at a rough estimate of $150 bln in global disclosed write-downs to-date... Based on available information, we believe that the largest players can be seen as having undertaken a rigorous valuation methodology to come up with conservative valuations. Citigroup (C) and Merrill Lynch (MER), for example, value their high-grade supersenior tranches at 52% and 68% discounts to original exposure, respectively. The broader range of banks values them at only a 30% discount. Similarly, Citi and Merrill value the supersenior tranches of the mezzanine CDOs at 63% and 73% discounts, respectively, whereas the broader range of banks values them at a 48% discount... We believe Citi and Merrill in particular have taken conservative views in this regard, and have built in liquidity premiums.
Now if only these guys had any credibility left . . .
Thursday, March 13, 2008 | 10:30 AM | Permalink
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Comments
Count me in for a buck. I'm feeling lucky ...
Posted by: Douglas Watts | Mar 13, 2008 10:38:20 AM
barry
i can vouch for it being passed around the street
Posted by: John | Mar 13, 2008 10:39:57 AM
The Swiss at par? Who could of thunk it?
Me
Posted by: Ross | Mar 13, 2008 10:43:09 AM
Ross,
The Aussie Dollar is next.
btw, 1 Yen = $.01 US.
Posted by: Pool Shark | Mar 13, 2008 10:51:43 AM
funny story about the swiss franc. Was in Las vegas over the weekend and actually found a 10 franc bill lying on the floor, I took it to the currency exchange and it was at $9.80 (and realizing it sort of has become the newest carry trade I cashed it in).........I should have kept it for shits and giggles.
BTW the Pallazo (newest Hotel) is going to be quite a red herring in about a year...along with the around 15k new rooms coming on line over the next two years. Foreign tourist's outnumber Americans 10-1 and LV should realize that it will only continue to grow if it embraces foreign tourists......because as the concierge indicated to me american tourists in Vegas (as a continued revenue stream) is over.
Ciao
MS
Posted by: michael schumacher | Mar 13, 2008 10:52:21 AM
...rumored to be leveraged at an astonishing 32 X
Sorry to sound snarky, but no, that 32X leverage is not rumor.
http://suddendebt.blogspot.com/2008/03/death-by-leverage.html
Total Equity: $669.5 Million
Total Assets: $21.8 Billion (mostly GSE's)
Divide and ...(drumroll)... leverage: 32.5 times.
Posted by: Will T | Mar 13, 2008 10:56:13 AM
go Carlyle! what Bush/Cheney/Greenspan havent yet done to the average US citizen/soldier/taxpayer Poppy Bush and James Baker and David Rubenstein can finish off. what a trifecta
Posted by: scorpio | Mar 13, 2008 10:58:11 AM
PS-
re: yen
the TV channels in the hotel had Korean, Chinese, vietnamese, fillipino but alas not one Japanese channel..not even Fuji TV.......
Sort of tells you something...
Ciao
MS
Posted by: michael schumacher | Mar 13, 2008 10:59:43 AM
The stock market recap from October 11, 2002, on the New York Times. This was the day after the market had a big jump, which essentially ended the last bear market. Here are the quotes from the article:
"Analysts said a rebound had been expected after Wednesday's steep declines, but they doubted that it would last, given uncertainties like war with Iraq.
"I don't think fundamentally anything has changed from the pessimism of yesterday,'' said Matt Brown, head of equity management at Wilmington Trust. ''There are still declining earnings estimates.
Analysts said that while a recent spate of heavy selling has made stocks attractive to bargain hunters, more steep declines were possible. They said the market could be pressed in the coming weeks as more earnings reports are released.
Mr. Brown of Wilmington Trust said that the Dow could fall below the 7,000 mark, which would have been unimaginable earlier in the year.
"I would put it at maybe a 50-50 chance,'' he said. ''I see the market right now as fairly valued. It's possible we may need to get into the dirt-cheap category before the market starts picking up again.''"
Sounds familiar???
Posted by: Bearish Blind Squirrels | Mar 13, 2008 11:00:08 AM
hmm. No GS on the list of creditors. How did Carlyle miss them?
Posted by: rob | Mar 13, 2008 11:03:10 AM
The banks can confiscate the collateral and then tender it to the fed in the Repo program that they announced 2 days ago and get treasuries.
The program the Fed announced will have the exact opposite effect....
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/03/the_fed_and_carlyle.html
Posted by: Vermont Trader.. | Mar 13, 2008 11:04:32 AM
my understanding is Carlyle Cap went public last July, so several months after it became pretty well known to anyone w a brain cell that the markets and leverage were going to come undone. question: did they throw every piece of garbage they had in the house into this vehicle at 32 X leverage? i mean leveraged loans, etc all marked at 100c as they off-loaded to the new vehicle?
Posted by: scorpio | Mar 13, 2008 11:04:40 AM
yen now below par for first time since 1995. check your charts on S&P re 1995 parabolic. i think this the beginning of an unwind that should take out the whole era. good-bye Bear Stearns
Posted by: scorpio | Mar 13, 2008 11:07:10 AM
Look at what's happening to Bear Stearns today...
Paulsen & Bernanke better get out the paddles for an electro shock...
Posted by: Chief Tomahawk | Mar 13, 2008 11:08:34 AM
Honolulu is full of foreign tourists too, a broader set than usual. All stripes of Asian, European, Brit and for the first time Eastern European/Russian too. Maybe the lesson in getting our money back is to lure it back with sun and fun.
Posted by: Darkness | Mar 13, 2008 11:17:50 AM
I am buying like crazy... It is all over the papers how bad things are...
Today's retail investors pessimism is one of the lowest readings since 1986, and in recent history has only been matched by August 28th and 31st, 1998.
Time to load up Barry!!!
Posted by: Bearish Blind Squirrels | Mar 13, 2008 11:18:16 AM
STOCK DECLINES STEEPEN AS TREASURY CHIEF FAILS TO REASSURE INVESTORS; KEY GAUGES DOWN 1.8%
Posted by: Nick Godt | Mar 13, 2008 11:22:19 AM
In an interview, Bear Chief Financial Officer Samuel Molinaro told the paper there is no truth to speculation of deep trouble at the firm.
Well, there you have it ...
Posted by: Douglas Watts | Mar 13, 2008 11:24:18 AM
That list comes from a Times (of London) article a few days ago that referenced its source as the Carlyle Annual Report.
As to the Moody's comment. wtf ? You have mezzanine tranches on a CDO, you have super senior tranches on synthetic CDO's. What the hell is a supersenior mezzanine tranche ?
Posted by: Steve Bowles | Mar 13, 2008 11:30:24 AM
Paulson essentially admits they don't know how to fix this mess.
Posted by: Stuart | Mar 13, 2008 11:34:08 AM
It is unfixable if the current system is allowed to stay the same......
$300 billion in less than two day's trading is yet another attempt to keep it the same.
Ciao
MS
Posted by: michael schumacher | Mar 13, 2008 11:43:35 AM
When was it exactly that S&P told us about the writeoffs they saw coming? Year? Month? Decade?
Time to break up the ratings cartel.
Posted by: Ross | Mar 13, 2008 11:46:37 AM
IMHO - just keep 1 eye on crude... if it breaks lower the market will rally. Until it does so all rallies are shortable.
Posted by: Vermont Trader.. | Mar 13, 2008 11:47:45 AM
Did anyone catch the interview with Ken Fisher from Fisher Investments on Bloomberg last night....about 5:30? If I had money with him, I would redeem today. What a BS artist! Pure salesman! Another guy getting his clients buried.
Likes C because of operating earnings and stated that balance sheet means nothing..... nothing. Of course, he didn't mention what his cost basis was....they never do when they're down 50% on a position.
Posted by: matt m. | Mar 13, 2008 12:00:10 PM
"Standard & Poor's Ratings Services believes that the bulk of the write-downs of subprime securities may be behind the banks and brokers that have already announced their results for full-year 2007."
Does anyone doubt that Big 4 auditors, having been scared to death in the aftermath of 2002 (Enron/Worldcom/AA&Co.) will this time be extremely conservative and rule-bound? S&P may lack credibility but the CPAs, not so much.
Posted by: TempusFugit | Mar 13, 2008 12:15:31 PM
