Bond Downgrades Escalate With Leverage Highest Since 2007 (Bloomberg)
Credit quality for U.S. companies is showing signs of weakening as issuers from Verizon Communications Inc. (VZ) to Apple Inc. borrow unprecedented amounts of money to expand and reward shareholders. A total of 223 companies had their bond ratings cut by Moody’s Investors Service in the six months ended November, compared with 172 increases, the highest proportion of downgrades since April. Issuers took advantage of borrowing costs that averaged a record-low 3.83 percent this year to sell an unprecedented amount of bonds, with 15 percent of offerings funding shareholder payouts, the most in five years. As the U.S. economy enters its fifth year of expansion after the worst recession in seven decades, Moody’s predicts that companies will be emboldened to seek out acquisitions and increase spending to enrich their owners. That may prompt borrowers to boost leverage, which has risen to the highest level since 2007.
PE firms may pay more than $1B in collusion case (NYP)
It’s going to cost the world’s largest private-equity firms — including KKR and Blackstone — more than $1 billion to settle the bombshell collusion case slowly winding its way through a Boston federal court, The Post has learned. While no deal has been offered, shareholders in eight companies have indicated any future settlement would have to be north of $1 billion, a source close to the situation said. “I think there was a time the plaintiffs would have settled for $1 billion, but that time has passed,” a source said. The value of the eight buyouts is $170 billion. Defendants are not ready to settle, sources said. The shareholders in 2007 sued KKR, Bain Capital, Silver Lake Partners, Blackstone Group, Carlyle Group, TPG Capital and Goldman Sachs Capital Partners and accused them of defrauding shareholders out of billions of dollars by colluding to keep prices artificially low when buying their companies.
Economy Entering New Year on a Roll (WSJ)
A pickup in business investment and robust new-home sales point to an economy on stronger footing heading into the new year. “It’s a holly, jolly data Christmas for the economy as all signs point to an accelerating economy,” said Joel Naroff, chief economist at Naroff Economic Advisors. Orders for U.S. durable goods—big-ticket items such as cars and aircraft designed to last more than three years—rose 3.5% last month, reversing a decline in October, the Commerce Department said Tuesday. Excluding the volatile transportation category, manufactured-goods orders rose 1.2%, the strongest gain since May.
Jobless Claims in U.S. Fell More Than Forecast Last Week (Bloomberg)
Jobless claims declined by 42,000 to 338,000 in the week ended Dec. 21, a Labor Department report showed today in Washington. The median forecast of 42 economists surveyed by Bloomberg called for a drop to 345,000. Continuing claims rose.
Bug Bites Cut Florida Orange Crop to Lowest in 2 Decades (Bloomberg)
A gnat-sized insect, the Asian citrus psyllid, forced Dean Mixon to replace about 1,000 orange trees in the past two years on the 50-acre Florida farm his grandfather started in the 1930s. The bug spreads a disease called citrus greening, causing fruit to shrink and drop early. “This is the worst we ever had to deal with,” said Mixon, 62. “Young trees can’t develop strong roots, and the quality of the fruit is also affected. We have been able to slow the spread of the disease, but not eradicate it.”
Deputies: Elderly couple’s argument over husband’s use of dating website puts her in hospital, him in jail (Sentinel)
Edward Aronson, 76, was arrested on battery charges and booked into jail after the scuffle at the couple’s Lake Worth home, according to a Palm Beach County Sheriff’s Office arrest report. Aronson’s 77-year-old wife caught him looking at an unidentified dating site on Saturday night. The two argued about it, and she became upset enough that she slapped him across the face, the report said. Aronson shoved her to the floor. He called 911 about 45 minutes later, and paramedics came to the house in the 8200 block of Abalone Point Boulevard. The woman was taken to Bethesda Hospital West, where a doctor confirmed her right hip was broken, according to the report. A nurse at the West Boynton hospital called the Sheriff’s Office when she overheard Aronson on the phone talking about pushing his wife.
U.S. regulator fines Barclays over decade of records failures (WSJ)
Barclays Plc has been fined $3.75 million by a U.S. regulator over its alleged decade-long failure to properly keep electronic records, emails and instant messages. The Financial Industry Regulatory Authority on Thursday said that from 2002 to April 2012, Barclays failed to preserve order data, trade confirmations, account records and other information in a format that prevented their alteration or erasure, known as “Write-Once, Read-Many” or “WORM.” It also said Barclays failed to properly retain attachments to some Bloomberg emails from May 2007 to May 2010, and failed to properly retain about 3.3 million Bloomberg instant messages from October 2008 to May 2010. FINRA said that once Barclays’ system encountered an attachment to an instant message that it had processed earlier on a given day, it would stop accepting instant messages for that day.
Yahoo Looks Dressed for Excess (WSJ)
Yahoo is dressed like a high-growth company. But it may soon have to revert to humbler garb. Much of the Internet company’s value rests on its 24% stake in Alibaba. Investors seeking exposure to the unlisted Chinese e-commerce juggernaut have flocked to Yahoo’s shares. These now sport a tech-like multiple of 25.5 times 2014 earnings before interest, taxes, depreciation and amortization, about double that of Google. But when Alibaba completes its initial public offering, expected next year, investors must ask whether Yahoo still is worth owning without its glitzy wardrobe.
Mizuho to Restructure Amid Loan Scandal (Reuters)
The chairman of Mizuho Financial Group, one of the largest Japanese lenders, will step down in March to take responsibility for a scandal over loans to organized crime, and the bank will restructure its board to improve governance, the bank said Thursday. Earlier in the day, Japan’s banking regulator, the Financial Services Agency, issued a second business-improvement order to Mizuho, the country’s second-largest lender, because of its inaction and false reporting over loans it had extended to members of organized criminal groups.
Drunk Santa storms Ride the Ducks bus (Seattle)
An intoxicated Santa ripped down Christmas lights from a Ride the Ducks vessel on Saturday after being refused a free ride, according to Seattle police reports. Ride the Ducks passengers were unloading from the wheeled duck boat after a tour about 6:30 p.m. near Fourth Avenue and Pine Street when a man donning a Santa suit boarded. Employees, smelling booze, asked the man if he had a ticket, reports say. He said he didn’t, but wanted to ride the next trip. Santa refused to leave the boat-bus when employees asked him to leave. Eventually, he ran off the ride and began climbing up the side, tearing down a string of lights. He then ran away, but Westlake Mall security apprehended him. Santa said he didn’t mean to rip the Christmas lights.
Programming Note: We’re on an abbreviated, vacation-esque schedule. Opening/closing wraps and brief sprinkles of moral support should we be struck with the urge to reach out and touch you (or one of the founders of KKR decides to pull a drunk Santa).