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. Read more »