California To Sell Body For Money (U.S. As Crack Whore Understudy) Second Edition

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So when Arnie came, hat in hand, begging for like $8 billion dollars to repair the disaster that is California, we snickered a little. Yes, we admit it, we snickered. Ok, ok, municipal bankruptcy is not funny at all. We know. (Sheesh, you guys have a bunch of Munis or what?)
All that as background should tell you exactly why we say "What the fuck, Arnie," when we see something like this:

California sold $5 billion in short-term municipal notes Thursday in a deal that helps the state meet its cash needs and one that was upsized twice in the final 24 hours because of strong investor demand.
The state will return to the market at a later date to raise the additional $2 billion toward its $7 billion total cash-flow borrowing needs for fiscal 2008-09, Bill Lockyer, California's state treasurer, said in a statement.
To woo enough investors to take on such a large block of debt, California set the initial yield ranges to relatively high levels for short-term paper. Demand for the offering was sufficient that the final yields were at the low end of ranges first quoted to individual investors.

This really sucked because we were so revved up making fun of California that any success on their part totally killed our schadenfreunde buzz. Weak, man. Seriously. Weak.
I guess Cramer's totally generic and borderline irresponsible "Go Munis" message the other day managed somehow to hit home.
California Increases Offering Twice to Meet Demand for Munis [WSJ]

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Nuns, Whores, DCFs

For some reason it is corporate governance day at Dealbreaker, so here is a grab-bag of inchoate nonsense (for a change!). First of all look at this: The third-largest U.S. proxy adviser recommended that El Paso Corp shareholders vote against a proposed $23 billion sale of the company to Kinder Morgan Inc, switching its position after comments made by a Delaware judge. Egan-Jones Proxy Services said in a report that it was withdrawing its endorsement of the deal because of "the conflicts of interest cited by (Delaware Chancery Court judge Leo Strine) and the attendant doubts cast on the deal." How should you take this? Well, one way to take it would be: if you paid me to tell you how to vote on things, you'd probably want me to look into those things and decide if they're good things for you, and if they are tell you to vote for them and if not etc. So Egan-Jones* went and looked at this merger and decided it was a good merger and that its clients should vote for it. Then they learned about the conflicts of interest cited by the Delaware court, most of which were publicly available long before the opinion came out,** and changed their minds. Suggesting that they didn't really do a bang-up job of examining the merger to begin with. But that's a stupid way of looking at Egan-Jones's role because, really, you're an EP shareholder and you're like "oh Egan-Jones ran a DCF and this price looks good to them"? You can go read the DCFs of actual investment banks if that's the sort of thing that gets you going. Nobody's actually paying proxy advisors (do people pay them? I don't know) for actual advice on how they should actually vote their shares. Instead they're paying (maybe?) for some vague patina of good "corporate governance," which means something like "good processes and independent boards and no conflicts of interest" and gets lots of chin-stroking academic articles written about it.