C, $6.89
M, $6.99
MO, $15.81
EXC, $54.57
NOK, $14.50
FCX, $25.04
Wednesday, November 26, 2008
TLGP: More Alphabet Soup
The FDIC approved the final rule to strengthen the agency’s Temporary Liquidity Guarantee Program (TLGP) last Friday, 11/21. This program will guarantee newly issued senior unsecured debt of banks, thrifts, and certain holding companies. It provides full coverage of non-interest bearing deposit transaction accounts as well.
The FDIC adopted the TLGP because of disruptions in the credit market, particularly the interbank lending market. The goal of the TLGP is to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize.
According to the FDIC, this industry program doesn’t rely on the taxpayer or the deposit insurance fund to achieve its goals. The FDIC will impose a fee structure based on a sliding scale, depending upon the length of maturity, and assessed annually for those institutions that participate in the TLGP. The range will be 50 basis points on debt of 180 days or less, and a maximum of 100 basis points for debt with maturities of 1 year or longer. According to FDIC Chairperson Sheila C. Bair; “We (the FDIC) will implement this program without relying on the taxpayer or the deposit insurance fund. Fees paid by participating entities should cover any losses associated with the program”.
A bank or qualifying financial institution will have until December 5, 2008 to opt out of the TLGP. However, once in the program they are in for the duration. Those that choose to opt out will not be able to participate at a later date.
Any debt issued on or before June 30, 2009 will be fully protected through the earlier of the maturity of the debt instrument, the shortest maturity is one month, or until June 30, 2012.
Goldman Sachs Group Inc was the first financial institution to issue debt under this program, announcing on November 25, the sale of $5 billion notes with a 3.25% coupon maturing 6/15/2012; a spread of 200 basis points over the 3yr T-note. Morgan Stanley and JPMorgan Chase & Co are said to be preparing offerings as well.
The FDIC guarantee will allow debt issued under the TLGP to be rated triple-A and expectations are that entities may raise $400-$600 billion in the next six months.
The FDIC adopted the TLGP because of disruptions in the credit market, particularly the interbank lending market. The goal of the TLGP is to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize.
According to the FDIC, this industry program doesn’t rely on the taxpayer or the deposit insurance fund to achieve its goals. The FDIC will impose a fee structure based on a sliding scale, depending upon the length of maturity, and assessed annually for those institutions that participate in the TLGP. The range will be 50 basis points on debt of 180 days or less, and a maximum of 100 basis points for debt with maturities of 1 year or longer. According to FDIC Chairperson Sheila C. Bair; “We (the FDIC) will implement this program without relying on the taxpayer or the deposit insurance fund. Fees paid by participating entities should cover any losses associated with the program”.
A bank or qualifying financial institution will have until December 5, 2008 to opt out of the TLGP. However, once in the program they are in for the duration. Those that choose to opt out will not be able to participate at a later date.
Any debt issued on or before June 30, 2009 will be fully protected through the earlier of the maturity of the debt instrument, the shortest maturity is one month, or until June 30, 2012.
Goldman Sachs Group Inc was the first financial institution to issue debt under this program, announcing on November 25, the sale of $5 billion notes with a 3.25% coupon maturing 6/15/2012; a spread of 200 basis points over the 3yr T-note. Morgan Stanley and JPMorgan Chase & Co are said to be preparing offerings as well.
The FDIC guarantee will allow debt issued under the TLGP to be rated triple-A and expectations are that entities may raise $400-$600 billion in the next six months.
Friday, November 14, 2008
Looking at Monday's TOTD
I'm looking to short tech via REW. The 5-DMA just crossed the 10-DMA, which is above the 50-DMA. Five. Ten. Fitty. The planets are aligned.
And, check out the PnF chart with a nice reversal and pullback from the high pole.
And, check out the PnF chart with a nice reversal and pullback from the high pole.
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