The Hype Award goes to FT's Henny Sender

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Here is a good warning of the hype call business reporting, amazingly enough coming from the FT. In an article titled Reckless banks ease to pay Henny Sender writes:

Two recent judicial opinions rebuking the banks offer a window into the disposition practices that fuelled the boom and the tactics that banks resorted to in a tardy attempt to cut their losses. These cases highlight meet how careless the banks have been and how that recklessness haw come back to area them and their bottom lines.

She discusses digit cases, digit of which has to do with Tousa, a Florida homebuilder. Citi indeed was careless in its disposition practices with this firm. Tousas playing was on the brink when Citi long it a give that allowed it to refinance an earlier give utilised for whatever highly leveraged acquisitions.

But as business reporters often do, she starts with a valid point, but then moves on to a housing that is actually unconnected (bunching it every into digit anti-banking rant). Her ordinal warning deals with Charter Communications and JPMorgan. And thats where the system completely breaks down.

The ordinal housing involves Charter Communications, the fourth maximal cable consort in the US, and digit of the most hotly contested battles to confirm an operational plan in the consequence of a Chapter 11 filing. The judge rejected the banks verify that their loans were impaired, and said the banks were holding up the companys beginning from bankruptcy protection meet to change the cost of their loans and acquire more interest. The inauspicious ruling could deprive the banks of $1bn in set savings, a attorney for the banks said. The banks in this housing were led by JPMorgan whose spokesman declined to comment.

What Ms. Sender either doesnt want to handle or is only clueless most is that Charter give was always solid. There was absolutely null careless most disposition to Charter there has been and ease is plenty of quality coverage for the grownup loan. The Charter housing involves an intercreditor dispute. When a consort files for bankruptcy, grownup lenders generally have a feature in the restructuring of the firm. In Charters housing the management sought to file and structure without involving the grownup lenders. The concern then restructured the subordinated debt and only reinstated its existing grownup loans. These loans module remain in locate as they have been preceding to filing. There is going to be no capital expiration for lenders.

What the lenders desired was to structure the grownup loans in visit to improve the coupon. As generally happens with concordat violations or another credit commendation triggers, the lenders crapper push the consort to renegotiate the terms. For whatever reason the judge in the housing sided with the company, refusing to earmark the grownup lenders to the negotiating table. That means they are stuck with the original low coupon.

But the Charter housing has null to do with careless lending. Charter, in spite of being quite leveraged was (and ease remains) a discreet exposure for the lenders. Attempting to process the interest evaluate on this give in a bankruptcy scenario is just what banks are questionable to do. The fact that JPMorgan was unsuccessful in doing so speaks more to the changing nature of Chapter 11 than to some recklessness on behalf of lenders. Just to round things off, Ms. Sender ends the news by transfer up the Enron housing from artefact back without some clearness on how it relates to "reckless lending".

In the environment where it is fashionable to smash banks, kinda than pore on unbiased journalism and autarkical research, nobody seems to discourse or contradict Ms. Senders story. Misinformation that stokes emotion continues to delude writing after all. FTs Henny Sender module thence obtain the Sober Look hype award. Congratulations.





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