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| Share Name | Share Symbol | Market | Stock Type |
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| Caliber Global | CLBR | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
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| 0.00 | 0.00% | 0.06 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
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| 0.06 |
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Posted at 12/3/2007 08:00 by lbo New Century Financial (NEW)Party's Over at New Century Financial New Century Financial, the second largest lender in the subprime mortgage market, announced that it will not be accepting any new loan applications. The company hopes the move is temporary but cautioned that it may not be. It can't accept any new applications and originate additional loans because New Century's creditors are closing the funding faucet rapidly and are essentially forcing the company to put a halt to its operations. Its stock is in the midst of a bloodbath at the stock exchanges as it has fallen 80% since the beginning of the month. Until a couple of weeks ago, the $1.3 trillion subprime market was considered to be the 'party of century' but things have soured extremely quickly. So where does the overall subprime market go from here and can New Century actually rebound? Stock Analysis Subprime loans are loans that are given to borrowers with a weak credit history and a poor FICO score. They carry with them a much higher interest rate (often greater than 10%) than the regular prime loans (whose interest rate levels are usually in the 6-8% range). The high interest levels mean handsome rewards for the parties funding these loans. These rates of return along with the recent real estate boom had attracted a number of different players to the subprime party. One of the major figures was New Century Financial which made these loans to the so-called risky borrowers and then turned around and sold those loans to major Wall Street banks which in turn securitized these loans (i.e. sold securities to investors which were backed by portfolios consisting of the aforementioned loans). Investors (a number of them institutional) were attracted to these investments because they offered much higher rates of return than the typical government and corporate bonds. Wall Street firms also provided substantial levels of financing to New Century and other such lenders in order to enable them to make more loans (which could in turn be packaged into more securities). So basically everybody won, from the risky borrower with the spotty credit track record who just realized the quintessential American Dream by becoming a home owner to the large Wall Street establishments. That is until the other side of the high reward equation kicked in i.e. high risk. The level of defaults on these loans started increasing as some newly minted homeowners realized that they may have overreached with their purchases and the cooling real estate market precluded them from turning around and selling their houses without taking a substantial hit. For New Century, this meant setting aside more money to deal with delinquencies as a higher percentage of people it had lent money to were not paying. But, as mentioned earlier, New Century turns around and sells a lot of its loan portfolio to Wall Street firms. Therefore, the impact of delinquencies should be limited as New Century is no longer the creditor. The problem with that is, a number of contracts that New Century entered in to sell its loans specify that it has to buy them back if the borrower defaults within a certain initial time period (typically ranging from 90 days to 6 months). Consequently, in a lot of these delinquencies, New Century is left holding the bag as the Wall Street firms are forcing the former to buy back these loans. In addition to dealing with these loans which have often lost 15-20% of their value, New Century is faced with the prospect of its major creditors (believed to be Morgan Stanley (MS: Charts, News, Offers), Goldman Sachs (GS: Charts, News, Offers) and Credit Suisse) withdrawing the credit lines previously extended to the firm. Therefore, New Century has no money to generate additional business. Plus, the Calif. based company is also the subject of a federal probe into its accounting and trading practices. So can New Century recover and return to its 52 week high of $51.97? Most analysts doubt it as the company is facing the double whammy of deteriorating assets and a liquidity crunch. Most people agree the two options for the company now are either a Chapter 11 bankruptcy filing or a sale (if there are any buyers left). However, if the company can somehow manage to survive, however unlikely that sounds right now, it will find itself in a business with much reduced competition. Most companies in the subprime market are heading for the exit sign right now but the ones that can weather the storm will be left to enjoy a market which will no doubt be lucrative once again down the road, once the current cycles play out, all by themselves. Profile New Century Financial Corporation operates as a real estate investment trust in the United States. It originates and purchases mortgage loans through two divisions, Wholesale and Retail. The Wholesale division provides loans through a network of independent mortgage brokers and correspondent lenders. It also originates mortgage loans through its FastQual Website at www.newcentury.com, where a broker uploads a loan request. The Retail division operates and originates loans through a consumer-direct channel and a builder/realtor channel, including radio, direct mail, telemarketing, television advertising, and the Internet. As of December 31, 2005, the company had 35 regional operating centers located in 18 states and originated and purchased loans through its network of 47,000 mortgage brokers, as well as operated a central retail telemarketing unit, 2 regional processing centers, and 222 sales offices. New Century Financial Corporation qualifies as a REIT under the Internal Revenue Code. As a REIT, it would not be subject to federal income tax to the extent it distributes 90% of taxable income to its shareholders. The company was co-founded by Robert K. Cole, Brad A. Morrice, and Edward F. Gotschall in 1995 and is based in Irvine, California. |
Posted at 31/1/2007 14:22 by lbo JPMorgan reduces mortgage exposureDAVID ENRICH NEW YORK - JPMorgan Chase & Co. is cutting its exposure to subprime mortgages amid deteriorating industry conditions that are proving troublesome to a growing group of lenders. JPMorgan Chief Executive James Dimon said in an investor presentation Tuesday that the company has sold off most of the mortgage loans it made last year to people with weak credit histories. He said mortgages are the one area of subprime lending where "we really see something taking place that looks like a recession." While the New York bank continued to hold $13.2 billion in subprime mortgages - making up 65 percent of its total subprime portfolio - as of the fourth quarter, that is down from $16.3 billion, or 72 percent of its total subprime portfolio, in the third quarter, JPMorgan said. Its overall subprime portfolio - which, in addition to mortgages, includes credit cards, auto loans and home equity loans - shrank to $20 billion from $23 billion in the third quarter. Meanwhile, JPMorgan has classified $4.5 billion of its subprime mortgage loans as up for sale. The company says it expects them to be sold in the first half of the year. JPMorgan said in the presentation that "loss severities" in subprime mortgages have started increasing, and that delinquencies of subprime loans originated last year are higher than the 2005 and 2004 vintages were at a comparable age. In the fourth quarter, JPMorgan saw net charge-off rates on subprime mortgage loans leap to 0.6 percent from 0.1 percent a year earlier. When it released its fourth-quarter earnings earlier this month, JPMorgan boosted its retail bank's provision for loan losses to $262 million from $158 million a year earlier, due in part to what the bank described as "some deterioration in subprime mortgage." Dimon said Tuesday that even if defaults spiked to recession-like levels, it would probably only boost JPMorgan's credit costs by about $100 million a year. "This is not a particularly large risk for JPMorgan," he said. With interest rates high and the housing market cooling, JPMorgan is hardly the only company struggling with subprime mortgages. Wachovia Corp. recently shut down its EquiBanc Mortgage Corp. unit, following "an intensive strategic review of its mortgage business which has altered the company's approach to the origination of non-conforming loans," according to a message on EquiBanc's Web site. Countrywide Financial Corp., the nation's largest mortgage lender, offered a gloomy forecast when it announced fourth-quarter results Tuesday, citing continued credit deterioration in the entire mortgage industry. And a number of small subprime lenders have gone out of business, while others have sold themselves to Wall Street firms. But Dimon said JPMorgan won't be exiting subprime lending. In fact, he said, if mortgage loans become cheap enough, the company would consider buying multibillion-dollar portfolios from other lenders. "We're an economic animal," he said |
Posted at 18/12/2006 19:59 by oniabsta LBO - Your timing on starting this thread may well be opportune (fingers crossed)I have noticed a lot of activity the last few days,and i am hoping this could be the turning point.The decline of the dollar has had a negative influence on this fund but again in recent days the dollar has strenghtened.I read recently that some top american bankers think that sterling will weaken against the $ in 2007. I have been an investor in these from my first purchase around $11 and another at about $9.5 only to see it fall further. It's my biggest looser by far. Many times i have thought about selling but i believe they will come good in the long run, meanwhile there's the divi currently about 16.7% yield. best of luck! |
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