Under The Radar News - Wednesday

• Ford forges ahead. Ford (F) appears to be staging a surprise turnaround. Quality ratings on its vehicles are approaching those of Toyota Motor (TM), which shaved $1B off Ford's warranty costs in 2007. CEO Alan Mulally wants to further cut costs by selling Volvo and shuttering the ailing Mercury brand. Ford reports Thursday.
• Architecture lull signals even weaker construction. The Architecture Billings Index, considered a forward-looking indicator of nonresidential construction, fell by 2 to 39.7, its lowest since the index was launched in 1995. A reading below 50 indicates contraction 9-12 months off. "Activity at architecture firms is coming to a screeching halt," it said. Developers are holding back on pipeline projects until they feel more secure about their economic futures.
• Dabbling in their own debt. Private-equity firms are using the credit crunch to repurchase their own debt at discounts of as much as $0.80 on the dollar. Banks such as Barclays (BCS), Credit Suisse(CS), Deutsche Bank (DB) and JPMorgan (JPM) are concerned borrowers will use their excess cash to buyback debt on the cheap rather than repaying it through formal channels as required by most standard leveraged debt covenants.
• Regulator fears rash of bank failures. UK Bank regulator John Dugan says he fears a wave of U.S. bank failures as a recessionary economy puts additional pressure on poorly underwritten debt. He's especially concerned about commercial real-estate. More than 33% of regional banks have made commercial property loans worth over 300% their capital; in 1987, when hundreds of banks failed, they had lent an average of only 175% their capital. Only three U.S. banks failed in 2007. Dugan also says rising losses on non-subprime deteriorating credit such as home-equity loans and credit cards will likely force banks to raise yet more capital.
• Brown backtracks on biofuel support. UK PM Gordon Brown says he may push for a halt in proportional increases slated for biofuel use, fearing biofuels are contributing to skyrocketing food prices. His remarks are likely to bolster perceptions of weakening governmental support.
• Citigroup antsy. Citigroup (C) is in talks to sell Nikko Antfactory, its Japanese private-equity unit, in an effort to bolster its balance sheet and comply with U.S. banking laws. Antfactory manages about $1.3B of investments. Its name presumably stems from its attraction to small investments. Meanwhile Morgan Stanley (MS) is opening a private-equity unit in India.
• Buffett focusing on Europe. Berkshire Hathaway (BRK.A) Chairman Warren Buffett is traveling to Europe in May to meet with strategic business owners. Sources say Buffett will make a major Europe acquisition "sooner or later."
• Puzzling answer. NY Times (NYT) publisher Arthur Sulzberger Jr., in response to why the Times doesn't run a Sudoku puzzle: "I know it’s something we’ve looked at but I cannot answer the question as to why we haven’t done it yet. Our [crossword] puzzle is one of the great puzzles of the world and it continues to be a huge draw for us. But I will certainly make your thoughts known to the puzzle people."
• Hedge funds snap up bankers. For the second time in two months, hedge fund Citadel Investment Group wooed a JPMorgan (JPM) investment banker. Hedge funds tend to offer more generous compensation than investment banks; their pull may now be stronger since hedge funds are seen as stronger than many large banks squeezed by the credit crunch.
• AT&T looks at Malaysian celco. AT&T (T) is in preliminary talks with Malaysia's Maxis Communications to acquire its 74% stake in Indian cellular phone company Aircel.