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  • Today - Wednesday, March 4, 2015

  • 1:58 AM
    • The Reserve Bank of India surprised markets on Wednesday by cutting rates for the second time this year, joining a world-wide trend of monetary easing that is driving global interest rates to multi-year lows.
    • Citing easing inflation and weakness in parts of the economy, the central bank lowered its benchmark rate by 25 basis points to 7.5%.
    • The move sent India's Sensex index to an all-time high of 30,024.74, breaking the key 30,000-level for the first time.
    • Sensex +0.6% at 29,768.77.
    • ETFs: EPI, INDY, SCIF, PIN, INDL, INP, INXX, INDA, SCIN, SMIN, INCO
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  • Tuesday, March 3, 2015

  • 5:01 PM
    • Artisan Partners (NYSE:APAM) files to sell 3.83M shares, or 5.2% of the float, with proceeds to be used to purchase stakes held by insiders.
    • Source: Press Release
    • Shares -1.35% after hours
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  • 4:58 PM
    • Putting a number on the dismantling of Royal Bank of Scotland's (NYSE:RBS) investment bank, the FT reports the bank has set a target of cutting up to four out of five jobs in the unit by 2019 - a full 14K positions. A large proportion of those will be in the U.S. and Asia.
    • "I am not a very patient person," said Barclays (NYSE:BCS) CEO Antony Jenkins after his bank reported a loss for 2014. "We won't hesitate to optimize the capital allocated to the investment bank." There have been long-running rumors Barclays might spin off or sell its investment bank, as analysts say it's better positioned to do so than RBS, especially as regulators are forcing it to split its U.K. and U.S. operations into separately funded entities.
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  • 4:47 PM
    • The special distribution of $6.5M or $0.50 per share will be paid out monthly over the remainder of the year (a nickel per month). This represents a 32% premium over the normal monthly distributions.
    • Capitala (NASDAQ:CPTA) exited in late December its equity investment in Chef'n Corporation, receiving $3.7M, including $2.9M in cash and $800K in rollover preferred equity. The $2.7M realized gain in Q4 represented an IRR of 61%, and a 4.2 multiple on invested cash.
    • Today, the company sold 179,748 shares (30% of its stake) in Boot Barn (NYSE:BOOT) for $22.33 each. The realized gain on the sold shares is $3.3M, or a 78% IRR. Capitala still holds 420K shares at a cost basis of $4 each.
    • Source: Press Release
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  • 4:39 PM
    • The total number of shares of VOYA being sold by ING Group is expected to be 45.6M. Part will be in an underwritten stock offering, and Voya will also purchase $600M worth (13.6M shares) directly from the bank.
    • Following the completion of the deals, ING will have fully exited its 19% stake in Voya, though will continue to hold warrants for 26M shares struck at $48.75.
    • Source: Press Release
    • Voya -0.2% after hours
    | 2 Comments
  • 4:34 PM
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  • 4:19 PM
    • Hannon Armstrong (NYSE:HASI): Q4 EPS of $0.27 beats by $0.02.
    • Revenue of $7.5M misses by $1.37M.
    • Press Release
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  • 4:11 PM
    • The new program of up to 130K shares of company stock, or roughly 2% of the float, comes after completion of OSHC's previous 130K share buyback, which was executed at an average cost of $14.34 per share.
    • Source: Press Release
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  • 4:07 PM
    • A total of $8.6B was pulled from Total Return (MUTF:PTTRX) in February, down from $11.6B in January, and bringing AUM to $124.7B. Since Bill Gross left Pimco (OTCQX:AZSEY) in late September, about $100B has exited the fund.
    • Alongside the slowing outflows are improving returns - up 1.44% YTD, outperforming 92% of peers.
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  • 3:57 PM
    • MetLife (MET +0.1%) in January sued the Financial Stability Oversight Council over its designation of the insurer as a systemically important. The two parties have now asked a court to agree to give the FSOC until May 7, rather than March 16, to respond.
    • The case is an important one as it could shed some light on exactly what the secretive council was looking at when it decided to hand out the non-bank SIFI label to not just MetLife, but also AIG and Prudential (who are not involved in any suit against the Council).
    | 1 Comment
  • 3:31 PM
    • Calling the deal the first of its kind in North America, Sun Life (SLF -0.3%) creates a insurance agreement with BCE covering $4B in pension liabilities in which the insurer will take on the telco's "longevity risk," i.e. the higher payout obligations which come from pensioners living longer than expected.
    • Under the terms of the deal, BCO's Bell Canada Pension Plan will make monthly payments to Sun Life, which in return will make monthly outlays into the plan for as long as current pensioners live.
    • Press release
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  • 3:11 PM
    • The reinsurance sector is nearly universally lit up red in today's session, but Montpelier Re Holdings (MRH +0.6%) is carving out a gain amid a report in The Insurance Insider suggesting Endurance Specialty (ENH -1.3%) and Chinese conglomerate Fosun are among the final bidders in the MRH's sale process.
    • Another possible suitor is Aspen Insurance (AHL), but its involvement hasn't been confirmed.
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  • 2:57 PM
    • Nice job in getting rid of your most profitable business, Citigroup (C +0.4%), writes Anthony Currie of the sale of OneMain Financial to Springleaf for $4.25B. The unit's ROA of 6.7% is about seven times better than the Citi as a whole, and while earnings of nearly $600M this year are only a fraction of the many billions the entire bank might earn, Citi could use all it can get.
    • Citi boss Michael Corbat, however, has plenty with which he can offset that hit, says Currie, noting a pretax gain of about $1B on the sale along with the opportunity to tap into the bank's roughly $50B DTA. There's also the freeing up of capital from the removal of OneMain's nearly $10B in assets. Assuming Citi holds 10% of that, Corbat can either reinvest $1B or ask the Fed to allow it to be returned to shareholders.
    • Previously: Springleaf sees big things with OneMain purchase (March 3)
    • Previously: Springleaf (finally) lands Citi's OneMain Financial (March 3)
    | 2 Comments
  • 2:45 PM
    • Investigators have asked Barclays (NYSE:BCS) for information on its electronic-trading platform which contains a program allowing traders a "last look" at an order before placement, reports Bloomberg.
    • Last-look is a vestige of the old computer era when the lag between an order being placed and confirmed was long enough to expose the market-maker to an unfavorable price movement. The lag has moved to pretty close to zero, but banks still retain the right to halt trades on a last-look basis.
    • “Last look is a hangover from a technology problem that no longer exists, yet still allows traders to reject trades and re-quote orders to the disadvantage of clients,” says David Mercer, CEO of LMAX Exchange, a forex platform competing with major banks.
    • For its part, Barclays is reserving another £750M for forex probes, bringing the total expected cost to about £1.25B.
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  • 12:37 PM
    • Former CIA director David Petraeus will plead guilty to one count of unauthorized removal and retention of classified materials, and he could spend up to one year in prison.
    • He's currently the head of KKR Global Institute - a unit of KKR charged with figuring how macroeconomic trends and government policy will affect its investments - and KKR has issued a statement suggesting Petraeus will remain in his position.
    | 4 Comments
  • 12:23 PM
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  • 11:45 AM
    • Founded in 1978 and based in West Chicago, NationAir Aviation Insurance provides insurance for just what its name says it does.
    • Terms of AJG's purchase were not disclosed.
    • Source: Press Release
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  • 11:23 AM
    • The Costco co-branding deal adds a third leg to the Citigroup (C +0.6%) story, says analyst Vivek Juneja, upgrading the stock to Overweight with price target boosted to $58 from $54.
    • One of his concerns with Citi, says Juneja, has been tepid growth and loss of market share in key businesses like U.S. credit cards, and the Costco deal should reverse this worry. The bank, he assumes, was likely able to win a very competitive bidding process because of its ability to utilize its DTAs.
    • He's not boosting his EPS estimates just yet because Citi has not announced an agreement for Costco's $14B in estimated receivables held by AmEx, but he expects one should follow a la the Best Buy deal in 2013.
    • Turning to the stress test and CCAR, Juneja expects Citigroup to be approved for capital returns this year. He also expects the bank to hit its operating efficiency targets in 2015.
    • Previously: Springleaf (finally) lands Citi's OneMain Financial (March 3)
    • Previously: Citigroup and Visa take AmEx's spot with Costco (March 2)
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  • 10:37 AM
    • Springleaf's (LEAF +28.5%) B rating and OneMain's B+ rating have both been put on CreditWatch with negative implications at S&P following the deal for LEAF to buy OneMain from Citigroup.
    • S&P expects Springleaf to have a stronger market position following the merger, but substantially higher leverage, and - depending on the details of the financing - the agency expects to cut LEAF's rating by either one or two notches. OneMain's rating will likely be lowered by a similar amount.
    • Efficient markets? The purchase of OneMain by Springleaf has been one of the market's worst kept secrets for some time, yet LEAF is higher by nearly 30% on the announcement.
    • Previously: Springleaf sees big things with OneMain purchase (March 3)
    • Previously: Springleaf (finally) lands Citi's OneMain Financial (March 3)
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  • 10:09 AM
    • "While it is clear that Fifth Third (FITB -0.6%) faces challenges, they also bring to the table a number of positives that we wouldn't normally expect from a bank trading at a discount to the group," says UBS analyst David Eads, starting the stock with a Buy rating and $22 price target.
    • He notes the bank had the lowest core efficiency ratio in his coverage universe last year (lower is better), and was second only to M&T in terms of ROTE. Further, FITB has been able to improve its efficiency ratio over the past two years even though revenue growth has been negative. "[It] makes us more confident in their ability to navigate this difficult environment."
    • Meanwhile, KBW throws in the towel on its buy recommendation, downgrading to Market Perform.
    • Stress tests results are due on Thursday afternoon, with the CCAR six days later.
    | Comment!
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