S&P May 3 afternoon ratings developments

Ratings On Bahrain-Based BMI Bank Lowered To ‘BB+/B’ On Weak Earnings Generation; Outlook Negative 03-May-2011
09:43 EST

China Resources Land Ltd. And Its Proposed Notes Assigned ‘BBB’ Rating; Outlook Stable 03-May-2011
03:33 EST

The release on their front page had this to say:

Market optimism about leading US banks’ rapid return to full financial health appears premature, according to a report from Moody’s Analytics. First-quarter earnings showed that bottom line results were bolstered by unsustainable releases of loan loss allowances. Top line revenue generation did not meet expectations. Balance sheet metrics were somewhat more encouraging.

New York, May 02, 2011 — After two years of no issuance, the credit quality of commercial-mortgage backed securities issued post recession has been strong, says Moody’s Investors Service in a new report. As the credit cycle continues, Moody’s expects the leverage of the loans in transactions to increase, however.

Since issuance resumed in 2010 after the break, Moody’s has rated eight “new generation” or CMBS 2.0 conduit deals. In its latest US CMBS review, Moody’s presents detailed metric analysis of this new issuance.

“Current underwriting is vastly improved compared with CMBS issuance from 2007 contrary to some reports in the market,” says Tad Philipp, Moody’s Director of commercial real estate research. “It is roughly consistent with that of 2004, one of the last ‘normal’ years before frothy underwriting kicked in.”

“In late CMBS 1.0 pro forma underwriting meant stretching for additional income from properties already operating at the zenith of their existence,” says Philipp. “In today’s market, underwriting properties beaten up by the recession may involve trying to get closer to normalized income.”

Moody’s notes that the post-recession deals are “chunky”, that is five or more single loans may each make up more than 5% of a transaction. The lumpiness adds an element of volatility to performance, says Moody’s.

Moody’s also expects loan leverage to increase as credit conditions loosen. Specifically, Moody’s expects a competitive lending market to drive up conduit loan to values (LTVs) to mid-70s percentages, from in the 60s they range in currently.

Favorable commercial real estate conditions should mitigate the credit risk this greater leverage might pose at this time.

“As the cycle advances and the effects of additional leverage become more pronounced, however, it may become necessary to increase subordination,” says Moody’s Philipp.

“The DOJ is suing Deutsche Bank for $1 billion.

The suit will be a “civil mortgage fraud lawsuit.”

It sounds like what happened is, Deutsche Bank was one of the firms that selected mortgages that would be insured by the government.

The government says DB “repeatedly lied” in order to be in the strategic position…”

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May 3 (Reuters) – Japan’s Nissan Motor Co Ltd (7201.T) won New York City’s 10-year contract to build the next generation of taxis for the city, a deal estimated to be worth more than $1 billion, the New York Daily News reported on Tuesday, citing unnamed sources.

“Mayor Michael Bloomberg and the city’s Taxi and Limousine Commission were due to announce the winner later on Tuesday.

The other two finalists for the concession were Turkish manufacturer Karsan Otomotiv (KARSN.IS) and U.S. automaker Ford Motor Co (F.N).

The “Taxi of Tomorrow” would replace the 16 models now authorized. The 10-year contract is expected to begin in 2013.”

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• “Chevrolet Cruze posts best month since launch with 25,160 total sales
• GMC Terrain, Chevrolet Equinox set April sales records
• Retail sales rose 25 percent for April; up 35 percent year to date
• Incentives decline more than 10 percent while retail sales rise 4 percent from March

General Motors dealers in the United States reported 232,538 total sales in April, a 27-percent increase versus April a year ago. Solid gains by GM’s lineup of fuel-efficient passenger cars and crossovers powered the gains, led by the best sales month for the Chevrolet Cruze and record sales for the Chevrolet Equinox and GMC Terrain compact crossovers.

Retail sales, those to individual customers, rose 25 percent versus last April with cars and crossovers up 49 percent and 28 percent, respectively. Retail sales for the Cruze were 180 percent higher than the Chevrolet Cobalt it replaced. The Equinox and Terrain also posted retail sales records, up 53 and 61 percent respectively….”

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“Samsung Electronics’ flat-panel TV shipments in first-quarter 2011 reached 8.8 million units, a 5% increase compared to the same period last year, but a 31% decline from fourth-quarter 2010, according to the company.

Sluggish demand in the Europe and US markets along with the earthquake in Japan oppressed growth for the TV market….”

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Developing…..

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Not really conclusive at all, but still interesting…..

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“As early as January of 2005, high-ranking officials were discussing the best way to sell the idea of North American “integration” to the public and policymakers while getting around national constitutions. The prospect of creating a monetary union to replace national currencies was a hot topic as well.

Some details of the schemes were exposed in a secret 2005 U.S. embassy cable from Ottawa signed by then-Ambassador Paul Cellucci. The document was released by WikiLeaks on April 28. But so far, it has barely attracted any attention in the United States, Canada, or Mexico beyond a few mentions in some liberty-minded Internet forums.

Numerous topics are discussed in the leaked document — borders, currency, labor, regulation, and more. How to push the integration agenda features particularly prominently….”

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“Do you avoid foods that contain artificial colors and sweeteners, and stick to whole, unprocessed foods instead? If so, you just might have orthorexia, an imaginary “disease” created in 1997 by Dr. Steven Bratman that appears to be gaining more attention in recent days. According to a recent report in Yahoo! News, restricting one’s diet to healthy, pure foods is a compulsive disorder that requires cognitive behavior therapy in order to cure.

Written about in so-called respectedhealthjournals like theJournal of the American Medical AssociationandPsychology Today, “orthorexia nervosa,” which means “nervous about correcteating” in Latin, allegedly causes malnourishment, anxiety, and social disorders. Its creators claim it stems from a type of obsessive compulsivedisorder, and that it can lead to anorexia.”

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“Contrary to popular belief, there the “wasteful spending” slice of the federal budget pie that is often blamed for America’s ballooning national debt is actually a slim one in comparison to decreased revenues. The debtor situation facing the U.S. is a product of many decisions made during two presidential administrations that were deemed important to the country, regardless of their long-term fiscal impact.”

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“John Hussman’s weekly letter has some excellent insights into the unusual market conditions we are currently confronted with.  Clearly, the Bernanke Put has exacerbated moves in just about every market.  The result is an ever increasing disequilibrium.  This, after all, is what the Greenspan/Bernanke Put has been doing to the market for the last 25 years.  Rather than allowing markets to be markets, the Fed has felt the need to coddle and “talk up” markets at every chance possible.  They see this as some sort of positive contributing force.  I see it as a highly destabilizing market force that significantly contributes to the volatility of the business cycle.  The market is not the real economy.  Therefore, focusing government policy on nominal wealth creation is just another way of putting the cart before the horse.

So, just how extreme are the current conditions?  Mr. Hussman notes:…”

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The White House backed away Monday evening from key details in its narrative about the raid that killed Osama bin Laden, including claims by senior U.S. officials that the Al Qaeda leader had a weapon and may have fired it during a gun battle with U.S. forces.

Officials also retreated from claims that one of bin Laden’s wives was killed in the raid and that bin Laden was using her as a human shield before she was shot by U.S. forces…..”

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Then there is this

Okay so they were not found guilty of terrorism, but were investigated for links to terrorists and found guilty for fraud, conspiracy, false statements, drug charges, and immigration problems…..

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“Morgan Stanley’s Stephen Roach sees “years of retrenchment” ahead for the “zombie” U.S. consumer, a trend that he says will force Asia’s giant exporters to look inward for growth.

“Afflicted by historically high unemployment, massive under-employment, and relatively stagnant real wages, while burdened with underwater mortgages, excessive debt, and subpar saving, U.S. consumers are stretched as never before,” Roach writes in an online column for Project Syndicate.

“Yet the U.S. government has tried virtually everything to prevent consumers from adjusting.”

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“Treasury Secretary Timothy Geithner said the U.S. will have three weeks more than previously seen before hitting its borrowing limit, giving the White House and Congress more time for a deal to raise the debt ceiling.

The U.S. can borrow until Aug. 2 after reaching the $14.29 trillion limit because of “stronger-than-expected tax receipts” and by taking “extraordinary measures” such as suspending the sale of bonds to finance state and local infrastructure projects, Geithner said in a letter to congressional leaders yesterday. He previously said the deadline would be July 8. Without such measures, the legal limit will be reached May 16, he said.”

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“Tokyo Electric Power may be asked to shoulder half of an estimated $49 billion in total compensation for damages stemming from its crippled nuclear power plant with other power firms to bear the rest, a Japanese newspaper reported on Tuesday.

Officials from the government, Tokyo Electric, and creditor banks have been scrambling to craft a scheme that would allow the utility to cope with the bill of compensating those displaced by the crisis at its Fukushima Daiichi plant, while continuing to operate as a private firm.”

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“The week before last on Thursday the Financial Times published an OpEd piece I wrote arguing that Washington should take the lead in getting the world to abandon the dollar as the dominant reserve currency. My basic argument is that every twenty to thirty years – whenever, it seems, that American current account deficits surge – we hear dire warnings in the US and abroad about the end of the dollar’s dominance as the world’s reserve currency. Needless to say in the last few years these warnings have intensified to an almost feverish pitch. In fact I discuss one such warning, by Barry Eichengreen, in an entry two months ago.

But these predictions are likely to be as wrong now as they have been in the past. Reserve currency status is a global public good that comes with a cost, and people often forget that cost.”

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