(Reuters) - Toyota Motor Corp, under pressure ahead of a scheduled management shake-up, has won 75,000 orders for its new Prius hybrid, the Nikkei business daily said, promising a fierce battle for Honda Motor Co's rival Insight hybrid.
Toyota, facing a potential $8.6 billion operating loss in the year to next March, has previously announced plans to appoint the founder's grandson to head the company in June and make many other management changes including a new head for its loss making U.S. operations.
The Financial Times highlighted an upcoming change in Toyota's management, noting that the personnel line-up announced last month replaced 40 percent of top managers.
Toyota's shares gained 2 percent, outperforming Honda's 1.3 percent rise and just ahead of the benchmark Nikkei share average's 1.7 percent.
Honda's new Insight hybrid, launched in early February in Japan, has outpaced the company's sales forecast with sales of nearly 20,000 units in the first three months.
A Toyota spokeswoman could not confirm the Nikkei report, saying the automaker had not compiled dealers' orders ahead of a scheduled launch on Monday.
Toyota has said it would bring back a former senior executive, Yoshimi Inaba, to lead its U.S. operations after he had left the company in 2007 to run an airport in Nagoya, near Toyota's headquarters.
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Thursday, May 14, 2009
Elliott Seeks Credit Swaps Payday in Failing Firms
(Bloomberg) -- Elliott Management Corp., the hedge fund that almost pushed the government of Peru into default in 2000, is now seeking to profit from the failure of distressed companies.
About 11 percent of Elliott’s $13 billion of assets were in so-called basis trades at the end of the first quarter, meaning it bought bonds and credit-default swaps that protect against losses on the debt, according to a report dated April 29 sent to investors and obtained by Bloomberg News.
“These trades are among the most interesting arbitrage trades in our book, and they are especially attractive given their extra profitability in the event of default of the underlying referenced obligation,” Elliott said in the letter.
New York-based Elliott, founded by Paul Singer in 1977, joins Deutsche Bank AG and Citadel Investment Group LLC in seeking to make money from the trades, pitting them against traditional creditors as defaults reach the highest since 2002.
Elliott has a bet on Clear Channel Communications Inc., which Moody’s Investors Service said will likely need to restructure its debt this year, potentially making it harder for the largest U.S. radio broadcaster to skirt bankruptcy because some of its creditors stand to profit from its failure.
‘Easy Decision’
“Investors will hold out if they would benefit more if there’s a default than a successful distressed debt exchange,” said Kingman Penniman, president of high-yield research firm KDP Investment Advisors in Montpelier, Vermont. “It’s an easy decision to say ‘No’ and put the company into bankruptcy.”
Credit-default swaps were created by JPMorgan Chase & Co. more than a decade ago to hedge against losses from bank loans. They pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent.
Hedge funds, insurance companies and asset managers are now using them to speculate on the creditworthiness of companies, sending the amount of contracts outstanding to $28.2 trillion as of May 8, according to the Depository Trust & Clearing Corp., which runs a central registry that captures most trading.
At least 32 companies including newspaper publisher Gannett Co. and department store owner Saks Inc. had more credit-default swaps outstanding than the bonds the contracts protected, according to a March study by Garman Research LLC.
“Investors are no longer quite as hostage to the companies to whom they lend,” said Christopher Garman, chief executive officer of the Orinda, California-based debt research firm.
Contracts Outstanding
A net $2 billion of protection was outstanding against a default by San Antonio, Texas-based Clear Channel as of May 1, according to the DTCC. The broadcaster has about $6.6 billion of bonds and more than $15 billion of senior secured debt.
Elliott holds Clear Channel loans, which it has hedged with credit-default swaps, and also has a basis trade on the broadcaster, according to the letter. The details on the firm’s holdings are dated March 31.
“Elliott, along with many other financial institutions, uses basis arbitrage as a trading and hedging tool to generate a current yield plus additional profits in the event of market normalization or default,” the firm said in a statement. “Elliott’s consistent performance is attributable, in part, to its history of success in hedging its portfolio.”
Jennifer Gery-Egan, a Clear Channel spokeswoman, declined to comment on the company’s financial health in an e-mail.
CreditSights Inc. and Barclays Capital analysts have cited the rise in basis trades for restructuring attempts that floundered. Residential Capital LLC faced bondholder resistance to its debt-exchange proposal in December partly because the investors also held derivatives, Bradley Rogoff, an analyst at Barclays in New York, said in a report that month. Minneapolis- based mortgage lender ResCap was later bailed out by taxpayers.
Gannett’s Attempt
Gannett, the publisher of USA Today, may have fallen short of its goals to reduce debt maturing in 2011 and 2012 in part because “a large percentage” of bondholders had bought credit- default swaps tied to the debt, CreditSights analysts said in a May 6 report. Citigroup Inc. analysts led by John Fenn in New York recommended investors buy McLean, Virginia-based Gannett’s bonds and credit-default swaps.
Frankfurt-based Deutsche Bank and hedge fund Citadel of Chicago were among the firms that piled into basis trades last year as the gap between the two markets began to widen. The difference expanded to a record after the collapse of Lehman Brothers Holdings Inc., leading to losses.
The basis has since converged, allowing investors to recoup some of their losses or earn profits for those that did the trades after the Lehman failure.
Deutsche Bank made money by owning debt and credit swaps of Lyondell Chemical Co., a Houston-based oil refiner and chemical producer that went bankrupt in January, according to a person with direct knowledge of the firm’s trading.
Read more here
About 11 percent of Elliott’s $13 billion of assets were in so-called basis trades at the end of the first quarter, meaning it bought bonds and credit-default swaps that protect against losses on the debt, according to a report dated April 29 sent to investors and obtained by Bloomberg News.
“These trades are among the most interesting arbitrage trades in our book, and they are especially attractive given their extra profitability in the event of default of the underlying referenced obligation,” Elliott said in the letter.
New York-based Elliott, founded by Paul Singer in 1977, joins Deutsche Bank AG and Citadel Investment Group LLC in seeking to make money from the trades, pitting them against traditional creditors as defaults reach the highest since 2002.
Elliott has a bet on Clear Channel Communications Inc., which Moody’s Investors Service said will likely need to restructure its debt this year, potentially making it harder for the largest U.S. radio broadcaster to skirt bankruptcy because some of its creditors stand to profit from its failure.
‘Easy Decision’
“Investors will hold out if they would benefit more if there’s a default than a successful distressed debt exchange,” said Kingman Penniman, president of high-yield research firm KDP Investment Advisors in Montpelier, Vermont. “It’s an easy decision to say ‘No’ and put the company into bankruptcy.”
Credit-default swaps were created by JPMorgan Chase & Co. more than a decade ago to hedge against losses from bank loans. They pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent.
Hedge funds, insurance companies and asset managers are now using them to speculate on the creditworthiness of companies, sending the amount of contracts outstanding to $28.2 trillion as of May 8, according to the Depository Trust & Clearing Corp., which runs a central registry that captures most trading.
At least 32 companies including newspaper publisher Gannett Co. and department store owner Saks Inc. had more credit-default swaps outstanding than the bonds the contracts protected, according to a March study by Garman Research LLC.
“Investors are no longer quite as hostage to the companies to whom they lend,” said Christopher Garman, chief executive officer of the Orinda, California-based debt research firm.
Contracts Outstanding
A net $2 billion of protection was outstanding against a default by San Antonio, Texas-based Clear Channel as of May 1, according to the DTCC. The broadcaster has about $6.6 billion of bonds and more than $15 billion of senior secured debt.
Elliott holds Clear Channel loans, which it has hedged with credit-default swaps, and also has a basis trade on the broadcaster, according to the letter. The details on the firm’s holdings are dated March 31.
“Elliott, along with many other financial institutions, uses basis arbitrage as a trading and hedging tool to generate a current yield plus additional profits in the event of market normalization or default,” the firm said in a statement. “Elliott’s consistent performance is attributable, in part, to its history of success in hedging its portfolio.”
Jennifer Gery-Egan, a Clear Channel spokeswoman, declined to comment on the company’s financial health in an e-mail.
CreditSights Inc. and Barclays Capital analysts have cited the rise in basis trades for restructuring attempts that floundered. Residential Capital LLC faced bondholder resistance to its debt-exchange proposal in December partly because the investors also held derivatives, Bradley Rogoff, an analyst at Barclays in New York, said in a report that month. Minneapolis- based mortgage lender ResCap was later bailed out by taxpayers.
Gannett’s Attempt
Gannett, the publisher of USA Today, may have fallen short of its goals to reduce debt maturing in 2011 and 2012 in part because “a large percentage” of bondholders had bought credit- default swaps tied to the debt, CreditSights analysts said in a May 6 report. Citigroup Inc. analysts led by John Fenn in New York recommended investors buy McLean, Virginia-based Gannett’s bonds and credit-default swaps.
Frankfurt-based Deutsche Bank and hedge fund Citadel of Chicago were among the firms that piled into basis trades last year as the gap between the two markets began to widen. The difference expanded to a record after the collapse of Lehman Brothers Holdings Inc., leading to losses.
The basis has since converged, allowing investors to recoup some of their losses or earn profits for those that did the trades after the Lehman failure.
Deutsche Bank made money by owning debt and credit swaps of Lyondell Chemical Co., a Houston-based oil refiner and chemical producer that went bankrupt in January, according to a person with direct knowledge of the firm’s trading.
Read more here
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