Ahead of the big IPO, Dow was up 19, advancers ahead of decliners 4-3 & NAZ gained 2. The Financial Index fell a fraction to the 186s, another new 3 month low.. The MLP index was even while the REIT index rose 1 to the 246s. Junk bond funds rose & Treasuries were mixed to lower. Oil continue its month long slide but gold found more buyers on growing Euro debt worries.
The 1 day-old Parliament in Greece is set to be dissolved to allow for new elections next month. Inconclusive elections on May 6 left squabbling politicians unable to form a gov, deepening a political crisis & giving strength to radical parties that reject the terms of country's intl bailout. In a symbolic move, the 300 legislators elected May 6 were sworn in for just one day, including 21 lawmakers from the far-right Golden Dawn party. A caretaker gov will lead Greece until the new election expected on Jun 17, but it can't make any binding decisions. German Chancellor Merkel spoke with Greek President Papoulias today to underscore EU hopes that a gov emerges from the Jun 17 poll with a strong mandate. "We're awaiting the results of these elections and it's the wish of all European partners and the (German) government that a government capable of taking decisions in Greece should be formed as quickly as possible after the elections," said a German gov spokesman. With a gov unable to make binding decisions until the elections, all eyes will be on Germany & other European leaders for signs that they will prove flexible in their demands for the new cuts next month &, more broadly, in Greece's bailout terms.
Greece to Dissolve Parliament for New Election
Photo: Bloomberg
The Spanish gov bank channeling aid to cash-strapped regions can keep a lid on its funding bill by tapping the ECB for loans that cost a fraction of the amount bond investors will charge. While Instituto de Credito Oficial (ICO) has sold 60% of the €20B ($25B) in bonds it planned to issue in 2012, the lender is also able to use its banking license to access the ECB’s facilities, allowing the institution to access money at 1%, compared with a cost of more than 5% from investors for its 3-year debt. “Like any other bank, the ICO can pledge loans as guarantees to obtain Bank of Spain funding,” Antonio Cordero, head of the ECB treasury said. “Potentially most of our balance sheet is eligible.” ICO, a gov development bank created in the 1970s, has become the main tool used by Prime Minister Rajoy to bolster regional finances as he struggles to meet Spain’s 2012 budget-deficit target. The institution’s access to the ECB shows the reach of emergency measures that pumped more than €1T into the area’s banking system. “We have €5B of prefunding from 2011, & we have a banking license & access to so-called non-conventional funding,” Cordero said. “As efficient managers we try to take advantage of the best opportunities markets offer.” ICO also stands to benefit from a decision by the ECB in Feb to widen the list of assets elligible for collateral by 7 central banks including the Bank of Spain. ICO’s €3B of 3.75% bonds due 2015 yield 5.2% which compares with a 1% rate the ECB applies to most of its loans including the €1T of 3-year financing provided in 2 rounds in Dec & Feb. That sounds like a bailout to me.
Facebook (FB) & its shareholders intend to raise $16B with its IPO shortly, the largest IPO by far for an internet company. The amount comes from shares sold by FB & early investors, 421M shares @ $38 per share. Additional shares, known as an overallotment, have been set aside if demand is heavy which could raise the IPO value to $18.4B. The IPO price gives FB an initial market value of $104B, larger than the $92B for McDonald's (MCD) which is a Dow stock & Dividend Aristocrat. Below are the others in the top 10 internet IPOs, according to Renaissance Capital:
Google - Aug 18, 2004, $1.7B.
Yandex- May 23, 2011, $1.3B.
Infonet Services (now part of BT Group) - Dec 15, 1999, $1.08B.
Shanda Games - Sep 24, 2009, $1.04B.
Zynga - Dec. 15, 2011, $1B.
Giant Interactive Group - Oct 31, 2007, $887M.
Renren - May 3, 2011, $743M.
Groupon - Nov 3, 2011, $700M.
Orbitz Worldwide - Jul 19, 2007, $510.
All-time top 10 IPOs for Internet companies AP
At this point, the markets are biting fingernails, waiting for the big IPO. With all the attention & hype, it should get a big pop out of the gate. But longer term, say next week, the outlook is less certain. Past sexy IPOs (especially internet related) have mixed post records & that's being kind. Until the stock is released, there will be very little going on in the markets. The first trades are just out at $43, up $5. Let's see how that plays out by day's end.
JPMorgan Chase Capital XVI (AMJ)
Treausury yields:
U.S. 3-month | 0.081% | |
U.S. 2-year | 0.298% | |
U.S. 10-year | 1.724% |
| CLM12.NYM | ...Crude Oil Jun 12 | ...91.84 | ..... 0.72 | (0.8%) |
| GCK12.CMX | ...Gold May 12 | ....1,590.80 ... |  16.30 | (1.0%) |
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The 1 day-old Parliament in Greece is set to be dissolved to allow for new elections next month. Inconclusive elections on May 6 left squabbling politicians unable to form a gov, deepening a political crisis & giving strength to radical parties that reject the terms of country's intl bailout. In a symbolic move, the 300 legislators elected May 6 were sworn in for just one day, including 21 lawmakers from the far-right Golden Dawn party. A caretaker gov will lead Greece until the new election expected on Jun 17, but it can't make any binding decisions. German Chancellor Merkel spoke with Greek President Papoulias today to underscore EU hopes that a gov emerges from the Jun 17 poll with a strong mandate. "We're awaiting the results of these elections and it's the wish of all European partners and the (German) government that a government capable of taking decisions in Greece should be formed as quickly as possible after the elections," said a German gov spokesman. With a gov unable to make binding decisions until the elections, all eyes will be on Germany & other European leaders for signs that they will prove flexible in their demands for the new cuts next month &, more broadly, in Greece's bailout terms.
Greece to Dissolve Parliament for New Election
Photo: Bloomberg
The Spanish gov bank channeling aid to cash-strapped regions can keep a lid on its funding bill by tapping the ECB for loans that cost a fraction of the amount bond investors will charge. While Instituto de Credito Oficial (ICO) has sold 60% of the €20B ($25B) in bonds it planned to issue in 2012, the lender is also able to use its banking license to access the ECB’s facilities, allowing the institution to access money at 1%, compared with a cost of more than 5% from investors for its 3-year debt. “Like any other bank, the ICO can pledge loans as guarantees to obtain Bank of Spain funding,” Antonio Cordero, head of the ECB treasury said. “Potentially most of our balance sheet is eligible.” ICO, a gov development bank created in the 1970s, has become the main tool used by Prime Minister Rajoy to bolster regional finances as he struggles to meet Spain’s 2012 budget-deficit target. The institution’s access to the ECB shows the reach of emergency measures that pumped more than €1T into the area’s banking system. “We have €5B of prefunding from 2011, & we have a banking license & access to so-called non-conventional funding,” Cordero said. “As efficient managers we try to take advantage of the best opportunities markets offer.” ICO also stands to benefit from a decision by the ECB in Feb to widen the list of assets elligible for collateral by 7 central banks including the Bank of Spain. ICO’s €3B of 3.75% bonds due 2015 yield 5.2% which compares with a 1% rate the ECB applies to most of its loans including the €1T of 3-year financing provided in 2 rounds in Dec & Feb. That sounds like a bailout to me.
Facebook (FB) & its shareholders intend to raise $16B with its IPO shortly, the largest IPO by far for an internet company. The amount comes from shares sold by FB & early investors, 421M shares @ $38 per share. Additional shares, known as an overallotment, have been set aside if demand is heavy which could raise the IPO value to $18.4B. The IPO price gives FB an initial market value of $104B, larger than the $92B for McDonald's (MCD) which is a Dow stock & Dividend Aristocrat. Below are the others in the top 10 internet IPOs, according to Renaissance Capital:
Google - Aug 18, 2004, $1.7B.
Yandex- May 23, 2011, $1.3B.
Infonet Services (now part of BT Group) - Dec 15, 1999, $1.08B.
Shanda Games - Sep 24, 2009, $1.04B.
Zynga - Dec. 15, 2011, $1B.
Giant Interactive Group - Oct 31, 2007, $887M.
Renren - May 3, 2011, $743M.
Groupon - Nov 3, 2011, $700M.
Orbitz Worldwide - Jul 19, 2007, $510.
All-time top 10 IPOs for Internet companies AP
At this point, the markets are biting fingernails, waiting for the big IPO. With all the attention & hype, it should get a big pop out of the gate. But longer term, say next week, the outlook is less certain. Past sexy IPOs (especially internet related) have mixed post records & that's being kind. Until the stock is released, there will be very little going on in the markets. The first trades are just out at $43, up $5. Let's see how that plays out by day's end.
Dow Industrials (INDU)
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