48.82 0.00 (0.00%)
After hours: 5:40PM EDT
|Bid||48.75 x 900|
|Ask||48.82 x 1800|
|Day's range||48.70 - 49.37|
|52-week range||27.20 - 57.57|
|Beta (5Y monthly)||1.49|
|PE ratio (TTM)||10.14|
|Earnings date||16 Jul 2020 - 20 Jul 2020|
|Forward dividend & yield||1.40 (2.93%)|
|Ex-dividend date||29 Apr 2020|
|1y target est||51.30|
(Bloomberg) -- Converge Information and Communications Technology Solutions Inc., a fast-growing Philippine provider of fixed broadband services, aims to raise as much as $725 million in a maiden share sale in October.The company will use the proceeds to fund capital expenditure and help accelerate its nationwide fiber network rollout, according to a preliminary prospectus filed with the Philippine SEC.“The Philippine fixed broadband market is currently at an inflection point, with demand for broadband subscriptions expected to increase as supply continues to meet the significant latent demand,” Converge’s investor Warburg Pincus said in a statement.Morgan Stanley, UBS Group AG, BDO Unibank Inc., Bank of the Philippine Islands will arrange the share sale, confirming a Thursday report by Bloomberg. At its maximum size, Converge ICT’s maiden share sale would be the largest Philippine IPO.Other Highlights:The plan is to sell as many as 1.30 billion shares with 195.19 million shares over-allotment option at a maximum price of 24 pesos each. Offer period will be from Oct. 13 to 19 and listing on Oct. 26Shares to be sold will comprise 415.68 million primary shares and 1.08 billion secondary shares by Comclark Network and Technology Corp. and Coherent Cloud Investments B.V.Converge added about 60,000 new residential subscribers in June, beating the record 50,000 set in May and bringing total home subscribers to about 750,000Its fiber network of more than 30,000 kilometers could reach about 4.1 million homes in the main island of Luzon as of March 31The Philippines’ fixed broadband penetration is significantly behind regional peers at 14% overall and only 6% on high-speed broadbandStory Link: Converge ICT Seeks to Raise $725m in Largest Philippine IPOFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Kyle Dennis took a leap of faith and decided to invest his savings of $15K in the stock market — $2.8M later, he owes his success to these strategies
(Bloomberg) -- The Chinese company behind the fast-growing Perfect Diary cosmetics brand has picked Goldman Sachs Group Inc. and Morgan Stanley to prepare for a potential initial public offering, according to people familiar with the matter.Guangzhou Yatsen E-Commerce Co., or Yatsen Global as it is known, aims to raise $400 million to $500 million in an offering, which could happen as soon as the end of this year, the people said. It has been considering Hong Kong among potential listing venues though no final decision has been made, said the people, asking not to be identified as the matter is private.Yatsen raised about $100 million in its latest funding round earlier this year, valuing the firm at about $2 billion, the people said. Tiger Global Management, Hopu Investment Management, Hillhouse Capital and Hony Capital are among its backers, according to its website.The founders started the cosmetic company in 2016, naming it after their alma mater which commemorates China’s first president Sun Yat-sen. The firm has developed over 700 beauty products and now has more than 25 million online followers. It plans to increase the number of Perfect Diary stores to more than 600 by 2022, up from 40 in 2019. In June, Yatsen launched its second brand, Abby’s Choice, featuring skincare, makeup and other products aimed at a female young adult demographic.Preparations for the IPO are at an early stage and details including size and timing could change, the people said. Representatives for Goldman Sachs, Morgan Stanley and Yatsen Global declined to comment.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Lemonade Inc., the online home insurance provider backed by SoftBank Group Corp., is set to raise $319 million in its U.S. initial public offering.The company will sell 11 million shares at $29 apiece, Lemonade said in a filing, confirming an earlier Bloomberg News report. It was marketing 11 million shares at $26 to $28 each after boosting the range from $23 to $26, according to filings with the U.S. Securities and Exchange Commission.At $29, Lemonade would have a market value of $1.6 billion, based on the number of shares outstanding listed on its IPO filings.SoftBank led a $300 million funding round in Lemonade last year, valuing the company at $2.1 billion at the time, Bloomberg News previously reported. SoftBank will own a 21.8% stake in the company upon the IPO, the filing shows. Sequoia Capital Israel and General Catalyst are also among backers.Lemonade has yet to turn profitable since its inception in 2015, it said in its prospectus. It reported a $36.5 million net loss in the three months ended March compared to a net loss of $21.6 million during the same period last year. Its sales have more than doubled in that period.The company allows customers to buy insurance policies on a mobile app after answering several questions. It also pledges to donate the leftover funds, after expenses, to a charity in order to discourage fraudulent claims.While the company is headquartered in New York, it has roots in Israel and it has 123 full-time employees there, its filing showed.Goldman Sachs Group Inc., Morgan Stanley, Allen & Co. and Barclays Plc are leading the offering. Citadel Securities is the designated market maker for the listing.Lemonade will list on the New York Stock Exchange Thursday under the symbol LMND.(Updates with details from statement in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Morgan Stanley Family Office Resources today announced the launch of a new Single Family Office Best Practices report. In response to the ten-fold increase in the number of family offices since 2008, the report provides a broad discussion of best practices that address the key questions Morgan Stanley single family office clients raise most often. The report was conducted by the Firm’s Single Family Office Advisory team in collaboration with Morgan Stanley Wealth Management professionals, including the Family Office Resources team, single family office executives, and the network of preferred providers in the Morgan Stanley Signature Access program.
Supported by a strong liquidity position, Morgan Stanley (MS) seems well-poised to be able to maintain its current dividend payment in the near term even if the economic situation worsens.
(Bloomberg) -- The value of mergers and acquisitions fell 50% in the first half from the year-earlier period to the lowest level since the depths of the euro-zone debt crisis, as the coronavirus pandemic brought global dealmaking to an abrupt halt.Every region was hit by the economic impact of Covid-19, which gripped markets in March and sparked countrywide lockdowns. This situation has made face-to-face meetings, a lifeblood of M&A, all but impossible. Little more than $1 trillion of deals have been announced this year, making for the slowest first half since 2012, according to data compiled by Bloomberg.The sharpest fall has been in the Americas, where the value of deals is down 69% in the first half. While every major industry has been hurt, the financial sector fared better than most. It was boosted by insurance brokerage Aon Plc’s $30 billion offer for Willis Towers Watson Plc and Morgan Stanley’s proposed $13 billion acquisition of E*Trade Financial Corp. The top three advisers on deals targeting the Americas so far in 2020 were Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co., the Bloomberg-compiled data show.Deals involving targets in Europe, the Middle East and Africa are down 32%. Large transactions that helped prevent a more dramatic drop include the $19 billion leveraged buyout of Thyssenkrupp AG’s elevator unit by Advent International and Cinven. There was also a recent flurry of activity in the Middle East, including Abu Dhabi’s sale of a $10.1 billion stake in its gas pipeline network that ranks as the biggest infrastructure transaction of the year. Goldman Sachs, JPMorgan and Rothschild & Co. were the busiest advisers on EMEA deals.Asia Pacific has held up better, with overall volumes falling just 7% and most sectors seeing smaller declines than in other parts of the world. The technology, media and telecommunications industry reported a 13% increase, helped by Indian billionaire Mukesh Ambani’s digital arm attracting $15 billion of investments from the likes of Facebook Inc. and KKR & Co. Another landmark transaction was Tesco Plc’s sale of Asian businesses to Thai billionaire Dhanin Chearavanont for more than $10 billion. The most active banks on deals in the region were Morgan Stanley, HSBC Holdings Plc and JPMorgan.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
On June 25, 2020, the Board of Governors of the Federal Reserve System released its CCAR 2020 results and notified Morgan Stanley (NYSE: MS) that it will be subject to a Stress Capital Buffer (SCB) of 5.9% from October 1, 2020 to September 30, 2021. Together with other features of the regulatory capital framework, this SCB results in an aggregate U.S. Basel III Standardized Approach Common Equity Tier 1 (CET1) ratio of 13.4%. The Firm’s U.S. Basel III Standardized Approach CET1 ratio was 15.7% as of March 31, 2020.
Morgan Stanley (NYSE: MS) is pleased to announce $10 million in grants to support the National Urban League (NUL) and expand a number of critical initiatives in communities where the Urban League operates. The funds will support the following initiatives:
Not everyone in the market is buying hand over fist. Interactive Brokers founder and chairman Thomas Peterffy joins Yahoo Finance to discuss markets.
The Fed will bar big banks from increasing their dividend payments, following the central bank’s annual stress tests that included a “sensitivity” analysis incorporating the impact of the COVID-19 crisis.
(Bloomberg Opinion) -- It’s hard to think of a less sympathetic group during the coronavirus pandemic than hedge funds and other firms that buy distressed assets and companies. They’re colloquially referred to as “predators” or “vultures” for a reason, after all. These investors step in when the outlook appears bleakest — and they have all the power — to lock in potentially huge returns in exchange for a cash infusion.Still, one recurring theme of the current economic crisis is how the quick rebound in many financial markets has confounded distressed investors and left them looking flat-footed. I wrote in late March that the firms scrambling to launch credit funds might be too late by the time they finished raising money. Indeed, by mid-April, the average yield spread on junk-rated corporate bonds had fallen to 700 basis points from 1,100 basis points on March 23. A 1,000-basis-point spread is typically the benchmark for “distress.” In the span of weeks, the projected future return from buying risky credit was slashed drastically.That spread has since contracted further, to 575 basis points. A Bloomberg News headline this week declared “Fear Is All But Dead in Credit Markets” because of the Federal Reserve, noting that June is likely to be a record-setting month for speculative-grade corporate debt sales. Roughly 621 bonds from 324 issuers are trading at distressed levels, down from 1,896 issues from 892 companies three months ago. Even leveraged-loan prices have recovered to 91 cents on the dollar from as low as 76 cents in March. It was always possible this could be a painful but quick recession, inflicted intentionally in the interest of public health. But few thought it would be this short-lived.The Economic Policy Institute’s Josh Bivens wrote in a blog post this month that the Fed’s actions during this crisis came “mostly at the expense of financial predators,” citing Carnival Corp.’s huge bond sale earlier this year as an example:Hedge funder predators were looking to exploit a nonfinancial corporation that needed loans as it faced distress caused by a global pandemic and economic crisis, and the Fed intervened and offered the nonfinancial corporation a better deal. From my perspective, there are no presumptive good guys in distributive conflicts between nonfinancial capital and financial predators. But it’s not obvious to me why we should shove more firms like Carnival closer to bankruptcy — and threaten to extinguish even more jobs than have already been destroyed — just to allow hedge fund vultures to reap the benefits of having their predatory loans be Carnival’s only option.That’s a good argument against “liquidationists.” Sure, public pensions are among the biggest investors in hedge funds and distressed-debt strategies, so suppressing returns only makes it that much harder for states and cities to meet their obligations to retirees. But is a higher funded level worth inflicting punitive borrowing costs upon airlines, cruise-ship operators and hotels? To say nothing about the future job market in those industries? Probably not.For distressed investors, then, the solution is to find the markets that have been left to fend for themselves.Certainly, some are skeptical that the Fed can fend off corporate insolvencies forever. Philip Brendel, a senior credit analyst at Bloomberg Intelligence, compares the sharp rebound in recent months to a similar bounce in early 2008, which obviously didn’t last. There have been several high-profile corporate bankruptcies thus far, and 13 U.S. companies sought court protection last week, the most since May 2009. GNC Holdings Inc. became the latest casualty this week.Still, the most intriguing area might just be commercial real estate, or CRE. This is clear by looking at the infamous CMBX 6, a synthetic index tied to commercial mortgage backed securities that has been used for years by investors — and, more recently, by billionaire Carl Icahn — to bet on the future of shopping malls and other retailers. It lurched lower in early March, staged a comeback toward the end of that month with other risky assets, then tumbled to a new low in May before surging again in the three weeks through June 8.Here’s what the chart looks like. As far as recoveries go, it’s not quite a U, a V, or even a W:It goes without saying that for Icahn, who reportedly amassed a big short position on the CMBX 6 index in the final months of 2019, the trade has been a spectacular success; it has been quite the opposite for mutual funds on the other side. A trio of real-estate experts said last week that CRE is entering a “classic distress cycle,” with retail seen as the most risky, followed by offices. Earlier this month, S&P Global Ratings put 96 classes from 30 U.S. conduit CMBS deals on CreditWatch Negative, “mainly due to their higher exposure to loans secured by lodging or retail properties,” which raises the risk the speculative-grade classes “could experience monthly payment disruption or reduced liquidity.”This appears to be fertile ground for opportunistic investors with cash on hand who have a view on commercial real estate in a post-coronavirus world. Some firms seem to be trying to snuff out those perspectives. Earlier this month, Bloomberg News’s Gillian Tan reported that Shelter Growth Capital Partners LLC was exploring the sale of a U.S. CRE loan portfolio with a face value of $711 million split into four pools: performing senior loans, construction loans, performing mezzanine loans and hospitality loans. “The potential transaction is being explored in part to test the appetite of institutional investors such as real estate credit funds,” according to a person familiar with the talks.While anticipating the future value of malls, office buildings and hotels can seem to some like staring into the abyss, that’s precisely when sophisticated investors are supposed to shine. Consider that retail and tech data firm Coresight Research estimates that as many as 25,000 U.S. stores could close permanently this year, mostly in malls. That seems like a staggeringly high number and explains the crash in CMBX 6, but there’s a price at which about any investment starts to make sense. The fluctuations in the index at least suggest this remains a two-way market, unlike other assets perceived to be in the Fed’s control. It will be telling, for instance, if billionaire Sam Zell, who invests in troubled real estate, has changed his tune since early May, when he was content to sit on the sidelines. That was right around the time CMBX 6 reached its low. If Zell’s call about America’s reopening is correct — “the fact that these places may be open doesn’t necessarily mean that they’ll be doing business” — then assets tied to CRE might be in for another decline. So far in New York, only a trickle of finance workers are going back to the office, backing up a vision from Morgan Stanley Chief Executive Officer James Gorman in April that the bank will need “much less real estate.” It might take some time for deeper problems to emerge.Since lockdowns began, I’ve held the view that most predictions about the world after Covid-19 will probably turn out to be exaggerated. Commercial real estate is a tough call. Certainly, I’d think that any retailer or restaurant without an online strategy before March has one now, which could mean less focus on the brick-and-mortar space. And without question, businesses have developed more comprehensive work-from-home capabilities, which might mean less demand for office space in a handful of large cities.The trend is in a decidedly downward direction; the question is whether the price is right. If commercial real estate is one of the only distressed opportunities available, however, investors can’t afford to be too picky.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. offloaded a large chunk of its stake in wireless carrier T-Mobile US Inc. stake at a discount, cementing a series of transactions that could fetch as much as $20 billion for the Japanese investment giant.The Tokyo-based company raised $14.8 billion from a sale of T-Mobile shares to institutional investors, SoftBank said in a statement. The offering of 143.4 million shares was priced at $103 apiece, representing a 3.9% discount to T-Mobile’s record high closing price on Tuesday.SoftBank is set to raise another $4.1 billion through several related deals that will see shares sold to Marcelo Claure, a T-Mobile board member, and other investors, according to the statement Wednesday. The total proceeds would rise to $20 billion if so-called over-allotment options are exercised.The deals are part of SoftBank’s broader $42 billion push to unload assets to finance stock buybacks and pay down debt. Masayoshi Son, the company’s founder, is dealing with steep losses in his Vision Fund after writing down the value of investments in the sharing economy from WeWork to Uber Technologies Inc.T-Mobile’s controlling shareholder, Germany’s Deutsche Telekom AG, has also been granted the right to buy 101.5 million shares in the U.S. carrier currently held by SoftBank, according to the statement. The stake is worth about $10.9 billion based on Wednesday’s closing price. Deutsche Telekom can exercise its options to buy the stock up to June 2024, according to a T-Mobile filing.SoftBank will now turn its attention to other assets in its portfolio and may pursue an outright sale of part of its stake in e-commerce giant Alibaba Group Holding Ltd. Son has said $11.5 billion raised from issuing contracts to sell stock in the Chinese company was a first step toward unwinding more of its holdings. SoftBank also plans to sell a 5% stake in its Japanese wireless subsidiary.Read more: SoftBank to Sell Slice of T-Mobile in a $21 Billion DealSoftBank agreed to pay T-Mobile $300 million as part of the transaction and will cover all fees and expenses related to the deal. The company became a co-owner of T-Mobile with Deutsche Telekom after the carrier took over Sprint Corp. this year in a $26.5 billion merger.SoftBank “needs to further enhance its cash reserves,” the Japanese company said in a statement on Tuesday, citing concerns for “a second and third wave of spread of Covid-19.” The Japanese investment giant may invest the proceeds in high-quality securities until they are used for buybacks or debt reductions.The stock offering was overseen by Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., JPMorgan Chase & Co., Barclays Plc, Bank of America Corp., Deutsche Bank AG and Mizuho Financial Group Inc. PJT Partners Inc. served as financial adviser to T-Mobile’s board.(Updates with details of related transactions from third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp., under pressure to raise capital after record losses in its investment business, is unloading part of its stake in wireless carrier T-Mobile US Inc. in a $21 billion deal.The transaction, along with a plan to sell a 5% stake in its Japanese wireless subsidiary, is part of a broader $42 billion push by SoftBank to unload assets to finance stock buybacks and pay down debt. Masayoshi Son, the company’s founder, is dealing with steep losses in his Vision Fund after writing down the value of investments in the sharing economy from WeWork to Uber Technologies Inc.SoftBank’s shares gained as much as 3% in Tokyo. The Japanese investment giant will now turn its attention to other assets in its portfolio and may pursue an outright sale of part of its stake in Chinese e-commerce giant Alibaba Group Holding Ltd. Son has said $11.5 billion raised from issuing contracts to sell stock in Asia’s largest corporation was a first step toward unwinding more of its holdings.SoftBank “needs to further enhance its cash reserves,” the Japanese company said in a statement on Tuesday, citing concerns for “a second and third wave of spread of Covid-19.” The company may invest the proceeds in high-quality securities until they are used for buybacks or debt reductions, it added.Read more: SoftBank Wraps Up $4.7 Billion Share Buyback in Three MonthsThe Japanese company is trying to shore up a balance sheet devastated by writedowns that triggered a record 1.9 trillion yen ($18 billion) loss last fiscal year at the Vision Fund. As concerns about investments mounted, Son responded with share repurchases in rapid succession, completing a $4.7 billion buyback program in just three months.As part of a complex series of transactions unveiled Tuesday, T-Mobile will hold a public offering of 133.5 million shares of its common stock, the carrier said in a statement. It also will grant the underwriters 10 million shares. Additionally, T-Mobile intends to sell as many as 30 million common shares to a Delaware statutory trust.Five million shares will be sold to an entity controlled by Marcelo Claure, a SoftBank executive and T-Mobile board member, with funding coming from SoftBank. And T-Mobile will have the right to buy almost 20 million shares. Altogether, as many as 198.3 million shares owned by SoftBank will be transferred.SoftBank secured the stake in T-Mobile US just this year, after U.S. regulators approved the American wireless carrier’s $26.5 billion takeover of Sprint Corp. T-Mobile’s market value is about $132 billion.Read more: SoftBank’s Vision Fund Loses $17.7 Billion on WeWork, Uber (2)T-Mobile stock closed at $106.60 Monday in New York, putting the value of the 198 million shares at about $21 billion. They had been up 36% this year through Monday’s close.Both companies had said earlier they are discussing a possible deal. Even before the transaction, Deutsche Telekom AG was the controlling shareholder of T-Mobile due to how voting rights were structured following the Sprint deal.The stock offering, due to trade June 24, will be overseen by Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., JPMorgan Chase & Co., Barclays Plc, Bank of America Corp., Deutsche Bank AG and Mizuho Financial Group Inc. PJT Partners served as financial adviser to T-Mobile’s board. SoftBank said it will pay T-Mobile $300 million as part of the transaction and will cover all fees and expenses related to the deal.(Updates with SoftBank’s shares from the third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
A Maryland multimillionaire says the biggest legal transfer of wealth in American history has just gotten underway—here’s #1 step you must take.
Morgan Stanley, TruFund Financial Services and the Ford Foundation today announced the launch of the Impact Developers Fund. The $26 million fund will provide much needed capital to emerging impact businesses that lack access to adequate affordable capital, including minority and women owned real estate development companies, expanding their capacity to build, own and operate quality affordable housing and to provide value-adding social services to enhance residents’ quality of life. The fund will also provide custom capital solutions, including debt and equity, tailored to the needs and capacity of the business.
(Bloomberg) -- Markus Braun’s almost two decades as Wirecard AG’s chief executive officer ended after accusations about the company’s accounting culminated in a shock disclosure that it was unable to locate 1.9 billion euros ($2.1 billion).James Freis has been appointed interim CEO, the German payments company said in a short statement Friday. A recent hire and former compliance executive at Deutsche Boerse AG, Freis was only named as a member of the management board on Thursday.Braun’s exit comes after a catastrophic few days for Wirecard, which suffered a share price collapse after the two Asian banks that were alleged to be holding the missing cash denied any business relationship with the company.Read More: Germany’s Fintech Star Falls on Failure to Clean Up WirecardWirecard is now facing a potential cash crunch. The company warned Thursday that loans of as much as 2 billion euros could be terminated if its audited annual report is not published on Friday. Analysts at Morgan Stanley estimated that Wirecard has available cash of around 220 million euros if it cannot locate the missing $2.1 billion.Wirecard’s lenders are considering hiring outside help as they seek to navigate the risk of a potentially massive default, a person familiar with the matter said.Named CEO in 2002, Braun has put tens of millions of euros of his own funds into the firm. The value of his stake, which once made him a paper billionaire, has dwindled in the course of the rout.His replacement is stepping into an almost unprecedented situation. Freis wasn’t supposed to join until July, when he was going to be responsible for a newly created department called “Integrity, Legal and Compliance.”Freis was previously head of compliance at Deutsche Boerse AG, and held the position of Director of the U.S. Treasury Department’s Financial Crimes Enforcement Network, where he was responsible for the regulation of financial institutions.The interim CEO will need to quickly reassure Wirecard’s business partners. Wirecard has licenses with Visa, Mastercard and JCB International, through which Wirecard’s banking arm issues its credit cards. If Wirecard is unable to find its missing cash, Visa and Mastercard may have cause to revoke the licenses.“The big question is whether they retain the Visa and Mastercard licenses,” Neil Campling, analyst at Mirabaud said. “Without those they have no business.”Mastercard said it is following the developments at Wirecard but did not want to comment on specific customer conversations or situations. Visa did not have an immediate comment.Missing CashWirecard claimed on Thursday that auditor Ernst & Young couldn’t confirm the location of the missing cash that was supposed to be held at two Asian banks and reported that “spurious balance confirmations” had been provided.The confusion deepened on Friday when BDO Unibank Inc., the Philippines’ largest bank by assets, and the Bank of the Philippine Islands, said on Friday that Wirecard isn’t a client.“It was a rogue employee who falsified documents and forged the signatures of our officers,” BDO Unibank CEO Nestor Tan said in a mobile phone message. “Wirecard is not even a depositor -- we have no relationship with them.”A document purporting to show a link between Wirecard and the Bank of the Philippine Islands was “bogus” and may be part of an attempted fraud, the president of the Southeast Asian lender said in a phone interview.Wirecard shares plunged as much as 52% in Frankfurt on Friday. The selloff in Wirecard’s bonds also intensified, with the company’s 500 million-euro bonds maturing in 2024 falling a further 14 cents to trade at 24 cents. Its 900 million euros of convertible bonds are now indicated at less than 10 cents on the euro.Wirecard was worth 24.6 billion euros in September 2018 when it entered Germany’s Dax index, and widely considered as one of Germany’s few successful fintech stories. It was valued at about 2.4 billion euros on Friday morning.Wirecard spokespeople did not return calls and emails for comment.Historic SlumpWirecard’s reversal of fortune has caught its supporters off guard. Some of the company’s most loyal shareholders are now dumping their stakes as allegations of accounting impropriety engulf the German payments company. Analysts are also quickly changing their recommendations, despite continued concerns about the company’s accounting.As of Wednesday, 10 out of 25 analysts tracked by Bloomberg recommended buying the stock. Since then, at least nine analysts have removed their recommendations and three have downgraded the stock to sell.German financial markets regulator BaFin said it is also examining Wirecard’s disclosure on Thursday as part of its investigation into whether the company violated rules against market manipulation, according to a spokeswoman.BaFin has three investigations of Wirecard running: whether the company manipulated markets with its disclosures, whether Braun’s stock purchase ahead of the planned publication of the company’s annual report violated market abuse roles and whether the company and its management are fit to be the owners of a bank.Fraud ClaimsBraun has previously painted the company as a potential victim, resisting calls to resign and aggressively defending Wirecard against accusations of accounting fraud, led by a series of articles in the Financial Times.“It cannot be ruled out that Wirecard has been the victim in a substantial case of fraud,” Braun said in a statement published overnight.The company temporarily suspended its outgoing Chief Operating Officer Jan Marsalek, it said in a statement late Thursday. Marsalek -- who has been suspended on a revocable basis until June 30 -- had tried to get in touch with the two Asian banks and trustees over the past two days to recover the missing money, but wasn’t successful, a person familiar with the matter said Thursday. It’s unclear if the funds can be recovered, the person added.German politicians are now asking how such a rapid collapse could happen to a fintech company that was once worth more than Deutsche Bank, and previously supported by local regulators. Early last year BaFin took the unprecedented step of temporarily banning short sales of Wirecard shares following reports of suspicious accounting practices.“Markus Braun’s resignation was overdue,” said Danyal Bayaz, a lawmaker with Germany’s Greens. “Wirecard is not a small fintech, but a DAX member.”(Updates with statement from Visa and the Bank of the Philippine Islands.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Wirecard AG has temporarily suspended its outgoing chief operating officer after revealing that auditors couldn’t find about 1.9 billion euros ($2.1 billion) in cash, spooking investors and casting doubt on the company’s leadership and survival.Jan Marsalek has been suspended on a revocable basis until June 30, the company said in a statement on Thursday. James Freis, who had already been tapped to lead the company’s new “integrity, legal and compliance” department starting next month, will begin in his role immediately. Marsalek was due to step down from the COO role to a new position in charge of business development, Wirecard said in May.The company suffered one of the worst stock slumps in the history of Germany’s benchmark index on Thursday after revealing that auditors had been unable to find billions of cash that was supposed to be held in Asian banks. The company warned loans of as much as 2 billion euros could be terminated if its audited annual report, delayed for the fourth time, was not published by Friday.Marsalek had tried to get in touch with the two Asian banks and trustees over the past two days to recover the missing money, but wasn’t successful, according to a person familiar with the matter. It’s unclear if the funds can be recovered, the person added. Marsalek couldn’t immediately be reached for comment.Ernst & Young was unable to confirm the location of the cash in certain trust accounts, and there was evidence that “spurious balance confirmations” had been provided, Wirecard said in a statement on Thursday. That’s about a quarter of the consolidated balance sheet total, the company said.“We are stunned,” said Ingo Speich, a fund manager at Deka Investments, a top 10 shareholder at the firm. “A new start in terms of personnel is more urgent than ever.”The escalating crisis also calls into doubt the future of Chief Executive Officer Markus Braun. The executive, also the company’s biggest shareholder, has been at the helm since 2002, building the company from a startup into a payment provider whose technology facilitates transactions around the world.Braun painted the company as a potential victim in a separate statement. The CEO has been resisting calls to resign and aggressively defending the company against accusations of accounting fraud, led by a series of articles in the Financial Times.“It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred,” said Braun, adding that the company will file a complaint against unnamed persons.In another statement published overnight, Braun said the trustee involved is in “constant contact” with EY and Wirecard and has promised to clear up the issue quickly with the two banks.“It cannot be ruled out that Wirecard has been the victim in a substantial case of fraud,” Braun said.The stock dropped as much as 71% to 29.90 euros in Frankfurt on Thursday, one of the biggest falls on record and the largest for a member of Germany’s prestigious 30-company DAX stock index. It later recovered somewhat to 39.90 euros, a decline of 62%. Wirecard’s bonds suffered a record plunge.Loan IssueWirecard warned loans up to 2 billion euros could be terminated if its audited annual report was not published by June 19. Analysts at Morgan Stanley estimated that Wirecard has available cash of around 220 million euros, if it cannot locate the missing $2.1 billion.“While we would expect Wirecard to seek covenant waivers, if the banks call 2 billion-euros of debt and that is mostly drawn, then we expect investor focus to turn to the balance sheet and liquidity,” said analysts at Morgan Stanley in a note on Thursday.Wolfgang Donie, analyst at NordLB, warned that the “overall situation at Wirecard can only be described as insupportable and the scandal is now becoming a crisis that is threatening the existence of the company.”German financial markets regulator BaFin said it is examining Wirecard’s disclosure on Thursday as part of its investigation into whether the company violated rules against market manipulation, according to a spokeswoman.In September 2018, Wirecard reached a market valuation of 24.6 billion euros, replacing Commerzbank AG in the DAX alongside titans such as Volkswagen AG, Siemens AG, and Deutsche Bank AG. Following Thursday’s collapse, the company is valued at around 6.7 billion euros.“Wirecard’s retreat could be terminal,” said Neil Campling, an analyst at Mirabaud Securities.EY told Wirecard that their results will require additional audits after two unnamed Asian banks that have been managing the company’s escrow were unable to find accounts with about 1.9 billion euros in funds, Wirecard said in an additional statement. Those funds had been set aside for risk management, the company said.Headquarters SearchedWirecard said last month that the latest delay in publishing results was due to EY needing more time to finish its review, and that the auditor hadn’t found anything material within the scope of its work. Wirecard had previously postponed the results while it was working with KPMG on a probe into allegations about accounting irregularities.Braun has aggressively fought against allegations that the company’s financials have been mismanaged. Braun has also resisted calls from activist investors TCI Fund Management Ltd. to step down, promising to regain investor confidence and improve compliance and control.Wirecard headquarters were searched in May by German prosecutors as part of a probe involving the company’s senior management.Wirecard said in February that full-year revenue rose about 38% to 2.8 billion euros while earnings before interest, taxes, depreciation and amortization jumped 40% to 785 million euros.(Updates with Braun statement from 10th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European stock markets are set to edge lower at the open Thursday, as the resurgence of Covid-19 infections raises concerns over the speed of the global economic recovery. At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.4% lower. France's CAC 40 futures were down 1.5%, while the FTSE 100 futures contract in the U.K. fell 1.5%.
He added that the rise of China and the decoupling of the U.S. from its trade partners is likely to end the supremacy of the dollar as the world’s reserve currency.
(Bloomberg Opinion) -- The collateralized loan obligation bogeyman is back.This time it comes in the form of a widely read article in The Atlantic, “The Looming Bank Collapse,” written by Frank Partnoy, a law professor who helped structure and sell CLOs and collateralized debt obligations at Morgan Stanley in the 1990s. CDOs, of course, were one of the key culprits behind the 2008 financial crisis. So, with the boom in CLOs during the last expansion, “we could be on the precipice of another crash, one different from 2008 less in kind than in degree,” Partnoy wrote. “This one could be worse.”Well, no. I don’t want to spend an entire column on a rebuttal (others already have), so suffice it to say I was skeptical when the big reveal was that Wells Fargo & Co.’s exposure to high-rated CLOs was described this way: “The total is $29.7 billion. It is a massive number. And it is inside the bank.” Never trust absolute dollar figures, no matter how large they may seem. As a percentage of total assets, that’s a mere 1.5%. And, remember, triple-A rated CLOs have famously never defaulted.The crucial question, then, is whether something is different this time. CLOs at their core are simply bundles of speculative-grade loans, sliced into different tranches, with the lower-rated portions suffering the first losses to protect payments to those invested in the top layer. One of the crucial assumptions behind CLOs is that because the debt is backed by companies of varying size and across disparate industries, the likelihood that all the securities would default at once is highly unlikely. That differentiates them from the CDOs of the past, which, in addition to being more complicated in structure, were exposed entirely to individual borrowers and just one part of the economy: the housing market.The Atlantic article poses this question, and goes on to give a hypothetical answer:Meanwhile, loan defaults are already happening. There were more in April than ever before. Several experts told me they expect more record-breaking months this summer. It will only get worse from there.If leveraged-loan defaults continue, how badly could they damage the larger economy? What, precisely, is the worst-case scenario?Rather than deal in hypotheticals, I prefer to turn to Moody’s Investors Service, which happened to publish an update on CLO credit quality late last week.Make no mistake, CLOs are under pressure. Moody’s has placed 77.3% of all U.S. CLO tranches rated B or lower on review for downgrade, along with about 60% of those rated Baa or Ba. A handful of those with the most significant deterioration in their underlying loans could even see their Aa rated portions downgraded. To some, that might seem too close to the triple-A tranche for comfort, even if it’s just 0.8% of the notional amount of the Aa debt.Still, a downgrade doesn’t equal a default. The fact that not a single top-rated slice is even at risk of a rating cut speaks volumes, considering they collectively make up more than 75% of the notional amount outstanding and are the portions sitting on banks’ balance sheets, both in the U.S. and elsewhere.Moody’s also casts doubt on whether it will get worse in the coming months. “In recent weeks, the pace of negative corporate rating actions has slowed as our reassessment of ratings based on the shock of the coronavirus and low oil prices has progressed,” analysts led by Peter McNally wrote on June 11. “After the current credit shock materialized in March 2020, the number of global negative rating actions peaked in late March and early April. More recently, these have declined steadily.”The worst-case scenario, as spelled out by Moody’s, isn’t as dire as it seems. The global 12-month trailing speculative-grade default rate will probably hit 9.5% by March 2021, up from 4.7% last month, and in its pessimistic forecast it’ll reach 16%, higher than at any point in the last 20 years. Drilling down deeper, Moody’s estimates the one-year default rate in the four industries most vulnerable to the coronavirus pandemic with the highest concentrations (on average 1% to 5%) in U.S. CLOs: hotel gaming and leisure, 17.5%; retail, 10.8%; automotive, 15.1%; and durable consumer goods, 15.1%. Obviously, the next 12 months will be painful for individual holders of those leveraged loans. Moody’s has long predicted that recoveries in a downturn will be lower than the historical average, with first-lien loans recouping closer to 61%, compared with the long-term rate of 77%, and second-lien debt will get just 14% compared with 43%. And, as I wrote last month, funds investing in the riskiest portions of CLOs have suffered a wipeout and haven’t benefited from the rebound in risky assets over the past two months.Whether speculators face losses is not the question at hand, however. It’s about financial giants like JPMorgan Chase & Co. and Citigroup Inc., two banks flagged as owning $35 billion and $20 billion of CLOs as of March 31, respectively. Setting aside that these are once again absolute numbers, even if Moody’s double-digit default rates over the next year come to pass, investment-grade tranches seem destined to come out unscathed. According to the credit-rating company’s analysis, the cumulative collateral default rate would have to reach 70% to 80% before double-A CLOs take losses, assuming a 60% recovery rate. DoubleLine Capital Chief Investment Officer Jeffrey Gundlach, for one, said on a webcast last week that middle-of-the-capital-structure CLOs were among his picks for most attractive assets, given that he sees a “significant march towards par in their future.” Certainly, every loan and CLO has its own quirks. Barclays Plc strategists flagged the bankruptcy plans of Acosta Inc. and J.C. Penney Co., which gave CLOs a recovery rate 20 to 30 points lower than other first-lien holders. The problem, they found, was that an aggressive approach from a small group of distressed investors can put CLOs at a disadvantage, in part because many quickly bail on the loans when they’re downgraded, and also because stated investment criteria largely ban purchases of defaulted assets or bridge loans. If this relative lack of flexibility takes a bite out of recovery rates time and again, Moody’s and others may have to reconsider their loss scenarios.Even still, it’s almost impossible given the evidence to extrapolate widespread losses to the biggest U.S. banks. The Atlantic’s hypothetical stipulates that “later this summer, leveraged-loan defaults will increase significantly,” which goes against the current outlook from Moody’s, and that “holders of leveraged loans will thus be fortunate to get pennies on the dollar as companies default.” Yes, the equity portions and speculative-grade tranches will face losses. They might even be wiped out entirely. That may seem like a novel concept when the Federal Reserve has taken to backstopping just about all forms of debt, but as S&P Global Ratings has said, that’s just CLOs “working as intended during periods of economic stress.”There are any number of reasons to fret about America’s recovery from the coronavirus crisis. A repeat financial collapse at the hands of a structured product with a similar sounding acronym isn’t one of them.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Morgan Stanley today declared a regular dividend on the outstanding shares of each of the following preferred stock issues:
(Bloomberg Opinion) -- If you’re going to take on a giant like Amazon.com Inc., it helps to have partners. Shopify Inc. just got a big one.Walmart Inc. said on Monday that it has partnered with e-commerce store software company Shopify Inc., offering its third-party marketplace as a channel for the upstart’s merchant base. Walmart executive Jeff Clementz told Bloomberg News the retailer plans to add 1,200 Shopify sellers this year, citing recent positive results from a test trial. He also expects thousands of Shopify merchants to be integrated onto the retailer’s marketplace over time. The executive said it will focus on adding U.S.-based small and medium businesses with good records of customer satisfaction to its platform that can also complement its current product assortment. On Monday, Shopify’s stock rose 5%, while Walmart shares were roughly flat.The announcement adds another major player to Shopify’s growing alliance against Amazon.com Inc.’s e-commerce dominance. Last month, I wrote how Shopify CEO Tobi Lutke has often said his company’s goal was to “arm the rebels” against the Amazon empire. The Walmart deal comes just weeks after Shopify signed a partnership with Facebook Inc. that allows Shopify’s merchants to sell on the social-media giant’s platforms under the newly launched Facebook Shops initiative. Before these moves, the aggregated online sales of Shopify’s U.S. customer base already ranked as the second-largest in the country after Amazon, according to the company. And now with Walmart on board and the expanded deal with Facebook, they mark significant steps to expand Shopify’s eco-system, making its platform a more viable and an attractive alternative to sellers. The battle for e-commerce leadership is especially important given the industry’s soaring sales in the era of Covid-19. Last month, Morgan Stanley analyst Brian Nowak said the trend toward e-commerce has been pulled forward by two years as consumers are preferring shopping online versus risking infection inside physical stores. Nowak predicts e-commerce penetration of U.S. retail sales will surge this year, rising to 23% versus 18% in 2019. In recent weeks, credit-card spending data for online shopping has stayed robust even as more states have re-opened their economies, pointing to a permanent shift of shopping behavior.The slew of Shopify partnerships may be coming at the right time for another reason as well: Amazon is increasingly getting scrutinized over its competitive practices. In April, The Wall Street Journal reported that Amazon employees used third-party seller data to develop its own competing products, actions the company has explicitly promised it wouldn’t do. And last week, Bloomberg News reported the European Union is preparing a formal complaint against Amazon, alleging the tech giant may be misusing data from third-party sellers on its platform.With more big players coalescing under Shopify’s banner, Amazon may finally be getting some serious competition in the e-commerce space. In turn, it will likely spur Amazon to do better, which is good news for all parties.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Wall Street is set to bounce back from Thursday’s sharp selloff, while oil has stabilised. The U.K. suffered a record drop in output in April, in the height of its lockdown, while Tesla’s stock is losing some investment banking friends after its meteoric rise. U.S. stock markets are set to surge Friday, rebounding after Thursday’s sharp selloff which has acted as a reality check given the strong gains on Wall Street over the last couple of months.
(Bloomberg) -- Palantir Technologies Inc., the secretive big-data firm, plans to file to go public in the coming weeks and could start trading as early as the fall, according to people familiar with the matter.The Palo Alto, California-based company is preparing to register an S-1 filing confidentially with the U.S. Securities and Exchange Commission, said the people, who asked to not be identified because the matter isn’t public.Palantir is working with bankers to organize a tender offer for private shareholders to help clean up its capital structure ahead of an initial public offering, the people said. It’s also working with an IPO readiness consultant, they said.Private investors last valued Palantir at $20 billion in 2015. It isn’t clear what valuation it may seek in an IPO. No final decision has been made and the company’s plans could still change, the people said.A representative for Palantir declined to comment.The potential IPO comes as Palantir expects to generate $1 billion in revenue this year and break even for the first time in its 16-year history, according to documents reviewed by Bloomberg.IPO ReboundU.S. IPOs have enjoyed a mini boom in the U.S. after coming to a near standstill when the coronavirus pandemic took hold in March. That includes companies such as ZoomInfo Technologies Inc., which last week raised $1.07 billion including the so-called greenshoe shares.Twenty-one IPOs have raised $6.8 billion in the past month, accounting for 44% of the total on U.S. exchanges this year, according to data compiled by Bloomberg.Co-founded by billionaire Peter Thiel, Palantir’s software mines troves of personal and commercial data and looks for patterns. The company, founded in 2003, got its start interpreting intelligence for the U.S. Central Intelligence Agency and the Pentagon and then moved on to banks, helping them watch for suspicious behavior. In-Q-Tel, the venture arm of the CIA, is a Palantir investor.Dozens of law enforcement and government agencies around the world use Palantir to compile and search for data on citizens with the intent of combating crime, hunting terrorists and in recent months, tracking the spread of Covid-19. The pandemic has boosted business, particularly with businesses using the products to help determine how to reopen.However, Palantir is highly controversial for the way its tools have been used to compromise privacy and enable excessive surveillance. Its use by police and immigration officials, in particular, has sparked numerous protests.IPO ResistedThe company had long resisted a public offering to avoid getting valued as a consultancy, and to stay out of the public eye as it worked toward profitability, people familiar with the matter have said.Its dependence on engineers customizing software for each client and bloated cost structure also resulted in consistent annual losses. That heightened the possibility that it wouldn’t be valued as a software company despite its Silicon Valley credentials.That changed last year, with customers using a new more automated product that has put Palantir on the path toward profitability.The company could go public within a year, Chief Executive Officer Alex Karp said in an interview with Axios Media on HBO last month.Palantir’s funders include Founders Fund, the venture capital firm started by Thiel. Other investors include Morgan Stanley, BlackRock Inc. and Tiger Global Management.PayPal, FacebookThiel, a co-founder of Pay PayPal Holdings Inc., has helped launch or advance Silicon Valley firms including Facebook Inc., where he has been a board member since 2004. Through Founders Fund, his influence has been extended to an array of technology companies.The billionaire has also served as an adviser to President Donald Trump, chastising other technology companies, in particular Alphabet Inc.’s Google, for their reluctance to work with the Defense Department.Palantir is in the process of expanding its board -- composed of Thiel and three other men -- to improve corporate governance and diversify perspectives. The company is interviewing candidates and intends to elect at least two independent members by the end of the year, people familiar with the matter said in April.(Revises description of Palantir’s tools and the controversy surrounding them starting in the 10th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Morgan Stanley (NYSE:MS) today announced $10 million in grants to Minority Depository Institutions (MDIs) including Industrial Bank of Washington, D.C., and Citizens Trust Bank of Atlanta, GA. These grants of $5 million to each MDI will allow the banks to bolster loan loss reserves to help weather the economic impact of COVID-19 in the wake of the pandemic. In addition, the grants will help the banks assist small businesses that were affected by COVID-19, particularly those that did not receive federal relief loans, and will support additional investments into technology systems to improve delivery of customer, mortgage and business lending services.
(Bloomberg) -- Russian technology firm Yandex NV is considering buying Uber Technologies Inc.’s stake in their joint ride-hailing unit instead of seeking an initial public offering of the division, according to two people familiar with the matter.The company that operates Russia’s largest internet-search engine and ride-hailing service wants to buy all of Uber’s 38% stake in Yandex.Taxi, said the people, who asked not to be named as the discussions are confidential. Uber valued its stake in the joint venture at $1.24 billion as of March 31. After February 2021, any transfer of the joint venture is subject to a right of first refusal in favor of Yandex, according to Uber.A spokesman for Yandex said the company is constantly reviewing different options to restructure ownership in its joint ventures and is open to discussions on this issue. A spokesperson for Uber declined to comment.Deliberations are at an early stage and may not lead to a transaction and Yandex could still pursue an IPO for the business in the future, the people said.The coronavirus pandemic has battered the taxi market, sending Uber and Lyft Inc. shares down and putting pressure on the valuation of other ride-hailing firms looking at IPOs. Against this backdrop, Yandex is looking at restructuring the venture given that its car-sharing business, currently not part of the Uber joint venture, may complement its taxi service, one of the people said.Uber merged its operations in Russia and neighboring countries with local leader Yandex in a deal that closed in February 2018 and valued the unit at $3.8 billion. The unit, legally known as MLU BV, last year attracted banks including Goldman Sachs Group Inc. and Morgan Stanley to assess a U.S. share sale. Discussions on the valuation of the business ranged from $5 billion to $8 billion, Bloomberg News reported in October.Yandex set up its ride-haling service in 2011 to add revenue streams beyond web advertising. Since the deal with Uber, Yandex.Taxi has expanded into other businesses such as food delivery and self-driving cars.The company said in April revenues in the division grew 49% in the first quarter, and it accounted for 24% of Yandex’s sales, even as it withdrew guidance for the whole company for this year amid uncertainty due to the pandemic.However, the Russian government’s measures to combat the spread of the coronavirus have hit demand for ride-hailing services. The company has recently invested in the business to improve affordability of taxi journeys and support drivers’ salaries, and ventured into grocery delivery.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.