A Couple of Updates on a Couple of Lawsuits

This wouldn't be America if everybody wasn't suing everybody else. Apparently,CCU took its bankers to court to try to force them to provide the financing for the private equity deal that appeared to be on the ropes yesterday. The Texas judge has issued an order barring the banks from taking steps that would "interfere or thwart" the closing of the $19.5 billion deal. This is a blow for the bankers who are now on the hook for providing financing at 2007 spreads. The banks (including Citibank, Morgan Stanley, Credit Suisse, Royal Bank of Scotland, Deutsche Bank and Wachovia) will be highly unlikely to sell these loans in the current market environment for anything resembling close to par if there is a bid at all. What they will have to do if the deal goes forward is hold the loans on their books. It is my understanding that leveraged loans are currently trading at around .80 in the market and I'm not even sure if it's possible to sell $20 billion currently. A little math shows an instant loss of $4 billion for the banks. Just what they need. Most assets to carry and more losses.

In happier news, RMBS won the memory-chip trial that went to jury yesterday (see story below "for those with a strong stomach".) The stock managed a nice rally of around $6.5 after the verdict was announced. While that was more than the 25% rally that I predicted, I still give myself bonus points for pointing out the opportunity to my faithful readers. Who needs readers when you can congratulate yourself?