Read what others are saying about 24SEVEN Hear from real people who are experiencing real results! 24Seven Services Group has performed wide-الفوركس services for a diverse group of clients. On Wednesday Feb 7th 2007 HSBC issued a profit warning. It was the first in its 142 year history.
5 billion because one of its units, its sub prime lender, was in deep trouble. And so began the sub prime crisis. Today GE issued a profit warning and cut its dividend to share holders from 12 cents to 1 cent. It is only the third time since the Great Depression that GE has reduced its dividend in this way. 22 Billion charge because one of its units, its power unit, is in deep trouble. In 2007 the banks had flooded the global market with sub-prime loans. Today it is not the banking world which stands at the centre of the storm but the corporate world.
In the last years they have flooded the market with junk rated bonds. At the same time they are also burdened with high yielding, leveraged and covenant- lite loans. 2018 corporate junk bonds and leveraged loans. 2007 banks and SPVs funded by the banks. Where is this sub-prime corporate debt sitting today? Nearly half sits in Insurance Companies and Pension funds.
Given the close ties between insurance and pensions this is not a happy picture. They are admittedly still small compared to the still larger mutual funds but they are a choke and panic point. Merrill Lynch, Fortis bank, Morgan Stanley, HSBC, Barclays, Citi etc. Some companies are both sponsor and authorised participant.
And some of those banks are also the people who have extended the leveraged loans and revolving credit lines to GE and others. Something its banks may come to regret. Because as of today GE is now shut out of what is called the Commercial paper market which is essentially very short duration bonds. This means GE is now reliant for much of the cash flow it needs for day to day operations upon revolving credit from its banks. The same banks who also buy GE bonds to put into their ETFs. It is also trying to let interest rates rise. Taken together this is the Fed trying to bring to a much postponed end, the temporary and extraordinary measures brought in to deal with the little 2008 sub prime blip.