Thursday, September 25, 2008

Possible WaMu Suitors Reluctant To Absorb Bad Debts

According to the Wall Street Journal, SeekingAlpha.com, MarketWatch.com and others

WaMu is now in talks with private-equity groups. Apparently Washington Mutual (WM) has approached private-equity firms such as Carlyle and Blackstone (BX), to gauge their interest in a potential takeover, according to sources close to the companies.

Additionally, WaMu continues to explore other options, include a sale to another financial institution,
though Santander (STD) has now dropped out, and TD Bank (TD) seems largely uninterested. JP Morgan (JPM), Citigroup (C) and Wells Fargo (WFC) have conducted some due diligence, but are reluctant to absorb WaMu's loans. This morning, Fitch noted there is an increased likelihood of a partial sale - leading to greater uncertainty for debt holders.
WaMu, which has 2,300 branches, has a 98 percent chance of defaulting on its debt over the next five years, according to credit-default-swap traders.


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