Two clear signs today that we are not out of trouble. Goldman Sachs and TPG unloaded Alltel to Verizon six months after they took it private, with the banks that financed the deal taking a loss.
Alltel’s lenders — who, incidentally, include Goldman Sachs itself — have a strong desire to unwind the leveraged buyout quickly. The dislocation in the credit markets has made it hard for them to resell the Alltel debt at an acceptable price, and they are loath to keep it on their books for very long.
The deal is smart for Verizon as both wireless networks run on CDMA and Verizon uses the money to grow rather than paying a fat dividend to Vodafone, their 40% shareholder. Fairly soon Vodafone is going to get tired of being in a minority position and will finally sell their shares back to Verizon. That would be a good thing.
The other troubling sign for the big banks is that they are unloading billions of Condo and Land loans at 40 cents on the dollar.
Banks with swelling portfolios of troubled loans tied to land and housing are struggling to unload some of their real-estate debt. IndyMac Bancorp Inc., a Pasadena, Calif., lender, is trying to sell $540 million in loans made to finance land purchases and housing construction projects. Winning bids on many of the loans were, on average, about 60 cents on the dollar, according to people familiar with the matter. But some winning bids were only about 20 cents on the dollar.
Cleveland-based KeyBank, a unit of KeyCorp., is trying to unload $935 million in loans tied to land and residential developments, while Wachovia Corp. is shopping a $350 million loan portfolio, according to two people who have seen the offerings.
The first three months of 2008 marked the worst quarter for American homeowners in nearly 25 years, according to the report, issued by the Mortgage Bankers Association. The rate of new foreclosures and past-due payments surged to their highest level since 1979, when the group first started collecting the data.
I am not confident that the stock market touts on CNBC saying the worst of the credit crisis is behind us, know what they are talking about.