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  • From: "Lisa K.V. Perry" <lisakvperry AT gmail.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] AEP, Honda, Dow Chem, HomeDepot want help
  • Date: Fri, 14 Nov 2008 13:10:08 -0500

AEP supplies our electricity! Guess we should be looking into solar
lanterns.

lkvp

Textron, AEP, Honda Ask Fed for Access to Commercial-Paper Fund
>
> By Robert Schmidt and Bryan Keogh
> Nov. 14 (Bloomberg) -- A group of companies including Textron
> Inc.<http://www.bloomberg.com/apps/quote?ticker=TXT%3AUS>,
> Home Depot Inc. <http://www.bloomberg.com/apps/quote?ticker=HD%3AUS> and
> Honda
> Motor Co. <http://www.bloomberg.com/apps/quote?ticker=7267%3AJT> is
> pressing the Federal Reserve to expand purchases of commercial paper to
> include them, two people briefed on the matter said.
>


> The coalition, which also counts Dow Chemical
> Co.<http://www.bloomberg.com/apps/quote?ticker=DOW%3AUS>and Nissan
> Motor Co. <http://www.bloomberg.com/apps/quote?ticker=7201%3AJT> as
> members, wants the Fed to go beyond top-rated paper and buy debt with the
> second-highest grade, the people said on condition of anonymity. American
> Electric Power Co. Chief Financial Officer Holly
> Koeppel<http://search.bloomberg.com/search?q=Holly+Koeppel&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>said
> the group is seeking to add more companies and preparing a letter to
> outline its case.
>
> While accepting lower-grade debt could reduce borrowing costs for a broader
> group of companies, it would also expose the taxpayer to greater risk. The
> request is one of a number of attempts to get a share of federal rescues,
> with industries from automakers to heating-oil retailers seeking funds.
>
> ``We are really creating a mindset where no one fails,'' said Adolfo
> Laurenti, a senior economist at Mesirow Financial Inc. in Chicago.
>
> Second-tier issuers of commercial paper, debt that matures in nine months
> or less and is a form of IOU for day-to-day expenses such as payrolls and
> rent, argue they're disadvantaged by the Fed's new Commercial Paper Funding
> Facility.
>
> Interest rates
> <http://www.bloomberg.com/apps/quote?ticker=DCPA030D%3AIND>on the
> highest-ranked 30-day commercial paper fell to 1.04 percent yesterday
> from as high as 4.28 percent on Oct. 9. By contrast, the rates on
> second-tier
> debt <http://www.bloomberg.com/apps/quote?ticker=DCPD030D%3AIND> were 5.36
> percent, compared with a high of 6.30 percent on Oct. 15.
>
> `Unintended Consequence'
>
> The Fed ``needs to make sure that any program doesn't have an unintended
> consequence that really conflicts with what it's intended to do,'' Koeppel
> of American Electric, the biggest U.S. producer of electricity from coal,
> said in an interview.
>
> American Electric has had to tap two revolving-credit facilities in part to
> pay off $400 million of commercial paper, Koeppel said.
>
> The Fed only purchases commercial paper rated A-1, F1 and P- 1 by Standard
> & Poor's, Fitch Ratings and Moody's Investors Service respectively. Its
> holdings rose to $258.5 billion as of Nov. 12, in the third week of
> operation, central bank data showed yesterday.
>
> ``Manufacturers that have A-2/P-2 paper are getting nailed,'' Senator Bob
> Corker<http://search.bloomberg.com/search?q=Bob+Corker&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>,
> a Tennessee Republican, said at a congressional hearing two weeks ago. ``All
> of a sudden, they're at a 500 basis-point disadvantage and basically getting
> ready to lay people off,'' he said, pressing Fed Governor Elizabeth
> Duke<http://search.bloomberg.com/search?q=Elizabeth+Duke&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>to
> revise the central bank's policy.
>
> Fed's Objective
>
> Duke responded to Corker that the Fed's objective was to get the market
> ``moving again,'' and once the top-tier portion is reenergized, ``then that
> will move the other parts of the market as well.''
>
> The Fed has argued that limiting the program to the highest- rated
> securities provides protection for taxpayers.
>
> Andrew
> Williams<http://search.bloomberg.com/search?q=Andrew+Williams&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>,
> a spokesman for the New York Fed, which runs the CPFF, declined to comment.
> Kim
> Reingold<http://search.bloomberg.com/search?q=Kim+Reingold&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>,
> a Textron spokeswoman, had no immediate comment and Paula
> Drake<http://search.bloomberg.com/search?q=Paula+Drake&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>at
> Home Depot declined to comment, while spokespeople for Dow Chemical and
> Honda couldn't immediately be reached.
>
> Genworth Financial Inc., the insurer spun off by General Electric Co., is
> considering whether to join the coalition, spokesman Tom
> Topinka<http://search.bloomberg.com/search?q=Tom+Topinka&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>said
> in e-mail. The Richmond, Virginia- based company's short-term debt
> rating was cut to P-2 by Moody's Investors Service earlier this month.
>
> Genworth has drawn down more than half of its $1.7 billion in revolving
> credit facilities to help repay outstanding holding- company debt.
>
> Nissan's Approach
>
> Nissan is working through the American Financial Services Association,
> which represents about 350 consumer-finance companies, spokesman Steve
> Parrett<http://search.bloomberg.com/search?q=Steve+Parrett&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>said.
>
> ``A lot of companies that qualify below the A-1/P-1 level are good
> performing companies,'' said Bill Himpler, executive vice president at the
> Washington-based American Financial Services Association.
>
> The commercial-paper market was roiled by the failure of Lehman Brothers
> Holdings Inc. in September, which prompted money- market funds, among the
> biggest buyers of commercial paper, to retreat into the relative safety of
> government debt.
>
> Fed data show that the market for A-2/P-2/F2 paper is about $80 billion.
> Some issuers have publicly disclosed they've been having difficulties due to
> the surge in borrowing costs.
>
> Textron, the Providence, Rhode Island-based maker of Cessna planes and Bell
> helicopters, had a little more than $2 billion of commercial paper
> outstanding with $3 billion of bank lines backing it up, Chief Financial
> Officer Ted
> French<http://search.bloomberg.com/search?q=Ted+French&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>said
> during an Oct. 16 conference call with analysts.
>
To contact the reporters on this story: Robert
Schmidt<http://search.bloomberg.com/search?q=Robert+Schmidt&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>in
Washington at
rschmidt5 AT bloomberg.net; Bryan
Keogh<http://search.bloomberg.com/search?q=Bryan+Keogh&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>in
New York at
bkeogh4 AT bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601109&sid=a6.zX8Uh5DcI&refer=home



  • [Homestead] AEP, Honda, Dow Chem, HomeDepot want help, Lisa K.V. Perry, 11/14/2008

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