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[Homestead] AEP, Honda, Dow Chem, HomeDepot want help
Chronological
Thread
<
Chronological
>
<
Thread
>
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,
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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
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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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