A look at some must-read news on deals and deal makers around the world.
Sovereign debt - bad news is good news in Spain and Ireland
The cost of the latest bailout effort for Irish banks is threatening to increase the total bill for the island country to €50-billion, thanks to the cost of taking a majority stake in the worst of the lenders, Allied Irish Banks PLC, and giving more cash to Anglo Irish Bank Corp. Markets are taking the news well, as the added clarity seems to be easing concerns. The cost of insuring Irish government debt is declining and the yield premium investors demand to hold Irish bonds instead of regional benchmarks from more stable Germany is shrinking.
THe premium to hold Spanish bonds also shrank after a credit-rating cut was less than expected.
Potash Corp: Weighing price and protectionism
Credit Agricole Securities is concerned that "the likelihood of a successful BHP [Billion]acquisition of Potash Corp. [of Saskatchewan Inc.] has declined significantly from the 12th August offer." One of the biggest issues, according to analyst Mark Connelly, is that "Canadian government comments have been consistently negative."
On price, Mr. Connelly says that "with potash prices moving higher, the probability of a higher clearing price is rising. We continue to believe that there is no compelling value in an offer below $160/share, and think that $170-180/share makes more economic sense, given the quality and strategic significance of the assets."
Beyond that, Mr. Connelly argues that there's a chance that this may be the deal that sees the Canadian government shift to a more protectionist stance after being wide open to resource industry takeovers by non-Canadian companies.
"Public sentiment in Canada is that foreign deals have gone too far, and that for all of Canada's success in negotiating the economic downturn, the country has little to show for it. It is against that feeling of angst that BHP's anti-Canpotex, 'nothing lasts forever' message has been particularly ill-received."
Globe and Mail columnist Eric Reguly argues just that - that it is indeed time for the government to step in, and if not stop BHP, then make the conditions more onerous so that BHP has to make a net benefit case that will stick.
Did Goldman threaten to leave Europe?
Goldman Sachs Group Inc. head Lloyd Blankfein sparked an outcry in Europe after saying that Europe's messy financial regulation could cause banks to leave the region. Was he hinting that Goldman would consider upping stakes? Goldman says no.
Where have the prop traders gone?
There's a steady stream of news bites about firms closing down prop desks. Michael Lewis, one of the best chroniclers of these strange times on Wall Street, takes a stab at figuring out where all those traders are going.