Vol 2 Chapter 747 Matrix of Rating Downgrades

Chapter 747 The Matrix of Rating Downgrade

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The call was from Matrix CEO Buddy Morris, and his tone was a little heavy.

“Boss, Comscart disclosed to the media about our merger talks. And the reason for unilaterally admitting failure is that Matrix’s debt ratio is too high, which aroused the concern of Conscart’s management about Matrix’s solvency. In addition , I got a call from Fitch and they asked us about Matrix’s financials based on information released by Comscart. Despite my repeated assurances that the company is profitable, cash flow rich and has sufficient debt servicing capacity. But they still Downgraded Matrix’s rating.”

The debt of the matrix company is indeed very high, especially in the past two years, Guo Shouyun has built three new Universal Studios in Singapore, Magic City and Beijing, with a total investment of nearly 15 billion US dollars. It also acquired the remaining shares of two Universal Studios in Osaka and Barcelona, ​​plus the cost of expanding the two Universal Studios in Hollywood and Orlando. The three together cost $24 billion.

Fortunately, after 9/11, the Federal Reserve lowered the federal funds rate to around 1%, otherwise Guo Shouyun would not have dared to borrow like this.

In addition to Universal Studios, a large borrower, the expansion of the matrix theater line is also not easy. There are about 15 to 20 screens in 103 seats, and at least one third of them are 3DMAX giant screens, with restaurants, bars, lounges, and ultra-luxury cinemas with properties, which cost the matrix nearly 6 billion US dollars.

Universal Studios and the Matrix theater chain have added $30 billion to the company’s debt. Of course, the profitability of both is good. Coupled with the high returns of Matrix Corporation in movies, games and peripheral derivatives, after three years, the foreign debt of 30 billion US dollars has been repaid 10.9 billion US dollars. But the rest still makes the debt ratio of the matrix company fluctuate around 40%.

However, with the gradual decline of investment, the company’s profitability has grown, and this number has also slowly declined. In Guo Shouyun’s view, the company’s cash flow is abundant and its balance sheet is very healthy. But in the eyes of outsiders, it is probably another matter. After all, matrix companies are not listed companies and do not need to disclose financial reports to the outside world. Coupled with the acquisitions of Time Warner and Universal over the years, and the big expansion in Universal Studios and the theater business, it is easy to give the impression of borrowing for development.

“How much has Fitch downgraded us?”

“A+ grade has been lowered to A-!” Buddy Morris said gloomily.

Guo Shouyun was not in a good mood either. The two-notch downgrade means that if the matrix company refinances, the interest rate will be raised by at least 50 basis points. When financing in units of 100 million, the matrix company has to pay millions of dollars more each year, or even tens of millions of dollars in interest. This undoubtedly increases the cost of shooting the company’s films, TV series and variety shows.

In recent years, the cost of loans is very low, and the profits of matrix companies are put into the capital market to earn higher returns. The production costs are all loans. The spreads earned, return Matrix companies hundreds of millions of dollars each year.

Because of the downgrades of Matrix’s ratings, coupled with the hike in the federal funds rate, returns on this block have clearly dropped a lot. In addition, because of the low oil and gold prices, some of the money invested by the Matrix Company in gold and oil futures is temporarily unavailable.

“Boss, I think it’s necessary for us to disclose our financials. Get the lost ratings back.”

Guo Shouyun shook his head after thinking about it.

“No. Now that Fitch has downgraded us. Even if we make our financials public, it’s hard to change anything.”

He’s not a fool. Fitch’s rating downgrade would have been a real ghost if it wasn’t for Citi, Goldman Sachs, ING, and Conscat. Now that they’ve chosen to downgrade, it’s not something that public finances can solve at all.

“But I’m afraid S&P and Moody’s will follow in Fitch’s footsteps. We’d be too passive.”

“You can talk to the CEOs of Standard & Poor’s and Moody’s. If necessary, you can disclose our financial affairs to them. This is far more efficient than public disclosure.” Guo Shouyun said after thinking.

“Yes!”

After finally communicating with Buddy Morris about the company’s current situation, he hung up.

The downgrade of the matrix is ​​obviously the result of the actions of conspirators such as Citi, Goldman Sachs, Conscart, and Schiff. Although it seems that shorting LinkedIn, downgrading the rating of the matrix company will not jeopardize his fundamentals. But it’s like a noose, if he doesn’t fight back, it will only get more and more deadly in the future.

This is the truth of boiling frogs in warm water.

“You are at every step, and I will not sit still!”

Thinking of this, Guo Shouyun took out his mobile phone, found Zhang Lei’s number and dialed it. But soon he hung up again. With Vice President Cheney’s name on the list of conspirators, the question of whether the phone will be insured is questionable. He hasn’t forgotten about the ‘Prism Gate’ in later generations. In these extraordinary times, it is better to be careful.

By contrast, mail is a little more insured. His computer is protected by the top security personnel at LinkedIn and Google, and unless it’s guys like Kevin Mitnick and Dennis Leach, don’t even think about getting into his computer.

And these days, guys who are sexually free are obviously unlikely to be hired by Wall Street, let alone go into government departments.

I sent a text message to Zhang Lei, and the chat between the two was transferred to the mailbox.

“Old Zhang, how many shares of Standard Chartered Bank do we hold now?”

“31.3%!”

In order to acquire Standard Chartered and expand Hanhua’s strength in the financial field, it has been slowly increasing its stake in Standard Chartered over the years. Of course, Hanhua also encountered the same problem as Bruce Fund. As more and more shares are held in its hands, it has become very difficult to increase its holdings from the secondary market.

“Do you think there is a possibility of an acquisition before the end of this year?”

“This… I’m afraid I won’t know until I contact the management of Standard Chartered.”

Guo Shouyun nodded, “Let’s start secret contact with Standard Chartered Bank now, there is no need to keep hiding.”

“If they reject our takeover…?”

“Close the position! Sell all the Standard Chartered shares!”

“Sell it? The rate of return of Standard Chartered in recent years is generally higher than the market average. It would be a pity to sell it.” Zhang Lei said.

Compared with traditional British banks such as Barclays and Royal Bank of Scotland, Standard Chartered’s customers are mainly in emerging markets such as East Asia, Southeast Asia, India and Africa. Thanks to the rapid economic development of emerging markets in recent years, Standard Chartered Bank’s yields are generally higher than those of financial institutions such as Barclays, HSBC Holdings, and Royal Bank of Scotland. Therefore, in the global financial market, Standard Chartered Bank also has the title of “the most popular acquisition target”.

But even so, when the subprime mortgage crisis came, no financial institution could escape. Therefore, if it is not possible to acquire Standard Chartered this year, it is the best choice for Hanhua to close the position when the market is high.

“Selling the stake in Standard Chartered may seem a pity on the surface, but it will be beneficial in the long run.”

“Southeast Asia and East Asia have benefited from China’s rapid growth since the 1997 financial crisis, and their economies have developed rapidly. There is no sign of a crisis at present.”

Zhang Lei’s answer revealed three words – why?

“Although the economic development of East Asia and Southeast Asia is in good shape, the global economic barometer is the United States. Once the US economy encounters a crisis, the global market will experience large fluctuations.”

“Do you think the US economy is in crisis?”

“Not bad! … The real estate industry, the backbone of the US economy, is showing signs of overheating. Credit institutions have issued too many subprime loans. And Wall Street has created several times the derivative bonds on the basis of these subprime loans. Very few Some people think it’s a problem, but a castle on the beach, no matter how gorgeous it is, can’t change the loose foundation. Once the big wave hits, everything will be gone.”

After posting this, Guo Shouyun did not receive a reply for a long time. He could feel Zhang Lei’s unbelievable expression across the computer.

“Boss, are you a little too worried? The past several ups and downs of U.S. real estate have not caused a systemic crisis in the U.S. economy.”

“I also hope I’m too worried. But now the size of subprime mortgages in the United States has ballooned to $300 billion. And in 2005, it increased by 18 billion in less than two months, and the bubble has expanded faster than subprime mortgages in the past decade. According to a model constructed by analysts at the Phoenix, Thunder and Bruce Foundation, if nothing changes, the size of subprime loans will expand to $450 billion by the end of this year. And, compared to subprime debt, it is more worrying Derivative bonds. Now CDOs and CDSs have ballooned to $1 trillion. And every time I see those numbers, my heart skips a beat.”

After Zhang Lei was silent for a while, UU read www. uukanshu.com “Boss, haven’t you thought about revealing this to the society?”

“Someone has expressed concerns about the fast-growing subprime mortgage before me. Unfortunately, no one can resist the temptation of high profits. No one can take back the financial voice from Wall Street. I don’t want to waste my efforts to provoke right and wrong. !”

“When do you think this crisis will break out?”

“Old Zhang, no one can accurately predict the future. But I think with the economic situation in the United States, if nothing changes, it can last up to two years.”

“Understood, I will deal with Standard Chartered as soon as possible.”

“Also, except for the shares of the four major banks, Tianshan Co., Ltd., and 49% of the equity in the Bundyuan project of the Magic Capital, all other equity investment projects were sold before 2007.”

The shares of the four major state-owned banks are too valuable, and it is far from the harvest period. It is a pity to sell them. Tianshan Co., Ltd., currently the third largest cement company in China, has at least a ten-year dividend period along with the tide of real estate development and China’s infrastructure construction. In addition, Hanhua Holdings has invested several Huaxia coins for the expansion of Tianshan shares. There is no reason to sell this company directly controlled by it before the harvest period.