Bailout for loans and losses - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Bailout for loans and losses

Nov 24, 2008

Driving on loans
Around 9 months earlier, the Tata group had paid US$ 2.3 bn for acquiring luxury car maker Jaguar Land Rover (JLR) and had raised a bridge loan of US$ 3 bn to finance the deal. Since then the global financial turmoil has hit the auto industry forcing JLR to cut down on production so as to sell its piled up inventory of vehicles. In fact, the Tata's are bracing themselves for a likely financial stress over the next 2 years. They are reportedly seeking a 1 bn loan from the UK government.

While UK government's response will be known in about 2 week's time, JLR would be hopeful of a positive response on the back of similar instances elsewhere in Europe. One of the considerations for the UK government in keeping the carmaker afloat would be preventing further job losses in an already gloomy situation. JLR has a workforce of 15,000.

We wonder if the Tata group is just a victim of bad timing or has it bit more than it can chew and has over-stretched the balance sheets of its companies?

US$ 100 bn at stake in Citigroup
The US regulators are in negotiations with Citigroup to contain the bank's possible losses on US$ 100 bn worth of toxic assets - mortgages, bonds, auto loans and corporate loans. As per Bloomberg, the assets will remain at Citigroup. The US government will assume losses beyond a specified amount. It may be noted that Citi's stock plunged by 60% last week raising concerns over its health.

The US government's intervention in this case is line with what it has done in earlier instances such as JP Morgan's acquisition of Bear Stearns and Citigroup's failed attempt to acquire Wachovia. The company is asked to absorb the initial losses, while the government guarantees the losses beyond that.

Citigroup's failure would indeed be the last straw on the proverbial camel's back.

Equitymaster requests your view! Post a comment on "Bailout for loans and losses". Click here!


More Views on News

Your Queries on the 8-Year Cycle Answered (Fast Profits Daily)

Sep 25, 2020

You've sent in your queries on my videos on the 8-year greed and fear cycle in the market. I'll answer them in this video.

It's When You Sell that Counts (Profit Hunter)

Sep 25, 2020

How I alerted readers to the impending crash last week.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

How to Save Money by Exiting Stocks Before They Fall podcast (Views On News)

Sep 24, 2020

A penny saved is a penny earned. It doesn't matter where you enter. All that matter is where you exit. Watch this video to identify an opportune time to exit your investments and book profits.

ICICI Prudential ESG Fund: Aims for Sustainability (Outside View)

Sep 24, 2020

PersonalFN briefly explains the newly launched fund : ICICI Prudential ESG Fund.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 25, 2020 (Close)