insto - Australian financial markets

The collapse of one-time investment bank darling Babcock & Brown was back in the spotlight last week with former executives facing questions in the Federal Court. Liquidator Deloitte is looking to find out if directors breached their duty to shareholders before the company’s collapse with debts of $3 billion. At its high point, B&B was valued at $10 billion. The hearing saw former chief executive Phil Green and CFO and CEO Michael Larkin questioned over dividend payments, and whether they had been unlawfully paid.

A year on since the Lehman Brothers failure, Caren Chesler, our US correspondent, sought answers. While the reasons for its demise are becoming clearer under the glare of 20/20 hindsight, what will be Lehman’s legacy is just as opaque as the practices that caused its collapse, as Chesler found…

Fitch Ratings said that the Australian Energy Regulator's final price determination for the four New South Wales electricity distribution and transmission companies highlights the need for significant additional investment in the sector. In addition, the agency notes that the reduction in the allowed return (the weighted average cost of capital or WACC) of almost 1 percentage point from the draft determination may come as a shock to the companies. Independently, the AER's proposals for WACC parameters for the next electricity network reviews are due to be released on 1 May 2009.

Its been an interesting week for the troubled property trust (or A-REIT) sector. GPT has been actively reducing its leverage through asset sales but was unable to avoid a credit rating downgrade. Thursday also saw America’s largest ever bankruptcy in the sector when General Growth Properties filed for Chapter 11, leaving local players wondering if it presents more risks than opportunities.

***Time to trust property again ? (17 April 2009)***

Its been an interesting week for the troubled property trust (or A-REIT) sector. GPT has been actively reducing its leverage through asset sales but was unable to avoid a credit rating downgrade. Thursday also saw America’s largest ever bankruptcy in the sector when General Growth Properties filed for Chapter 11, leaving local players wondering if it presents more risks than opportunities.