Debt on Willis Tower, formerly the tallest U.S. building, was put in special servicing after the borrower requested a loan modification, Fitch Ratings Inc. said.

“The borrower anticipates significant capital costs going forward in order to secure additional new leases,” the rating company said in a report yesterday, citing commentary from the servicer. The Willis Tower debt, which was packaged and bundled into commercial mortgage-backed securities, was transferred to special servicing because of “imminent monetary default,” Fitch said.

The building has almost $499 million of senior debt that was sliced up and packaged into four commercial-mortgage bond deals, according to Barclays Plc. The total loan balance is $774 million, according to Fitch. The property was appraised at $1.22 billion in May 2013, Barclays analysts led by Keerthi Raghavan said in a report today….

Read the rest of the article at Bloomberg.

Hedge funds and private-equity investors are bidding up prices of some troubled assets in Europe, sparking a surge in sales by banks seeking to rid themselves of soured corporate loans.

For years after the financial crisis, European banks resisted selling their corporate loans for fear of having to record heavy losses. But recently, some European lenders have reversed their stance as demand for these assets has jumped. One reason for the shift: Defaults and bankruptcy filings have declined in the U.S., leaving investors with fewer opportunities to buy distressed debt and sell it for a profit in a restructuring.

“The prices have risen to the point where some banks are looking to sell because they’re seeing transaction prices that imply” a much smaller loss for certain assets, said Ari Lefkovits, a managing director at Lazard Ltd. LAZ +2.97% , who moved to London in August 2012 in part because of an anticipated uptick in European restructuring activity….

Read the rest of the article at the WSJ.

“Quite a few people tell me we’re crazy,” Richard Griner, a 41-year-old Tampa police detective and vice chairman of the
pension fund’s board, told me this week. “I go to quite a few investment conferences. They just can’t believe that we do this
the way we do. But then I tell them the numbers, and they tend to shut up.”

The Tampa, Fla., pension fund may be unique in its approach to managing its assets, which totaled $1.76 billion as of
last September. Unlike the so-called Yale model, which has been widely copied and stresses alternative investments, the
Tampa fund has no hedge fund or private equity investments.

But neither does it follow the low-cost, index-oriented approach championed by Vanguard and others. The Tampa fund
doesn’t own index or mutual funds.

As for being diversified, which is the mantra of nearly all institutional money managers and consultants, it isn’t. A single
outside manager makes all investment decisions, and the fund’s assets are concentrated in a relatively small number of stocks
and fixed-income investments.

In short, the Tampa pension fund pretty much breaks all the conventional rules of fund management….

Read the rest of the article at the NY Times.

Just when the world of restructuring was becoming dull, the world responded with a wave of financial distress. That sounds like bad news for most people, but for the cognoscenti of financial misfortune, it’s like an early Mardi Gras.

Starting in Greece, there is a story that, if not quite Mycenaean, is at least getting old. The country, you see, will probably need another bailout. Greece has already negotiated two bailouts worth 240 billion euros, or about $329 billion, with the European Commission, the European Central Bank and the International Monetary Fund, but the country now agrees that its banks need at least $6 billion to $7 billion. Everyone else says the number is closer to $20 billion. That sounds like small potatoes to those steeped in United States financial institutions, but remember that the Greek banking sector is probably close to the size of New Jersey’s. A third bailout cannot be too far behind. . .

Read the rest of the article at the NY Times.

BlackBerry Ltd. (BBRY), once valued at $83 billion, may be stuck with the cheapest valuation ever for a North American technology or telecommunications takeover.

The smartphone maker said yesterday it reached a tentative agreement for a $4.7 billion buyout by a group led by Fairfax Financial Holdings Ltd. (FFH), its biggest shareholder. Including net cash, the proposal values the Waterloo, Ontario-based company at an 80 percent discount to its book value and just 0.17 times its sales, the cheapest revenue multiple on record among similar-sized North American telecommunications or technology acquisitions, according to data compiled by Bloomberg.

While the company has six weeks to seek other bids, Pacific Crest Securities said investors should be happy to get the $9 a share that Fairfax is offering. Chief Executive Officer Thorsten Heins, who took over in January 2012, didn’t publicly disclose the company was for sale until last month after almost a year of canvassing potential buyers. Now, BlackBerry has posted a string of quarterly sales declines and lost almost $79 billion in market value as it fell behind Apple Inc. and Google Inc. Last week, BlackBerry said it will cut a third of its workforce and take a writedown of as much as $960 million….

Read the rest of the article at Bloomberg.

That might seem like an odd notion in a place wrestling with an estimated $18 billion debt. But unions, creditors and retirees are expected to file formal objections to Detroit’s eligibility for bankruptcy protection before a Monday deadline, the opening of a legal fight over whether the largest municipal bankruptcy in the nation’s history should proceed.

“This is just getting your ticket punched to get in the door,” said Michael A. Sweet, a bankruptcy lawyer with Fox Rothschild in San Francisco. A trial to consider Detroit’s eligibility for bankruptcy is scheduled for Oct. 23.

To meet the criteria for municipal bankruptcy, known as Chapter 9, Detroit must convince Judge Steven W. Rhodes of federal bankruptcy court that the city is insolvent. It must also show that it received state authorization to seek bankruptcy protection and that it made a good-faith effort to reach a deal with creditors before seeking bankruptcy.

The deadline for filing eligibility challenges is 11:59 p.m. Eastern time Monday. By Sunday evening, only a handful of objections had been submitted.

Since 1954, there have been only 63 Chapter 9 filings that dealt with cities, towns, villages or counties across the country, said James E. Spiotto, a bankruptcy specialist based in Chicago at the law firm of Chapman and Cutler. Of those, 29 cases were dismissed for reasons that included ineligibility, he said….

Read the rest of the article at the NY Times.

Those in attendance, including leaders of Abu Dhabi’s sovereign wealth fund and France’s pension system, were there to consider ways to put their money to work together without paying fees to private equity firms and hedge funds. Over that weekend, three of the attendees completed the details of a $300 million investment in a clean-energy company.

The group holding the gathering, the Institutional Investors Roundtable, has kept a low public profile since it began in 2011, but it attracted 27 funds managing public money to its latest meeting and is spinning off concrete investments. The group is part of a much broader push by the world’s biggest pension and sovereign wealth funds to reduce their reliance on the Wall Street firms that used to manage almost all their money….

Read the rest of the article at the NY Times.

The dangers of that approach were revealed on Wednesday in the government’s criminal complaints against two former JPMorgan Chase traders.

The traders, Javier Martin-Artajo and Julien G. Grout, may eventually be absolved of all the charges against them. But there is now enough material in the public domain to conclude that a cadre of JPMorgan employees embarked on a foolhardy quest to trade their way out of trouble, and left the bank with $6 billion of losses in the process.

Their trading didn’t take place in a market where large numbers of transactions produced transparent and public prices through the day, like the stock market. Instead, the traders made bets with derivatives, financial contracts that often trade sporadically and in the shadows of Wall Street. They focused on so-called credit derivatives, which allow traders to bet on the perceived creditworthiness of companies. In particular, they took large positions in a credit derivatives product called CDX. NA. IG9, which represents a basket of companies.

In its lawsuits, the government says that the traders deliberately valued such bets to make their losses look lower than they actually were in the early months of 2012.

One way that traders value their holdings is to use pricing data from a range of banks.

If Wall Street brokers are offering to buy a derivative contract at 100 and sell it at 104, the trader might value that contract on his own books at 102, the midpoint between the two numbers……

Read the entire article at the NY Times.

To the Justice Department, a merger between American and US Airways would increase the fares and fees that have been steadily rising.

But to the airlines, the merger would lower costs and provide more flexibility for many travelers. What is more, some industry analysts said that a hobbled American, which is still trying to emerge from bankruptcy protection, would struggle to compete against the two giants, United Airlines and Delta Air Lines.

“What we are saying today is simply that they got this one wrong,” Richard Parker, a lawyer for US Airways, told reporters on Wednesday.

The Justice Department’s action comes after a decade of rapid consolidation in the airline industry, including the mergers of Delta and Northwest in 2008 and United and Continental in 2010. But antitrust officials said on Tuesday that despite the cost savings for the carriers from consolidation, domestic airfares, on average, had increased much faster than inflation over the last several years, prompting the department to revise its thinking about what was best for the consumer….

Read the rest of the article at the NY Times.

Lawyers for AMR are due to appear in U.S. Bankruptcy Court in Manhattan today to seek approval of a reorganization plan that hinges on combining the two airlines into the world’s largest carrier. The Justice Department sued both companies Aug. 13 to prevent the transaction, saying its anticompetitive effects would lead to higher airfares.

Before the suit, American hoped the hearing before U.S. Bankruptcy Judge Sean Lane would be the “final episode” in its Chapter 11 reorganization, Joe Sims, an attorney for the airline, said on a conference call with reporters yesterday.
“It’s not going be now, so they will deal with that,” said Sims, of the Jones Day law firm. “They’ll adjust and continue as they have been.”….

Read the entire article on Bloomberg.