smh article...

Just before I retire for the night I have just seen this article in the SMH.

Of note:

Ditto Allco, Centro, MFS and others who are in default but kept alive by the grace of their bankers who do not want to take a writedown.

For these companies and their long-standing shareholders, the reticence of the banks is a good thing; it's a fighting chance.

There is always a prospect of recovery, though, their share prices show it's a hairy-chested bet.

It is hard enough for good companies to get funding from their banks, or the commercial paper markets - and certainly not without forking out. Take Wesfarmers.

For the banking system and the economy, however, the reluctance to liquidate simply puts off judgement day in the banks themselves.

Since everyone is quietly grimacing about problem exposures but no one is calling them in, this going concern-itis will only undermine the health of the whole market. At what point does the pill just have to be taken?

If we look at ANZ, new boss Mike Smith has opted to expand into broking and stock-lending via equity stakes in Tricom and Chimaera, rather than take the pain .

Mind you, that is not a huge strategic stretch for a bank.

In the case of Centro, if there were good news to announce, the market would know it by now. The data room has been opened.

There is no suitor. It's too hard. Rumours of white knights ripple through the market from time to time which are either wishful thinking - or market manipulation.


Now I must add that this article is journalism at its worst, or I am totally deluding myself on Centro - which is it??? I think I might let others be the judge & comment accordingly.

Cheers, Pie