Shorts (left)
Junk bond avalanche looms for credit markets in 2012
When the Mayans envisioned the world coming to an end in 2012 at least in the Hollywood telling — they didn’t count junk bonds among the disasters that would lead to worldwide disaster.
Maybe they should have, because 2012 also is the beginning of a three-year period in which more than $700 billion in risky, high-yield corporate debt begins to come due, an extraordinary surge that some analysts fear could create a glut in the debt markets.
With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.
The U.S. government alone will need to borrow nearly $2 trillion in 2012, to bridge the projected budget deficit for that year and to refinance existing debt.
Indeed, worries about the growth of national, or sovereign, debt prompted Moody’s Investors Service to warn on Monday that the United States and other Western nations were moving “substantially” closer to losing their top-notch Aaa credit ratings.
Sony and Jackson estate sign sweeping $250 million contract
Nine months after Michael Jackson’s death, his estate has signed one of the biggest recording contracts in history, giving Sony, Jackson’s longtime label, the rights to sell his back catalog and draw on a large vault of unheard recordings.
The deal, for about 10 recordings through 2017, will guarantee the Jackson estate up to $250 million in advances and other payments and offer an especially high royalty rate for sales both inside and outside the United States, according to people with knowledge of the contract who spoke anonymously because they were not authorized to speak about it publicly.
It also allows Sony and the estate to collaborate on a wide range of lucrative licensing arrangements, like the use of Jackson music for films, television and stage shows and lines of memorabilia that will be limited only by the imagination of the estate and the demand of a hungry worldwide market.
The first recording covered by the new contract is the “This Is It” soundtrack, released last year, and Sony plans a new album of unreleased recordings for November.
In Ohio, Obama appeals for health care votes one by one
STRONGSVILLE, Ohio —President Barack Obama, declaring that “every argument has been made” on his health care overhaul, sought to seal the deal with Congress and the American people Monday by focusing on a single patient: a self-employed cleaning woman who dropped her costly insurance plan and just discovered she has leukemia.
Obama traveled here, to a recreation center in a region that is home to several swing Democrats, to begin a week of closing arguments that will culminate in a series of make-or-break House votes. With the House speaker, Nancy Pelosi, struggling to corral her caucus behind his top legislative priority, Obama is using the power of his presidency to court lawmakers one by one.
In Washington, the House Budget Committee opened the formal legislative process by which Democrats hope to complete the health care legislation, perhaps even this week. By a vote of 21-16, the committee advanced a budget reconciliation bill, essentially a legislative shell that will contain the crucial revisions to the health care measure adopted by the Senate on Dec. 24.