Today? Well, it's down 35% again. Only this time, down to the $1.30s - and there goes the country's largest chicken producer.... debt is simply toxic in this market. I can't even say cash is king because it's not helping stocks to have cash - but at least it keeps you from prospective bankruptcy.
- A flurry of paper, gaming and consumer-related companies could face a cash crunch in the year ahead as the ability to raise capital remains squeezed, fixed-income research service CreditSights said in a report.
- Despite dramatic government attempts to revive the lending markets, yields on corporate bonds remain far too high for many companies to issue debt, effectively shutting them out of the bond market.
- Average yields for high-grade corporate bonds have hit a record 6.1 percentage points over those on comparable U.S. Treasuries, while junk bond yields are at an all-time high of 16.8 percentage points over Treasuries.
- Shares of Pilgrim's Pride Corp. slipped Monday, even after the nation's largest chicken producer said it had reached another agreement to temporarily extend its credit facilities through the end of November.
- Stephens Inc. analyst Farha Aslam wrote in a research note Monday that it was good news the company received an extension but, she warned, "the fact that the company was not able to secure more permanent financing is telling. The troubles in the industry are considerable, particularly given the weakening export environment."
Or perhaps as US taxpayers we will soon own our own chicken processing plants ....
[Sep 25: Cash is King: Pilgrim's Pride Down 40%]
[Mar 12: Pilgrims Pride Cutting Chicken Output]
No position
2 comments:
I was checking out CALM ( The egg producer ) and read that all three of the biggest chicken suppliers have debt due to purchases of smaller operations at the wrong time. (CALM didn't). And I just received a 'Rising Tide' newsletter today which also stated that debt was the problem with Pilgrims Pride. (For the record, PDA, a So American meat supplier) has no real debt and HOGS, a Chinese pork supplier is in very good shape.)
However, it got me thinking about who might be impacted by Pilgrim. Names that come to mind are McDonalds and KFC... And the American family.. This fromw Wikipedia on PETA issues with chicken handling:
KFC responded by saying the chickens used in its products are bought from suppliers like Perdue Farms, Tyson Foods, and Pilgrim's Pride.
With sales in emerging markets supposedly slowing, this might be a downside for those fast food outlets that sell a lot of chicken.
Of course, if the Department of Energy bails out the Big Three, why wouldn't Homeland Security bail out the chicken farms?
jegan
*yields on corporate bonds remain far too high for many companies to issue debt, effectively shutting them out of the bond market.*
This will change... The central banks will succeed in hammering down bond yields on commercial paper even if they have to buy it all themselves...
I am building a long position in HYF here... a high yield paper fund.
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