Chapter 747 Matrix of Rating Declines

……

The call was made by Buddy Morris, CEO of Matrix, and his tone was a little heavy.

"Boss, Kongscart has opened up to the media about the merger talks between us. Moreover, the unilateral admission of failure was due to the high debt ratio of Matrix, which raised concerns among Kongscat's management about Matrix's solvency. In addition, I received a call from Fitch who asked us about the financial situation of Matrix based on the information published by Kongscat. Although I have repeatedly assured that the company is profitable, has strong cash flow and has sufficient solvency. But they still downgraded the rating of the matrix. ”

The debt of the matrix company is indeed very high, especially in the past two years, Guo Shouyun has built three new Universal Studios in Singapore, Magic City and Beijing in one go, with a total investment of nearly 15 billion US dollars. It also acquired the remaining shares of the two Universal Studios in Osaka and Barcelona, plus the cost of expanding the two Universal Studios in Hollywood and Orlando. Together, the three will cost $24 billion.

Fortunately, after 911, the Federal Reserve lowered the federal funds rate to about 1%, otherwise Guo Shouyun would not have dared to borrow like this.

In addition to Universal Studios, a large borrower, the expansion of the matrix cinema chain is also not easy. 103 seats with about 15~20 screens, and at least one-third of them are 3DMAX giant screens, and there are restaurants, bars, lounges, and ultra-luxury cinemas with properties, which consume nearly $6 billion in the matrix.

Universal Studios and Matrix Cinemas have added $30 billion to Matrix's debt. Of course, both are profitable. Coupled with the high returns of Matrix on movies, games and peripheral derivatives, in three years, $10.9 billion of the $30 billion foreign debt has been repaid. But the rest still makes the debt ratio of the matrix companies oscillate around 40%.

However, with the gradual decline in investment and the growth of the company's profitability, this figure is also slowly declining. In Guo's view, the company's cash flow is abundant and its balance sheet is very healthy. But in the eyes of outsiders, I'm afraid it's a different matter. After all, Matrix is not a listed company and does not need to disclose financial reports to the outside world. Coupled with the acquisition of Time Warner and Universal over the years, and the great expansion of Universal Studios and cinema business, it is easy to give people the impression of borrowing for development.

"How much has Fitch downgraded our rating?"

"A+ downgraded to A-!" Buddy Morris said in a gloomy tone.

Guo Shouyun was not in a good mood. The downgrade of the rating by two levels means that the Matrix will raise interest rates by at least 50 basis points if it refinances externally. When financing in units of 100 million, Matrix has to pay millions of dollars more than $100 million in interest every year. This has undoubtedly increased the cost of filming the company's movies, TV series and variety shows.

In recent years, the cost of loans has been very low, and the profits of matrix companies are put into the capital market to earn higher returns. And the production costs are all loans. The spreads earned bring hundreds of millions of dollars in returns to matrix companies every year.

Because of the decline in the rating of the matrix companies, coupled with the increase in the federal funds rate, the return on this piece has obviously dropped a lot. In addition, because of the low prices of oil and gold, some of the money invested in gold and oil futures by the matrix company cannot be taken out for the time being.

"Boss, I think it's necessary for us to be open about our finances. Get back the ratings you lost. ”

After thinking about it, Guo Shouyun shook his head.

"No need. Now that Fitch has downgraded our rating. Even if we make our finances public, it's hard to change anything. ”

He's not a fool, and Fitch's downgrade would have been a ghost if it hadn't been for the likes of Citi, Goldman Sachs, ING, and Kongscart. Now that they have chosen to downgrade, it is simply not something that public finances can solve.

"But I'm afraid S&P and Moody's will follow Fitch's lead. In this way, we are too passive. ”

"You go talk to the CEOs of S&P and Moody's. If you want, you can make our finances public to them. This is far more efficient than being open to the public. Guo Shouyun thought about it for a while.

"Yes!"

After finally communicating with Buddy Morris about the company's current situation, he hung up the phone.

The downgrade of the matrix is clearly the result of the actions of conspirators such as Citigroup, Goldman Sachs, Kongscart, and Schiff. Although on the surface it seems that shorting LinkedIn and downgrading the rating of Matrix will not jeopardize his fundamentals. But this is like a noose, and if he doesn't fight back, it will only become more and more deadly in the future.

Boiling frogs in warm water is the truth.

"You take it step by step, and I won't sit still!"

Thinking of this, Guo Shouyun took out his mobile phone, found Zhang Lei's phone and dialed it. But soon he hung up again. With Vice President Cheney's name on the list of conspirators, it became questionable whether the phone would be safe. He hasn't forgotten the 'Prism Gate' in later generations. In these extraordinary times, it's better to be careful.

In contrast, mail is a bit more secure. His computer is protected by the top security personnel on LinkedIn and Google, and he doesn't want to get into his computer unless it's a guy of Kevin Mitnick and Dennis Leach's level.

And these days, the most free guys obviously can't be hired by Wall Street, let alone enter the government department.

sent a text message to Zhang Lei, and the chat between the two was transferred to the mailbox.

"Lao Zhang, how many shares of Standard Chartered Bank do we hold now?"

“31.3%！”

In order to acquire Standard Chartered and expand the strength of GCA in the financial field, it has been slowly increasing its stake in Standard Chartered over the years. Of course, GCA also encountered the same problems as the Bruce Fund, and as it held more and more shares, it became difficult to increase its holdings from the secondary market.

"Do you think there is a possibility of an acquisition before the end of this year?"

"This... I'm afraid I won't find out until I get in touch with the management of Standard Chartered. ”

Guo Shouyun nodded, "Let's start secret contact with Standard Chartered Bank now, there is no need to continue to hide." ”

"If they reject our takeover...?"

"Close the position! Sell all the Standard Chartered shares!"

In recent years, the rate of return on Standard Chartered has generally been higher than the market average, and it is a pity to sell it. Zhang Lei said.

Compared with traditional British banks such as Barclays and Royal Bank of Scotland, Standard Chartered's customers are mainly in emerging markets such as East Asia, Southeast Asia, India and Africa. Thanks to the rapid economic development of emerging markets in recent years, the yield of Standard Chartered Bank is generally higher than that of financial institutions such as Barclays, HSBC Holdings, and Royal Bank of Scotland. Therefore, in the global financial market, Standard Chartered Bank also has the title of 'most popular acquisition target'.

But even so, when the subprime mortgage crisis came, no financial institution could avoid it. Therefore, if you can't buy Standard Chartered this year, it is the best choice for Hanhua to close the position at the high point of the market.

"Selling our stake in Standard Chartered, while a shame on the surface, is beneficial in the long run. ”

"Southeast Asia and East Asia have benefited from China's rapid growth and rapid economic development since the 97 financial crisis. There are no signs of a crisis. ”

Zhang Lei's answer revealed three words: why?

"While the economies of East and Southeast Asia are doing well, the global economic barometer is the United States. Once the U.S. economy is in crisis, global markets will be volatile. ”

"Do you think there is an economic crisis in the United States?"

"Not bad... The real estate sector, which is the backbone of the U.S. economy, is already showing signs of overheating. Credit institutions are issuing too many subprime loans. And Wall Street has created derivative bonds several times over these subprime loans. Few people find this problematic, but a castle on the beach, no matter how ornate it is, can't change its soft roots. Once the big wave hits, everything will cease to exist. ”

After sending this article, Guo Shouyun did not receive a reply for a long time. He could feel Zhang Lei's unbelievable expression through the computer.

"Boss, are you a little too worried? In the past, there have been several ups and downs in the U.S. real estate industry, but there has been no systemic crisis in the U.S. economy. ”

"I also wish I was overly worried. But now the size of subprime loans in the United States has swelled to $300 billion. Moreover, in less than two months in 2005, it increased by 18 billion, and the bubble inflated faster than the growth rate of subprime loans in the past decade. According to the model built by analysts at the Phoenix, Thunder and Bruce Foundations, if all else does not change, the size of subprime loans will swell to $450 billion by the end of this year. Moreover, derivative bonds are more worrying than subordinated bonds. Now the size of CDOs and CDS has swelled to a trillion dollars. And every time I see these numbers, my heart jumps. ”

Zhang Lei was silent for a while, "Boss, haven't you thought about revealing these to the public?"

"Concerns about fast-growing subprime loans have been voiced long before me. It's a pity that no one can resist the temptation of high profits. No one can take back the financial discourse from Wall Street. I don't want to waste my time trying to stir things up!"

"When do you think this crisis will erupt?"

"Lao Zhang, no one can accurately predict the future. But I think that with the economic situation in the United States, if nothing changes, it can last for two years at most. ”

"Understood, I'll deal with the Standard Chartered matter as soon as possible. ”

In addition, except for the shares of the four major banks, Tianshan Co., Ltd., and the 49% interest in the Modu Bund project, all other equity investment projects were sold before 2007. ”

The shares of the four major state-owned banks are too precious, and now it is far from harvest time, and it would be a pity to sell them. Tianshan Co., Ltd., as the third largest cement company in China, has at least ten years of dividend period along with the tide of real estate development and infrastructure construction in China. In addition, Hanhua Holdings invested several Huaxia coins in the expansion of Tianshan shares, and there was no reason to sell the company that it directly controlled before the harvest period.