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Big Deals (October 15) Print E-mail

Debt restructuring deals getting larger, Chinese state-oil company on the asset prowl.

By Marine Cole

The total value of debt restructuring deals is on the rise despite the number of deals going down.

The third quarter saw 41 completed restructuring deals with total value of $10.2 billion, up 6 percent in volume from the second quarter, which saw 84 completed deals and total value of $9.7 billion, according to data provided by Thomson Reuters.

"This is the second consecutive increase in quarterly total value despite the number of deals declining for the third straight quarter," it said.

Year-to-date completed restructuring deals are down across the Americas, Europe and Japan, while Asia has seen restructuring activity more than double in the region from $1.3 billion for the same period in 2009 to $2.8 billion this year.

The US ranks as the top nation with 55 deals valued at $10.4 billion, accounting for 41 percent of worldwide deals by value and 25 percent of total number of deals so far this year.

Meanwhile, the merger and acquisition market was busy this week.

Cnooc, one of the largest Chine state-run oil companies, agreed to buy a third of Chesapeake Energy's oil and gas assets in the South Texas shale deposit for $1.1 billion, in a deal that will ultimately be worth double that amount, according to the New York Times. "It is the largest Chinese purchase of US energy assets ever and the latest in a string of similar deals by Beijing around the world," it wrote.

The Wall Street Journal also reported that AOL and several private equity firms, including Silver Lake Partners and the Blackstone Group, are exploring making an offer to buy Yahoo, which the New York Times thinks won't be so easy to accomplish.

Andrew Ross Sorkin wrote in Dealbook Thursday the "trial balloon in the media is coming from a handful of bankers and investors who have tried to gin up interest in a deal for months," and that the Blackstone Group has already passed on the idea of investing.

In the investment banking world, the collective market share of the top 10 bookrunners in the global equity capital markets has decreased by over 11 points from 2009, and now accounts for slightly more than half of activity compared to 66 percent for last year, according to Thompson Reuters.

Seven out of the 10 firms saw a drop in market share from the same period last year with the largest drop from JPMorgan, down 6.1 market share points from 2009.

No surprise, then, JPMorgan released lower revenue for the third quarter. But, it was still able to post a $4.4 billion profit for the quarter, up 23 percent from the same period last year.

Most of the gain came from a large reduction in loan-loss reserves. Still, the firm's chief executive, Jamie Dimon, warned that while consumer loan losses were stable, they may still grow if the economy worsens, according to the New York Times.

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