Banks eye AIG’s $47 billion in toxic assets held by NY Fed: WSJ

NEW YORK, Fri Mar 16, 2012 – Several banks including Goldman Sachs have shown an interest in buying American International Group Inc’s. complex and troubled assets tied to the insurer’s bailout, the Wall Street Journal said, citing people familiar with the matter.

The troubled assets, which are held by the Federal Reserve Bank of New York, are valued at about $47 billion at face value, the paper said. These toxic assets were acquired by New York Fed as a part of the AIG bailout at the height of the financial crisis.

Banks including Barclays PLC’s Barclays Capital unit, Credit Suisse Group AG and Goldman Sachs are among the ones interested in buying the complex mortgage-backed assets at around their current market value, the Journal said, quoting people familiar with the matter.

A few interested buyers have approached the New York Fed about the collateralized debt obligations. However, the people told the paper that they do not yet expect any imminent sales.

None of the parties were immediately available for comment when contacted by Reuters.

Chesapeake Energy Corp. targets new asset, debt sales

OKLAHOMA CITY, Okla. – Chesapeake Energy Corp said it would sell off $10 billion to $12 billion in assets and issue another $1 billion in debt to cover its spending this year amid the weakest natural gas prices in a decade.

To bolster its cash flow, the second-largest U.S. natural gas producer has been cutting production from “dry gas” wells and shifting to liquids-rich fields that produce products whose prices are based on that of crude oil.

Chesapeake said on Monday that it would put fields in Texas and Oklahoma as well as some midstream assets on the block and sell its future production in the Granite Wash field.

Investors initially welcomed the announcement. Shares of Chesapeake rose more than 5 percent in early trading, before falling back somewhat.

Chesapeake may find it difficult to get the prices it wants for the assets because of low prices for natural gas, which are hovering near $2.50 per million British thermal units, Brean Murray, Carret & Coone analyst Raymond Deacon said.

The low natural gas prices are also putting pressure on the company’s cash flow.

Analysts have said anticipated cash flows of about $5 billion in 2012 are likely to fall far short of Chesapeake’s spending needs of around $12 billion.

“They need to get those levels more in line,” Deacon said.

Chesapeake shares had slumped nearly 40 percent since their peak in August through last week, hurt by the weak gas prices. The company has promised to trim its debt to $9.5 billion by the end of the year from nearly $14.5 billion at the end of the third quarter.

Last week, Chesapeake said it had cut its gas output by 500 million cubic feet per day and was considering pulling production down by double that amount, a move that could help reduce spending.

Included in the expected deals are sales or joint ventures for the company’s West Texas Permian Basin assets and Mississippi Lime acreage in northern Oklahoma, which will yield $6 billion to $8 billion.

Newfield Exploration to sell more assets this year

HOUSTON – Newfield Exploration Co. said it expects to sell non-core assets worth $335 million early this year to focus on oil-rich properties and is looking at options for its Gulf of Mexico fields.

The company sold $400 million worth of assets last year, the independent oil and gas producer said in a statement.

“We are re-allocating our people and using proceeds from recent asset sales to drive strong oil growth. For 2012, we will direct substantially our entire budget to oil and liquids-rich opportunities,” CEO Lee Boothby said.

The company expects production of oil and liquids to grow more than 20 percent this year and account for half of its total production by second half of the year.

In 2011, Newfield grew its oil and liquids production more than 20 percent, it said.

Newfield is not planning to drill any additional exploratory wells in the Gulf of Mexico. Production at its Gulf of Mexico deepwater division fell 16 percent for the three months ended September, according to a regulatory filing.

Shares of the company were up 1 percent at $38.63 on the New York Stock Exchange on Monday.

Lehman brokerage trustee eyes $18.3 billion payout

NEW YORK ― The trustee liquidating Lehman Brothers Holdings Inc’s. brokerage unit asked a bankruptcy judge for permission to set aside $18.3 billion of assets to be returned to customers beginning early next year.

That payout would represent more than three-fourths of the $23.7 billion of assets that James Giddens, the trustee for the Lehman Brothers Inc unit, said he has under his control.

Of the $23.7 billion, $12.7 billion are securities and $11 billion is cash. Lehman was the fourth-largest U.S. investment bank prior to its Sept. 15, 2008, bankruptcy, the largest Chapter 11 filing in U.S. history.

“The great bulk of the assets that will be available for distribution … are now in hand,” Giddens said in a late Thursday filing with the U.S. Bankruptcy Court in Manhattan. “The trustee would like to be in a position to proceed with interim distributions to customers in early 2012.”

Soon after Lehman’s bankruptcy, Giddens distributed $92.3 billion to benefit customers holding 110,000 accounts. Many accounts were absorbed by Barclays Plc and asset manager Neuberger Berman.

Giddens is also liquidating the broker-dealer unit of MF Global Holdings Ltd, a futures brokerage once run by former New Jersey governor and Goldman Sachs chief Jon Corzine. Customer distributions in that case are a small fraction of those in Lehman’s bankruptcy.

According to Thursday’s filing, Giddens plans to keep $3.07 billion of assets in reserve pending the outcome of litigation with Barclays. The British bank bought much of Lehman’s investment banking business.

Giddens’ request requires approval by U.S. Bankruptcy Judge James Peck. A hearing is scheduled for Jan. 25, 2012.

Peck is also expected at a Dec. 6 hearing to approve Lehman’s reorganization plan. The plan would return about $65 billion to creditors starting early next year. Lehman this week said that plan has overwhelming creditor support.