Beazer’s Near-Distressed Bond Deal Reflects Deteriorating Housing Market

Most interesting is that the offers were all resembling the 2005-2007 bullshit as no one had any real skin in the game. I looked over the offers and said to my realtor, “here we go again, 2005-2007” … once again we get real stupid.

That quote is from someone who emailed me describing the process of selling his home recently.  He agrees with me that the housing market is about to do another cliff-dive.

I just published an article discussing the near-distressed bond deal floated by Beazer Homes this week.  Despite the belief that we’re supposed to be in a housing market recovery, Beazer’s bond deal was rated two slim notches above “distressed” by Moodys.  I don’t know have current statistics, which would be severely distorted by the massive intervention in the markets from the Fed’s QE anyway, but historically companies with a “triple hook” rating (CCC/Caa) have a very high probability of eventually ending up in bankruptcy.  When this happens again to Beazer, it will be either chapter 22 or chapter 33 (chapter 11 x 2 or 3).

You can read the details of my article here:   Beazer’s Triple Hook Bond Deal.

Interestingly, Wells Fargo’s quarterly earnings report contained data which re-confirmed my view that the housing market is starting to drop hard.   Wells Fargo underwrites roughly 22% of all mortgages – they are twice as big as the next largest mortgage underwriter.  According to their numbers, home purchase mortgage applications dropped over 10% from Q1 2013 to Q1 2014.

Last week, in what is supposed to be the start of the best seasonal period for home sales – and with no supposed distractions from bad weather – the Mortgage Bankers Association reported a 14% drop year over year for the week for purchase applications.  I’ll let the reader decide what this means for the health of the housing market…


11 thoughts on “Beazer’s Near-Distressed Bond Deal Reflects Deteriorating Housing Market

  1. I worked heavy civil construction in Stockton Ca from 1999 to 03 and Las Vegas from 2003 to 09. I’ve been back in Stockton since 2010. I have to admit it sure feels like 07 in Vegas. The union halls have long lists. There are tons of unbuilt subdivisions (rotting away) and homes forsale signs are up longer and being hung more frequently.

    Keep Stacking
    P.s. My friends in Vegas say Heavy Civil Work is real, real slow. 2001/02 slow.

  2. US banking giant JPMorgan Chase has reported a sharp fall in profits at the start of 2014, which it blamed on declines in its mortgage business.

    The bank said net income in the three months to the end of March was $5.3bn (£3.1bn) – a fall of 19% compared with a year earlier.

    Profits from its mortgage business stood at $114m, down $559m from last year. The figures mark the second successive quarterly fall in profits at the bank. It comes as Wells Fargo, the biggest US mortgage lender, reported a higher-than-expected 14% rise in first-quarter net profit.

    But it said the rise in profits was the result of a series of equity investment gains, which helped offset a continuing slowdown in its home loan business.

    1. Speaking of JPM …just read somewhere that Blythe Masters could be thrown under the bus by Jamie Dimon due to the mortgage debacle JPM is facing . If this is in fact the truth nothing could be better than a first class liar getting their due reward based on their chicanery way of life !

  3. Just wanted to put this on a post. That I was listening on a radio called LBC here in the UK that Europe are actually asking Russia for a loan of 3 billion for the Ukraine. This was said on the radio by a Russian parliamentary official.

  4. prometheus update Apr 13 on $SPX:

    Down, maybe hard, into late May STCL.
    On April 4, our cycle analysis identified the formation of the latest alpha high (AH). Additionally, we noted that a quick move below the short-term cycle low (STCL) in late March would signal the likely transition to a bearish translation. Since the formation of the AH, stocks have moved well below the last STCL, confirming the transition to a bearish short-term translation and favoring additional weakness heading into the next STCL in late May.

  5. A Chinese consortium is buying Glencore Xstrata’s copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China’s largest mining acquisitions. The consortium is led by MMG Limited and includes China’s Citic Metal.

    The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September. Analysts expect Glencore to use the proceeds from the sale to reduce its debt. The mine is expected to produce more than 450,000 tonnes of copper a year in its first five years.

    China relies heavily on the metal, which is used in electronics production. Ivan Glasenberg, Glencore’s chief executive, said in a statement: “Since we acquired Xstrata… our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the consortium.”

  6. I comment each time I especiallу enjoy a article on a website or if I have somеthing to add
    to the cօnveгsation. It’s caused by the sinceгness displayed in the post I browsed.

    And ߋn this article Beazer Homes Shows Housing Marкet Iѕ Tanking | Investmeոt Research Dynamics.
    ӏ wwas actually moved enough to post a thought 😉 I do have 2 queѕtionѕ for you іf it’s allгight.
    Is it simplʏ me or do a few of theѕe responsеs come across like left by brain dead indivіduals?
    😛 And, if you are writiոg at adԀitional online sites, I’d like to keep սp witɦ
    you. Could you make a lіst the complete urls of all your public pageѕ
    like yοսr twitter feed, Faсebook page or linkedin ƿrofіle?

    1. Thanks for your feedback. There’s no question that the housing market bulls are engaging in either severe denial or blind hope. I had one reader on Seeking Alpha who tried to tell me that the KBH CEO was buying a lot of stock. When I checked the SEC filings using, I discovered that the CEO had been excercising 100’s of thousands of compensation options and dumping the shares immediately. His total share holdings were declining. The reader tried to tell that the data on is “unreliable.” Here’s the thing: provide free, real-time access to the actual SEC filings LOL.

      This is my only website. Please sign up for the email updates. I’m working on my first junior mining stock research report will be available for a small fee. As soon as I finish the write-up, my web guy will install the software enhancements for this.

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.