Credit-market tightness threatens InBev
The worries of credit markets grinding to a near-halt stretch to Europe, according to a gloomy analysis of European banks issued this week.
Morningstar analyst Erin Davis on Monday increased the uncertainty ratings on six big European banks to "extreme," citing "deep uncertainties" surrounding their ability to maintain access to the wholesale funding she said they need to continue operating.
The banks are Credit Suisse, Lloyds, UBS, Barclays, Deutsche Bank and Royal Bank of Scotland.
Why should we care? Because the last three banks on that list are deeply involved in funding Belgian brewer InBev’s $52 billion buyout of St. Louis-based Anheuser-Busch Cos., the biggest U.S. brewer.
Some analysts have said over the past few weeks that the specter of deteriorating global credit markets injects a measure of uncertainty into InBev’s buyout plan, although they say the deal will probably be consummated by the end of the year as planned.
InBev spokeswoman Marianne Amssoms told Bloomberg News that the company has a "very diversified group of strong banks" and is confident in its financing.
Still, confidence in the global banking system has not yet been restored by the proposed $700 billion bailout plan, Davis wrote on Monday, noting that it was then unclear how much relief foreign banks that have significant operations in the U.S online cash advance. would get. Each of the six banks she downgraded have at least some operations in the U.S., "but it is not clear whether they would be considered significant," Davis wrote.
Global banks are much more exposed than typical U.S. banks to institutions that will not be eligible to participate in the bailout and could suffer collateral damage if global credit markets deteriorate further, she wrote.
But on a more positive note, the recent three-country European rescue of Belgian-Dutch banking and insurance group Fortis demonstrated that European leaders "are capable of quick, coordinated action aimed at keeping financial institutions from failing," Davis wrote. Fortis is also involved in InBev’s buyout of Anheuser-Busch.
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