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AIG in focus as financial meltdown spreads

HONG KONG - American International Group Inc, thrown a $20 billion lifeline by New York state officials, came under fresh pressure for survival on Tuesday as ratings agencies downgraded the insurer's debt and the global financial sector meltdown spread. Asian markets, many of them closed for a holiday on Monday, tumbled as investors absorbed the weekend's dramatic events on Wall Street, where Lehman Brothers filed for bankruptcy protection and rival Merrill Lynch agreed to be sold to Bank of America for $50 billion. Shares in AIG plunged nearly 61 percent on Monday and the US Federal Reserve hired investment bank Morgan Stanley to review options for what was once the world's biggest insurer -- which has lost 92 percent of its value this year -- a person familiar with the situation said on Monday. British bank Barclays Plc, which over the weekend pulled out of rescue talks for Lehman, was reported by the Wall Street Journal to be in talks to buy large portions of Lehman. We do not comment on market rumors, said Angie Tang, a Barclays spokeswoman in Hong Kong. AIG's ratings downgrade could force it to post more collateral and nullify insurance contracts, possibly setting in motion a chain reaction that could threaten its survival. While regulators allowed it to tap its subsidiaries for cash, this will not suffice beyond the short term, and its troubles risk losses for its counterparties, Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong, wrote in a research note. Top US savings and loan institution Washington Mutual Inc saw its rating cut to junk status by Standard & Poor's amid concerns about mortgage losses, causing its shares to slide in after-hours trading after a 27 percent drop in the regular session. Eyes on AIG Moody's Investors Service cut AIG's rating to A2 from Aa3, a two-notch downgrade. S&P lowered the rating to A-minus from AA-minus, a three-peg reduction, and Fitch Ratings reduced its standing to A from AA-minus, a two-notch cut. AIG's ratings are still investment grade, although all three agencies said more downgrades could follow. AIG seems to be the next guy on the chopping block, said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey. Again seeking a private solution to Wall Street's woes, the Fed had asked JPMorgan Chase & Co and Goldman Sachs Group Inc to explore arranging $70-$75 billion in loans to support AIG, among other financing options, another person familiar with the situation said. AIG turned to the Fed late on Sunday after failed talks with several buyout firms and Warren Buffett's Berkshire Hathaway. The company has also said it was exploring asset sales. Markets tumble Asian stocks tumbled across the board, with Tokyo down more than 5 percent at a three-year low. Japanese government bond futures jumped by their daily limit of three full points as investors fled to safe havens, while Japan's central bank said it would strive to maintain stability in financial markets. Hong Kong's Hang Seng Index was off nearly 7 percent, while Seoul's main index dropped more than 6 percent. The second leg of the subprime crisis has begun, Jun Kwang-woo, head of South Korea's Financial Services Commission told reporters. It could be painful but a recovery, once in place, may be rapid. US stocks tumbled on Monday, with the Dow Jones industrial average dropping more than 500 points, or 4.4 percent, as Wall Street had its worst day since markets reopened after the September 2001 attacks. There was speculation that Wall Street's worsening meltdown could prompt the Fed to act. US short-term interest rate futures rose sharply on Monday, reflecting the higher prospects for a rate cut at or before Tuesday's Federal Reserve meeting. The iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion, widened by over 50 basis points from Monday's levels to a record 700/750 bps. The equivalent investment -grade index widened by 20 bps to 195/210 bps, also a record. Darkening one of the few bright spots from the weekend's mayhem, Bank of America -- which would surpass Citigroup Inc as the country's largest bank by assets with the planned takeover of Merrill -- saw its shares plunge by 21 percent. The concern for Bank of America is the debt that they are acquiring, said Marc Pado, US market strategist at Cantor Fitzgerald & Co in San Francisco. Secondly, is it too big a purchase? They are dealing with Countrywide right now. Did they need to be dealing with this as well? There's some concern they might have bit more than they could chew. The state of New York, where AIG is based, did its best to bolster the stricken insurer with a complex asset swap giving it a $20 billion lifeline, but its longer-term rescue depended on additional funding.

The cost to insure the debt of AIG also surged on Monday. AIG's credit default swaps jumped to 33.5 percent of the sum insured paid upfront, plus annual premiums of 5 percent for five years, from 13 percent upfront on Friday, according to Markit Intraday.

Blaze hits shoe soles factory in Antipolo

A shoe soles factory in Antipolo City caught fire Saturday afternoon, ABS-CBN News learned.
The fire at the Marikina Rubber shoe soles factory, located in Barangay Mambugan, started at around 4 p.m.
The Antipolo City Bureau of Fire Protection's initial report said that the fire has reached 4th alarm and was still burning as of 5:30 p.m.
Several houses have also been damaged by the blaze.
No injuries or fatalities have been reported as of posting.

Daboys body kept from public view; burial set for June 12

The remains of the late actor Rudy "Daboy" Fernandez have been closed off from public view starting at 1:00 in the afternoon of Wednesday to allow close family and friends some private time together.
They will also prepare the chapel for a Holy Mass scheduled at 8 pm.
Reportedly, Rev. Fr. Arlo Yap, spiritual director ng Oasis of Love Catholic Renewal Community, will officiate the mass.
Fans and supporters of the late actor Rudy "Daboy" Fernandez however continue to gather at the Heritage Park in Taguig where the actor's remains lie. The crowd began lining up along Bayani Road, where one of the park's gates is located, As early as six in the morning Wednesday.
The burial is set for Thursday, June 12, at one in the afternoon.
Daboy passed away on Saturday, June 7, after a two-year struggle against periampullary cancer. He passed away in the presence of his wife Lorna, family and friends at their home in White Plains, Quezon City.
Dubbed as the Philippines Cinema's "Prince of Action," Fernandez made almost 100 films. He started his acting career at the age of three in the movie "Luksang Tagumpay" with his father, Gregorio Fernandez, as the film director.
His career bloomed when he starred in action films based on real life characters, both anti-heroes and heroes, including "Bitayin si Baby Ama" ; "Batuigas: Pasukuin si Waway" and "Victor Corpuz" and "Markang Bungo."

Philex ships out P727M worth of metals

Philex Mining Corp., the country's biggest miner by market value, said Tuesday it shipped out P727 million worth of copper and gold last Friday.
The company delivered 5,025 dry metric tons of copper concentrates with metal contents of 2.5 million pounds copper and 8,265 ounces gold.
Philex closed unchanged at P6.50 on Tuesday.

Majority of Americans believe Obama will win election: poll

Agence France-Presse
WASHINGTON - A majority of Americans believe that Democratic candidate Barack Obama will win the presidential election against Republican hopeful John McCain in November, a Fox News poll showed Thursday.
While 51 percent say Obama, who is vying to become the first African American president, will win the election, only 27 percent are betting on a McCain victory.
Voters registered as Democrats are more confident about their candidate's chances than their Republican peers: 71 percent of Democrats see Obama winning on November 4 while 51 percent of Republicans believe McCain will win.
One in four Republicans think that Obama, a senator from Illinois, will succeed US President George W. Bush.
A month ago, 47 percent of Americans believed that Obama, 46, would win the election compared to 32 percent for McCain, a 71-year-old Arizona senator.
Even though many Americans are predicting an Obama victory, the race remains tight.
In a head-to-head matchup, Obama leads McCain 41 to 40 percent among registered voters, the poll showed. If Libertarian candidate Bob Barr and independent hopeful Ralph Nader are added, Obama leads McCain by 40 to 37 percent.
If Obama chooses former Democratic nomination rival Hillary Clinton as his running mate and McCain picks former Massachusetts governor Mitt Romney, a former Republican candidate, the Democratic ticket leads 48 to 39 percent.
The survey was conducted between July 22-23 among 900 voters. The margin of error is plus or minus three percentage points.
While the race remains close, Obama is struggling to convince many Americans of his commander-in-chief mettle after serving in the US Senate for only three years.
An NBC News/Wall Street Journal poll out Wednesday showed that 55 percent of Americans believe Obama would be the riskier choice for the presidency compared to 35 percent for McCain, a Vietnam war veteran.
When asked about the poll, Obama told NBC television Thursday: "I do understand it. I'm new to the scene."
"John McCain's been around 25, 30 years in public life. I have just recently emerged in terms of our national politics. And so it's not surprising that people would say that the guy we're more familiar with is the less riskier choice," he said.
"That doesn't answer the broader question, though, which is what do Americans think we need right now?"
Another poll released Thursday by Quinnipiac University Polling Institute showed McCain had cut Obama's lead in the key battleground states of Michigan, Minnesota and Wisconsin, and overtaken Obama in voter support in Colorado.
"It's been a good month for McCain. His movement in these key states, not large except for Minnesota, jibes with the tightening we are seeing in the national polls," said Peter Brown, the institute's assistant director.
"The good news for McCain is that he has improved his standing in Colorado and Michigan, two states that are critical to each man's strategy," Brown said.
McCain led Obama by 46 percent to 44 percent in Colorado, the survey conducted last week of some 1,400 people in the mountainous state showed. The margin of error was 2.6 percent.
In June, Obama led McCain by 49 percent to 44 percent in Colorado, traditionally a Republican state.
In Michigan, Obama also saw a couple of percentage points shaved off his voter-support tally, which fell from 48 percent in June to 46 percent this month. McCain held steady at 42 percent. The margin of error in that state's poll was 2.4 percent.
And in Minnesota, McCain surged ahead -- from 37 percent in June to 44 percent -- while Obama fell back from 54 percent to 46 percent, Quinnipiac said. Minnesota's margin of error was 2.8 percent.
Another poll by the Pew Research Center found that two-thirds of Hispanic voters support Obama for the White House, while less than one quarter back McCain.
The findings marked a positive turn for Obama's fortunes with Latinos: he lost the Hispanic vote in the Democratic primaries to Clinton by nearly two-to-one, Pew noted.