Dollars and Jens
Monday, May 07, 2007
New Century Financial
At the same time the common stock of New Century Financial was delisted from the NYSE, so were two issues of preferred stock. They continue to trade on the pink sheets, and, while I don't know what the relevant par values are, the subprime market in general didn't really do anything interesting until the past six months, so the 52-week high may be a reasonable proxy, and they're both still trading — a few trades took place today — around 35% of that level. Barring the ever-present possibility that the market's just being dumb, this suggests at the very least a 35% chance that lenders and bond holders are going to come out of this thing whole, and really suggests odds rather better than that.
It's looking more and more like a chapter 11 liquidation at this point, and they just sold some mortgages at 30 cents on the dollar, but it may be that a nonnegligible part of their assets are unimpaired loans that could sell around their book value, though I should emphasize that I don't actually know that and am wildly speculating here. In any case, someone in the market thinks assets could work out to exceed liabilities. (I don't have data on where their bonds are trading. If anyone who reads this does, see whether the comments section works.)