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When Apple ran into trouble and people began speculating about a big capital-return event, the myth began to sprout that Apple had never before issued bonds.

As Bloomberg makes clear, the widely expected upcoming offering is not the first time the company has tapped the debt markets. But it is the first time since 1996 -- a very long time. We can all be forgiven for forgetting.

Goldman Sachs was the underwriter back then, as well as for a debt offering in 1994. Apple has had much need for an investment bank for years, but it turned to the gilded bank for advice on how to deal with its controversial cash stash. That involved advising the company on how to deal with a controversy ignited by hedge fund manager David Einhorn, who wanted the company to deliver enhanced value to shareholders via preferred shares.

That work may have put Goldman Sachs in the pole position when it came time to hire a debt underwriter. And it's a decent bet that Goldman Sachs was not unopposed to such an offering in its advice.

But Apple will not rule the tombstone alone. The tech giant has also turned to Deutsche Bank, which advised the company when it took over Next in 1997. The two banks are likely to be tapped as formal lead underwriters, if they haven't been already.

Update: Apple raised $17 in a blockbuster debt issue.

For more:
- here's the Bloomberg article

Read more about: Goldman Sachs, Apple
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2. KKR steps up in lending

By Jim Kim

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3. Executive departures raise questions ahead of JPMorgan meeting

Critics of overly aggressive bank regulation have argued that banks will eventually have no choice but to ratchet down their lending, which would have big implications in terms of economic growth.

The void in lending will either go unfilled, crimping growth, or the void will be filled in by less regulated entities, they say. The irony would be that if "shadow banking" rises to meet demand, regulators will have succeeded in making that semi-opaque system more powerful and more consequential, the direct opposite of what proponents of bank regulation have sought.

An example of these dynamics in action comes from KKR, which has agreed to lend the Spanish construction materials firm Uralita 320 million euros after banks refused to loan it any more cash, reports Bloomberg. It notes also that "as new regulations and rising loan losses force Europe's banks to cut back on the amount of money they lend to companies, investment houses such as KKR, Blackstone and Prudential's M&G are trying to fill the gap by lending directly to businesses facing a cash crunch."

A KKR executive was quoted saying, "These companies are so frustrated, frustrated by banks that won't support them, frustrated by hedge funds that are buying their debt in the secondary market and just looking for short-term gains."

In the U.S., the industry is certainly seeing more credit hedge funds and specialty finance companies step up their activity in creative ways, as the local bank loan option looks less and less favorable to small companies.

For more:
- here's the article

Related Articles:
The true cost of heightened regulation

Read more about: shadow banking, KKR
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By Jim Kim

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4. London hedge fund event cancelled

JPMorgan Chase (NYSE:JPM) will host its annual shareholder meeting on May 21 in Tampa, and it's shaping up to be a barnburner.

There will be lots of pointed questions asked, and it remains to be seen if CEO Jamie Dimon will emerge unscathed. While most of the discussion has been about whether the board should split the chairman and CEO positions, effectively stripping the chairman title from Dimon, other big issues have emerged, including executive depth and CEO succession. Shareholders have every right to question the succession plans in light of the multiple executive departures over the past few years.

The latest departure was that of Frank Bisignano, who was "regarded within JPMorgan as something of an operational wizard," according to DealBook. The news "has heightened worries about the persistent executive turnover at the bank and raised fresh questions about who is ready to succeed Mr. Dimon one day."

Dimon has addressed the issue of executive depth before. In his annual letter to shareholders, he wrote that the changes are "not as pronounced" as some might conclude because the replacements were experienced. Matthew Zames for example is now the bank's sole chief operating officer; previously, he already shared the job with Bisignano. "Dimon appears unfazed by the steady stream of departures. At meetings inside the bank he has lauded the executive team that remains, and although the bank's succession plans are not known, he has told people close to him that he is confident the bank will be in good hands when he does decide to leave."

What's emerging is a game of chicken. The board is reaching out to shareholders, suggesting that if Dimon is stripped of the chairman title, he might leave, which might hurt the stock. But if the executive team is really deep and strong, perhaps his leaving wouldn't make a huge difference. The board is walking a fine line ahead of the meeting.

In the end, I think Dimon will hang on to both titles, though the board might have to make some concessions, perhaps enhancing the roles of top independent directors.

For more:
- here's the article

Read more about: Annual Meeting, CEO succession
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By Jim Kim

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5. A new estimate of the implicit subsidy to big banks

The Ark gala -- "once the lavish pinnacle of London's boomtime financial social scene," according to the Financial Times -- has been put on hiatus, at least for one year.

It's certainly tempting to interpret the news as an indication that the financial scene in London remains in disarray. Certainly, the top banks are reeling. One might think that this has nothing to do with hedge funds, which in a strict sense is correct. Hedge funds in fact may have benefitted, as more than a few top bankers and traders sought to exit regulated entities. But the tone has been negative on high finance in general, which means ostentation is not really vogue right now.

While the dinner had "earned notoriety for scaling the heights in outrageous ostentation and financial largesse," it was a fund raiser as well. "Over its decade-long history, the £10,000-a-ticket gala has been a barometer of the hedge fund sector's success, peaking with the £26.6m it raised in a single evening in 2007, when Madonna and Prince sang to guests, former US president Bill Clinton delivered the opening speech and the auction prizes included a private dinner with Mikhail Gorbachev," FT noted. Last year, the proceeds were down to £14.5m.

The organization, headed by a Swiss hedge fund manager, is considering other ways to raise funds for charity. It may make a return in future years, though perhaps in slightly less grand terms. One insider was quoted saying, "It was all getting to feel a little bit 1788 and all that," a comparison "to the court of Louis XVI on the eve of the French Revolution."

I doubt that any heads will roll over the decision to cancel.

For more:
- here's the article

Read more about: Fundraisers, Charity Event
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By Jim Kim

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