Jefferies Group Inc. (JEF) said it’s increasing disclosure of European holdings today to counter investor concerns that the assets could hobble the firm.
The investment bank will list on its website individual holdings in Italy, Spain, Ireland, Portugal and Greece, New York-based Jefferies said today in a statement.
“These are fragile times in the financial market and we decided the only way to conclusively dispel rumors, misinformation and misplaced concerns is with unprecedented transparency about internal information that is rarely, if ever, publicly disclosed,” said Richard Handler, chairman and chief executive officer, in the statement.
Trading in Jefferies’s stock was halted twice yesterday and the shares plunged as much as 20 percent after Egan-Jones Ratings Co. downgraded the firm’s debt, citing large “sovereign obligations” relative to equity. Jefferies has released four statements this week seeking to assuage concern about holdings of European sovereign debt, the kind of risk that helped doom MF Global Holdings Ltd. (MF), which filed for bankruptcy this week.
Jefferies has about $2.41 billion in so-called long bets on the sovereign risk of the five nations and $2.32 billion in short positions, according to today’s statement. The disclosure on the website will list holdings by their Committee on Uniform Securities Identification Procedures numbers, or CUSIPs.
The firm gained 1.5 percent to $12.19 at 3:19 p.m. New York time, after trading as low as $11.12 earlier today. Jefferies has declined by more than half this year.
Interest Rates
“Jefferies has no meaningful credit risk in respect of the sovereign debt of these nations, and an insignificant risk related to interest-rate movements” said Brian Friedman, chairman of the executive committee, in the company’s statement.
Jefferies said the value of the fixed-income portfolio would change by $37,000 if interest rates move by 1 basis point, or .01 percentage point.
Leucadia National Corp. (LUK), Jefferies’s biggest stockholder, added another 500,000 shares today for about $11.35 each, after purchasing 1 million shares yesterday, the New York-based firm said in a regulatory filing.
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