HBOS Funding Raising Under Pressure
While the new shorting disclose rules were introduced to try and create a transparent market the plan seems to have backfired somewhat on the HBOS share price. The shares came under severe pressure after investment bank UBS issued a research note suggesting that the company would see mortgage arrears rise substantially throughout 2008, putting yet more strain on the group’s balance sheet.
However the news that a leading US hedge fund was shorting the stock seems to have made a number of UK investors sit up and take notice. The shorting rules were introduced in order to try and make the markets more transparent but they seem to have had the opposite affect with many wondering why such a leading hedge fund would take a sizeable short position in the stock.
The HBOS share price has now fallen below the rights issue price and while the fund raising event is underwritten, i.e. institutions have already agreed to take up the stock if shareholders did not, it does not bode well for the immediate future of the share price. Whether this is just short term jitters ahead of the rights issue close or a change in heart by analysts remains to be seen but it does not look good in the financial press.
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