Merrill Lynch CEO John Thain has said that although the credit crisis is far from over his company doesn't need any more outside capital to strengthen its balance sheet. 'We will not have to go back to the market to raise capital,' he said. Merrill has raised about $6.6 billion from investors, mainly sovereign wealth funds based in the Middle East and Asia, this year alone. He also denied rumors that Merrill may get sold or merge with a bank. He emphasized that Merrill had a strong balance sheet with about $80 billion in cash at the end of December 2007. He indicated that the company was carrying a similar amount of cash at the end of the first quarter this year.
Optimism is mounting on Wall Street that another Bear Stearns like situation will be avoided as write downs for bad assets seems to have peaked.
Merrill Lynch is due to announce its first quarter earnings later this month. Mr. Thain declined to comment on the earnings but he said,'If you look at the prices of credit related assets, mortgages, leveraged loans, commercial real estate, all have deteriorated over the last three months. We have all of them.'
He wasn't sure the fiscal and monetary stimuli provided by the Fed and Congress would help, given the fact that the problem was not so much a liquidity issue but a credit issue tied to a lack of confidence in assets and counter parties. The inability of hedge funds to build up leveraged positions in the present situation will prolong the difficult economic environment, he felt.