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Economy Ekes Out Positive Signals

NEW YORK: That investors are willing to refi big chunks of leveraged debt is a positive sign for the economy according to John Connaughton, a senior executive at New York private equity giant Bain Capital. He told Reuters that the movement of large, second-lien loans demonstrates some degree of faith remains in the market. A bounty of available money in the two years leading up to the current recession created a staggering amount of debt due in three to five years, and companies across the board are seeking ways to manage it.

Most broadcasters are still cost cutting--writing down millions and restructuring, but at least one, Dallas-based Belo Corp., recently renegotiated $50 million off of a bank loan due in 2011.

Connaughton said private equity investors like Bain remain cautious, waiting for some stability in the market, but that cyclical businesses were starting to look “very interesting.”

Meanwhile on Wall Street, the Dow jumped 500 points yesterday for its fifth-largest single-day gain. The spike was attributed to the fed’s plan to wipe up $1 trillion in bad mortgages. The index cooled slightly in Tuesday trading but retained much of its previous-day gain.

Institutional investors and the fed are not alone in their intent to invest. One in five Average Joes still intend to buy a home within the next five years, according to numbers gleaned by Move, purveyor of Realtor.com. Of the 23 percent of people surveyed who said they planned to buy a home, more than half would be doing so for the first time.

The results said that regardless of fears about unemployment and the economy, around 18 percent of those surveyed intended to buy a home this year to take advantage of a new $8,000 tax credit.

“It’s not all doom and gloom. We found Americans are optimistic about homeownership despite concerns” said Move CEO Steve Berkowitz. “They’re doing everything they can, from reducing discretionary spending to pay their mortgages, to planning to take advantage of the administration’s new program to stop foreclosures. They’re also working with lenders to modify loans.”

Move said 1,005 interviews were completed for the survey, taken March 6-8.-- Deborah D. McAdams