Posts from Tuesday Jan 12 2010

Cheer up M&A banker, 2010 should be better than 2004

Better by half-a-trillion or so, in dollars. That’s according to Citigroup, whose Financial Strategy Group have produced a digestible tome tackling nine themes that they think will shape the corporate finance agenda in 2010. Namely: Read more

Let’s hope they have it ready in time…

Related links:
US and UK banks face political heat
– FT
Eliot Spitzer: Top Ten Questions for the Financial Crisis Inquiry Commission
– New Deal 2.0

And now weather-related shipping congestion

The natural gas, citrus, rock-salt and distillate markets have all been affected by colder than usual winter temperatures.

And just when you thought there couldn’t possibly be any more weather-related markets stories, here’s one connected to the shipping market. Read more

Greek tragedy

It’s the last thing you need when you’re trying to convince the market that you’re fiscally sound and responsible — a European Commission report condemning you for deliberately falsifying data.

But that’s just what happened to Greece on Tuesday afternoon. From the report: Read more

Bernanke shows Wall Street how its done

Now here’s a sentence we never expected to write: the US Federal Reserve posted full-year earnings for 2009 that beat expectations on Tuesday.

Here’s the full Fed news releaseRead more

A brief UC Rusal primer

Oleg Deripaska’s UC Rusal and its 1,141 page/2.5kg IPO prospectus rolls into town later this week.

According to the Times, at the core of Rusal’s pitch to institutions is this claim on how it wants to invest in its $2.6bn flotation proceeds: Read more

Meet the best bank on the Street

America’s beleaguered investment banks will have fourth-quarter earnings competition from an unlikely source: The Federal Reserve.

An analysis by the Washington Post has the central bank earning a whopping $45bn last year — about 42 per cent more than in 2008. Read more

Lunch Wrap

On FT Alphaville Tuesday morning,

- Corporate change and cash calls. Read more

China curbs more liquidity

It’s been speculated upon, and on Tuesday it became fact: China’s central bank raised banks’ reserve requirements by 0.5 percentage points in a bid to ward off soaring inflation. The new measures will be effective from January 18, according to Reuters.

The decision is likely also to be a response to growing fears that an asset bubble might be developing in the country. Read more

Fidelity forecasts positive decade for stocks

When it comes to talking their own books, the big beasts of the money management world are never backward in coming forward.

So far in January, we have been treated to Pimco’s view on UK and US government debt, thoughts echoed by Invesco’s Neil Woodford who went on to inform us that “the attractiveness of shares is as great as I remember.” Read more

When cold is good

Recent cold weather in the northern hemisphere may be putting pressure on natural gas and rock-salt supply, but there’s one imbalanced market where the big chill is probably very welcome indeed.

We’re talking here about the refining business and related oil products market. An overhang of distillate stock due to poor demand over the past year put significant pressure on refining margins, leading many facilities to mothball or shutdown capacity. Read more

Markets Live transcript 12 Jan 2010

Live markets commentary from FT.com 

Santander’s debt rebranding

On Monday, Santander said it was buying back as much as €2.5bn in debt, including hybrid bonds from Abbey and Alliance & Leicester, the British banks it bought in 2004 and 2008, respectively.

That same day, the Spanish bank also began its £15m UK rebranding campaign, in which it will switch the signs and colours gracing the hundreds of Abbey, Alliance & Leicester (and its other UK acquisition, Bradford & Bingley) bank branches in Britain to those of Banco Santander. Read more

That extra 8.29bps (+50bps) in China

Remember that extra 4.04bps China’s central bank added to its three-month bond auction last week?

On Tuesday, we are experiencing a redux — but this time it’s a full 8.29bps. Uh Oh. Read more

JAL: Some things don’t stay the same, or do they?

The whole sorry saga of Japan’s foundering national flag carrier, Japan Airlines, is being hailed in some circles for producing at least one change in the arcane workings of Japan’s pseudo-nanny state: after several big JAL bailouts over the past decade (all under the once-ubiquitous LDP), the DPJ-led government of Yukio Hatoyama is indicating it will let the airline go to the wall.

And that is no bad thing,William Pesek writes on Bloomberg on Tuesday: Read more

Treasury ΣTCHings

Is this a picture of ants marching towards a picnic basket?

An early version of cult-classic computer game SimCityRead more

Corporate change and cash calls

It’s obviously coincidental, but isn’t it funny how often management change follows an unpopular cash call?

It happened at Reed Elsevier, then Rexam and now Ladbrokes, which you may recall launched an unpopular £275m rights issue in October. Read more

Further reading

Elsewhere on Tuesday,

- Bonus Mad LibRead more

Pink picks

Comment, analysis and other offerings from Tuesday’s FT,

Gideon Rachman: Bankruptcy could be good for America
Perhaps the most memorable thing said so far by an official in Barack Obama’s administration was the remark by Rahm Emanuel, the White House chief of staff, that “you never want a serious crisis to go to waste”. America is now piling up debt and may one day be lucky enough to experience its very own national fiscal crisis. Let us hope it is not wasted. Read more

Snap news

Breaking pre-market news on Tuesday,

- Virgin Media to offer £500m equivalent of Senior Secured Notes due 2018 – statement. Read more

Ladbrokes seeks new chief

Ladbrokes, the UK bookmaker, will on Tuesday announce it is seeking a new chief executive after Chris Bell decided he would step down this summer. Bell’s decision will come as a surprise to the leisure industry, although several analysts have been notably more favourable towards Ladbrokes’ key rival, William Hill. The vacancy comes eight months after Peter Erskine, former chairman and CEO of O2, took over as chairman. Insiders said Bell had raised the subject of his succession shortly after Erskine took the chairmanship

Invista in talks over sale

Invista Real Estate, the UK asset manager majority owned by Lloyds Banking Group, is in talks over a sale in the latest sign of consolidation in the UK property fund management sector. The company on Monday revealed it was in talks with an undisclosed third party after a sharp rise in its share price, but said the talks were at a “highly preliminary stage”. Invista spoke to parties late last year including Aberdeen Asset Management and Henderson Global Investors but it is not thought the talks led to any concrete offer.

Overnight markets: Down

Asian stocks fell for the first time in three days and the dollar gained against higher-yielding currencies after China guided its benchmark money-market rate higher and Alcoa’s profits missed analyst estimates, reports Bloomberg.

Asian markets
Nikkei 225 up 63.50 (0.59%) at 10,861.82
Topix up 9.38 (1.00%) at 950.67
Hang Seng down -100.69 (-0.45%) at 22,310.83 Read more

Carlyle plans renminbi fund

Carlyle Group, the US private equity fund, on Tuesday unveiled plans to work with city authorities in Beijing to establish a renminbi fund that will enable it to make local currency investments across China. Carlyle has signed an MoU with the Beijing municipal government and expects the fund to begin operation later this year. Up to now, foreign buy-out groups in China have faced strict regulations on the use of dollar-based offshore funds to acquire local assets.

Rate fears spark bond frenzy

Businesses and governments have rushed to bond markets in a frenetic round of new year fundraising amid fears that interest rates are set to jump. A flurry of issuers, including Virgin Media, BMW and Manchester United football club, turned to the capital markets on Monday in efforts to raise more than $20bn. Poland and Mexico were among governments also to tap investors. So far this month, more than $75bn has been raised, mostly by financial institutions.

US banks face new levy

The Obama administration plans to impose a new levy on top US banks, to pay for the financial bail-out as part of the budget to be presented in February. The surcharge is intended to recoup the cost of the Tarp bail-out fund, estimated at $120bn, although officials say the ultimate cost will be less than $100bn. The proposal comes amid growing pressure from Congressional Democrats for the administration to take punitive action against banks, and just as banks this week begin announcing big new bonus schemes.

Lehman warns on claims

Banks seeking to profit from “outrageously unreasonable” claims against Lehman Brothers’ US business will be forced to prove their case in public courts, the executive in charge of unwinding the failed bank has warned. As the process moves into its second year, Bryan Marsal, chief executive of Lehman Brothers Holdings, said he would make an example of banks seeking to claim more than they should on massive losses linked to derivatives trades.

SEC to widen BofA suit

America’s SEC asked a federal judge on Monday for permission to expand its case against Bank of America and add charges that BofA should have disclosed massive losses at Merrill Lynch prior to a shareholder vote on the deal. Late on Monday, the judge denied the request but left the door open for the SEC to bring the charge in a separate case from the existing one that goes to trial on March 1.

Man Utd details refinancing

Manchester United on Monday confirmed it would launch an issue of seven-year bonds to raise £500m to restructure its finances, and reported a return to annual profit – from a pre-tax loss of £21.4m in 2008 to a £48.2m profit in 2009. FT Alphaville reports (here, and here) that the documents provide insight into the structure of the English Premier League champions, acquired by the Glazer family in a £790m leveraged buy-out in 2005, and into the family’s plans to repay PIK notes they personally used to help finance the buyout. The FT adds that the club on Monday also revealed losses of £35m on derivative trades.

JAL plunges by 45% limit

Shares in Japan Airlines, Asia’s biggest carrier, on Tuesday plunged 45%, the daily limit, to Y37 on speculation it will file for Japan’s sixth-biggest bankruptcy, reports Bloomberg. Prime Minister Yukio Hatoyama said that shareholders should take responsibility “in general” for JAL. The government is likely to approve a court-run restructuring this week to keep JAL operating. Delta Air Lines and American Airlines, now competing to invest in JAL, have both indicated a bankruptcy would not deter them.