Posts from Monday Jan 18 2010

(Ir)rational enthusiasm, emerging markets edition

There was something uncanny about the coincidence of a frothy comment on Russia and a typically less-than-impressed note from David Rosenberg both hitting our in-boxes on Monday.

First, from RBS (emphasis FT Alphaville’s): Read more

Intl Power says “No deal”

Better late than never we suppose.

Press release timed at 15.09 on Monday afternoon. Read more

Did foreigners cause the financial crisis?

That’s foreigners, as in non-United States. And it’s the thesis of MIT economist Ricardo Caballero that’s already setting the blogosphere aflame after it was highlighted by Time Magazine over the weekend.

Here’s the basic premise, as synopsised by Time: Read more

A drachma-tization

Could Greece be forced out of the euro zone – or for that matter the EU – as a result of its fiscal delinquency?

As we reported last week, it’s a matter recently taken up in an EU paper entitled “Withdrawal and Expulsion from the EU and EMU: Some reflections” by Phoebus Athanassiou and published in December 2009. Read more

Hamp-ing up the numbers

On Friday the US Treasury released December figures for its Home Affordable Modification Program.

The report makes for interesting reading maths. Read more

Austerity is the way… (updated)

…according to Bob Janjuah, chief strategist at RBS, who has just published his 2010 outlook piece. We can report that it has an intriguingly pro-Eurozone flavour.

It’s also very, bearish. So much so that some of it might even make Albert Edwards and his colleagues wince. Read more

What Google says about inflation

Alternative research shop Variant Perception is always good for an exciting nugget of eco-data.

In their latest monthly report their focus — as always — tips towards the inflationary view of things. One indicator they cite to lend support to that view being statistics stemming from Google Trends. Read more

Primary dealer pains

Poor primary dealers.

They are the official trading partners of the Federal Reserve Bank of New York, currently numbering 18, but they’ve had to contend with some difficult newsflow in recent weeks. Read more

Lunch Wrap

On FT Alphaville on Monday morning,

– Deal or no deal at Intl Power? Read more

Markets Live transcript 18 Jan 2010

Live markets commentary from 

Corporate markets head for indigestion

After the busiest start to any year for sovereign emerging-market debt, it’s corporate bond investors around the world who now seem to be heading for a massive case of indigestion, as ShortView noted last week.

As Bloombeg reports on Monday, the cost to borrow in the corporate bond market is rising for the first time since November, especially in Europe as a slew of banks – including Barclays, Lloyds Banking Group and more than a dozen others – sell record amounts of fixed-income securities to refinance $2,000bn of debt due for repayment this year. Read more

Grεεk dεbt disastεr

Here’s a singularly-arresting chart from Deutsche Bank’s excellent fixed income team:

 Read more

Extra Time

The more that Manchester United’s £500m senior notes offering is picked over, the less appealing its looks, especially at the 9.25% interest rate implied by the pro-forma figures in the prospectus.

Here’s something we picked up from Covenant Review, which provides analysis of bond covenants by lawyers as opposed to securities analysts. Read more

Consulting the Greek CDS oracle

Forecasting the fate of nations has never been easy.

Take for example the story of King Croesus of Lydia, told by Greek historian Herodotus. Read more

China’s lukewarm money?

Guan Tao, head of the international payment department of the State Administration of Foreign Exchange, over the weekend stated that stronger capital control were essential to maintaining stability in the Chinese currency and price level, reported the South China Morning Post. ( via China Economic Review)

Guan Tao’s capital control warning came just two just days before China International Capital Corp., one of the country’s biggest investment banking and research houses, said the PRC attracted a total of $48.7bn of so-called `hot money in December — the biggest amount in eight months. Read more

Deal or no deal at Intl Power?

It is 40 minutes since trading on the London Stock Exchange got under way on Monday morning — and still no statement from either International Power or GDF-Suez on the Sunday Times bid report, reproduced in part below.

FRANCE’s state-controlled power giant GDF Suez has made a takeover approach to International Power, the £5 billion energy group.

 Read more

Further reading

Elsewhere on Monday,

– How to get your share of bonuspalooza.
 Read more

Pink picks

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

Clive Crook: Smarter ways to punish a banker
Whenever you wonder if rage at Wall Street is getting a little out of hand, some titan of the industry speaks up and makes you think, “Let’s go down there and smash some windows”. But anger is a poor basis for policy – especially when combined with a misunderstanding of the issues, says the FT’s CrookRead more

Snap news

Breaking pre-market news on Monday,

– GDF-Suez eyes partnership tie-up with International Power – reportRead more

Overnight markets: Down

Asian stocks mostly fell on Monday, reports Bloomberg, snapping four weeks of gains for the MSCI Asia Pacific Index, after JPMorgan on Friday reported a loss in retail banking and US consumer confidence trailed forecasts.

Asian markets (Mon)
Nikkei 225 down -134.43 (-1.22%) at 10,848
Topix down -8.76 (-0.91%) at 957.64
Hang Seng down -67.73 (-0.31%) at 21,586 Read more

Hershey plans to top Kraft bid

US food group Kraft plans to increase its £10.5bn ($17.2bn) hostile bid for Cadbury as early as Monday to more than 800p a share by adding more cash after investors rejected its initial offer, reports the FT. But rival US confectioner Hershey plans to offer at least $17.9bn to top Kraft’s bid, adds the WSJ. Kraft might use Monday’s US public holiday, when markets are closed, to make a revised offer ahead of a Tuesday midnight deadline.

Dubai World debt up for sale

Bank creditors owed billions of dollars by Dubai World are trying to reduce their exposure to the debt-laden conglomerate by offering their loans for sale ahead of an expected restructuring of the company’s $22bn debt. Last week, debt traders told potential investors that an unidentified seller wanted to offload about $100m of loans, possibly at 70% of face value. If it proceeds, the sale would be the first large trade in the $5.5bn loan facility at Dubai World’s parent, of which $2.1bn falls due in June.

Marshall Wace eyes ETF listing

Marshall Wace, one of Europe’s largest hedge funds, will on Monday unveil plans to launch a publicly listed exchange-traded fund to track its flagship Tops fund strategy as it tries to rebuild assets after huge redemptions in 2009. The move marks the revival of an earlier trend for top-tier hedge funds to list versions of restricted, proprietary strategies. The Marshall Wace vehicle, expected to raise $500m, will be structured as an ETF, the first such structure of its kind.

Tiger IPO shines amid the gloom

Tiger Airways, the Singapore low-cost carrier, will on Monday announce it has raised S$248m ($178m) in the first IPO by an Asian airline for five years, defying investor concern about its forecasts. The success of the IPO sets the stage for an escalating battle between Tiger and its two main rivals, Malaysia’s AirAsia and Jetstar, owned by Qantas, for the rapidly growing regional budget travel market.

KDB, HSBC, eye Siam City

Korea Development Bank, South Korea’s largest state-owned lender, is considering bidding for a stake in Siam City Bank, Thailand’s seventh-biggest lender, reports Bloomberg. KDB chief executive Min Euoo Sung is understood to be in Thailand for talks with Siam City. Reuters adds that HSBC and Thailand’s Thanachart Bank are also bidding for the 47% stake in Siam City.

Allianz to shake up strategy

Allianz, Europe’s biggest insurance company, plans to significantly increase its investments in alternative asset classes in a push for higher returns. The group, which manages about €400bn ($575bn) of customers’ investments in insurance policies, will boost investment in private equity, property and infrastructure such as renewable energy assets. The move highlights how insurers are dealing with a low-interest rate environment, which is cutting returns from their big bond holdings, while avoiding riskier investments in equity markets.

Spyker denies joint bid for Saab

Dutch sports car maker Spyker denied on Sunday it had plans to jointly bid for General Motors’ Saab with Luxembourg investment firm Genii Capital, reports Reuters. German WirtschaftsWoche business weekly, in an article to be published on Monday, says the two companies, which have been trying individually to clinch a deal to buy the troubled Swedish carmaker, had now teamed up.

Europe commercial property soars

Commercial real estate investment has risen by more than 40% in Europe in the past quarter to the highest level since the collapse of Lehman Brothers in 2008. More than €25.7bn of property deals were sealed in Q4, up 42% on the previous quarter and double the levels in the first two quarters of the year, according to property consultant CB Richard Ellis.

New rules for UK auditors

The biggest UK audit firms must appoint independent non-executives to help reduce the risk of an Andersen-style collapse, according to a radical new UK governance code to be published on Monday. The Audit Firm Governance Code – drawn up at the request of the Financial Reporting Council – is the first time the “big four” accounting firms will be required to adopt a code similar to that governing the companies they audit in the UK.

London will ‘thrive’: hedge fund

London will thrive as a financial centre over the next decade as the natural western hub for emerging market growth, according to UK hedge fund Toscafund. While some UK funds such as BlueCrest Capital and Brevan Howard move staff to Switzerland amid warnings of the City’s imminent demise, Savvas Savouri, Tosca’s chief economist, predicts that London will attract at least 100,000 new financial services jobs over the next decade, spurred by growth of the BRIC nations.