Posts from Tuesday Jan 19 2010

Which governments are really at risk of bankruptcy?

Everyone knows who are the sick men of Europe, right? Just look at the CDS markets to see which countries have the riskiest debt profiles: Greece wins hands down followed by Ireland some way behind.

But CDS traders might be systematically underestimating the riskiness of some of the traditionally more fiscally heavy-weight nations, especially dear ‘Old Blighty’, according to a fascinating presentation given by the head of research at Natixis, Patrick Artus, at a conference in Paris yesterday. Read more

Cadbury post-mortem

No doubt the board of Cadbury are feeling pretty pleased with themselves right now.

After all, they have just managed to extract a higher offer from Kraft, providing an exit at a 50 per cent premium to the level it was trading at the day before the first offer in SeptemberRead more

Citi’s CVA oops

What’s this? An own credit oversight up at Citi?

From the bank’s fourth-quarter 2009 earnings statementRead more

Chevron’s refinery slapdown

Wow. We knew things were bad for Chevron’s refining business but we didn’t quite expect this.

From Reuters on Tuesday: Read more

Citi’s so-called credit caution

Citi may still claim to be “cautious” about the outlook for future credit losses, but its loan-loss reserve build suggests it’s really quite optimistic about future credit prospects. Or at least, it’s acting that way.

The bank’s loan loss provisions in Q4 were $8.2bn, down about 36 per cent from Q4 2008 and 10 per cent from Q3 2009. Net credit losses, meanwhile, were down about 11 per cent from Q3 to $7.1bn. Read more

The world’s top 280 energy projects

Here’s an exhaustive view of the energy projects that are likely to change the world according to Goldman Sachs.

In fact, the bank says there are 280 such projects currently under development or in the process of exploration. And here’s how they’re positioned Read more

Citi posts Q4 loss of $0.33 a share, net loss of $7.6bn

Terminally-troubled Citigroup is the second of the big US banks to report this fourth-quarter earnings season.

And on Tuesday, the company’s shares were down slightly in pre-market trade after posting a Q4 net loss of ‘just’ $7.6bn, or $0.33 a share — in keeping with analysts’ expectationsRead more

Europe’s auto-ABS revival

We’re not talking about automatic breaking systems either.

Last week it emerged Ford and BMW would be breathing life back into the European market for asset-backed securities by issuing more than €1bn of debt backed by automobile loans and leases. Read more

Lunch Wrap

On FT Alphaville Tuesday morning,

- Cadbury melts away. Read more

Mervyn readies his pen

From Reuters on Tuesday:

LONDON, Jan 19 (Reuters) – British consumer price inflation rose at its fastest annual pace in nine months in December as a cut in value added sales tax, heavy discounting and a sharp fall in oil prices at the end of 2008 were not repeated in 2009, the Office for National Statistics said on Tuesday. Read more

Markets Live transcript 19 Jan 2010

Live markets commentary from FT.com 

SocGen calling

What’s this? A bank actually calling its Tier 1 bonds?

From a statement on the Luxembourg Exchange: Read more

Krafty

If you thought Kraft shareholders might be able to derail the company’s new, improved bid for Cadbury think again.

From the Recommended Final Offer for Cadbury, unveiled on Tuesday morning: Read more

Barclays needs more capital

Around £17bn of it, according to Jonathan Pierce, banking analyst at Credit Suisse

The reason, as you might have guessed, are the latest proposals on capital requirements from the Basel Committee on Banking Supervision, which have been covered about extensively on this siteRead more

Cadbury melts away

Lo and behold, not with a bang but a whimper, do the finalised terms of the Kraft-Cadbury deal come on Tuesday morning, right, as Pestowire predicted, at 9:04am London time.

From the statementRead more

JAL’s kamikaze bankruptcy

It gives new meaning to the word kamikaze… In a move that the FT attributed to “self-inflicted wounds”, Japan Airlines formally nosedived into bankruptcy on Tuesday, filing with the Tokyo District Court for a court-led restructuring as its share price reached the miserable level of Y5.

JAL  became Japan’s  biggest corporate failure outside the financial industry when it filed for bankruptcy protection as part of a government-supported rescue plan under which creditors will be asked to forgive Y730bn ($8bn) in debt. Read more

Further reading

Elsewhere on Tuesday,

- Kradbury terms on Pestowire.
 Read more

Pink picks

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

Gideon Rachman: Why America and China will clash
Google’s clash with China is about much more than the fate of a single, powerful firm, writes FT columnist Rachman. The company’s decision to pull out of China, unless the government there changes its policies on censorship, is a harbinger of increasingly stormy relations between the US and China. Read more

Snap news

Breaking pre-market news on Tuesday,

- Travelport to raise $1.775bn via London IPO to reduce indebtedness – statementRead more

Overnight markets: Down

Asian stocks fell for a second consecutive day, reports Bloomberg, led by shares of banks and tech companies, on concern about earnings growth. Commodities rose and the dollar declined. US  markets were closed on Monday for a national holiday.

Asian markets (Tues)
Nikkei 225 down -102.48 (-0.94%) at 10,753
Topix down -10.05 (-1.05%) at 947.50
Hang Seng down -78.64 (-0.37%) at 21,381 Read more

Cadbury, Kraft sweeten up

Cadbury and Kraft are in final-stage negotiations that could lead to an agreed cash-and-stock deal of up to £11.7bn ($19bn) for the UK group. A deal, after months of acrimony over the US group’s hostile takeover bid last August, could come as early as Tuesday and would value Cadbury at 850p per share. Lex says Kraft’s improved offer should rule out a counterbid by competitor Hershey.

Tyco to buy Brinks unit

Tyco International furthered its push into the US market for home and business security systems, agreeing to acquire Brink’s Home Security Holdings for about $2bn. The deal will fold Brink’s, which operates as Broadview Security, into the US conglomerate’s ADT security division and marks the latest step in the industry’s gradual consolidation. The companies’ cash-and-stock agreement values Brink’s at $42.50 a share, or about 35% above the closing price.

CapitaLand in Orient Overseas deal

Hong Kong’s Orient Overseas International shipping group has sold its China property arm to Singapore’s CapitaLand, southeast Asia’s biggest developer, for $2.2bn. CapitaLand, which is recycling the S$2.7bn ($1.9bn) it raised in November through an IPO of its  CapitaMalls Asia subsidiary, aims to increase its China exposure from 28% of assets to 45%. The Orient deal will take its Chinese portfolio to 36% of assets.

GDF Suez drops International Power

GDF Suez of France and International Power have abandoned discussions over proposals to jointly create a world-leading, listed  electricity group, after weeks of rumours fuelled a sharp rise in the British company’s shares. The two had been in talks for several months about injecting GDF Suez’s electricity production assets outside of Europe into International Power. See also FT Alphaville’s “comment from the trading floor”.

Old GM shares revive and thrive

General Motors died in a US bankruptcy court last summer but its shares remain very much alive. As the rest of Wall Street suffered its steepest fall of the year last Friday, shares of the old GM, now known as Motors Liquidation Company, gained another 3%, giving the legacy company a market value of nearly $500m. Despite warnings from the restructured GM, the SEC and others that the shares are worthless, Motors Liquidation has surged from 47 cents at new year to 77 cents on Friday – partly due to short-covering and day traders’ activity.

US banks divided on levy

Large investment banks are at odds over the Obama administration’s new banking levy, with one industry lobby exploring legal action while others urge caution. The Securities Industry and Financial Markets Association confirmed it had hired Carter Phillips, a prominent partner at law firm Sidley Austin to consider action over the tax. But some bank executives questioned whether a legal victory that found the tax unconstitutional would be worth the inevitable public backlash.

CS in dark pool disclosure

Credit Suisse has become the first bank to reveal the value of trading in its Europe “dark pool”, saying €10bn ($14bn) of equities changed hands in its block trading facility in the fourth quarter of last year. The move is another sign that some banks that run such facilities are responding to heightened regulatory scrutiny. Last month Nomura became the first bank to say it would reveal publicly what trades had been done in its dark pool.

Citic seeks investors for China AMC

Citic Securities, China’s biggest listed securities brokerage, is actively seeking investors, including foreign institutions, to buy part of its stake in China Asset Management Co, the country’s largest fund manager by assets. Citic has owned 100% of China AMC since 2007, despite rules limiting single shareholdings in fund management companies to 49%. Citic pledged last January to comply with the regulations within six months but is yet to divest any of its stake.

Goldman delays UK bonuses: report

Goldman Sachs has postponed the expected announcement of its annual bonus pool to UK staff, according to the Daily Telegraph, reports Reuters. The paper said the bank was due to make the announcement on Monday but told staff it had been delayed until possibly the end of the month. The report quoted a bank “insider” as saying London’s FSA watchdog had taken issue with Goldman’s bonus arrangements, effectively blocking the plans.

Hermes targets Infineon chair

Germany is braced for its first proxy fight at a blue-chip company after an influential UK investor launched an attempt to oust the chairman-designate of Infineon, the chipmaker. Hermes, the fund manager owned by the British Telecom Pension Scheme, has submitted a proposal to replace Klaus Wucherer, due to become Infineon’s chairman at its annual meeting next month, with Willi Berchtold, finance director of ZF Friedrichshafen, a car parts supplier.