Markets live chat transcript for the chat ending at 12:11 on 10 Nov 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM:
Hello – welcome to Markets Live
PM:
Hello – welcome to Markets Live
PM:
Okay — thought we’d try something a bit different this morning.
PM:
We will come back to the soaraway market
PM:
We are looking to tap directly into the wisdom of you lot below – the ML crowd.
PM:
PM:
Obviously we’ve done it with interest rate decisions before – and no, I don’t think anyone got last week’s 150bp – but we will let you off that.
PM:
And of course we also have that little excel gizmo that we are still fine-tuning – that allows us to forecast the Footsie close according to the number of comments on Markets Live.
PM:
But this is different.
PM:
Today – YOU DECIDE
PM:
Decide what?
NH:
Whether or not the Lloyds TSB / HBOS merger should go ahead.
PM:
Simple yes or no will suffice. But you can of course add your reasoning if you like.
NH:
We will then collect all the votes and put them in a big pixelated mail bag and post them to the Scottish parliament – and also leave them outside the door of No 11.
NH:
So you decide – should the LBOS merger go ahead – yes or not?
PM:
We have an AV default position on this, of course.
PM:
Answer is “no” – but that’s only because we think it would be interesting to watch HBOS continuing to stagger around without any management and a dangerously depleted capital base.
NH:
Lots of good copy in that – we think.
PM:
Also, get to see Eric Daniels EXPLODE. He’d move Lloyds to somewhere where he can smoke Malboros freely and openly, rather than having to nip out on to the fire-escape where he is currently.
NH:
So that would be good copy for us as well –watching one of Britain’s clearing banks fleeing the country.
PM:
But it is probably wrong to set competition policy and generally build the country’s financial framework around the story needs of this blog.
PM:
Important tho that consideration is.
PM:
We should and will look at the more complex arguments for and against this merger.
PM:
So basically, Neil is taking the side of the Super Bank.
PM:
While I am going to be the honoury Scot.
NH:
Minus the accent, I hope.
PM:
Aaahghg Jimma! Ya wanna barnie?
NH:
Murphy – don’t try that
PM:
Swatch, i’ve bin practicin’ thes aw morn. Ah defendin’ th’ brae scottish bankin’ industry.
NH:
Ok, well you might be at a disadvantage – I’m taking the sensible side.
NH:
This deal is going through.
PM:
Nae way! thes deal was hatched in a moment ay panic. th’ moment ay panic has passed – nae it is time fur a bit ay sense tae prevail.
NH:
Pack it in Murphy.
PM:
Okay – I will pack it in.
PM:
The basic piece common sense here is that putting HBOS together with Lloyds is anticompetitive.
PM:
That much is illustrated by the fact that Lloyds was will to become a partial – albeit temporary – subsidiary of HM Government – to get this deal. For Lloyds such a takeover is made in heaven – since it allows the bank to create a monopolistic position in British banking.
PM:
Look at how it fought to get hold of Abbey national – 18 months of disruption – -and then lost.
PM:
HBOS is a FAR larger prize than Abbey national ever was.
NH:
Hang on. Look at the reality here Murphy.
NH:
This is a done deal.
NH:
HBOS was bust at the time of conception. This was a rescue takeover – and if you took the rescuing bank away now I very much doubt that HBOS would survive.
NH:
There would be a run on the bank – both in the market and on the high street. And it would end up being nationalised.
NH:
Is that what you want – a half-Scottish bank in public ownership, drinking all your oil revenues.
PM:
Hold on there, matey – look at the OFT stuff on this. It is anti-competitive – and that means it is bad for ordinary people.
PM:
You don’t have to be a socialist to be against monopolistic banks.
PM:
Here’s the OFT summary on the matter
PM:
1. The Office of Fair Trading (OFT) hereby reports to the Secretary of State for
Business Enterprise and Regulatory Reform (the Secretary of State) in relation to
the anticipated acquisition by Lloyds TSB Group plc (Lloyds) of sole control of
HBOS plc (HBOS) which was announced on 18 September 2008 (the
transaction). On 18 September 2008 the Secretary of State, in exercise of his
powers under section 42(2) of the Enterprise Act 2002 (the Act), gave a public
interest intervention notice (the Notice) to the OFT and required it to investigate
and report on the transaction in accordance with section 44 of the Act within
the period ending on 24 October 2008 (see Annex 1 for the Notice).
Business Enterprise and Regulatory Reform (the Secretary of State) in relation to
the anticipated acquisition by Lloyds TSB Group plc (Lloyds) of sole control of
HBOS plc (HBOS) which was announced on 18 September 2008 (the
transaction). On 18 September 2008 the Secretary of State, in exercise of his
powers under section 42(2) of the Enterprise Act 2002 (the Act), gave a public
interest intervention notice (the Notice) to the OFT and required it to investigate
and report on the transaction in accordance with section 44 of the Act within
the period ending on 24 October 2008 (see Annex 1 for the Notice).
PM:
2. As required by section 44(4) of the Act, the OFT’s report contains four principal
‘decisions’. These are that the OFT believes that it is or may be the case that:
‘decisions’. These are that the OFT believes that it is or may be the case that:
PM:
• arrangements are in progress or in contemplation which, if carried
into effect, will result in the creation of a relevant merger situation
into effect, will result in the creation of a relevant merger situation
• the creation of that merger situation may be expected to result in
a substantial lessening of competition (SLC) within a market or
markets in the United Kingdom for goods or services, including
personal current accounts, banking services to small and medium
enterprises (SMEs), and mortgages, such that further inquiry by
the Competition Commission (CC) is warranted
• any relevant customer benefits in relation to the creation of the
relevant merger situation concerned do not outweigh the
substantial lessening of competition and any adverse effects of the
substantial lessening of competition, and
• it would not be appropriate to deal with the matter by way of
undertakings under paragraph 3 of Schedule 7 to the Act.
PM:
3. The OFT accordingly reports and advises in accordance with sections 44(3) and
(4) of the Act that the test for reference to the CC on competition grounds
contained in section 33 of the Act is met.
(4) of the Act that the test for reference to the CC on competition grounds
contained in section 33 of the Act is met.
NH:
yes, but there is something else in the OFT report
NH:
countrfactual section
NH:
this assess what would happen if the deal did not go through
PM:
And?
NH:
look at Par 53 of appendix 5
PM:
Oh 
PM:
i only read the summary
NH:
The parties argue that a more realistic counterfactual to HBOS remaining
independent is that Government would have intervened with some form of HBOS
specific ‘rescue package’, 13 and further that such intervention would probably
have led to structural limitations on the ability of HBOS to compete effectively
independent is that Government would have intervened with some form of HBOS
specific ‘rescue package’, 13 and further that such intervention would probably
have led to structural limitations on the ability of HBOS to compete effectively
NH:
As regards the possibility of HBOS failing or exiting the market,
the parties argue that the OFT should be flexible in its approach to the failing
firm defence. They say that it is inconceivable that Government would have
stood by and allowed HBOS actually to fail, because this would have given rise
10 www.
the parties argue that the OFT should be flexible in its approach to the failing
firm defence. They say that it is inconceivable that Government would have
stood by and allowed HBOS actually to fail, because this would have given rise
10 www.
NH:
to unacceptable systemic risk, jeopardising the stability of the entire UK financial
system,
system,
NH:
and look at this
NH:
Failure or inevitable exit of HBOS
PM:
NH:
The parties argue that there are certain peculiarities about financial markets (for
example, the fact that bank failures can happen suddenly, and can have wider
consequences for both financial markets and the wider economy) that have to be
taken into account in assessing the counterfactual for financial institutions,
[REDACTED].
example, the fact that bank failures can happen suddenly, and can have wider
consequences for both financial markets and the wider economy) that have to be
taken into account in assessing the counterfactual for financial institutions,
[REDACTED].
NH:
In particular, the parties argue that [REDACTED], would have been disastrous in
terms of financial stability, in particular in terms of counterparty exposure,
depositor exposure, investor confidence and general confidence in the wider
economy.
terms of financial stability, in particular in terms of counterparty exposure,
depositor exposure, investor confidence and general confidence in the wider
economy.
PM:
That is just the OFT being a bit hysterical — remember they were writing in the eye of the storm also
NH:
HBOS told the OFT that the macroeconomic developments described briefly
above led to a range of [REDACTED] impacts on HBOS. Many of these events
applied to all other banks but some had a disproportionate impact on HBOS
[REDACTED]. As market participants became increasingly concerned with
counterparty risk and uncertainty over the scope of the sub prime crisis, so
liquidity reduced, [REDACTED].
above led to a range of [REDACTED] impacts on HBOS. Many of these events
applied to all other banks but some had a disproportionate impact on HBOS
[REDACTED]. As market participants became increasingly concerned with
counterparty risk and uncertainty over the scope of the sub prime crisis, so
liquidity reduced, [REDACTED].
NH:
In these circumstances, HBOS argues there was no realistic prospect of
reorganising its business. It submits that it would have been required to take
steps [REDACTED]. A similar picture, it says, would have emerged in SME
lending. While it would have been possible, in theory, to sell off assets
[REDACTED] asset disposals would need to have been on an extraordinary scale
to make any meaningful contribution [REDACTED]. Moreover, as a distressed
seller of assets, HBOS would undoubtedly have incurred substantial losses even
if buyers could be found.
reorganising its business. It submits that it would have been required to take
steps [REDACTED]. A similar picture, it says, would have emerged in SME
lending. While it would have been possible, in theory, to sell off assets
[REDACTED] asset disposals would need to have been on an extraordinary scale
to make any meaningful contribution [REDACTED]. Moreover, as a distressed
seller of assets, HBOS would undoubtedly have incurred substantial losses even
if buyers could be found.
NH:
Therefore, even [REDACTED] HBOS could have remained an independent
competitor without HBOS specific Government support, HBOS argues that it
would have been a very weak competitor, not just in mortgages and other
lending [REDACTED], but also with respect to retail banking more generally.
competitor without HBOS specific Government support, HBOS argues that it
would have been a very weak competitor, not just in mortgages and other
lending [REDACTED], but also with respect to retail banking more generally.
PM:
okay okay
PM:
But look, there ware some to quality names calling for this deal to be unwound
PM:
Sir Peter Burt — yeah?
PM:
the esteemed Sir George Mathewson — hello???
NH:
hang on a minute is the same Sir Geroge who once bragged about his bonus
PM:
NH:
March 2001 to be precise
PM:
Oh that was years ago
NH:
The deputy chairman of the Royal Bank of Scotland provoked complaints yesterday when he said that for a top banker a ££750,000 share of a £2.5m corporate bonus was not even enough to buy “bragging power in a Soho wine bar”.
PM:
NH:
The deputy chairman of the Royal Bank of Scotland provoked complaints yesterday when he said that for a top banker a £750,000 share of a £2.5m corporate bonus was not even enough to buy “bragging power in a Soho wine bar”.
The remark by Sir George Mathewson about pay packages for senior executives angered not only unions and campaigners but also corporate Britain itself, including the representative of some of the nation’s biggest investors.
NH:
and now all of sudden this guy cares about the fate of 2m private HBOS shareholders
PM:
NH:
come on
PM:
NH:
and isn’t he also chairman of Tosca, the hedge fund
PM:
Oh, i forgot that
PM:
What are they down this year?
NH:
a lot
NH:
and also
PM:
I dont want to take your side but Sir George also put Sir Fred in situ
NH:
it is clear that Lloyds has been propping up HBOS since the deal was announced
NH:
so the idea it could continue as an independent company is ludicrous
PM:
Okay okay
PM:
ll think it is anti-competitive
NH:
it would need more capital as a standalone bank than the £11.5bn the govt has underwritten
PM:
That is true
PM:
Anyway — i feel as tho i am losing this argument
PM:
Let’s talk about something else
NH:
oh and we forgot to mention the Phantom HBOS bid
NH:
one of the Sunday papers claimed the bidder could be BBVA
NH:
but after the Santander news this mornign, somehow I can’t see that
NH:
anyway
PM:
prices wise
PM:
HBOS is up 6.2p at 110
PM:
Lloyds is up a penny at 201.5p
PM:
PM:
Lots of banking news around this morning
PM:
Santander looking for 7.2bn euros
NH:
what ever happened dynamic provisioning in Spain?
PM:
Santander stock off 5 per cent at 7.88
NH:
not a bad performance, considering
PM:
Hugely discounted righs — 4.50 sale price
PM:
And we had HSBC q3 earlier also
NH:
we did
NH:
shares off small
NH:
actually unchanged now at 746p
PM:
PM:
Bear with us, Neil is having problems with his headrest
PM:
NH:
right back now
NH:
HSBC
NH:
pretty much as expected
NH:
slowing revenues in Asia
NH:
deteriorating credits trends in commercial and corporate banking
NH:
and no end in sight to the pain in the US
NH:
here’s a quick wrap from Caz on the numbers
NH:
then we will look at AIG briefly
NH:
In the context of the external environment, performance has been satisfactory”.
Underlying profit was ahead of Q3 last year. For the YTD, pre-tax profit is lower but by a lower percentage than at the half year stage (H1: -25%); Caz 2008E: -18% on an underlying basis (excluding gains)
Underlying profit was ahead of Q3 last year. For the YTD, pre-tax profit is lower but by a lower percentage than at the half year stage (H1: -25%); Caz 2008E: -18% on an underlying basis (excluding gains)
NH:
Asia remains at the heart of core operating profitability and European retail businesses “remained robust”.
NH:
YTD underlying PBT in Asia, Europe and Latin America was ahead of last year.
NH:
US business declined markedly as a result of higher PFS impairment and GBM write-downs (Caz 2008E: US$4.3bn loss after break-even in 2007).
Tier 1 ratio 8.9% end Q3 (H1: 8.8%)
Deposit/loan ratio improved to 114% (Jun08: 111%) and balance sheet footings remained stable.
Tier 1 ratio 8.9% end Q3 (H1: 8.8%)
Deposit/loan ratio improved to 114% (Jun08: 111%) and balance sheet footings remained stable.
NH:
US business declined markedly as a result of higher PFS impairment and GBM write-downs (Caz 2008E: US$4.3bn loss after break-even in 2007).
Tier 1 ratio 8.9% end Q3 (H1: 8.8%)
Deposit/loan ratio improved to 114% (Jun08: 111%) and balance sheet footings remained stable.
Tier 1 ratio 8.9% end Q3 (H1: 8.8%)
Deposit/loan ratio improved to 114% (Jun08: 111%) and balance sheet footings remained stable.
NH:
Loan impairment higher (Caz 2008E: +20%) driven by PFS (mainly in the US), an increase from low levels in Commercial Banking, and a single exposure in GBM Europe.
NH:
HSBC Finance
“Current trends point to further deterioration in the near to medium term”. Management expects elevated loan impairment charges in the coming year as unsecured loan portfolios (eg credit cards) deteriorate further. We expect North America PFS impairment of US$13.5bn in 2008E followed by US$14.5bn in 2009E.
Mortgage Services arrears rate declined in Q3, and remained stable in US$ terms.
There may be a further write-down of goodwill at the the year end.
“Current trends point to further deterioration in the near to medium term”. Management expects elevated loan impairment charges in the coming year as unsecured loan portfolios (eg credit cards) deteriorate further. We expect North America PFS impairment of US$13.5bn in 2008E followed by US$14.5bn in 2009E.
Mortgage Services arrears rate declined in Q3, and remained stable in US$ terms.
There may be a further write-down of goodwill at the the year end.
NH:
Asia
HK Commercial Banking (CB) revenues held up well, but PFS revenues constrained by falling deposit margins.
Cost growth was curtailed in Q3 in response to slowing revenues.
Rest of Asia Pacific saw strong revenue growth in PFS and CB. Costs grew broadly in line with revenues.
Impairment in PFS and CB rose in HK and China, but remained at low levels. Loan impairment increased in India and Middle East.
GBM delivered results “well ahead” of Q3 2007.
HK Commercial Banking (CB) revenues held up well, but PFS revenues constrained by falling deposit margins.
Cost growth was curtailed in Q3 in response to slowing revenues.
Rest of Asia Pacific saw strong revenue growth in PFS and CB. Costs grew broadly in line with revenues.
Impairment in PFS and CB rose in HK and China, but remained at low levels. Loan impairment increased in India and Middle East.
GBM delivered results “well ahead” of Q3 2007.
NH:
also have a note from Alex Potter at Collins Stewart
NH:
who is on Paul’s side in the HBOS/Lloyds debate
NH:
he thinks HBOS has an independent future
NH:
will dig that peice of work out in a minute
NH:
but first he thoughts on HSBC
NH:
Outlook stmt muted but hardly a surprise
NH:
HSBC sees global growth will slow over the “next few quarters” though with Asian growth remaining more resilient. The company also repeats its caveats regarding the effects of deleveraging on the entire financial system. Mgmt also indicates that HSBC Finance will see asset quality deteriorate further before improving. It appears that even the more recent vintages of lending in the core HFC business, including cards, are now worsening.
NH:
Asian results slowing but remaining orderly
NH:
The trends we had expected in the Asian businesses are emerging. Revenues in HK are suffering from strong base effects in terms of higher prior interest rates in the deposit business as well as the roll-off of the 2007 Chinese IPO boom. Rest of As-Pac remains strong, driven by Middle East, China and India. We see revenue growth remaining relatively muted in Asia but still better than Europe/US.
NH:
Asset quality is the key driver and in line with estimates
NH:
Firstly, write-downs were relatively contained at $4.8bn AFS hit and c.$1bn aggregate income stmt hits. Secondly, impairments are rising in Europe and Asia, albeit from low levels. Finally and most importantly, the US impairment of $4.2bn for 3Q08 is in line with our estimate of c.$10bn of 2H08 impairments in HSBC Finance. Mgmt allude to worsening impairments here and this is already captured in our estimates. Recovery remains a 2010 issue, at best.
NH:
Overall, broadly in line – remains preferred bank
NH:
The news on impairments and Asian slowdown are already factored into our thinking on HSBC. Its capital strength, funding advantage and diversity means it remains our favoured bank in a weak sector.
NH:
also did you see HSBC took advantage of IAS 39
NH:
reclassified $13bn of loans
NH:
HSBC identified US$13 billion of eligible assets, including US$6.3 billion of performing syndicated loan assets, and reclassified them as at 1 July 2008 in accordance with the revised standard. If this reclassification had not been made the Group’s pre-tax profits would have been lower by US$835 million, split US$245 million in the US and US$590 million in Europe
NH:
NH:
right let’s have a look at the breaking news from AIG
PM:
just to catch up on AIG
PM:
NEW YORK–Nov. 10, 2008–American International Group, Inc. (AIG) today reported a net loss for the third quarter of 2008 of $24.47 billion or $9.05 per diluted share compared to 2007 third quarter net income of $3.09 billion or $1.19 per diluted share. Third quarter 2008 adjusted net loss, as defined below, was $9.24 billion or $3.42 per diluted share, compared to adjusted net income of $3.49 billion or $1.35 per diluted share for the third quarter of 2007. AIG’s results in the third quarter were negatively affected by financial dislocation in global markets, as well as catastrophe losses and charges related to ongoing restructuring-related activities. Insurance premiums and other considerations grew nearly 7 percent, despite these challenging conditions.
Commenting on third quarter 2008 results, AIG Chairman and Chief Executive Officer Edward M. Liddy said, “Third quarter results reflect extreme dislocations and volatility in the capital markets and significant charges related to restructuring activities. Reported earnings are not indicative of the underlying core earnings power of our insurance businesses, which remain solidly capitalized. Retention of our customers remains strong and reflects the support and loyalty of our long-term partners, intermediaries and sponsors.”
PM:
Net loss for the first nine months of 2008 was $37.63 billion or $14.40 per diluted share, compared to net income of $11.49 billion or $4.40 per diluted share in the first nine months of 2007. Adjusted net loss for the first nine months of 2008 was $14.12 billion or $5.40 per diluted share, compared to adjusted net income of $12.51 billion or $4.79 per diluted share in the first nine months of 2007.
PM:
And here’s some detail from the new rescue plan
NH:
AIG = Financial Black Hole
PM:
Designed to Create Durable Capital Structure, Resolve Liquidity Issues from Credit Default Swaps and U.S. Securities Lending, Facilitate Orderly Asset Sales, and Enable Repayment of Loan Plus Interest
PM:
Allegedly
PM:
American International Group, Inc. (AIG) today announced agreements with the U.S. Treasury and the Federal Reserve to establish a durable capital structure for AIG, and facilities designed to resolve the liquidity issues AIG has experienced in its credit default swap portfolio and its U.S. securities lending program.
Edward M. Liddy, AIG Chairman and CEO, said these agreements are a dramatic step forward for AIG and all of its stakeholders: “Today’s actions send a strong signal to our policyholders, business partners and counterparties that AIG is on the road to recovery. Our comprehensive plan addresses the liquidity issues that threatened AIG, and gives us the financial flexibility to complete our restructuring process successfully for the benefit of all of our constituencies.”
Liddy continued, “The $85 billion emergency bridge loan was essential to prevent an AIG bankruptcy, which would have caused incalculable damage to AIG, our economy and the global financial system. Thanks to decisive action by Congress, Treasury and the Federal Reserve, there are now additional tools available to create a durable capital structure that will make possible an orderly disposition of certain of AIG’s assets and a successful future for the company. Our goal is to repay taxpayers in full with interest, and emerge as a focused global insurer that will create meaningful value for taxpayers and other stakeholders.”
PM:
The actions announced today include both ongoing financing facilities and one-time transactions designed to address AIG’s liquidity issues. The ongoing financing facilities include:
* Preferred Equity Investment: The U.S. Treasury will purchase, through TARP, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York (FRBNY) credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends.
* Revised Credit Facility: The existing FRBNY credit facility will be revised to reflect, among other things, the following: (a) the total commitment following the issuance of the perpetual preferred shares will be $60 billion; (b) the interest rate will be reduced to LIBOR plus 3.0% per annum from the current rate of LIBOR plus 8.5% per annum; (c) the fee on undrawn commitments will be reduced to 0.75% from the current fee of 8.5%; and (d) the term of the loan will be extended from two to five years. The extension of the term of the loan will give AIG time to complete its planned asset sales in an orderly manner. Proceeds from these asset sales will be used to repay the credit facility. In connection with the amendment to the FRBNY credit facility, the equity interest that taxpayers will hold in AIG, coupled with the warrants described above, will total 79.9%.
PM:
You can get all the details ehre:
NH:
yeah that’s all really interesting but what about this stuff on CDO’s?
NH:
AIG is going to buy them in the market and then cancel the CDS’s it has written
PM:
Reduction of Exposure to Multi-Sector Credit Default Swaps: AIG and FRBNY will create a second financing entity that will purchase up to approximately $70 billion of Multi-Sector CDO exposure on which AIG has written CDS contracts. Approximately 95% of the write-downs AIG Financial Products has taken to date in its CDS portfolio were related to Multi-Sector CDOs.
PM:
In connection with this transaction, CDS contracts on purchased Multi-Sector CDOs will be terminated. AIG will provide up to $5 billion in subordinated funding and FRBNY will provide up to $30 billion in senior funding to the financing entity. As a result of this transaction, AIG’s remaining exposure to losses on the Multi-Sector CDOs underlying the terminated CDS’s will be limited to declines in market value prior to closing and its up to $5 billion funding to the financing entity. As with the securities lending program, FRBNY and AIG will share in any recoveries in the market prices of assets.
AIG will continue to have exposure to CDS contracts on Multi-Sector CDOs that are not terminated. As AIG winds down its Financial Products division, it will also have exposure to other types of remaining CDS contracts, which have generated substantially smaller total collateral demands than the CDS contracts on Multi-Sector CDOs.
PM:
PM:
Right — wider makret and CHINA!
PM:
All abotu the miners this morning
NH:
that’s right
NH:
sector is flying on the back of the China stimulus plan
NH:
as were Asian markets overnight
NH:
The sector’s big three are the biggest beneficiaries
NH:
up by an average of 15%
Anglo American (AAL:LSE): Last: 1,591, up 241 (+17.85%), High: 1,593, Low: 1,429, Volume: 4.59m
RIO TINTO (RIO:LSE): Last: 3,022, up 404 (+15.43%), High: 3,048, Low: 2,782, Volume: 3.01m
BHP Billiton (BLT:LSE): Last: 1,168, up 153 (+15.07%), High: 1,176, Low: 1,090, Volume: 11.05m
NH:
and there are also good gains for
Xstrata (XTA:LSE): Last: 1,242, up 174 (+16.29%), High: 1,249, Low: 1,136, Volume: 4.45m
Kazakhmys (KAZ:LSE): Last: 354.25, up 31 (+9.59%), High: 371.25, Low: 343.25, Volume: 1.43m
PM:
Should mention here that this has put a rocket under the Footsie
Eurasian Natural Resources Corp (ENRC:LSE): Last: 328.25, up 25.25 (+8.33%), High: 347.75, Low: 315.00, Volume: 578.75k
PM:
FTSE 100 is currently 137 points higher at 4502
PM:
Has been as high as 4524
PM:
Holding comfortably above 4500
PM:
so far
NH:
but, but, but
NH:
volumes are really, really thin this morning
NH:
about 70% of the recent 30 days average
NH:
few people want to chase the FTSE 100 at + 4,500
NH:
and others are looking at the China stimulus plan and trying to figure out how much is new money and investment
PM:
and?
NH:
well, the brokers that I have been speaking to this morning reckon only RMB 1.5tr of RMB 4 trn plan is new
NH:
still it has been enough to force the short sellers to close out positions
PM:
And what are analysts making of it all??
NH:
about the same – much of this is not new
NH:
but before we get to that a quick recap on the plan
NH:
Chinese govt has outlined ten measures to stimulate domestic demand.
NH:
in ten areas:
NH:
these are (1) public housing; (2) rural development; (3) infrastructure; (4) health care and education ; (5) environment; (6) technological innovation; (7) post-quake construction; (8) increasing agriculture subsidies and social security payments; (9) introducing VAT reform on a nation-wide basis; (10) abolishing the credit quota system and supporting credit growth for priority sectors.
NH:
The statement said that the relevant investment programs would involve a
total investment of about RMB4tn by the end of 2010.
total investment of about RMB4tn by the end of 2010.
NH:
that’s around $570bn
PM:
okay
NH:
So, Deustche Bank has been pouring over the statement and has come to the conclusion that not much of this new
NH:
most of the plans were known and this is really a bit of spin by the Chinese government
PM:
I see
NH:
here’s the note
NH:
Despite the initial excitement the announcement may generate among market
participants, after carefully studying the contents, one should realize that most of
these efforts and priorities are known and thus are not a surprise
participants, after carefully studying the contents, one should realize that most of
these efforts and priorities are known and thus are not a surprise
NH:
Previously, local press has reported a number of investment plans: (a) a plan to invest RMB5tn in road and water transport for the next 3-5 years; (b) a plan to invest RMB2tn in the railway system for next 3 years; and (c) a plan to invest RMB1.2tn on post-quake construction for 3 years (see our last week’s note on “Infrastructure FAI is Smaller Than You Think”).
NH:
According to our calculation, about 90% of the RMB4tn investments (for next two
years; or RMB2tn per year) mentioned in yesterday’s State Council press release are
simply reiteration of the above-mentioned three investment plans and thus not new to
the market.
years; or RMB2tn per year) mentioned in yesterday’s State Council press release are
simply reiteration of the above-mentioned three investment plans and thus not new to
the market.
PM:
That’s very interesting — and very believable
NH:
90% reiterated
NH:
wow
PM:
So its fiscal spin
NH:
that Alistair Campell would be proud of
PM:
PM:
And yet the London market is up 3% on this
NH:
still it has burnt a few shorts in the mining sector today
NH:
I have some more from Deutsche
PM:
Oh do paste!
NH:
Note that, as in the past, the majority of funding for infrastructure projects and postquake reconstruction is not from the government budget. Most (3/4) of the funds will come from corporate earnings, equity and debt market financings, and bank loans, and will thus face some uncertainty.
NH:
Many of the planned investments will be needed to maintain the current level of FAI in their respective sectors. Also note that RMB4tn for two years (or RMB2tn per year) is not a huge sum relative to the size of Chinese total
FAI. This year, China’s total FAI is likely to amount to RMB17.4tn.
FAI. This year, China’s total FAI is likely to amount to RMB17.4tn.
NH:
The most accurate measure of the magnitude of fiscal stimulus is the government’s
fiscal deficit for 2009 (more precisely, the difference between the government’s
deficit/GDP ratios in 2009 and 2008). Our expectation is that the central government
will budget a deficit of close to RMB300-400bn next year vs an actual surplus of about RMB100bn this year (note that local governments are not yet allowed to issue debt, but we hope this restriction can be lifted).
fiscal deficit for 2009 (more precisely, the difference between the government’s
deficit/GDP ratios in 2009 and 2008). Our expectation is that the central government
will budget a deficit of close to RMB300-400bn next year vs an actual surplus of about RMB100bn this year (note that local governments are not yet allowed to issue debt, but we hope this restriction can be lifted).
NH:
This will translate into a fiscal stimulus of about 1.5-1.7% of GDP. Despite this stimulus, we expect next year’s GDP growth to decelerate to around 7.6%. The announcement last night does not alter our 2009 projection of FAI and infrastructure spending growth either — we continue to look for FAI growth to slow from this year’s 27% to next year’s 16%, and infrastructure FAI growth to be at about 30% next year.
PM:
brave analysts who produced that
PM:
Clearly not planning a trip to Shanghai any time soon
NH:
Jun Ma is the author
NH:
not titled
NH:
Stimulus package” not a surprise
PM:
note titled
NH:
of course there is one downside to this plan, regardless of how much is new
PM:
go on
NH:
the law of unintended consequences
NH:
as China focuses its attention to more domestically orientated growth, they may have less money to recycle into Treasuries.
NH:
and as we all know Chinese demand has clearly been a big driver of
rock bottom real yields in recent years.
rock bottom real yields in recent years.
PM:
NH:
and another strange thing about this move in the mining sector today
NH:
is that is comes as Rio Tinto cuts iron production
PM:
really?
NH:
yup, Rio has announced a 10% cut in its 2008 iron ore production guidance from its Pilbara operations to 170-175m tonnes
NH:
now, Numis Securities reckons this quates to a Q4 cut of around 40% from the run rate that would have been achieved at full production.
NH:
which is consistent with recent newsflow from the global steel industry where there are numerous references to steel production cutbacks of the order of 30% in Q4, probably accompanied by an element of iron ore destocking.
NH:
of course the background here is that it follows similar announcements by Vale of Brazil
PM:
OK
PM:
and the impact on earnings??
NH:
for Rio
NH:
Numis sees it as a downgrade of 7-8% in 2008.
NH:
Comment: This is not surprising and was basically forced given the Q4 global steel slowdown, in order to avoid very large stockpiles of ore being built up ahead of Apr09-10 contract negotiations. The question is the outlook for 2009: given the ongoing deterioration of macro data globally and especially in China, there now appears the possibility of global steel production declining somewhat in 2009. As such, we believe further cutbacks in production of iron ore (and possibly coking coal, manganese, molybdenum, nickel, ferrochrome etc) are likely to be announced for 2009 rather than just Q4 2008.
NH:
Chinese package: That said, we note the announcement of a Chinese fiscal stimulus package of US$586bn, which will be aimed at loosening credit conditions, cutting taxes and bringing forward infrastraucture spending over the period until end 2010. Whilst unlikely to have an immediate effect, this is clearly likely to be positive for sentiment and, in time, commodity demand.
PM:
Any more comment on the miners
PM:
or shall we move on
NH:
got some stuff from Liberum Capital
NH:
some on the Rio
NH:
and also some very interesting comments on a meeting they had with the two very senior executives from BHP Billiton
NH:
and they had plenty to say about the bid for Rio
NH:
here it all is
NH:
Rio Tinto and Fortescue cut FY2008 iron ore shipment guidance by 10%, and
announce temporary production cuts
announce temporary production cuts
NH:
Rio Tinto and Fortescue mining both announced this morning in Australia that they
were cutting Cal 2008 production guidance by c.10% and temporarily cutting
production to match this run rate. Rio Tinto are now guiding for shipments in 2008
of 170-175mt (i.e 15-20mt off a prev 190-195mt guided in the last quarterly) and
have cut production capacity by c.10%. Quarterly shipments may fall as much as
30% QoQ for RIO.
were cutting Cal 2008 production guidance by c.10% and temporarily cutting
production to match this run rate. Rio Tinto are now guiding for shipments in 2008
of 170-175mt (i.e 15-20mt off a prev 190-195mt guided in the last quarterly) and
have cut production capacity by c.10%. Quarterly shipments may fall as much as
30% QoQ for RIO.
NH:
The move follows Vale who have also cut guidance by c.10% on
an annualised basis in reaction to softer demand. With Ferrexpo also having cut
aggressively, only BHP Billiton are left – reiterating informally today that they do not
intend to cut production. We wonder how long this position can be sustained given
inventories of iron ore are difficult to store and demand has clearly collapsed as
steel mills cut capacity to re-balance supply/demand and inventories of ore are
drawn down.
an annualised basis in reaction to softer demand. With Ferrexpo also having cut
aggressively, only BHP Billiton are left – reiterating informally today that they do not
intend to cut production. We wonder how long this position can be sustained given
inventories of iron ore are difficult to store and demand has clearly collapsed as
steel mills cut capacity to re-balance supply/demand and inventories of ore are
drawn down.
NH:
The earnings impact of the announcements are difficult to read – for
2008E RIO earnings will be down no more than c.3-5% as much of the costs in iron
ore are variable. The read across for into 2009 is more difficult as the industry is
hoping this is a temporary shut down to re-balance supply/demand. With the
$600bn China stimulus package announced over the weekend this prognosis may
well prove true.
2008E RIO earnings will be down no more than c.3-5% as much of the costs in iron
ore are variable. The read across for into 2009 is more difficult as the industry is
hoping this is a temporary shut down to re-balance supply/demand. With the
$600bn China stimulus package announced over the weekend this prognosis may
well prove true.
NH:
and here are the comments on the bid situation
NH:
present at the meeting were Alberto Calderon, Group Executive and Chief Commercial Officer, and Head of IR, Andre Liebenberg
NH:
A year on from launching its conditional offer for Rio Tinto, Calderon
said the transaction now makes sense more than ever. He believes that there
has been a shift in joint shareholders’ sentiment from demanding a higher price
for Rio Tinto towards accepting the merits of creating a super major in the current
economic climate. BHP Billiton would still like to seek an agreed solution but they
have still not held formal discussions with Rio Tinto.
said the transaction now makes sense more than ever. He believes that there
has been a shift in joint shareholders’ sentiment from demanding a higher price
for Rio Tinto towards accepting the merits of creating a super major in the current
economic climate. BHP Billiton would still like to seek an agreed solution but they
have still not held formal discussions with Rio Tinto.
NH:
They are working through the issues outlined in the EU’s Statement of Objections (received last Tuesday), which as far as they are aware will not be made public. Whilst current commodity and credit market conditions now provide less room for manoeuvre to placate
any major requirements of the EU (particularly potential disposals) they are
hopeful that they can address the EU’s concerns without compromising the deal
logic.
any major requirements of the EU (particularly potential disposals) they are
hopeful that they can address the EU’s concerns without compromising the deal
logic.
NH:
Citing potential regulatory concerns over competition, Calderon pointed to
Vale’s recent failed attempt to extract a 12% mid-season price increase from
Chinese customers as proof that the market is operating efficiently based on
supply demand fundamentals alone.
Vale’s recent failed attempt to extract a 12% mid-season price increase from
Chinese customers as proof that the market is operating efficiently based on
supply demand fundamentals alone.
NH:
Regarding the Australian Federal
Government’s recent decision on sharing rail access for iron complexes, thecompany reiterated that it vigorously opposes the decision and will pursue the
legal routes available to it.
Government’s recent decision on sharing rail access for iron complexes, thecompany reiterated that it vigorously opposes the decision and will pursue the
legal routes available to it.
NH:
See no reason to restructure Rio Tinto offer:
NH:
Rio Tinto’s shares are trading at a 28.2% discount (equivalent to 2.44 shares to 1) to the proposed terms and Calderon considers BHP Billiton’s 3.4 for 1 offer “a very compelling offer”. BHP Billiton still expect Rio Tinto’s share of net earnings in the combined company to remain at a similar level to the c.37% achieved in H1 going forward (equivalent to c.2.53 shares to 1) .
NH:
They note that their US$55bn acquisition facility remains in place for the duration of the bid under the expected timetable, and acknowledge it has some $15bn of headroom in it for its currently intended buy-back or cash element to a bid. We would expect the company to think about restructuring the offer post EC approval such that it substitutes cash for BHPB equity.
NH:
Calderon acknowledged that some investors have voiced concerns over BHP taking on Rio Tinto’s c.US$42bn net debt, however he stressed that with an additional US$15bn of debt, the combined company would have satisfactory gearing and that free cash flow at risk would not be drastically different from what it is currently.
BHP Billiton is currently trading on marked to market PER of 6.1x versus 5.9x for Rio Tinto.
BHP Billiton is currently trading on marked to market PER of 6.1x versus 5.9x for Rio Tinto.
NH:
We like both shares – preferring RIO as it is the cheap way into a deal that we
see as increasingly likely to go through.
see as increasingly likely to go through.
PM:
Plenty to chew on there — deserves a bickie
Reminder to readers – if you arrived late and want to stop the dialogue ‘jumping’ as you catch up, hit the ‘pause auto-scrolling’ tab at the bottom right hand corner
PM:
PM:
ONE-MONTH DOLLAR LIBOR 1.54% VERSUS 1.62%, BBA SAYS
*OVERNIGHT STERLING LIBOR UNCHANGED AT 3.21%, BBA SAYS
*THREE-MONTH DOLLAR LIBOR 2.24% VERSUS 2.29%, BBA SAYS
*ONE MONTH STERLING LIBOR 3.98% VS 4.08%, BBA SAYS
*OVERNIGHT DOLLAR LIBOR 0.35% VERSUS 0.33%, BBA SAYS
*THREE-MONTH STERLING LIBOR 4.42% VS 4.50%, BBA SAYS
*OVERNIGHT STERLING LIBOR UNCHANGED AT 3.21%, BBA SAYS
*THREE-MONTH DOLLAR LIBOR 2.24% VERSUS 2.29%, BBA SAYS
*ONE MONTH STERLING LIBOR 3.98% VS 4.08%, BBA SAYS
*OVERNIGHT DOLLAR LIBOR 0.35% VERSUS 0.33%, BBA SAYS
*THREE-MONTH STERLING LIBOR 4.42% VS 4.50%, BBA SAYS
PM:
Thanks to Nelly for a quick post of that
NH:
just looking at the stuff on AIG below. Clearly it is being used as the TARP
NH:
and the govt will be buying CDO’s above the value banks have marked them at
NH:
otherwise, why else would they sell
NH:
and as the US Treasury own AIG why not use it for this purpose
PM:
OIS $ is 171 v 175
£ 195 v 198
€163 v 173
£ 195 v 198
€163 v 173
PM:
So stress slowly coming out of the system it would apepar
NH:
perhaps it is time to buy equities
NH:
did u see Page 9 of today’s paper??
PM:
john Authers — taht seems to be his call
PM:
But its a Big Page number, so havent had a chance to read in full yet
PM:
Here’s the link to that
NH:
very bullish
PM:
last two pars:
PM:
A confident attempt to call a bottom to the market requires, in any event, a belief that the economy will be rebounding soon. Yet there is a flip side to that. “It is typical for great bubbles to overrun badly. But usually we don’t invest our money on estimated likely overruns, but instead filter our money in slowly and hope to get lucky,” says Mr Grantham.
“After all, if stocks are attractive and you don’t buy and they run away, you don’t just look like an idiot, you are an idiot.”
PM:
Maybe we could get John to do a rally monkey type flash thing for us
PM:
That would definitely bring in a few readers
NH:
PM:
Lwemmy ntoes Jacko in the paper this morning
PM:
Sorry esteemed Tony Jackson
PM:
Time to pay closer attention to credit markets, he says
PM:
Last week in this paper, the global head of institutional investment at Fidelity International urged equity analysts to drop their fixation with earnings and spend more time on cash flow and capital structures. As things stand, he is unlikely to get his way soon.
But in the meantime, remember the lesson. This is still first and foremost a credit crisis. If the equity and credit markets disagree, go with credit.
NH:
let’s get the graphic sorted out
NH:
The John Authers rally money
PM:
What music shall we get to accompany it?
PM:
Anyway — lets move on
PM:
NH:
thought I would share this
NH:
from George Buckley at Deutsche Bank
PM:
Hang on
PM:
taxloss — we admire your wit — but please! Don’t abuse John like that!
PM:
PM:
he cant hit back cos he will still be in bed (in the US)
PM:
Sorry — neil — Buckley?
NH:
he thinks rates in the UK are going to their lowest level since 1694
PM:
1694????
NH:
the year the Bank was founded
NH:
apparently
NH:
he sees a further 150bps cut over the next few months
PM:
Goodness
NH:
The Bank of England’s 150bp rate cut this week
was unprecedented. Such a large move was well
outside the range of economists’ forecasts, and
was treble the Bank’s previous largest move since
independence back in 1997.
was unprecedented. Such a large move was well
outside the range of economists’ forecasts, and
was treble the Bank’s previous largest move since
independence back in 1997.
NH:
In our view, this move should be seen as the MPC
starting with a blank sheet of paper and asking,
“Where should interest rates be?” irrespective of
the previous level of interest rates. Indeed, it
would seem that the Committee (rightly) made its
decision based on the level of, rather than the
change in, interest rates on this occasion. Weaker
growth outturns and changes to their forecasts
for growth and inflation in the forthcoming
Inflation Report were undoubtedly the catalysts
for this bold move.
starting with a blank sheet of paper and asking,
“Where should interest rates be?” irrespective of
the previous level of interest rates. Indeed, it
would seem that the Committee (rightly) made its
decision based on the level of, rather than the
change in, interest rates on this occasion. Weaker
growth outturns and changes to their forecasts
for growth and inflation in the forthcoming
Inflation Report were undoubtedly the catalysts
for this bold move.
NH:
Looking ahead, continued weakness in the
economic environment alongside sharply falling
inflation should be sufficient to bring down
official rates further. We see the Bank cutting
rates by a further 150bp over the next few months
for a trough of just 1.50% by the spring. This
would be the lowest level of rates since the Bank
was founded back in 1694.
economic environment alongside sharply falling
inflation should be sufficient to bring down
official rates further. We see the Bank cutting
rates by a further 150bp over the next few months
for a trough of just 1.50% by the spring. This
would be the lowest level of rates since the Bank
was founded back in 1694.
NH:
The extent to which such policy easing helps will,
of course, depend on how much of the decline is
passed on to final borrowers. Libor-OIS spreads
tightened following the decision, but still high
funding costs/liquidity constraints mean that not
all mortgage lenders will cut rates by as much as
the easing in policy rates.
of course, depend on how much of the decline is
passed on to final borrowers. Libor-OIS spreads
tightened following the decision, but still high
funding costs/liquidity constraints mean that not
all mortgage lenders will cut rates by as much as
the easing in policy rates.
NH:
PM:
Just clicking thru the small caps before we go
PM:
What’s this — Sweet China?????
PM:
Up 40% at 4p ???????????
NH:
does what it says on tin – makes sweets in China
PM:
NH:
listed on Aim
PM:
What and some of this infrastructure package is going to flow thru to it — yeah??
NH:
yeah, why not
NH:
increased spending on confectionery
PM:
NH:
actually the real reason is this
NH:
from the company’s PR
NH:
Ladies and Gentlemen, the buyers strike which has affected Sweet China’s shares in recent months, looks to have ended as the company’s shares are chased 1p, or 40% higher to 3.5p, following on from a 67% gain on Friday
NH:
Last month the company revealed that sales continue to be robust despite the global financial crisis and the Melamine scandal out of China, adding that none of its products manufactured in China had been affected. It looks like the news has finally hit its target.
NH:
NH:
some flashes coming through on HBOS
NH:
and it looks like the big shareholders in HBOS are not in favour of the new plan
NH:
and that’s probably because all of the big shareholders have a massive slice of Lloyds as well
NH:
another reason why this deal will go through
PM:
These flashes are from Reuters we shold add
NH:
Three major shareholders in HBOS
said a proposal from two Scottish ex-bank chiefs to
block the government-banked takeover of Lloyds TSB is
unlikely to win much support from investors.
block the government-banked takeover of Lloyds TSB
unlikely to win much support from investors.
NH:
“They don’t stand a cat in hell’s chance. There is
absolutely no interest (in the proposal). This is entirely
designed to pacify the Scottish lobby and show that they have
tried. It’s a joke,” one investor said.
absolutely no interest (in the proposal). This is entirely
designed to pacify the Scottish lobby and show that they have
tried. It’s a joke,” one investor said.
NH:
NH:
right time to go
PM:
Some very funny comments below
PM:
Here’s a free Lex on Smug Bank in thanks
PM:
HSBC
Published: November 10 2008 09:22 | Last updated: November 10 2008 10:04
Published: November 10 2008 09:22 | Last updated: November 10 2008 10:04
HSBC has earned its nickname of the world’s smuggest bank. A month ago, as it welcomed in depositors fleeing shakier institutions, it sniffily said its UK business had no need to tap any government funding facility. The group is virtually alone among global banks in not having reported losses or cut dividends; its shares have fallen by 11 per cent this year, versus an average 70 per cent fall for UK-listed peers. Credit default swap prices have barely broken a sweat; HSBC currently trades only a few dozen basis points wider than the UK itself.
Just imagine how insufferable the group would be if it hadn’t done a silly thing like buy HSBC Finance, its sub-prime lender in the US, five years ago. As the group’s third-quarter figures showed on Monday, rising impairments on this rancid loan book remain a real drag on the resilient (so far) earnings generated in Asia, South America and the Middle East. The group is running Finance down by degrees, selling assets where possible to pay down debt. But it continues to suck capital from the centre – another $1.3bn in the last quarter alone. In the absence of an outright sale or a debt restructuring, it is hard to see where this process ends.
PM:
Without this dead leg, HSBC may well have been tempted to do a deal in Western markets by now. In 1992 it took advantage of depressed valuations to buy the UK’s Midland at 7 times forward earnings, or 1.4 times book value. But even if its hand was stayed by US exposures, management is doing the right thing by sticking with emerging markets. Last month’s $600m acquisition, at a heady four times book, or Indonesia’s Bank Ekonomi, is why investors buy and hold the shares. That, and HSBC’s quaint habit of taking in more money than it lends. In this kind of market, faint praise is good enough.
PM:
Thank you d below
PM:
havent had a chance to tot-up everyone’s calls on the HBOS Lloyds situ
PM:
But i think the mood is pretty clear
But i think the mood is pretty clearPM:
We will be back tomorrow at 11am
NH:
and we forgot to mention Imperial Energy this morning
NH:
stock has been all over the place this morning
NH:
traded as low as 891p
NH:
now off 65.5p at 999.5p
NH:
background here is that ONGC of India have offered £12.50 a share for Imperia
NH:
sorry Imperial
NH:
which is a exploration company working in Russia
NH:
that has something of an erratic record
NH:
anyway, reports in the Indian press this morning suggest the company wanted to lower the value of the deal,
NH:
According to the Economic Times, the Indian government is having second
thoughts on the justification of ONGC’s bid for IEC. The paper points
out that global financial downturn and falling oil prices have reduced
the valuation of IEC since the pre-conditional offer was announced in
August. A source in the Cabinet told the paper that with oil prices
crashing from $128 to just $60 a barrel, the government is keen to
renegotiate the deal. “Petroleum minister Murli Deora has asked his
colleagues including the finance minister, whether the ONGC bid in the
present condition is expensive”, a Union government official told the
paper. The source also told the paper that “Crude oil prices have
declined more than 50% since ONGC first made its offer. We are reviewing
our decision to buy Imperial, which is yet to get the nod from various
Russian regulators. We bid aggressively to outbid our Chinese
counterpart Sinopec. However, we need to justify our investments as the
valuations have crashed”.
thoughts on the justification of ONGC’s bid for IEC. The paper points
out that global financial downturn and falling oil prices have reduced
the valuation of IEC since the pre-conditional offer was announced in
August. A source in the Cabinet told the paper that with oil prices
crashing from $128 to just $60 a barrel, the government is keen to
renegotiate the deal. “Petroleum minister Murli Deora has asked his
colleagues including the finance minister, whether the ONGC bid in the
present condition is expensive”, a Union government official told the
paper. The source also told the paper that “Crude oil prices have
declined more than 50% since ONGC first made its offer. We are reviewing
our decision to buy Imperial, which is yet to get the nod from various
Russian regulators. We bid aggressively to outbid our Chinese
counterpart Sinopec. However, we need to justify our investments as the
valuations have crashed”.
NH:
but ONGC have since informed Reuters via sources there is nothing in this
NH:
11:07 10Nov08 RTRS-ONGC VIDESH HAS NOT TRIED TO RENEGOTIATE
IMPERIAL ENERGY BID – SOURCES
IMPERIAL ENERGY
NH:
LONDON, Nov 10 (Reuters) – Indian state-owned oil company ONGC has
not tried to renegotiate its takeover bid price for UK-listed Imperial
Energy, sources close to both sides said on Monday, despite a
report that New Delhi may try and cut the price.
“They are not acting like they do not want to do the deal,” one
source familiar with the situation said.
Other sources said statements from ONGC’s overseas unit,
ONGC Videsh, that bid conditions had not been met, were purely
procedural and did not reflect backtracking.
“My impression at this time is that it’s about process,” a second
source said.
not tried to renegotiate its takeover bid price for UK-listed Imperial
Energy
report that New Delhi may try and cut the price.
“They are not acting like they do not want to do the deal,” one
source familiar with the situation said.
Other sources said statements from ONGC’s
ONGC Videsh, that bid conditions had not been met, were purely
procedural and did not reflect backtracking.
“My impression at this time is that it’s about process,” a second
source said.
NH:
personally not surprised there is a huge discount on this offer
NH:
a company with an erratic track record, with assets in Russia being bought by a state owned Indian company
NH:
could all end in tears
PM:
Come on Neil — I need some lunch
PM:
VP — we can add anything on L&G im afraid
PM:
We have got to go
NH:
yet
PM:
thanks for joiing — back tomorrow at 11am
NH:
still trying to get some sense of what happened