December, 2009
Pink picks
Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: Why China’s exchange rate policy concerns us
A country’s exchange rate cannot be a concern for it alone, since it must also affect its trading partners.
AV after dark
On FT Alphaville late Tuesday,
- Clifford Chance on the Gauzès report.
- The SEC’s retail focus.
- Greece and Dubai spark risk aversion in the CDS market.
- How do you say tin hat and vicious circle in Greek?
Overheard in the Long Room,
Snap news
Breaking pre-market news on Wednesday,
- Andy Harrison, CEO of EasyJet, has indicated his desire to leave the Company in order to seek new challenges – statement.
- Volkswagen to pay Y222.5bn for Suzuki Motor stake – report.
Dubai utility faces $2bn debt demand
A wave of credit downgrades of Dubai’s state-owned companies have triggered an accelerated payment clause on a $2bn debt issued by the emirate’s utilities provider. Dubai Electricity and Water Authority’s $2bn securitization scheme,
Activist fund swoops on TNT
Hedge fund activism made a high-profile return to Europe on Tuesday when it emerged that Jana Partners and co-investor Alberta Investment Management Corporation had taken a 5% stake in Dutch postal services giant TNT – a move seen as a prelude to the sale of the group.
Greece downgraded over high debt
Greece saw its credit ratings downgraded to the lowest level in the eurozone on Tuesday amid fears over its deteriorating public finances. Heavy selling of Greek stocks and bonds highlighted concerns that the country is heading for financial disaster unless it tackles dangerously high debt levels,
CIT could exit bankruptcy ‘in days’
US small business lender CIT Group on Tuesday won approval from a New York bankruptcy judge for its prepackaged reorganisation plan, paving the way for it to exit bankruptcy within days, reports Reuters.
Tarp setback for Citi
US authorities are split over how much capital Citigroup should raise before it repays $20bn of Tarp bail-out funds – a disagreement that is hampering the bank’s efforts to free itself from the government’s grip.
Mexico hedges against falling oil prices
Mexico has taken out a $1bn insurance policy against oil prices falling next year, in the latest sign that commodities producers are concerned about the threat of a double-dip recession. The world’s sixth largest oil producer said on Tuesday it had hedged all its net oil exports for 2010,
UK to levy one-off bonus tax
The UK chancellor will levy a one-off tax on the billions of pounds set aside by banks to pay bonuses in his pre-Budget report, in an attempt to underline the government’s response to public anger over bankers’ remuneration.
Darling to detail 14% budget cuts
UK chancellor Alistair Darling will flesh out the biggest squeeze in public spending for a generation in his pre-Budget report, with only schools, hospitals and the police being spared average cuts of about 14% over three years.
Northern Rock shares ‘valueless’
An independent valuer said on Tuesday that shareholders of UK lender Northern Rock should not be entitled to any compensation after their investments were wiped out when the bank was nationalised two years ago.
BTA agrees $7.7bn write-off
BTA, Kazakhstan’s biggest bank, has agreed a deal with creditors who will write off $7.7bn in debt and interest owed as part of a wave of restructuring in the country’s banking system. BTA and a committee of international creditors signed a term sheet on Monday setting out key terms of its proposed financial restructuring.
BlackRock plans debt sale
BlackRock, the world’s largest asset manager, plans to sell $2.5bn of bonds in three parts, the company’s first offering since its debut issue more than two years ago, reports Bloomberg. Blackrock plans to sell three-year notes in addition to the five- and 10-year debt initially planned.
Morgan Stanley sets reshuffle
James Gorman, who will succeed John Mack as chief executive of Morgan Stanley next month, on Tuesday unveiled management changes that reflect the bank’s push to close the gap with its arch-rival, Goldman Sachs.
Overnight markets: Down
Asian stocks fell on Wednesday, following European and US markets down after Dubai developer Nakheel posted a $3.65bn loss and Japan’s economy grew less than expected, reports Bloomberg. The euro slid to near a five- week low against the dollar as Greece’s debt rating was reduced.
Clifford Chance on the Gauzès report
UPDATE: note the important clarifying point from “Mr B” in the comments below…
Says the international law firm of the report by French parliamentarian Jean-Paul Gauzès on how hedge funds should be regulated by the EU:
The SEC’s retail focus
Just one day after accusing three former top executives at New Century — a fallen subprime mortgage lender — of securities fraud, the SEC has announced another aggressive suit related to the troubled US mortgage market.
CDS report: Greece and Dubai spark risk aversion
Markit’s Gavan Nolan wrote this CDS report
In what is becoming a familiar story sovereigns again drove direction in the financial markets, with nations in Europe and the Middle East causing volatility.
The Greek collateral issue
Greece’s finance minister George Papaconstantinou and central banker George Provopoulos have been making statements following Tuesday’s sovereign rating cut by Fitch to BBB+.
Among the flashes from Reuters (our emphasis):
Discrepancy du jour, APS edition
FT Alphaville reported earlier on Tuesday that HM Treasury does not expect losses on its Asset Protection Scheme portfolio to exceed £60bn, meaning all of that will be borne by RBS as per the terms set out in the APS agreement.
Fitch downgrades Greece to BBB+
Greek banking stocks were off more than 6 per cent most of Tuesday morning, following a move by S&P to put the Hellenic Republic on creditwatch.
Fitch, however, acted a tad more decisively on the day,
[Outlook 2010] How will analysts fare?
Analysts will do better in 2010, say Citi analysts strategists.
The group, Citi notes, had something of an annus horriblis in 2009 — struggling to make the right calls at key turning points.
Here’s the thrust of the argument put forth by Citi’s European Portfolio Strategy team:
Lunch Wrap
On FT Alphaville Tuesday morning,
- Tuesday Dubai doom and gloom.
- Testing the AAA boundaries.
- Presenting RBS’s toxic assets.
- Making an example out of Greece.
- A merry Halifax Christmas to you!
- Thundering Herd bullish on Euro equities.
Tuesday Dubai doom and gloom
Dubai doom and gloom comes in the form of two things on Tuesday morning.
First — a mass Downgrade of Dubai Inc. companies by Moody’s, the text of which is below:
Moody’s announces further downgrades to Dubai Inc.
S&P’s impeccable timing, Islamic finance edition
The world of Islamic finance has been roiled by the upheavals in Dubai: questions abound over such matters as the structuring of al-ijarah sukuk like the $3.5bn bond issued by Nakheel, Dubai World’s real estate development subsidiary.
More US non-farm payroll questions
This time it’s the turn of the usually unflappable Dennis Gartman — author of the Gartman Letter and CNBC talking head– to question the veracity of Friday’s unbelievable US payroll numbers.
As he sums up in his Tuesday note (our emphasis):
Markets live transcript 8 Dec 2009
Markets live chat transcript for the chat ending at 12:17 on 8 Dec 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE) NH:Hola NH:it’s 11.03 am