Economic, Earnings & Money :: World finance

Press digest sunday british business sept 15


´╗┐LONDON, Sept 15 British newspapers reported the following business stories on Sunday. Reuters has not verified these this site Sunday TimesCO-OP REBELS CHALLENGE BANK LOSSES A group of rebel bondholders has accused Co-operative Bank of overstating losses in an attempt to force through a rescue deal. A letter highlighting their concerns about write-offs totalling 379 million pounds ($601 million) was sent to Richard Pym, the chairman of the bank, on Friday night. SULTAN OF BRUNEI IN 500 MLN STG LONDON SWOOP The Sultan of Brunei has secretly spent 500 million pounds buying about 75 percent of the property on Queensway, the west London thoroughfare. TWITTER MAY SHUN NASDAQ Twitter is considering shunning Nasdaq, the traditional home for growing tech companies, for its forthcoming float. The company is thought to be leaning towards a New York Stock Exchange listing after glitches marred Facebook's Nasdaq debut last year. FOOD GIANT CARGILL HELPED KEEP LEHMAN ALIVE Cargill, one of the world's biggest grain traders, played a key role in salvaging the London arm of Lehman Brothers. Two days after Lehman folded in 2008, Cargill provided a $100 million emergency loan so administrators could pay staff. LENDERS THREATEN "HELP TO BUY" PLAN Banks and building societies could derail the government's "help to buy" scheme amid concerns they may be saddled with too many high-risk loans. Lenders are warning privately that they plan to stick with their current lending criteria.

MINISTERS TRY TO RENEGOTIATE BAE DEAL British ministers are trying to renegotiate a 5.3 billion pounds contract with BAE Systems to build two aircraft carriers in an attempt to force it to take more responsibility for spiralling costs. Sunday TelegraphLEGAL FIGHT THREATENS ROYAL MAIL TNT Post UK, which is owned by Dutch mail group PostNL , is taking court action against Royal Mail's tax status in a move that could have a significant impact on the government's plans for a multibillion-pound float of the state-owned service. TNT Post UK is challenging the 20 percent VAT exemption the Royal Mail is granted as the "universal provider" of postal services in Britain. IGAS IN TALKS OVER SHALE ENERGY DEALS

Shale gas explorer IGas Energy is in talks with major landowners and industrial firms in Lancashire and Cheshire about drilling access and gas supply deals. AIR CHINA MOVE HITS GATWICK EXPANSION PLANS Gatwick airport's bid to rival Heathrow as a gateway to long-haul destinations has been dealt a blow as Air China prepares to scrap its direct flights from Gatwick this winter. Independent on SundayPRIVATE EQUITY FIRMS PONDER MERGERMARKET BIDS A host of private equity firms are considering bids for Mergermarket, the online news service that Pearson put on the block in July. Advent International, Exponent and HgCapital are all understood to be pondering offers.

INVESTEC TO LAUNCH $500 MLN AIRCRAFT DEBT FUND Investec will launch a $500 million fund to invest in aircraft debt later this month, which the specialist asset manager claims is a world first. Mail on SundayLONDON HOUSE BUBBLE "THREAT TO UK RECOVERY" A crash in the soaring London housing market could derail the tentative recovery of the entire British economy, according to Paul Ballew, global chief economist at Dun & Bradstreet. NEW RULES ON WAY FOR PAYDAY LENDERS The third major investigation into payday lending in less than two years will be launched by the new Financial Conduct Authority next week and is expected to result in a complete overhaul of the sector with stringent new controls on lenders. INVESTOR REVOLT BREWS OVER DIAGEO EX-BOSS An investor revolt is brewing over the 18.2 million pounds pay package for Paul Walsh, the former chief executive of drinks group Diageo. Sunday ExpressASDA AIMING FOR 500 MORE STORES Andy Clarke, the chief executive of Wal-Mart's British unit Asda, is considering opening 500 more supermarkets as part of the company's plan to be within reach of the entire population.

Rlpc loan pricing falling for europes top companies


´╗┐* Loan pricing drops by nearly a third for top companies* Blue chip companies tempted into early refinancings* French, UK and Scandinavian firms to follow Germany's leadBy Alasdair ReillyLONDON, Oct 11 Tumbling loan pricing is tempting highly rated European companies such as German utility E. ON back into the syndicated loan market to refinance existing loans well before maturity to lock in low rates, bankers said on Friday. Loan pricing for highly-rated European companies has fallen by around a third since the beginning of the year, Thomson Reuters LPC data shows, which has allowed blue-chip companies to cut borrowing costs significantly. German companies are able to access the lowest loan interest margins in Europe, as E. ON's DE> new 5 billion euro ($6.78 billion) loan shows, although French companies are catching up quickly. Unrated French lens-maker Essilor which is considered to be a strong single A rated credit, matched pricing of 25 basis points (bps) in August on German chemicals firm BASF's 3 billion euro loan which was signed in March. BASF's loan is widely credited with starting the current round of pricing decreases, most of which have been reserved for German companies as banks scramble to lend to Europe's economic powerhouse. E. ON's loan refinancing is priced at 27.5 basis points (bps), matching German carmaker Daimler's 9 billion euro loan refinancing that signed in late September. E. ON and Daimler are both rated A-/A3. E. ON has been able to nearly halve pricing on the 6 billion euro loan from 2010 that is being refinanced, which paid an interest margin of 47.5 bps over Euribor.

The new five-year loan, which is being co-ordinated by Commerzbank and UniCredit, has two one-year extension options, and is expected to remain undrawn. The loan will act as a back-up facility for E. ON's commercial paper programme, and also serves as a liquidity reserve and for general corporate purposes. PRICING DOWN Average pricing for single A rated European companies fell by 31 percent in the third quarter to 28.75 bps and triple-B rated loans saw a similar 27 percent drop in margins to 48 bps, Thomson Reuters LPC data shows.

Competition to lend between banks is creating increasingly favourable conditions for borrowers, but E. ON's decision to match Daimler's margin instead of pushing lower suggests that the pricing squeeze could be slowing, bankers said."They (E. ON) could have gone cheaper, but this was a sensible move under the circumstances. Pricing is where it is and will probably remain where it is for the foreseeable future" a senior banker said. More European companies including French, Scandinavian and UK firms are also expected to refinance loans early to take advantage of cheaper pricing or amend and extend existing loans, which could push loan volume higher. With the spectre of deleveraging receding rapidly, banks are eager to lend, even to undrawn liquidity backstop loans for highly-rated clients. These standby loans make less money than drawn term loans and have to be subsidised by other business, including bond fees. A+/A1 rated German engineering firm Siemens secured a $3 billion loan from a group of 31 banks at the end of September which raised more than $5.7 billion in commitments from the market, despite paying a competitive margin of just 20 bps over Euribor.

Siemens cut its borrowing costs by a third from the 30 bps the company paid on a 4 billion euro five-year facility that was arranged in April last year. Baa1/BBB+ rated Deutsche Post signed a 2 billion euro revolving credit that refinanced an existing loan that was due to mature in December 2015. That financing, which has a five-year maturity with two one-year extension options, was coordinated by Commerzbank with bookrunners and mandated lead arrangers Citigroup, Deutsche Bank and HSBC. Deutsche Post's loan paid 30 bps over Euribor, significantly lower than the 55 bps paid on the borrower's existing loan facility, which was arranged in December 2010. As pricing for highly-rated companies seems to reach a floor, signs are emerging that margins for lower rated non-investment grade companies are also coming under pressure. Average BB rated margins dropped 9 percent in the third quarter to 267 bps, according to the data."This is the next part of the market where we expect to see a significant fall in pricing and a subsequent increase in opportunistic refinancing," a banker said. Irish paper and packaging firm Smurfit Kappa, which is rated BB/Ba2, recently completed a corporate refinancing 750 million euro term loan and a 625 million euro revolving credit facility. The company was able to cut 150bps from the margin of the 750 million euro term loan and 125bps from the 625 millon euro revolving credit to 225bps and 200bps respectively. ($1 = 0.7373 euros)