Romania central bank cuts rates to 4.0 percent

BUCHAREST | Tue Nov 5, 2013 5:27am EST

BUCHAREST Nov 5 (Reuters) - Romania's central bank cut interest rates by 25 basis points to a record low of 4.00 percent on Tuesday, taking advantage of a sharp decline in inflation to support economic recovery.

Tuesday's cut was the fourth consecutive this year and in line with consensus. Persistently high inflation had kept the central bank on hold for more than a year while its emerging European peers lowered borrowing costs sharply.

But September inflation fell to 1.9 percent from August's 3.7 percent. The central bank had forecast 2013 inflation at 3.1 percent, within its 1.5-3.5 percent target range.

18.12 | 0 komentar | Read More

CORRECTED-BRIEF-Franchise Services of North America subsidiary Simply Wheelz to file for bankruptcy

Tue Nov 5, 2013 4:58am EST

Nov 5 (Reuters) - Nov 5 (Reuters) - Franchise Services of North America Inc : * Announces bankruptcy filing by simply wheelz llc * Says simply wheelz, which does business as Advantage Rent a Car, has determined to file for Chapter 11 * Source text for Eikon * Further company coverage

18.12 | 0 komentar | Read More

UPDATE 1-UAE to impose watered-down exposure rules on banks

By Stanley Carvalho

ABU DHABI | Tue Nov 5, 2013 5:36am EST

ABU DHABI Nov 5 (Reuters) - The central bank of the United Arab Emirates has eased planned curbs on commercial banks' exposure to state-linked debt, giving them five years to comply after the banks complained that the rules could hurt their business.

As part of efforts to reduce risk for banks and prevent any repeat of Dubai's 2009-2010 corporate debt crisis, the central bank announced early last year that banks would have until the end of September 2012 to restrict their lending to the government and state-linked entities.

Each bank would have to cap such lending at 100 percent of its capital base, with lending to a single borrower limited to 25 percent.

The rules were suspended after lobbying by the banks, however, and central bank governor Sultan Nasser al-Suweidi on Tuesday outlined substitute rules that were much less harsh.

Banks will have five years to comply fully with the rules, Suweidi said; they will have to cut their excess lending by 20 percent every year until they reach the ceiling for exposure.

"We think that is a reasonable time frame. Most banks will be compliant," he told reporters on the sidelines of a financial conference.

Bonds that are rated by credit rating agencies will not be counted as exposure for the purposes of the rules, Suweidi said - a provision that will remove pressure on banks to cut their holdings of bonds, and could prompt Dubai, which lacks a rating, to seek one.

Also, the debt of "commercial" state entities which can stand on their own will not be counted, Suweidi added. He did not elaborate on whether this meant banks could, for example, lend without restriction to real estate developers in which the governments of emirates in the UAE own major stakes.

The new rules will come out within one week and will then be published in the official gazette, taking effect thereafter, Suweidi said.

PRESSURE

Taken together, the new rules appear to be much less disruptive to banks' earnings and the growth of the UAE economy than the original ones could have been.

In a report in September, analysts at Bank of America Merrill Lynch calculated the UAE's domestic banking sector had extended a whopping $42 billion in credit to the government and related entities since 2008, bringing its exposure to the state and non-financial public enterprises to 104 percent of capital - the highest ratio since the late 1970s.

For some major UAE banks, the ratios are believed to be considerably higher, so a sudden cut to the 100 percent level could have saddled them with losses while making it difficult for the emirates to finance ambitious development plans.

The International Monetary Fund has warned that the concentration of loans to the government at Emirates NBD , Dubai's top bank, is high, raising corporate governance and risk management concerns.

ENBD has said it is managing its loan book prudently, and Suweidi said on Tuesday that Dubai, where property prices have been rebounding strongly this year, did not risk another boom-bust cycle.

"There is no possibility of a new bubble in the real estate sector. Banks have gone through the experience of 2006, 2007 and the first half of 2008. They know that things cannot go up forever," he said.

"Most loans in the UAE are in the form of mortgage loans. That will balance the issue and it will not permit banks to overextend themselves."

Last week, the UAE central bank issued restrictions on mortgage loans in order to limit speculation in the real estate market; the caps were not as stringent as initially planned because of lobbying by the banking industry.

Suweidi also said he did not expect UAE inflation to rise beyond a normal rate of around 2 percent. "We are not seeing anything beyond normal credit growth, inflation and general expansion of real estate loans."

The UAE's annual consumer price inflation was at 1.3 percent in September for the fourth month in a row, but rising rents in Dubai and upward pressure on prices in Abu Dhabi have raised the possibility of higher inflation nationally.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

Bankrupt LightSquared sues Deere & Co, GPS industry titans

By Nick Brown

NEW YORK | Fri Nov 1, 2013 6:51pm EDT

NEW YORK Nov 1 (Reuters) - Bankrupt LightSquared on Friday sued leaders in the GPS industry, including Deere & Co and Garmin International Inc, saying they kept mum about interference concerns stemming from LightSquared's wireless network until the company had already pumped $4 billion into building it.

In a 65-page lawsuit in U.S. Bankruptcy Court in New York, where LightSquared is fighting to keep control of its spectrum, the company alleged that farm equipment maker Deere, and GPS companies Garmin and Trimble Navigation Ltd led it to believe its network would not interfere with global positioning system devices.

The complaint comes on the heels of a similar lawsuit against the GPS industry by Phil Falcone's Harbinger Capital, LightSquared's controlling shareholder.

Last month, LightSquared received permission from the bankruptcy judge overseeing its Chapter 11 case to pause the Harbinger lawsuit so that LightSquared could decide whether it wanted to join the suit or bring claims of its own.

In Friday's filing, LightSquared says the companies made "promises, agreements and representations" over the 10 years that LightSquared spent building its network, all to the effect that a wireless network would not cause interference with GPS devices.

But in 2010, when LightSquared was close to deploying its network, the GPS industry changed its tune, the lawsuit says. As a result, the Federal Communications Commission revoked LightSquared's license to operate its spectrum, and the company was forced into bankruptcy in 2012.

"This case ... is about how those three GPS manufacturers waited until those billions were invested in the necessary network infrastructure before then breaking their prior promises, reneging on their prior agreements, and disavowing their prior representations," LightSquared says.

The lawsuit alleges that the only reason the interference concerns exist is that the GPS devices encroach upon the spectrum that LightSquared is licensed to operate. The nine-count complaint, which also names industry groups the U.S. GPS Industry Council and the Coalition to Save Our GPS as defendants, alleges breach of contract, tortious interference and other claims.

A spokesman for Deere declined to comment, while a spokeswoman for Trimble did not immediately respond to a request for comment. A representative for Garmin could not immediately be reached.

LightSquared's bankruptcy has become a messy fight for control between Falcone and Charles Ergen, the chairman of DISH Network Corp, which is making a hard push to acquire the company's valuable spectrum.

The assets are likely to be auctioned off to the highest bidder, with Dish having already made a baseline offer for some of the spectrum.

LightSquared and its lenders have pushed competing proposals for the parameters of a sale, while Harbinger has put forth a plan that would restructure LightSquared without a sale. The plans are being voted on by creditors.

Doug Smith, LightSquared's chief executive, in a statement noted his company's "fiduciary duty" to "ensure that parties understand all of the assets of our estates more specifically."

"The unfortunate reality is that this company unnecessarily lost billions of dollars, and this lawsuit provides for interested bidders the factual background between LightSquared and the GPS industry," Smith said.

Last week, Ergen and Dish won dismissal of a lawsuit by Harbinger that had accused them of amassing loans to become LightSquared's biggest lender and then unlawfully using that position to try to wrest control of the company.

In September, LightSquared's bankruptcy judge nixed one of Harbinger's nominees to a committee to oversee the company's auction, citing a possible bias against Dish. The woman, Donna Alderman, had lost her job when Dish acquired her former employer, and said in emails that she felt "screwed" by the process.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

UPDATE 1-Ecuador's economy grew 3.5 pct in second quarter

Fri Nov 1, 2013 7:24pm EDT

QUITO Nov 1 (Reuters) - Ecuador's economy grew 3.5 percent in the seacond quarter that ended in June vs the same period a year earlier, driven by expansion of construction, communications and oil sectors, the central bank said on Friday.

Second quarter growth in 2013 was the same as first quarter growth of 3.5 percent, but marked a slowdown from the second quarter of 2012, when the Andean nation's GDP expanded 5.5 percent year-on-year.

The South American nation, which is OPEC's smallest member, saw its economy grow 5 percent in 2012.

However, growth is expected to slow this year due to slumping prices for commodities and the idling of its largest refinery for several months for an overhaul.

Decent economic growth and heavy state spending helped President Rafael Correa win a landslide re-election in February.

He is predicting growth of 3.7 to 4.0 percent this year, and an improved 4.5 to 5.1 percent growth in 2014.

The leftist government has said it plans to issue sovereign debt - perhaps this year or in the first quarter of 2014 - marking a return to international debt markets five years after defaulting on $3.2 billion of sovereign bonds.

The Finance Ministry said on Friday that the government's 2014 budget would be $34.3 billion - a 6 percent rise from the previous year's $32.4 billion. A deficit of $4.9 billion would be "adequately" financed, it added in a statement.

The budget forecasts 3.2 percent inflation and average crude sale prices of $86.40 per barrel for 2014, it added.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

UPDATE 3-Bondholders lose bid to lift U.S. stay in Argentina litigation

Fri Nov 1, 2013 8:10pm EDT

By Nate Raymond

NEW YORK Nov 1 (Reuters) - A U.S. appeals court on Friday said it would leave a freeze in place on an order requiring Argentina to pay $1.33 billion to bondholders suing for repayment in the wake of the country's 2002 default.

The 2nd U.S. Circuit Court of Appeals in New York denied a motion to lift a stay it issued in favor of Argentina, pending U.S. Supreme Court review of a ruling for the holdout bondholders in August.

The request to lift the stay was made Oct. 15 by bondholders led by hedge funds NML Capital Ltd, a unit of Elliott Management Corp, and Aurelius Capital Management LP.

The case is one of many lawsuits filed by bondholders in the wake of Argentina's $100 billion sovereign default in 2002.

"The court's order confirms that the legal procedures pursued by Argentina are right and we ratify that Argentina will exercise its defense in all available judicial bodies," Argentinas Finance Secretary Adrian Cosentino said in a statement.

In two restructurings, creditors holding about 93 percent of Argentina's bonds agreed to swap out their bonds in deals that gave them 25 cents to 29 cents on the dollar.

But bondholders who did not participate in the restructurings, including NML and Aurelius, sued for full payment. The litigation was filed in New York under the terms of the bond documents.

In 2012, U.S. District Judge Thomas Griesa ruled Argentina had violated a clause requiring the equal treatment of creditors. The 2nd Circuit largely upheld that order in a decision that the U.S. Supreme Court recently declined to review.

As part of its October 2012 decision, the 2nd Circuit sent the case back to Griesa to clarify how the injunctions he had issued would function.

Griesa issued a new order last November that required Argentina to pay $1.33 billion into a court-controlled escrow account in favor of the holdout bondholders.

The 2nd Circuit upheld that decision, but stayed its impact pending a second appeal by Argentina to the U.S. Supreme Court.

After the 2nd Circuit's ruling, Argentine President Cristina Fernandez pitched a voluntary swap of foreign debt in exchange for bonds governed by local law. But Judge Griesa said last month the proposal would violate an injunction he had issued.

Argentina said in a court filing late Friday that it would appeal that order.

Following Griesa's latest order, NML and Aurelius asked the 2nd Circuit to lift its stay.

A three-judge panel denied that request on Friday. A spokeswoman for Aurelius declined to comment. NML did not immediately respond to requests for comment.

The case is NML Capital Ltd et al v. Republic of Argentina, 2nd U.S. Circuit Court of Appeals, No. 12-105.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

GLOBAL MARKETS-Euro on the ropes after dive in inflation

Fri Nov 1, 2013 5:48am EDT

  * Euro remains under pressure after biggest fall vs dollar  in 6 months      * European shares start lower but head for 4th week of gains      * Solid China manufacturing activity reports limit Asian  share losses      * Dollar index hits two-week peak after U.S. data suggests  economy resilient        By Marc Jones      LONDON, Nov 1 (Reuters) - The euro tumbled to a two-week low  on Friday after a plunge in euro zone inflation left markets  suddenly eyeing the outside chance of a cut in interest rates by  the European Central Bank next week.      European shares saw a subdued end to what looked to  be a fourth week of gains, but the combination of Thursday's  surprise dive in inflation to just 0.7 percent and a revitalised  dollar kept it on the ropes.      After its biggest fall in six months in the previous  session, the euro fell to $1.3530, on course for a fall over the  course of the week of two percent.      "It is clear that there has been a major sentiment change on  the euro," said John Hardy, head of FX strategy at Saxo bank in  Copenhagen.      "The ECB's single mandate has always been on inflation so  this gives Draghi and co further reason to do something at next  week's meeting. We see considerable further downside. The likes  of euro/dollar back into the old range, down towards $1.30."      The move was amplified as dollar continued to kick  away from a recent nine-month low, boosted by upbeat U.S. data  overnight.      Stock markets across the continent lost between 0.2 and 0.5  percent,   , pegged back  by signs of third quarter weakness at some major European firms.      At the same time, the return of bets on an ECB rate cut saw  euro zone government bonds extend this week's rise.                           CHINA REASSURES      Reassuring signals on China's factory activity offered  support to Asian markets, though Tokyo's Nikkei   finished at a one-week low as the yen strengthened  against the euro.      Markets' focus remains heavily on U.S. monetary policy and  how soon the Federal Reserve will begin tapering back its $85  billion a month support programme, having delayed a move in  September.      U.S. S&P E-mini futures edged up about 0.1 percent,  after the S&P 500 Index closed down about 0.4 percent on  Thursday but still gained 4.5 percent for the month.           The ISM survey of manufacturing for October will give  investors the latest temperature reading on the state of the  U.S. economy after some upbeat PMI data on Thursday.      "If the ISM report is better than expected, it could add to  revived tapering expectations, and U.S. yields and the dollar  could go up and stocks could go down," said Masashi Murata,  senior currency strategist at Brown Brothers Harriman in Tokyo.      Not all players are convinced that this week's U.S. newsflow  heralds a shift in monetary policy expectations, given the  disruption caused by last month's Federal shutdown.      "The existence of noise in the October data will likely make  it difficult for the Fed to gather enough evidence to start  tapering in December," strategists at Barclays wrote.      In commodities trading, gold steadied but at $1,326.01 an  ounce was still close to its lowest in nearly two weeks, hurt by  sharp losses in the previous session from month-end  profit-taking, the strong U.S. economic data and the higher  dollar.      Copper got a lift from the China data, rising to  $7,281 a tonne and back toward a one-week peak of $7,300 hit on  Thursday. Brent crude added 0.3 percent to $109.19 a  barrel as U.S. crude edged up 0.1 percent to $96.44.  

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

ING cuts state ties in securities deal, paves way for repayment

AMSTERDAM | Fri Nov 1, 2013 5:58am EDT

AMSTERDAM Nov 1 (Reuters) - The Dutch state said on Friday it will sell a 6.4 billion euro ($8.7 billion) portfolio of U.S. mortgage securities that it took over from ING during the financial crisis, paving the way for the bank to repay its state aid ahead of schedule.

The original arrangement between the government and ING, set up in 2009, was intended to reduce risk and uncertainty for ING stemming from its portfolio of U.S. Alt-A mortgage securities, and was provided by the state on top of a 10 billion euro capital injection.

"Market developments now allow the unwinding of the facility, including selling the securities, with a cash profit for the Dutch State," ING said in a statement.

The agreement removes one aspect of ING's state ties, leaving the repayment of the rest of the state aid, analysts said.

Bailed out by the Dutch state in 2008, ING has been shedding its insurance, investment management and other assets through disposals or listings and is cutting thousands of jobs to raise funds with which to repay state aid and bolster its capital.

"This is positive for ING," said Cor Kluis, an analyst at Rabobank.

"ING had two lines of state involvement, Alt A and state capital. Now we have this agreement on Alt A, ING has a bigger motivation to pay back the government ahead of schedule. I think that by the middle of next year they will have paid back the government in full, one year ahead of the 2015 deadline."

ING shares were up 1.5 percent at 9.523 euros by 0914 GMT.

ING said earlier this week it would repay another 1.125 billion euros to the state on Nov. 6, including premiums and interest, bringing the total amount repaid to the state to 11.3 billion euros.

"With this payment we will have paid the Dutch State over 11 billion euros in principal, interest and premiums and we intend to make our final payments within the next 18 months, resulting in a total annualised overall return for the Dutch state of 12.5 percent," said Ralph Hamers, CEO of ING Group.

Another tranche was due to be paid in March 2014 and the final tranche due in May 2015, ING said.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

RPT-Fitch Affirms Baidu at 'A' with Stable Outlook

Fri Nov 1, 2013 5:58am EDT

Nov 1 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed China-based Baidu Inc.'s (Baidu) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'A' and foreign-currency senior unsecured rating of 'A'. The Outlook is Stable.

Key Rating Drivers

Dominant market position: The ratings reflect Baidu's dominance in the internet search market in China with a revenue market share of over 80%. The company has also achieved a clear leading position in China's mobile search market. The ratings also benefit from the company's strong profitability and balance sheet, reflecting its cash generation ability through a proven performance-based, online marketing service to over half a million advertisers targeting hundreds of millions of Chinese internet users, and its strong pricing power.

Strong competitive advantages: Fitch believes that technological innovation plus high levels of brand recognition and consumer satisfaction have enabled Baidu consistently to defend its high market share in a rapidly growing market. The company continues to invest to improve natural language processing, deep learning, image recognition, voice technology, use of big data, location-based services and mobile application search, further strengthening its technology leadership. It also has managed its relationship with the government and regulatory bodies well.

Solid performance: Baidu's revenue grew robustly, by 42.3% yoy, in Q313 while EBIT margin stayed at 37.7% (H113: 37.8%), which remained above global search engine peers' margins. Mobile search revenue continued to accelerate, outpacing mobile search traffic growth, as more customers embrace the benefits of mobile marketing on Baidu's platform. Recent acquisitions further strengthen Baidu's mobile application distribution capabilities and boost its location-based service (mobile map) offering, complementing its existing advertisement business.

Strong cash generation: Baidu generated free cash flow (FCF)/sales of around 40% for the period of 2008 to 2012. Including short-term investments, where the company parks its surplus cash, Baidu had unrestricted cash of CNY17.8bn and near cash of CNY25.5bn at end-September 2013, together covering 243% of its total debt. Fitch expects Baidu to maintain strong financial flexibility with sound profitability and ample liquidity over the medium term.

Foreign ownership restrictions: Chinese law restricts foreign equity ownership in internet, online advertising and employment agency companies in China. Baidu operates its websites in China through contractually controlled consolidated affiliated Chinese entities. These variable interest equity (VIE) arrangements are the usual mechanism for overseas investors to participate in China's restricted sectors and are a credit weakness as they may not be as effective in providing control as direct ownership or may face legal challenges in the future.

VIE weaknesses mitigated: Baidu generates over 70% of revenues from, and keeps almost all the cash and assets within, its wholly owned subsidiaries in China rather than at the contractually controlled, consolidated affiliated entities.

Fitch is reassured by the alignment of Baidu's and affiliates' objectives and the company's continuing good relationship with the government and regulatory authorities.

Rating Sensitivities

Negative: Future developments that may, individually or collectively, lead to negative rating action include:

- evidence of greater government, regulatory or legal intervention leading to an adverse change in the company's operations, profitability or market share

- decline in operating EBIT margin to below 10% (37.7% in 9M13)

- decline in pre-dividend FCF/sales ratio to below 10% (42.3% in 2012)

- increase in funds flow from operations-adjusted leverage to above 2x (1.3x for 2012)

Positive: For the short-to-medium term, Baidu's rating is at its ceiling and takes into account Fitch's expectation of profit growth. Fitch may consider an upgrade if the company develops businesses that materially diversify cash generation away from operations which are subject to Chinese government and regulatory risk, provided such diversification does not damage the company's financial profile.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

Euro zone Oct inflation at 4-yr lows, Sept jobless at record high

Thu Oct 31, 2013 6:19am EDT

  * Euro zone joblessness at 12.2 pct for two months in a row      * 60,000 Europeans lose jobs in September compared with Aug      * Inflation hits 4-yr lows, drops below 1 percent        BRUSSELS, Oct 31 (Reuters) - Euro zone inflation  unexpectedly dropped to a nearly four-year lows in October and  unemployment stood at a record high in September, increasing  pressure on the European Central Bank to further cut interest  rates.      Inflation in euro zone fell to 0.7 percent year-on-year in  October as energy costs fell 1.7 percent on the year, the lowest  reading since November 2009.       The inflation rate dropped below 1 percent for the first  time since February 2010, a flash estimate from the European  Union's Statistics Office showed.      Analysts expected the inflation rate to be flat at 1.1  percent in October.      The very low inflation rate increases the chances that the  ECB might consider another interest rate cut and the euro fell  on the news to 1.3665 against the dollar from 1.3690.      Costs of food, alcohol and tobacco products rose by 1.9  percent. Core inflation, which excludes prices of energy, food  alcohol and tobacco slowed to 1.1 percent year-on-year from 1.4  percent in September.      The jobless rate in 17 countries sharing the euro was flat  at 12.2 percent against an upwardly revised August figure, but  60,000 more Europeans were unemployed on the month, Eurostat  said.      The global financial crisis, followed by European sovereign  debt crisis wiped out hundreds of thousands of jobs over the  past four years and no swift turnaround is in sight as job  problems in Europe are of structural and long-term nature.      Young Europeans, aged 15-24, are the ones most affected with  youth jobless rates in European Unions countries like Spain,  Greece and Croatia above 50 percent. They are below 10 percent  only in Germany and Austria.      The unemployment rate in Germany inched down to 5.2 percent  after being flat for three consecutive months, while the second  largest economy France and third largest Italy registered a  modest increase in their jobless rates in September.      European leaders made fight against high unemployment one of  key priorities.      The European Central Bank (ECB) considers the unemployment  rate unacceptably high as Europe risks losing a generation of  young workers it fails to address the problem and revive growth.  

• Tweet this
• Link this
• Share this
• Digg this
• Email
• Reprints

Comments (0)

Be the first to comment on reuters.com.

Add yours using the box above.

18.12 | 0 komentar | Read More