UPDATE 2-Czech president sees early election in late October

Fri Aug 16, 2013 5:51am EDT

* President to call vote for Oct. 25-26

* Lower house set to vote on dissolution on Aug. 20

* Early poll to return country to centre-left rule

By Jason Hovet and Robert Muller

PRAGUE, Aug 16 (Reuters) - Czech President Milos Zeman will call an early election for Oct. 25-26 if parliament votes to dissolve itself next week to try to end a political standoff that has paralysed decision making in a country recovering from recession.

The second election in three years looks set to usher in a new government led by the left-leaning, pro-European Social Democrats after the centre-right coalition collapsed because of spying and corruption allegations.

It could also mark a new role in policymaking for the Communist Party (KSCM), which has not had a share in power since 1989 when its totalitarian rule of Czechoslovakia ended. The Party's return to power could trigger protests among strident anti-Communists.

"In the event that the lower house will pass the motion for its dissolution on Tuesday, then I will call an early election for October 25 and 26," Zeman told Halo Noviny newspaper.

The president's office confirmed the date.

Zeman said he had decided to announce the date in Halo Noviny, which has personal ties to the Communist party, because of the party's backing of his prime minister, and longtime ally, Jiri Rusnok in a confidence vote earlier this month.

Rusnok lost the confidence vote after the largest political parties on the left and right accused leftist Zeman of trying to grab power when he appointed Rusnok as prime minister in June.

There will be a vote on dissolving parliament on Aug. 20. Most parties agree on an early election that should return the Social Democrats to power for the first time since 2006.

Polls show the party, which says it will cancel so-called second pillar pension accounts and proposed new taxes to boost public coffers by the centre-right, would win by a double-digit margin over the nearest contender but not gain a majority in the house.

LEFTIST COALITION

The Social Democrats, which want to prepare for the euro and are more passionate about deeper European integration than rightist rivals, won the most votes in the country's last election in 2010 but could not form a coalition.

To avoid a repeat, the party has said it will try to form a minority cabinet backed by - but not including - the far-left Communist party, which is running second or third in opinion polls. It could also look for partners among smaller centrist or even centre-right parties.

In the interview, Zeman suggested he would back a minority cabinet of Social Democrats supported by the Communist party. The president has a largely ceremonial role but has powers to appoint prime ministers and central bankers, and past actions have shown he is willing to use his powers.

The Social Democrats (CSSD), which have pushed hardest for early elections, said the proposed election date fell in line with their expectations. "CSSD has wanted an election at the earliest (possible date)," spokesman Martin Ayer said.

The confidence vote revealed the centre-right no longer had a lower house majority.

The conservative TOP09 party, part of the former ruling coalition along with the Civic Democrats, joined the main leftist parties - the Social Democrats and Communists - in support of the new election.

TOP09's vote will give the motion to dissolve parliament the needed constitutional majority to pass.

The former ruling coalition parties have seen their popularity slip sharply after three years of tax rises and spending cuts that along with the euro zone crisis pushed the European Union state into its longest recession in two decades.

The economy grew on a quarterly basis for the first time since mid-2011 in the second quarter.

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

18.12 | 0 komentar | Read More

Tenaga Nasional seeks 1 bln euro loan for Bord Gais bid-Basis Point

HONG KONG | Fri Aug 16, 2013 5:57am EDT

HONG KONG Aug 16 (Reuters) - Malaysian state-owned utility Tenaga Nasional Bhd is seeking 1 billion euros ($1.33 billion) in financing to back a bid for Ireland's Bord Gais Energy, Basis Point reported on Friday, citing bank sources.

Several unnamed international and Malaysian banks had submitted proposals after Tenaga sent out a request for proposals for a bridge loan, the report said. A mandate for the loan has not been awarded. Basis Point is a Thomson Reuters publication.

Bord Gais Eireann announced in May that it had started the sale process for its energy unit, which sources expect to fetch about 1.5 billion euros.

RBS Capital Markets is financial adviser to Bord Gais Eireann. The Irish state-owned group plans to complete the sale by the end of the year.

Bord Gais Energy is targeting EBITDA of about 160 million euros by 2015 and 250 million euros by 2018, according to Bord Gais Eireann.

The energy supplier has a 445MW power plant, a portfolio of onshore wind assets, and an energy distribution network business in Northern Ireland.

Tenaga's deal would add to record M&A loan volume this year for Malaysia, boosted by aggressive expansion at home and abroad, which could eventually exceed $3 billion, according to Thomson Reuters LPC data. Malaysia's previous highest M&A loan volume was $1.37 billion in 2010.

In April, Malaysian oil and gas firm SapuraKencana Petroleum Bhd sealed a $1.85 billion 12-month bridge loan to acquire Seadrill Ltd's tender oil rig business. Seadrill, the world's biggest offshore rig group by market value, is listed in New York and Oslo.

Malaysian government-linked Employees Provident Fund, along with Malaysian conglomerate Sime Darby Bhd and property developer SP Setia Bhd, is raising a roughly 790 million pound ($1.23 billion) financing related to its purchase of London's Battersea Power Station.

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

18.12 | 0 komentar | Read More

TDF gets bids bellow 4 bln euros for French unit-sources

By Sophie Sassard

LONDON | Fri Aug 16, 2013 6:31am EDT

LONDON Aug 16 (Reuters) - Telediffusion de France (TDF) received bids bellow 4 billion euros ($5.31 billion) for its domestic unit, raising concerns over the deal and the company's ability to repay debt, three sources familiar with the matter said.

The owners of mobile and digital television broadcast company TDF were initially hoping to raise at least 4 billion euros from the sale to help repay a 3.8 billion-euro ($5.04 billion) debt pile and avoid a costly restructuring with their lenders, two of the sources said.

Private equity fund TPG is TDF's largest shareholder with 42 percent of the equity, followed by France's national investment fund FSI and fellow private equity funds AXA and Charterhouse.

TPG, TDF, FSI, declined to comment while AXA and Charterhouse were not immediately available for comment.

18.12 | 0 komentar | Read More

Sterling hits 2-month highs, 10-yr gilt yields at 2-yr peak

Thu Aug 15, 2013 6:06am EDT

* GBP rises after forecast-busting UK retail sales data

* 10-yr UK gilts yields soar to 2-year high

* SONIA rates inching towards pricing a rate move in 18 months

By Anirban Nag

LONDON, Aug 15 (Reuters) - Sterling hit a two-month high against the dollar while 10-year gilt yields rose to two-year peaks on Thursday after UK retail sales beat forecasts and bolstered expectations of early monetary tightening.

Investors steadily brought forward expectations of a hike in the bank rate, currently at 0.5 percent. Sterling overnight interbank average rates (SONIA)- the very short-term interest rates that form the basis of lending costs to the wider economy - inched towards pricing in a first move in 18 months, compared with two years on Wednesday.

Currently under its "forward guidance" plan, the Bank of England expects to keep rates low until the end of 2016 when it expects the jobless rate to fall to 7 percent. But a steady improvement in data is leading to doubts whether the guidance plan can keep rates anchored for that long.

Retail sales for July rose 1.1 percent from a month earlier, easily beating expectations of a 0.6 percent rise. That comes after a string of recent releases, ranging from rising house prices to a jump in services activity and a brighter prospect for the job market.

Sterling was up 0.5 percent at $1.5585, having hit$1.5591, its highest level since mid-June. The euro was down at 85.23 pence, a 1-1/2 month low, while against a trade-weighted basket, sterling was at 81.40, a seven-week high.

"Consecutive data surprises have pushed sterling higher with the SONIA rates rising and the back-end of the gilt curve steepening," said Adam Myers, head of European FX strategy at Credit Agricole. "Markets are wondering if the BoE forward guidance is backfiring."

The 10-year gilt yield sat at two-year highs of 2.657 percent, according to Reuters data.

UNWARRANTED FINANCIAL TIGHTENING

The 18-month SONIA rate rose to 0.4965 percent after the retail sales data, from 0.4900 percent beforehand and 0.47125 on Wednesday morning. The two-year SONIA rose to 0.5575 percent from 0.54875 percent beforehand as investors are increasingly pricing in a greater chance of a rate hike in 2015 by the central bank.

Those expectations were bolstered on Wednesday after the jobs report pointed to a brighter outlook and Bank of England minutes showed an unexpected division among policymakers about the guidance plan.

The steady shift in expectations has taken markets' view of the Bank of England rate outlook back to where it was in late June, just before Mark Carney became governor. Soon after taking over on July 1, Carney dampened expectations of an early move by calling a rise in short-term money market rates "unwarranted".

"Tighter financial conditions are the last thing the Bank wants and, as such, we believe that Carney will attempt to verbally push back market pricing over the coming weeks," Morgan Stanley said in a morning note.

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

18.12 | 0 komentar | Read More

German yields hit highest since April 2012 as economy picks up

LONDON | Thu Aug 15, 2013 6:12am EDT

LONDON Aug 15 (Reuters) - German 10-year government bond yields hit their highest since April 2012 on Thursday due to an improved economic outlook for the euro zone.

Bund yields rose as high as 1.857 percent, up 4.8 basis points on the day.

18.12 | 0 komentar | Read More

Air Berlin signs deal on 11 aircraft with China's Minsheng

FRANKFURT | Thu Aug 15, 2013 6:51am EDT

FRANKFURT Aug 15 (Reuters) - German airline Air Berlin said it signed a letter of intent to sell 11 new and used aircraft to Minsheng Commercial Aviation Limited.

The deal covers the sale and lease-back of five used Airbus A320 family aircraft owned by Air Berlin as well as deliveries of new Airbus A320 family aircraft and a new Boeing 737-800 aircraft in 2014, Air Berlin said on Thursday.

In addition, Minsheng - a unit of Chinese leasing company Minsheng Financial Leasing - will have the option to buy four Boeing 737s from Air Berlin and place them into the Chinese market, it said.

18.12 | 0 komentar | Read More

Spaniards rebel against solar panel levy

Wed Aug 14, 2013 6:12am EDT

* Spain imposes solar panel levy under energy reform

* Rebels risk fines of up to 30 million euros

* Reforms threaten Spain meeting 2020 EU renewable energy goals

By Tracy Rucinski and Jose Elías Rodríguez

MADRID, Aug 14 (Reuters) - Two weeks after Spain's government slapped a series of levies on green energy, Inaki Alonso hired two workmen to remove the solar panels he had put on his roof only six months earlier.

Alonso, an architect who specialises in ecological projects, calculated the cost of generating his own power under a new energy law and decided the numbers no longer added up.

Neither was it possible to leave the panels on his Madrid home without connecting them to the electricity grid; that would have risked an astronomical fine of between 6 million and 30 million euros ($8 million-$40 million).

"The new law makes it unviable to produce my own clean energy," Alonso said.

Spain's conservative government announced a reform of the energy system last month, including the "support levy" on solar power in a country blessed with abundant sunlight.

Imposed by decree, the reform aims to raise money for tackling a 26 billion euro debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.

Under the constitution, the government can impose emergency measures by decree and has done so repeatedly since it came into office in late 2011. With Spain in economic crisis, power consumption is falling but the energy debt will continue growing by 4-5 billion euros a year unless the government takes action.

Utilities such as Iberdrola, Endesa and Gas Natural have attacked other revenue-raising measures in the reform. However, Spaniards who have generated power independently for their own homes under a system known as "autoconsumo" are among the hardest hit by policies which they say punish, rather than encourage, energy efficiency.

Industry Minister Jose Manuel Soria accepts the measures are painful but says they are needed to plug the energy deficit.

"I support 'autoconsumo' ... but the power system has infrastructure, grids that the rest of us Spaniards who are in the system have to pay for. And we pay for it through our electricity bill," said Soria.

As a decree law, the measures are unlikely to undergo much scrutiny in parliament where the ruling People's Party has an outright majority, meaning the opposition cannot force a debate.

GREEN SAVINGS CRACK-DOWN

Spain imports over 80 percent of its energy needs, spending more than 40 billion euros - or about 4.5 percent of gross domestic product - a year. Supporters of solar power says the government ought to be supporting the industry to cut this bill and achieve renewable energy targets set by the European Union.

Soria announced the measures just as home-produced solar power had become increasingly attractive compared with electricity supplied over the grid by traditional utilities.

In the past, the high cost of solar panels discouraged many consumers from taking the plunge, but prices have more than halved in the last three years. A 240-watt solar panel kit, enough to power household appliances, is now available on the Internet for as little as 500 euros.

Under the old regime, Spanish consumers could recover a typical 1,600-2,100 euro investment in solar panels through savings on their utility bills in about five years. According to FENIE, an association for solar panel installations, this will jump to 17 years when the levies are imposed under the new law.

Moreover, the law does not allow homeowners to sell electricity they do not need back to the grid, a common practice in other countries such as Germany.

Spain's climate offers huge potential for solar power. In Germany, a four-person household can cut its consumption of power from the grid by 30 percent by using panels. In Spain, which has among the highest electricity prices in Europe, the figure is three times that - offering big savings for consumers hit by the recession and 26 percent unemployment.

SOLAR REBELS

In the end, Alonso moved his solar panels to a friend's house deep in the Spanish countryside. This was far enough from the nearest mains supply to be exempt from the stipulation that panels must be hitched up to the grid.

Apart from people in isolated communities, Spaniards must connect their panels to the grid within two months. This allows their solar power production to be metered remotely - and taxed.

However, some panel owners plan to rebel by ignoring the government's deadline, confident the courts would hesitate to uphold the huge fines. These were laid down in an old 1997 energy law and, while possibly appropriate for a large corporation, no private individual could ever pay them.

"If I spend 600 euros to install solar panels and get fined 6 million euros, let the judge decide," said Sergio Pomar, chief executive of energy-efficient installation firm INEL.

Courts already expect a series of legal challenges to other elements of the reforms, which investors in renewable energy says renege on the terms of their investment.

Teresa Ribera, senior adviser to the Paris-based Institute for Sustainable Development and International Relations (IDDRI), said the law could provoke civil disobedience.

"This law is illogical in terms of energy efficiency and costs ... and is a serious invitation by the government for citizens to become anti-system," she said.

She dismissed the idea that independent solar power producers should pay for costs such as running the grid and subsidising other energy forms. "It's like asking cyclists to pay a levy to keep open the petrol stations they don't use," said Ribera, who served as secretary of state for the environment under the former Socialist administration.

BACKTRACKING ON RENEWABLES

Ribera said the law is a setback for Spain in the competitive renewable energy industry, where it was once a frontrunner.

It also threatens to prevent Spain from meeting an EU goal of producing 20 percent of its energy from renewable sources by 2020. "If we continue burning more coal and stop installing renewables capacity, the targets are at risk," said renewable energy advocate Mario Sanchez.

Javier Garcia Breva, chairman of Spain's renewable energy foundation, said the country had to cut its energy import bill. "Failing to support energy efficiency will only make these costs go up," he said.

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

18.12 | 0 komentar | Read More

U.S. schools face tough decisions on Obamacare benefits

By Yasmeen Abutaleb

WASHINGTON | Wed Aug 14, 2013 6:59am EDT

WASHINGTON Aug 14 (Reuters) - Hit by years of budget cuts, some U.S. public school boards are looking to avoid providing health benefits to substitute teachers and supporting staff under President Barack Obama's reform law, education officials say.

According to the law, employers will have to offer health coverage to all full-time employees, defined as those who work an average of 30 or more hours per week each month, or else pay a fine starting in 2015.

School boards, already struggling to manage after years of state budget cuts, are trying to get ahead of the potential costs of Obamacare for the current academic year, education and labor officials say. The need to find creative solutions, or risk cutting back staff hours further, will increase as they finalize their budgets, they say.

In Pennsylvania's Penn Manor School District, Superintendent Mike Leichliter said there is no room in its constrained budget to provide additional employee insurance. Instead of cutting hours, the district used a substitute-teacher contracting service to pay part of the salaries for 95 employees. Money for such a service does not count against the school's budget.

"When we looked at our costs, (healthcare) was one area that really had the potential to skyrocket," Leichliter said. "This is absolutely the worst time for school districts to be faced with mandated increases."

The National School Board Association said many states and school districts have at least explored reducing hours, according to Linda Embrey, a communications officer. Several school officials contacted by Reuters said they could not find a way around cuts.

In Indiana's Fort Wayne Community Schools district, one of the state's largest, administrators reduced hours for 610 of its 4,050 employees, including substitute teachers and support staff, who were working 30 or more hours a week. Providing them with health insurance would have cost $10 million annually, said Krista Stockman, public information officer for Fort Wayne.

"You get to a point where there's a danger that you're cutting too much and that the quality of education you're providing isn't as great," Stockman said. "We're just going to have to do the same amount or more with less."

Most of the employees affected are substitute teachers, classroom aides, cafeteria workers, bus drivers or similar support staff, according to school officials and labor representatives. They had not been receiving healthcare coverage from their employers in the past. Now, instead of getting such employer-sponsored benefits under the reform law, they may be eligible for government-subsidized coverage that will be offered by new state insurance exchanges starting on Oct. 1.

SEQUESTER TAKES A SECOND TOLL

During the 2012-2013 school year, 26 states provided less money to local school districts than the prior year, and 35 states provided less funding than in 2008 (a better year), according to the Center on Budget and Policy Priorities.

This year they are also grappling with across-the-board "sequester" spending cuts introduced after Congress deadlocked over how to fix the deficit. An Obama administration official said those cuts plus the states', and not healthcare reform, are the main reasons for staff losing work-time at schools.

"We are seeing no systematic evidence that the Affordable Care Act is leading to a shift to part-time work," the official said. "There are a variety of factors impacting schools, including sequestration, which is cutting budgets and is a completely separate issue."

The National Education Association is working with union leaders across the country to figure out how to encourage employers to avoid cutting hours as a result of healthcare reform, said Joel Solomon, NEA senior policy analyst. The effort has included a training session for dozens of labor representatives in June, and more sessions are planned for this year.

Solomon said one popular solution offered by the NEA is to help schools get a more precise accounting of employee hours to see whether staff are truly working an average of 30 hours a week each month when holidays and other time off are included. That has helped some schools make less drastic cuts in employee hours, he said.

Many school employees are expected to qualify for Obamacare's tax subsidies, which are available starting in January to people who make within 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four in 2013).

Even if they don't, the new plans are preferable to what they currently have to buy on the individual market because insurers cannot deny coverage based on prior illness.

In Nebraska, the Plattsmouth Community School District is limiting the hours of permanent substitute teachers, who typically work every day, said Marlene Wehrbein, a labor union official who advocates for employees in the state's public school districts.

"It creates a lot of inconsistency in staffing, and I can't see how that would be good for students," Wehrbein said. "How could you have a teacher teaching English four days a week and then on the fifth day you have someone else?"

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

18.12 | 0 komentar | Read More

RPT-INSIGHT-JCPenney's 100-year bonds swoon amid retailer's turmoil

Wed Aug 14, 2013 6:59am EDT

By Dan Burns

Aug 14 (Reuters) - It was a "century" deal, but in hindsight it was hardly the deal of the century.

More than 17 years and a dozen credit downgrades ago, JCPenney Co Inc. joined an elite club in capital markets circles by issuing a rare 100-year bond.

The deal from Penney, then sporting a mid-range investment-grade rating of "A" from Standard & Poor's and coming off record holiday-season sales, matched the year's largest "century bond" deals at $500 million, but the company stood out as the only retailer in the mix.

By all accounts the sale of the 7-3/8 percent notes due 2097 , managed by Credit Suisse, JP Morgan, Morgan Stanley and Merrill Lynch, went smoothly. The future seemed bright: Penney was riding high on investor optimism about its $3.3 billion purchase of the Eckerd drug store chain months earlier and within 18 months its stock would be at then record highs.

But 100 years makes for one long bet, particularly on a player in a sector as flighty as mass-market retailing, and it's been anything but smooth sailing since.

Like the stock, Penney's bonds, long since fallen deep into junk status with a CCC- rating, have taken it on the chin as the store group's sales have plunged amid a disastrous pricing and marketing strategy and failed attempt to appeal to the more affluent shopper. Its recent related tussle with activist hedge fund investor Bill Ackman, and uncertainty about the status of its vendor financing deals, have further undermined investor confidence.

It is now facing a very uncertain holiday season with a temporary CEO at the helm following its firing of Ron Johnson, the former Apple executive who was largely seen as the architect of its failed strategy.

The 2097 bonds have fallen 21 percent in price since mid-May, and are currently trading at 67 cents on the dollar, near their lowest since the financial crisis. They offer a yield of 11.38 percent. By contrast, the average effective yield on bonds in the Bank of America Merrill Lynch CCC and Lower U.S. High Yield Index, an index of lower-rated junk bonds, is 9.77 percent.

Some big names in the bond business can be counted among the casualties.

Loomis Sayles & Co. holds about $19.4 million of the bonds as of June 30, according to Emaxx, a bond investor tracking service owned by Thomson Reuters.

Dan Fuss, vice chairman and portfolio manager at Loomis, said the firm, which has $190 billion in assets, is reassessing its position.

"When you lose market share, it is difficult to stop the bleeding, especially in retail," Fuss said.

Back in 1997, the Penney deal came to market in what turned out to be the banner year for "century bond" issuance.

Following on IBM's record $850 million deal in December 1996, ultra-long bond fever struck Wall Street and corporate treasurers alike, and an unprecedented 26 investment grade century bond sales totaling $7.12 billion hit the market over the next 12 months, according to IFR Markets data.

Car makers Ford and Chrysler both sold $500 million, as did Baby Bell operators BellSouth and US West. Railroads Norfolk Southern and Burlington Northern Santa Fe clocked in at $350 million and $200 million respectively, and Boston University raised $100 million.

In all, IFR data shows 65 U.S. 100-year bonds with a face value of $16.29 billion have been issued since Walt Disney and Coca-Cola debuted century deals on successive days in July 1993. Recent ultra-long issuance has been dominated by high-rated universities, which account for six of the 10 deals since the financial crisis, led by Massachusetts Institute of Technology's $750 million deal in May 2011, largely on the basis that they are more likely to be around in the next century than many companies.

In fairness to Penney's bonds, few of the century bonds have fared well of late as the corporate bond market has been whipsawed by investor anxiety over the future of the U.S. Federal Reserve's massive stimulus program.

High-grade bonds like IBM's 2096s, rated AA-, have dropped 18 percent in price since early May. Even MIT's AAA-rated notes due 2111 have shed 19.3 percent in price in that time, with their yield climbing nearly a full percentage point to 4.88 percent.

Still, the questions around Penney's future suggest more volatility ahead. Its credit default swaps, insurance against a default, price a nearly 65 percent default probability in five years and 85 percent over 10 years, according to data from Markit. For some bond mavens, that's just too much risk to take on.

Portfolio manager Bonnie Baha, who heads Global Developed Credit at DoubleLine, said the $57 billion bond house has had Penney bonds on its "avoid" list for years and doesn't buy the argument that Penney's swooning securities don't take into account the value of the retailer's real estate.

"In the era of Amazon.com and other online retailing, I don't think much of legacy real estate assets of the Big Box stores," Baha said.

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

18.12 | 0 komentar | Read More

Recurring profit at Banco do Brasil comes in line with estimates

SAO PAULO | Tue Aug 13, 2013 6:26am EDT

SAO PAULO Aug 13 (Reuters) - State-controlled Banco do Brasil SA posted second-quarter earnings in line with earnings estimates on Tuesday.

Recurring profit, a measure of profit that excludes one-time items, came in at 2.634 billion reais ($1.15 billion) in the quarter, according to a securities filing. A Thomson Reuters poll of seven analysts had predicted recurring profit of 2.630 billion reais for the period.

18.12 | 0 komentar | Read More