Update-Moody's: Transaction amendments do not have a negative impact on Trafigura Securitisation Finance plc ratings

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Euro falls, German yields tumble on below-forecast inflation

LONDON Fri Jan 31, 2014 5:20am EST

LONDON Jan 31 (Reuters) - The euro fell against the yen and the dollar, while benchmark 10-year German Bund yields plunged to six-month lows on Friday after euro zone inflation dropped unexpectedly in January.

The fall in inflation is likely to increase speculation the European Central Bank, which meets next week, may ease policy further.

Consumer prices in the 18 countries sharing the euro fell to 0.7 percent year-on-year in the first month of 2014, down from 0.8 percent in December and compared with a 0.9 percent forecast in a Reuters poll.

The euro fell to a 10-day low of $1.35175 after the inflation data from around $1.3540 beforehand. The single currency fell more sharply against the yen, dropping to a two-month low of 138.53 yen, down from 138.88 earlier.

German 10-year Bund yields fell 4 basis points to a six-month low of 1.574 percent, while two-year yields hit two-month lows of 0.079 percent. Money market rates also fell

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Buyout groups bid for public finance specialist Depfa - sources

FRANKFURT Fri Jan 31, 2014 5:33am EST

FRANKFURT Jan 31 (Reuters) - Public finance specialist Depfa, which state-rescued German bank Hypo Real Estate has put on the block, has attracted binding offers from several private equity groups and hedge funds, several people familiar with the transaction said.

A consortium of hedge funds including Third Point, which approached Hypo Real Estate over Depfa in February 2012, is among the final bidders, one of the people said.

Separately, a consortium of hedge fund Och-Ziff and Blackstone bid, as did J.C. Flowers and Apollo, three other people familiar with the transaction said.

Former UBS Chief Executive Oswald Gruebel with backing from a sovereign wealth fund has also handed in a bid, two of them added.

The offers value Depfa at 200-300 million euros ($271.27-406.91 million), the sources said, adding Hypo Real Estate is planning for a final round of bids in several weeks.

"We are currently evaluating the offers but presently cannot comment on the number of bidders and the bids," a spokesman for Hypo Real Estate said.

The bidders declined to comment, except for Och-Ziff and Blackstone, which were not immediately available for comment.

Hypo Real Estate has to sell Depfa by the end of 2014 and its Deutsche Pfandbriefbank arm by 2015 as a condition of the European Commission's approval of its state bailout.

Germany nationalised the stricken real estate lender, which collapsed in the aftermath of the Lehman Bros bankruptcy. Hypo Real Estate received a 10 billion euro capital injection in the wake of the financial crisis as well as 145 billion euros in liquidity guarantees.

Sector bankers have said in the past that Hypo Real estate could end up winding down Depfa itself, as that may prove easier than a sale to a private equity investor, which would have to shoulder relatively high refinancing costs as they usually do not have cheap access to bond markets.

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Ukraine PM Azarov offers to resign 'to help end conflict'

Tue Jan 28, 2014 5:16am EST

* Azarov has been loyal lieutenant since Yanukovich elected

* But Yanukovich, beset by crisis, offered his job to opposition

* Azarov move came as parliament held emergency meeting on crisis

* Ukraine convulsed by street protests for two months

By Richard Balmforth and Natalia Zinets

KIEV, Jan 28 (Reuters) - Ukrainian Prime Minister Mykola Azarov offered his resignation to President Viktor Yanukovich on Tuesday, saying he hoped his departure would help towards a peaceful settlement to two months of unrest which has convulsed the former Soviet republic.

The 66-year-old Azarov announced his decision as parliament met for an emergency session to work out possible concessions to the opposition to end street protests in the capital Kiev and in other cities in which six people have been killed.

Azarov, a loyal lieutenant of Yanukovich since the latter was elected to power in February 2010, said he was offering to step down "with the aim of creating extra means for finding a social-political compromise, for the sake of a peaceful settlement of the conflict."

But in reality he has been publicly humiliated by Yanukovich's offer at the weekend to give his job to former economy minister Arseny Yatsenyuk, one of the opposition leaders, in an effort to stem the rising protests against his rule.

The opposition has been calling consistently for the resignation of the Azarov government since the onset of the crisis. But opposition leaders have shied away from the offer of top government posts by Yanukovich, seeing it as a trap intended to compromise them in front of their supporters on the streets.

Yatsenyuk, one of a "troika" of opposition leaders, formally turned down the offer of the top government job on Monday night and the question now was whether Yanukovich would accept Azarov's departure or not.

Azarov has steered the heavily indebted economy through hard times over four years, keeping the national currency tightly pegged to the dollar and refusing International Monetary Fund pressure to raise gas prices at home.

He backed the decision in November to walk away from a free trade agreement with the European Union - the move which sparked the mass street protests - and it was Azarov who took the heat in parliament, defending the need for closer economic ties with Russia in a stormy debate with the opposition.

EMERGENCY SESSION

Parliament went into emergency session on Tuesday with ministers loyal to Yanukovich saying they would press for a state of emergency to be declared if the opposition leaders did not rein in protesters and end occupation of municipal and government buildings across the country.

Opposition leaders, who include boxer-turned-politician Vitaly Klitschko and nationalist Oleh Tyahnibok, are also pressing for the repeal of sweeping anti-protest laws rammed through parliament by Yanukovich loyalists on January 16.

A government reshuffle had also been slated for discussion at the emergency session but it was not clear now how this would proceed given Azarov's resignation offer.

Another battle lies ahead over protesters detained during the unrest. The Yanukovich side said these would be pardoned, but only once protesters had ended their occupation of public buildings and blockade of roads.

The parliamentary session observed a moment of silence in respect of those who had been killed in the wave of unrest and parliament speaker Volodymyr Rybak then announced a recess.

Talk of a state of emergency being declared in the former Soviet republic of 46 million made the European Union's foreign policy chief, Catherine Ashton, hastily move up a visit to Kiev on Tuesday.

U.S. Vice President Joe Biden called Yanukovich on Monday to urge the government not to declare a state of emergency and to work with the opposition to bring a peaceful end to unrest.

"(Biden) underscored that the U.S. condemns the use of violence by any side, and warned that declaring a State of Emergency or enacting other harsh security measures would further inflame the situation and close the space for a peaceful resolution," the White House said.

Though the protest movement began because of Yanukovich's U-turn on policy towards Europe, it has since turned into a mass demonstration, punctuated by clashes with police, against perceived misrule and corruption under Yanukovich's leadership.

Several hundred people camp round-the-clock on Kiev's Independence Square and along an adjoining thoroughfare, while more radical protesters confront police lines at Dynamo football stadium some distance away.

Yanukovich's Party of the Regions and its allies hold a majority in the Ukrainian parliament but in reality pressure from the president and his aides behind the scenes can easily swing a vote the way he wants it to go.

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EMERGING MARKETS-Emerging currencies, stocks stabilise on c.bank hopes

By Natsuko Waki

LONDON Tue Jan 28, 2014 5:33am EST

LONDON Jan 28 (Reuters) - Turkey's lira extended gains on Tuesday, supported by the possibility of an aggressive interest rate hike, while other emerging currencies and stocks rose on growing expectations more developing countries would tighten policy.

The benchmark MSCI emerging equity index rose half a percent, having fallen for three straight days to hit a 4-1/2 month low on Monday, while emerging sovereign dollar bond spreads tightened by 3 basis points.

The lira rose almost 1 percent to trade about 7 percent off Monday's record lows, thanks to expectations that Turkey's central bank will raise its benchmark rates at its first extraordinary monetary policy meeting since Aug 2011.

It is expected to raise rates by 225 basis points to 10 percent, according to a Reuters poll of analysts, in what would effectively mark the end of its so-called unorthodox monetary policy.

Expectations are growing that more emerging central banks will tighten monetary policy after India unexpectedly raised its policy rate by 25 bps to counter inflation.

Brazil, South Africa and Indonesia - part of what has been dubbed the Fragile Five economies which have a strong reliance on external capital - may follow suit.

"The trigger for stability is emerging central bank action. If Turkey does something it will help," said Sebastien Barbe, head of emerging market strategy at Credit Agricole in Paris.

"We expect the Turkish central bank to hike rates by 150-200 bps. If they do that it will allow stabilisation in the lira at least in the short term."

Barbe however, like most analysts, does not expect any action from South Africa when the central bank meets later this week. The rand was up 0.3 percent at 11.03 per dollar, off its five-year low hit on Monday.

Tradition Analytics said no rate hike from South Africa would leave the country's assets more exposed.

"The rand and bonds will be increasingly exposed to the current offshore dump of emerging market assets without an adequate interest rate buffer," it said.

Following the rate hike, the Indian rupee rose 0.7 percent to 62.65 to the dollar. The benchmark 10-year bond gained slightly on the day while shares lost 0.2 percent.

New cash injections from China's central bank and a deal from a trust firm that averted a possible default for a wealth-management product also helped stabilise China, which many emerging economies are geared to.

"The 'managed default' successfully staves off a potentially disruptive default during the Chinese New Year period and the hope is that it limits any systemic ripple effects," Deutsche Bank said in a note to clients.

In the long term however, investors are concerned about the effects of China's economic slowdown and the Federal Reserve's plan to scale back its monetary stimulus.

The Fed is expected to announce a further $10 billion cut in its bond buying at a meeting this week.

Ukraine's hryvnia rose 0.3 percent from four-year lows against the dollar after the central bank offered to sell dollars at 8.40.

The currency has been under pressure as concerns intensified about the damage to the heavily indebted economy from two months of unrest.

Prime Minister Mykola Azarov offered his resignation on Tuesday. A faithful lieutenant of President Viktor Yanukovich, Azarov backed the decision in November to walk away from a free trade agreement with the European Union, defending the need for closer economic ties with Russia.

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

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RPT UPDATE 2-Turkish central bank, under rate hike pressure, vows decisive action

Tue Jan 28, 2014 5:35am EST

* Basci vows lasting tightening if needed

* Says bank free of political interference

* Lira firms from lows, cost of insuring Turkish debt drops

By Nevzat Devranoglu

ANKARA, Jan 28 (Reuters) - Turkey's central bank governor raised expectations for an emergency interest rate hike on Tuesday, denying he was hostage to political pressures and vowing decisive action to fight rising inflation and a tumbling lira.

Erdem Basci said the bank would not hesitate to tighten monetary policy in a "lasting way" if needed and asserted the bank's independence amid investor concern that it has shied away from rate hikes under pressure from the government.

He also ruled out any imposition of capital controls, saying such moves were "not in our dictionary."

Prime Minister Tayyip Erdogan, keen to maintain economic growth ahead of an election cycle starting in two months, has been a vociferous opponent of the higher borrowing costs sometimes needed to bolster currencies, railing against what he describes as an 'interest rate lobby' of speculators seeking to stifle growth and undermine the economy.

That has left the central bank struggling to contain the lira's precipitous slide. Investor confidence has been damaged by a corruption scandal shaking the government, fears about a power struggle and the global impact of a cut in U.S. monetary stimulus.

"In Turkey, politicians publicly criticise or praise central bank decisions ... I don't think it threatens the bank's independence," Basci told a news conference to announce the bank's quarterly inflation report.

"Nobody should have any hesitation that the central bank will use all available tools. The bank will not hesitate to take steps to make lasting tightening in monetary policy if deemed necessary," he said.

The lira firmed on his comments to 2.2601 against the dollar from 2.3120 late on Monday, having touched a record low of 2.3900 on Monday morning.

The cost of insuring Turkish debt meanwhile eased from Monday's 19-month highs, according to data from Markit.

The bank sharply raised its inflation forecast for the end of the year to 6.6 percent, heightening market expectations that it will hike rates at its first extraordinary monetary policy meeting since August 2011, the height of the euro zone crisis.

It is expected to raise its lending rate - the cost of its overnight loans to Turkish lenders - by 225 basis points to 10 percent, according to the median forecast in a Reuters poll of 31 economists taken on Monday.

The bank will announce the outcome of the meeting at midnight locally (2200 GMT).

WILL IT BE ENOUGH?

Erdogan congratulated the central bank last week after it left interest rates on hold, despite the lira's precipitous decline, while his new economy minister came out a day before the meeting saying the bank should not hike.

"Stand firm, don't raise," the pro-government Yeni Safak newspaper said in its main front page headline on Tuesday, alongside a picture of Basci.

"The interest rate lobby based in London and New York virtually blackmailed the central bank yesterday, pushing the lira has high as 2.39 against the dollar," the paper said.

Thirty respondents in the Reuters poll, a wide sample of Turkish and international banks, forecast a rate hike, with estimates ranging from a rise of 125 basis points to 425. Only one forecast the bank would leave rates unchanged.

There was less consensus over whether such a move would be enough to stabilise the lira and tame inflation, with 12 economists saying yes and seven saying no, citing the need for structural reforms and political stability.

The graft scandal, which triggered the resignation of three ministers and detention of businessmen close to Erdogan, has grown into one of the biggest challenges of his 11 years at the helm.

His reaction, purging the police force of thousands of officers and seeking tighter government control over courts, has been criticised by the European Union and raised investor concern over the rule of law and independence of state institutions.

Reluctant up to now to make an outright rate hike, the central bank has struggled to defend the lira instead by burning through its forex reserves and trying to squeeze up borrowing costs on the margins - a battle it has clearly been losing.

The bank raised its mid-point forecast for year-end inflation to 6.6 percent from a previous forecast of 5.3 percent, well above its target rate of 5 percent.

Basci said inflation would slow from the second half of 2014 and forecast the 2015 inflation mid-point at 5 percent.

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PRESS DIGEST-Canada-Jan 27

Mon Jan 27, 2014 5:18am EST

Jan 27 (Reuters) - The following are the top stories from selected Canadian newspapers. Reuters has not verified these stories and does not vouch for their accuracy.

THE GLOBE AND MAIL

* More than a million people across Canada worked for minimum wages or less last year, the fourth year in a row that number has been above the one million mark, according to Statistics Canada data. Since 2000, their numbers have nearly doubled. ()

* Worried Canadian pork producers are stepping up measures to fend off a potentially devastating virus that has cut a deadly swath across the United States and is showing its first signs of life across the border. ()

Reports in the business section:

* Cash offers have been skyrocketing, as much as seven-fold, for holdout Nebraska landowners who are willing to sign quickly to allow the Keystone XL pipeline onto their property. ()

NATIONAL POST

* As the world outside sought to identify who or what is to blame for the fire that claimed the lives of 32 nursing-home residents, people of the village took refuge in their 158-year-old church Sunday for a remarkable display of solidarity and compassion. ()

* A California company is claiming a world first with a Canadian-invented product that pumps contaminated hospital rooms full of antiseptic vapour, theoretically reaching every nook and cranny and letting no bacteria live. The product is a possible solution for "terminal clean," the exhaustive disinfection of a hospital room tainted by drug-resistant superbugs or other dangerous microbes. ()

FINANCIAL POST

* A weak January doesn't necessarily mean tech stocks are bound to underperform this year, and analysts and fund managers think they are well positioned to benefit from a rebounding global economy. But following a year of outsized returns, valuations, a perennial concern in the tech sector, have once again become a source of worry. ()

* A majority of Canadian investors don't realize how damaging rising interest rates can be to their retirement portfolios, a new poll from CIBC Asset Management has found. ()

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UPDATE 1-Liberty goes all-loan route for Ziggo acquisition debt

Mon Jan 27, 2014 5:28am EST

By Robert Smith

LONDON, Jan 27 (IFR) - Ziggo launched the debt financing for its long-anticipated acquisition by Liberty Global (LGI) on Monday, opting for an all-loan debt package against the backdrop of a softening bond market.

Ziggo has mandated banks for a new EUR3.735bn-equivalent term loan B, according to a banker on the deal. The loan will be split into euro and dollar tranches, both maturing in January 2022, with 0.75% Euribor and Libor floors.

The proceeds will be used to refinance existing Ziggo debt as well as financing the acquisition of Ziggo by LGI.

LGI is a frequent issuer in both the high-yield bond and leveraged loan markets, but has opted for an all-loan deal in this instance, in contrast to its approach on previous acquisitions. When LGI acquired German cable firm Kabel BW in March 2011, for example, it financed the acquisition with a EUR2.25bn high-yield bond.

The fact the European high-yield bond market has softened in recent days could have influenced LGI's decision. The iTraxx Crossover, a synthetic index often used to gauge market sentiment, was bid as tight as 280bp on Wednesday, but has widened out to 312bp on Monday morning.

"In the current market this capital structure is one that works for Liberty," said a banker on the deal.

Ziggo has EUR3.114bn of total debt, according to its latest financial results presentation. Some EUR1.905bn is senior secured, split into a EUR405m senior credit facility, a EUR750m 6.125% 2017 bond, and a EUR750m 3.625% 2020 bond. The remaining EUR1.209bn is accounted for by an 8% senior unsecured 2018 bond.

Ziggo has launched a tender offer to purchase any and all of the outstanding 3.625% 2020 notes, and has also announced its intention to redeem any and all of the 6.125% 2017 notes.

Ziggo has also announced an exchange offer on the 8% 2018 notes, under which up to EUR934m will be swapped for an equal amount of new 8% 2018 paper.

The new Ziggo acquisition debt will "more or less" take out all of its outstanding debt "over a staged period of time", according to a source close to the deal, however.

The new loans will not be fully covenant-lite, but will have just two maintenance covenants covering net senior leverage and total financial leverage.

The loans are expected to be rated Ba3/BB-. Ziggo's expected corporate rating is B1/BB-.

Global coordinators are Credit Suisse and Bank of America Merrill Lynch. Joint bookrunners and mandated lead arrangers are Credit Suisse, Bank of America Merrill Lynch, ABN Amro, Credit Agricole, Deutsche Bank, HSBC, ING, JP Morgan, Morgan Stanley Nomura, Rabobank, Scotiabank and Societe Generale.

Bank meetings in London and New York will be held on Tuesday, with a February 4 commitment deadline.

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TABLE-Economists cut Brazil growth estimates, raise inflation view

Mon Jan 27, 2014 5:33am EST

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  BRASILIA, Jan 27 (Reuters) - Economists slashed their  forecasts for Brazil's economic growth in 2014 and 2015 to 1.91  and 2.20 percent respectively, from 2.00 and 2.50 percent  previously, a weekly central bank survey showed on Monday.      Economists also raised their forecasts for interest rates   and inflation. The poll, conducted by the central bank, provides  the median forecasts of economists at about 100 financial  institutions.               (pct)                2014                  2015                        previous   new        previous  new                        forecast   forecast   forecast  forecast   Consumer inflation   6.01       6.02       5.60      5.70   Exchange rate        2.45       2.45       2.50      2.50     Interest rate        10.75      11.00      11.50     11.50     GDP growth           2.00       1.91       2.50      2.20   Industrial output    2.20       2.20       2.89      2.95  

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UPDATE 3-Ukraine opposition seek more after offer of top government posts

Sat Jan 25, 2014 6:33pm EST

* Yanukovich offers prime minister's post to opposition

* Wants end to street violence and occupations

* Opposition presses for early elections, repeal of anti-protest law

By Richard Balmforth and Jack Stubbs

KIEV, Jan 25 (Reuters) - Ukrainian President Viktor Yanukovich offered the opposition several top government posts on Saturday, hoping to coax his opponents into ending protests that threaten to bring the country to a standstill.

But opposition leaders, whose power base is among thousands of protesters massing in Kiev's city centre, continued to press for further concessions, including early elections and the repeal of an anti-protest law.

After meeting opposition leaders, Yanukovich offered former economy minister Arseny Yatsenyuk the post of prime minister to replace Mykola Azarov, whose government would be expected to resign, the presidential website said.

Vitaly Klitschko, a former international boxing champion, would be appointed deputy prime minister responsible for humanitarian issues, it added.

The presidency linked its offer to the opposition reining in violent protesters and quoted Yanukovich as promising that those detained during the unrest would be dealt with leniently.

It said Yatsenyuk could be given the job of heading the government of Mykola Azarov. Yatsenyuk, meanwhile, was quoted as saying the opposition was ready to "lead the country."

But Klitschko later told German newspaper Bild am Sonntag: "This was a poisoned offer by Yanukovich to divide our protest movement. We will keep on negotiating and continue to demand early elections.

"The protest by Ukrainians against the corrupt president must not have been in vain," Klitschko was quoted as saying.

The opposition has been calling for the dismissal of Mykola Azarov's government since unrest broke out two months ago after Yanukovich rejected a trade deal with the European Union in favour of closer ties with Russia.

Thousands were massed on Saturday night on Kiev's Independence Square to report on their discussions with Yanukovich.

In the past week, more radical protesters have violently clashed with police about a half mile away (1 km) in front of the Dynamo Kiev football stadium.

The presidential website said Yanukovich had promised that those detained during the unrest would be dealt with leniently if the opposition reined in the radical protesters and if they persuade those who have been occupying public buildings to leave.

Ukraine's interior minister had said that all those who occupied public buildings and stayed on Independence Square - the crucible of the protest where hundreds camp overnight - would be considered by police to be "extremist groups."

Police would use force against those who went over to the side of the radical protesters, who have clashed with police in front of the football stadium since last Sunday, the minister, Vitaly Zakharchenko, said in a statement.

DRUMBEAT

The overnight violence near the stadium left fires burning and smoke billowing. Protesters kept up a drumbeat of sticks on corrugated metal.

Though the violence petered out early on Saturday morning after a negotiated truce, protesters nearby stormed into the Energy Ministry.

"There was an attempt to seize the building. About 100 people came, armed. I went to them and said that if they did not peacefully leave the building, then the whole energy system of Ukraine could collapse," Energy Minister Eduard Stavytsky told Reuters by telephone.

Stavytsky, who was shown on television angrily remonstrating with a black-helmeted activist, added: "What is taking place is a direct threat to the whole Ukrainian energy system."

Hundreds of activists had already occupied City Hall and the Agricultural Ministry.

Though the protest movement - known as the "EuroMaidan" - is largely peaceful, a hard core of radicals have been fighting pitched battles with police away from the main protest on Independence Square.

The United States has warned Yanukovich that failure to ease the standoff could have "consequences" for its relationship with Ukraine. Germany, France and other Western governments have also urged him to talk to the opposition.

Russia on Saturday stepped up its warnings against international interference in Ukraine, telling European Union officials to prevent outside meddling and cautioning the United States against inflammatory statements.

"I told (U.S. Secretary of State) John Kerry that it is very important now not to interfere in the process and to avoid any statements that will only heat up the situation," said Foreign Minister Sergei Lavrov.

"I hoped he heard me," he said, in an interview with the Vesti v Subbotu state television news programme.

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