Global Ports breaks Russian IPOs pricing curse 30 Jun 2011 Investor scepticism over greedy valuations has forced Russian issues to be pulled or sent shares tanking. But the strong showing of Global Ports up 18 percent on the day of its London debut suggests issuers may begin to understand the need for an attractive discount.
US muni bond tax exemption is accident of history 30 Jun 2011 Lawmakers last year ended a program that explicitly subsidized municipal project financing. Yet the federal tax break on state and local debt is a subsidy by another name. Getting rid of it could hit smaller borrowers but would create a more efficient, transparent market.
Lloyds chief banks on cuts to fund growth 30 Jun 2011 Antonio HortaOsorio is slashing 15,000 jobs to slice 1.5 bln pounds off the lender's cost base. No new bad loans and a promise to restart dividends helped lift the share price 9 pct. But revived growth depends on crossselling an area where UK banks have failed so far.
Medicare plan might shift U.S. debt logjam 30 Jun 2011 A pair of senators have proposed changes to retiree healthcare that would save $600 bln over 10 years. That's modest compared with the problem. But it's probably the last chance to make a start until 2013. It could even help ease the more immediate impasse on federal borrowing.
Fed’s debit-card U-turn doesn’t mean it’s caving 30 Jun 2011 Doubling the proposed swipefee cap makes it look like it can be cowed by intense bank lobbying. But it's actually a decent compromise. The problem is the Fed started with such an extreme stance. If it's not more careful, it may wind up being seen as more lapdog than watchdog.
Spain’s savings banks start to get real on IPOs 30 Jun 2011 Bankia and Banca Civica are both prepared to sell up to half their equity at steep discounts to book value. More realistic valuations will help lure domestic investors. But they may have to be even more flexible if they are to attract jittery international institutions.
France’s new finance chief has debt work cut out 30 Jun 2011 François Baroin made headlines last year when he warned that France was at risk of losing its AAA credit rating. As finance minister, he will have to make sure the upcoming presidential campaign doesn't become a moment for populist spending and costly electoral promises.
Foster’s bid poses big FX risks for SABMiller 30 Jun 2011 The $12 bln approach for the Australian brewer comes as the Aussie dollar rides high. Bidder SABMiller can hedge the risks, but only to a point. A shifting currency could wreak havoc on a deal's financial logic or on Foster's investors' willingness to accept it.
U.S. agencies could use better debt collectors 30 Jun 2011 Fraudsters, polluters and other corporate and whitecollar miscreants owe Uncle Sam more than $65 bln in fines. Only pennies on the dollar are ever paid. Firms like Contrarian Capital, meanwhile, make millions buying creditors' claims. Maybe they and the feds should do business.
Google probe may resemble Microsoft’s in end alone 30 Jun 2011 The antitrust investigations of the two tech giants invite easy comparison but are actually quite different. The U.S. case against Microsoft was simpler and still took over a decade to resolve with the company promising to restrain itself. Google's outcome could be similar.
Rid of MySpace, Murdoch should focus on his space 29 Jun 2011 Mercifully for shareholders, the octogenarian media mogul's failed experiment in social media has ended. The costly episode is a reminder of his many poor uses of capital of late, including buying Dow Jones. Big TV is what News Corp does best and where most resources belong.
UK IPO troubles hard to pin on boutique advisers 29 Jun 2011 Boutiques have been muscling in on the European newissues business, advising vendors on whether bookrunners are getting them the best price. These gatecrashers are being blamed for throwing a spanner in the works. But the criticism doesn't really stack up.
Lagarde’s IMF should prioritize toughness 29 Jun 2011 Too often, as in Greece, the fund has lent to countries that can't repay, only delaying and worsening the reckoning. The institution can have the pivotal role Lagarde wants while being less of a soft touch. That means saying no a lot and saying yes only on tough terms.
LSE pays bearable price for misjudging TMX deal 29 Jun 2011 The LSE was naive to think a merger with its Canadian peer would be plain sailing. The deal's failure leaves the London bourse vulnerable. But it isn't badly hurt, and it's protected by two big Gulf investors. The LSE's next deal needn't and probably won't happen quickly.
Maybe now BofA boss Moynihan can open Moynihan era 29 Jun 2011 The $21 bln of mortgagerelated charges just taken by BofA's CEO doesn't quite clear the decks. But it removes one of the biggest stains left by his predecessor Ken Lewis. Some 18 months into the job, that might just might enable Brian Moynihan to start carving his own path.
UK’s public sector has poor case for strikes 29 Jun 2011 Many state employees face a big increase in pension contributions but they get a better overall deal than peers in the private sector. The UK government is likely to face down the industrial action and it must because as yet the austerity hasn't got very far.
BJ’s board takes a full year to hose shareholders 29 Jun 2011 One year after LBO firm Leonard Green first approached the U.S. wholesale retailer, its board agreed to a $2.8 bln takeover. While the $51.25 a share offer compares to a yearago $37 stock price, it actually lags the performance of rival Costco in the period. BJ's board blew it.
China’s inflationary mixed messages 29 Jun 2011 Is inflation under control? Even the premier, Wen Jiabao, seems unsure. The confusion reflects the existence of two kinds of inflation in China. Shortterm pressures probably aren t a problem. But it is hard to see how longterm forces can be tamed without a slowdown in growth.
Square circles clunky U.S. card payment system 29 Jun 2011 The mobile cardswiping startup from a Twitter cofounder has sparkle: rave reviews, a board filled with Silicon Valley bigwigs, and now $100 mln of extra cash to play with at a $1 bln valuation. U.S. card payments need a revolution, but Square's success is far from certain.
A letter to the Greeks 29 Jun 2011 As the Greek parliament prepares to vote on austerity and the people mass in demonstrations and strikes, Hugo Dixon explains why it would be mad to vote No and proposes a better alternative.
Default not an option under U.S. Constitution 28 Jun 2011 Ratingagency warnings and budgettalk walkouts aside, America's founding document probably won't let the government stiff its creditors. That's no reason to derail a deal on the debt ceiling. But if push comes to shove, the White House may have legal leverage on its side.
Bank of Moscow mess tarnishes VTB 28 Jun 2011 Russia is mulling a $9 billion cleanup for the Moscow lender, following its controversial takeover by stateowned VTB, which should bear a chunk of the cost. The shambles reflects badly on VTB's due diligence, and is a cautionary tale for investors in Russian privatisations.
Fed finally cottons on to tax code debt distortion 28 Jun 2011 OK, it's just the Minneapolis branch president for now. But it's about time U.S. central bankers spotlighted the harm caused by letting companies and consumers deduct debt payments from taxable income. It's foolish policy to incentivize profligacy. More voices would be welcome.
California budget doesn’t reach too much for stars 28 Jun 2011 To close a $27 bln gap, Governor Jerry Brown mostly avoided the rosy ways that earned him the nickname Moonbeam. He slashed $12 bln first and the economy delivered $8 bln more. There's an admittedly ambitious revenue outlook and some luck, too. But there's still room to maneuver.
U.S. junk investors fold in high stakes Greek game 28 Jun 2011 Earlier this year, buyers couldn't get enough of U.S. highyield bonds. But with each European bailout for Greece, the perceived danger of a disorderly default has increased. Now investors are backing off as even potentially high returns from junk bonds can't trump the risk.
Greek plan B needs two elements 28 Jun 2011 The EU is finally working on a contingency plan in the unlikely case that Greece's parliament votes against austerity. The priority should be swift ECB action to protect Europe's banking system from mayhem. And the EU should give Athens a second chance to reflect on its folly.
China’s profligate officials show economy run amok 28 Jun 2011 One of China's big economic unknowns local government debt has at last been quantified. The number, $1.6 trillion, seems a little low. And while it may not be enough to destroy the banking system, it's a glimpse of how common sense has been forgotten in the dash for growth.
Carrefour edges Casino by sacrificing in Brazil 28 Jun 2011 Both French retailers want a dominant position in Brazil's largest retail chain. But by offering a piece of itself to a fund working with the state, Carrefour could best its rival and please Brasilia. That's how multinationals may need to engineer growth in emerging markets.
EU bank test laggards will need capital backstop 28 Jun 2011 Up to 15 lenders are expected to flunk Europe's stress tests. That outcome would give the exercise muchneeded credibility, but also involve sizeable costs. Stragglers need to show how they can fill the capital holes and periphery governments have limited scope to help.
Greek debt plan requires banks to fear the worst 28 Jun 2011 A French proposal to roll over Greek government bonds would limit lenders' downside risk. But for creditors to play ball, they must believe the alternative is a disorderly default. That will make it harder to persuade rating firms that banks are going along voluntarily.