Big airports IPO requires faith in Spain’s future 3 Feb 2015 Aena, the $9 bln operator of airports in Madrid, Barcelona and beyond, needs flocking tourists to mint money. For now, it’s a safe bet. Low capex needs and ample capacity are a plus. But the state still calls the shots and a new regulatory regime stores up some uncertainty.
Market calm sends wrong signals on Grexit 3 Feb 2015 Bonds issued by the euro zone’s weaker nations have been immune to the Greek crisis. The European Central Bank’s new quantitative easing may limit the fallout for now. Yet Europe’s crisis defences aren’t perfect, and the trauma from a Greek exit would be serious.
Memo to Tsipras: How to win over Merkel 3 Feb 2015 Greece’s new government has put forward some sensible ideas in addressing the country’s debt burden. But any deal needs the backing of a reluctant Germany. Some crucial Dos and Don’ts – many of them symbolic, but some substantial – can make it easier to sway Angela Merkel.
Radical Greek finance minister sounds sensible 3 Feb 2015 Yanis Varoufakis dropped calls for an explicit debt haircut and made plausible proposals on debt and deficits. The “erratic Marxist” is growing into the job. Still, investors and foreign politicians will take some persuading that his government can deliver major economic reforms.
BP hunkers down for prolonged oil slump 3 Feb 2015 The UK oil and gas major is cutting capital spending by 20 pct. That’s a robust response to cheaper oil for a company with a strong balance sheet, but BP has more problems than most. If such spending cuts keep coming from the industry, the oil price might rebound further.
Santander’s next task: sustainable profit growth 3 Feb 2015 After raising capital and trimming the dividend, new boss Ana Botin has proved her leadership credentials. The Spanish bank’s results show provisions and costs down, and net profit up. The real test will be maintaining the momentum even as key economies like Brazil falter.
Hugo Dixon: Give Greece’s Alexis Tsipras time 3 Feb 2015 If the Greek prime minister is backed into a corner, the chances of Grexit and contagion will rise. If he is given time, there’s less risk of Athens quitting the euro. And even if Greece leaves, delay will make it easier to contain the political and financial backlash.
Banker pay cut deceleration may have wider effects 2 Feb 2015 Investment banks have held steady the slice of revenue paid out to employees in recent years, an industry-sponsored study finds. Higher pay at buyout firms and hedge funds acts as a brake. But with returns tepid everywhere, finance sector-wide compensation may fall further.
Low-growth consumer stocks are pushing the limit 2 Feb 2015 Yield-starved investors are chasing reliable dividend payers. Beside near zero-yield sovereign bonds, 3 pct from stocks such as Procter & Gamble, Diageo and Unilever is easy to like. But there’s little growth in their emerging or developed markets. The stocks look expensive.
CRH’s $7.4 bln buy reveals M&A tolerance 2 Feb 2015 It’s a big bet. The Irish building group will increase leverage – even with a big equity issue – to buy surplus assets from Lafarge worth a third of its market cap. CRH got sucked into an auction too. Yet investors cheered. It’s how things work in a low-return, low-growth world.
Hugo Dixon: Renzi still living on borrowed time 2 Feb 2015 The Italian prime minister did well to secure the election of a president against the wishes of his quasi-partner, Silvio Berlusconi. Matteo Renzi’s victory could allow him to accelerate reforms. He mustn’t waste the chance. Italy’s serious problems have not gone away.
Ryanair finds it harder to get “always better” 2 Feb 2015 Europe’s largest low-cost carrier upped its fiscal-year forecast again, eyeing a 60 pct net profit jump. But sober days lie ahead. Hedges limit the impact of lower oil prices. Other costs will rise. After gaining nearly 50 pct lately, the richly valued stock looks vulnerable.
Why the sky-scraping deal fees over Canary Wharf? 30 Jan 2015 Qatar’s $4 bln swoop on Wharf-owner Songbird didn’t take long. Once big shareholders folded, the defence against the lacklustre offer collapsed. Yet the target’s support team could pocket up to $45 mln. M&A due process certainly doesn’t come cheap.
Russian central bank chooses banks over rouble 30 Jan 2015 A surprise interest rate cut suggests the central bank is more concerned about the economy than the value of the currency. Worries about the banking sector’s solvency could explain the move. The downside: Russia could end up with both high inflation and a deep recession.
Review: What the Great Depression taught the Fed 30 Jan 2015 Ben Bernanke is an expert on the famous crash. But Barry Eichengreen argues in his new book that the Fed boss during the 2008 crunch hadn’t learnt the lessons of the boom preceding the bust. Bernanke’s knowledge helped with crisis management, but it is too early to say how much.
StanChart’s woes stretch far beyond corner office 30 Jan 2015 Worries about bad debts and a sliding share price have raised doubts about Chief Executive Peter Sands’ future. The main challenge for the emerging market lender is to boost returns and retain capital as growth slows. If Sands leaves, his successor will face the same issues.
Qatar stake is vote of confidence in BA-owner IAG 30 Jan 2015 Taking a 10 pct stake worth $1.7 bln makes Qatar Airways the biggest investor in British Airways’ parent company. The immediate strategic benefit is limited: the groups already cooperate and IAG gets no new capital. But a deep-pocketed, long-term backer can be helpful.
Greek deposits fly between a rock and a hard place 30 Jan 2015 One remedy to capital flight would be to give so-called emergency liquidity assistance to Greek banks. But heavy use of ELA could mean big losses if Greece left the euro. The alternative is to copy Cypriot capital controls. That, though, would be politically toxic in Greece.
ECB-induced distortions sprout in debt markets 29 Jan 2015 Mario Draghi’s asset-purchase plans are warping bond markets. The most obvious and benign consequence is a drop in yields. But there are also insidious effects. Investors shun anything the ECB won’t buy. And market liquidity will become patchier as the programme progresses.
Rob Cox: Podemos can improve Spanish capitalism 29 Jan 2015 After Syriza’s victory in Greece, investors are fretting that Spain’s “We Can” party could derail reform plans and fiscal discipline. They needn’t worry. The Podemos target is the demon of corruption. Even if the movement has already peaked, it has done the country a service.