Big dividend should deliver Royal Mail IPO success 12 Sep 2013 The state-owned British mail group is finally going public. At a mooted 2.5 to 3 bln stg market value, investors could enjoy a 7 pct dividend yield. That’s a sensible recognition postal companies are income stocks, not growth stories, even if there is potential in e-commerce.
Verizon herds investing sheep in grand fashion 11 Sep 2013 Bond buyers are piling into the telco’s record $49 bln debt sale. A 10-year yield above 5 pct and an investment-grade rating make it appealing. A big part of the lure, though, is the creation of a supersized, super-liquid benchmark. It’s an offer that just can’t be refused.
UK needs to live with a rising pound 11 Sep 2013 Sterling is on the march, reflecting better UK growth, lower unemployment and a lack of quantitative easing from new Bank of England head Mark Carney. The worry is that this comes before the UK economy has rebalanced towards exports. But it’s hard to see what policymakers can do.
Vodafone rightly defies hedge funds in cable tangle 10 Sep 2013 The mobile giant says it won’t tweak its $10 bln Kabel Deutschland bid, even as Elliott Management builds a possible blocking stake. That’s sensible. Deal failure would hurt the combative hedge fund too. Instead, a fight looms over the value of the rump of the company.
Suntory pays up to quench thirst for Japan escape 10 Sep 2013 The Japanese firm is spending $2.1 bln on British soft drink brands Ribena and Lucozade. The multiple of almost 14 times EBITDA looks an expensive way to cut exposure to a tough domestic market. But Suntory’s overseas M&A track record should give it the benefit of the doubt.
Factory cost squeeze blots UK growth picture 4 Sep 2013 The economy is picking up but problems are brewing. British manufacturers face the strongest cost pressures in two-and-a-half years. They will either have to absorb them, to the detriment of profit margins and jobs, or pass them on, to the chagrin of the Bank of England.
UK banks can resist offer to cut gilts buffer 3 Sep 2013 The Bank of England says Britain’s top banks can reduce the cushion of cash and gilts they hold against market shocks, and use the 90 bln stg freed up to support growth instead. But don’t expect a gilt glut. Banks will still be more inclined to hoard gilts than to dump them.
Wall Street megadeal quest reaches end of rainbow 30 Aug 2013 Thousands of investment banker man-hours and a decade’s worth of lost evenings and holidays devoted to calling on Vodafone and Verizon could finally pay off. The fee pool may exceed $300 mln for the $130 bln wireless acquisition. The return on investment, though, will vary.
Review: Thatcher’s determination battled her flaws 30 Aug 2013 Charles Moore’s biography shows the Iron Lady’s determination often helped overcome previous mistakes. The book shows her less in control than was widely believed, and her colleagues, especially Geoffrey Howe, as major contributors. Like Napoleon’s best generals, she was lucky.
Hugo Dixon: Cameron, UK hurt by Syria vote fiasco 30 Aug 2013 Never in modern history has a British prime minister lost a parliamentary vote authorising military force. Cameron may cling on to power, but his authority at home has taken a hit. So has his standing abroad, and Britain’s influence. The PM himself is largely to blame.
Edward Hadas: The overvaluing of overwork 29 Aug 2013 The death of an investment bank intern in London has raised a worthy reflection on the voluntary work ethics of the young elite. Their painfully long hours may reflect a desire to be socially valuable - the ultimate luxury when leisure is mass produced. Change would be welcome.
Vodafone needs to deliver on Verizon exit 29 Aug 2013 Shares in the UK telco have jumped on confirmation of talks to sell out of its U.S. venture with Verizon for a reported $130 bln. Recent U.S. consolidation may have made Verizon move on price. Vodafone boss Vittorio Colao won’t be forgiven if he now fails to secure a good deal.
Co-op’s gory details aid case for creditor bail-in 29 Aug 2013 A 709 million stg pre-tax loss in the first half shows why regulators have told the UK bank to find 1.5 billion stg in new capital. But for Co-op’s new bosses, the bad news is also good news. It makes it easier to persuade angry creditors that burden-sharing is fair and inevitable.
Carney to market: Go ahead, make my day 28 Aug 2013 OK, the new Bank of England head isn’t so aggressive. But he used his first speech to reassert that the BoE would act to curb rising market rates if they hamper a UK recovery. Carney looks more in control. Still, he needs supportive data, and co-policymakers, to take such action.
G4S cash call shows need for speed 28 Aug 2013 Equity markets are soft yet the UK security contractor is placing around 350 mln stg of new shares to swerve a credit downgrade. Any more would have required a rights issue. With Syria creating uncertainty, and interest rates rising, there was virtue in taking a speedy solution.
Trading floors prove a shrewd trade for Blackstone 23 Aug 2013 The crisis yielded surprisingly few M&A bargains. Blackstone found one right at the heart of the City. In 2009 it bought half of the site that houses UBS and Icap from a wobbly British Land. Four years on, foreigners’ love of London property means the bet will pay off handsomely.
Bank capital reform means French gain and UK pain 23 Aug 2013 SocGen’s hybrid debt issue helps towards its capital and leverage ratios, the new yardstick for bank solvency. Yet UK rules mean similar bonds sold by Barclays will have less attractive terms. Regulators’ drive to improve capital standards could end up hurting competition.
UK fracking furore reflects skewed view of risk 23 Aug 2013 If protests against the drilling technique keep up, they could scupper the country’s shale ambitions. Opponents cite risks which look manageable and often gloss over the problems of other sources of energy. Such fearful and narrow analysis is an invitation to bad policy.
Time for UK banks to go legit 22 Aug 2013 The saga of bad behaviour continues. Dodgy mortgage insurance, dangerous interest rate swaps and now a 1.3 bln pound hit for helping sell needless credit card protection. UK banks need genuine reform, which starts with charging openly for current accounts. The regulator can help.
Markets defy European central banks’ plans 22 Aug 2013 Central banks want to keep policy accommodative, but despite their best efforts, euro zone and UK businesses and consumers still face higher interest rates and rising currencies. If this goes on, policymakers can fight back with words, and - last resort - with even looser policy.