Blog Archives

China’s bold new 2009

Energy

Chinese Petro Corp CNPC ($PTR) is going ahead with $30 billion in loans to finance acquisitions despite the failed CNOOC bid in 2007, planned destinations being Argentina ( YSF Repsol) Brazil and Russia after state level discussions earlier in 2009 in Brazil and Russia.

PetroChina recently acquired a 45.5% stake in Singapore Petroleum from Keppel Corp. for 1.47 billion Singapore dollars ($1.02 billion). And it also signed a $41 billion liquefied natural gas deal with Exxon Mobil Corp. (NYSE:XOM) to import the LNG from the Australia-based Gorgon LNG project

Also CNPC’s pocket from this loan is a total of $50 billion including its Cash reserves, while its purchase in Libya has already been stopped by local state officials and the Repsol purchase is only $15 billion..

Aviation

Boeing Co. (BA) expects orders from Chinese airlines to account for around 40% of its forecast of 8,960 commercial jet orders from Asia over the next 20 years, a senior Boeing executive said Wednesday. ( zyakaira niotes: this estimate is already 2 years behind, with all this heave ho on, and no aircrafts having sold)

Randy Tinseth, Boeing’s vice president of marketing for its commercial aircraft division, told this WSJ report that China will grow at 8.6%, NA at 2.5% and the intra-Europe market to grow 3.4% annually, as measured in revenue passenger kilometers, a key metric for gauging passenger revenue.

Tinseth said the recent economic downturn has prompted some airlines to defer deliveries of new aircraft. For 2008, Boeing recorded 100 deferrals, mostly from North American customers.

Tinseth said the number of deferrals this year is “something greater than” the 2008 number, but declined to elaborate. The Energy news here is courtesy TheDeal and silobreaker

State Money

While state-owned China Development Bank financed CNPC, the $300 billion China Investment Corp (SWF) is moving in to purchase distressed real estate in the US with the help of the US government

Commodity Derivatives and the excessive lending

Meanwhile Foreign banks continued to suffer in China and probably move faster to N11 and North American Markets as Chinese Aviation and Oil companies continued to threaten 100% default on Commodity derivatives because prices have dropped sharply and new loan growth has slowed down after a state wide change in policy closing down the long term fund window on stimulus and planning to save its economy from spiralling bad debt

Other MNCs like Unilever continue to plan far a longer innings at the cost of profits according to the new Chinese edition of WSJ

Advertisements

AIG’s Taiwan Life Unit

zyakaira notes: The Taiwan Life unit: The recent laundry list of asset sales planned by AIG see here continues to find conflict of interest in almost each of its deals, as AIG remains the buck stopper of the entire industry’s claims good or bad..

Bloomberg reports that Morgan Stanley’s (NYSE:MS) private equity fund pulled out of the bidding group Chinatrust Financial Holding Co. is leading. So is Chinatrust still in the bidding?

The sale of the unit is expected to bring in about $2 billion, but it could have trouble hitting that price target as the unit is under as much financial pressure as its parent. Nan Shan was forced to raise $1.45 billion in a rights offer last year to avoid slipping below a regulatory capital requirement as unprofitable policies eroded its reserves.

So who else is in the bidding for the unit?

Carlyle Group, which joined Fubon Financial Holding Co.

Cathay Financial Holding Co.

China Strategic Holdings Ltd. may have joined Primus Financial Holdings Ltd.

Binding offers are due for submission on Aug. 28, according to the reports. – Maria Woehr

via Morgan Stanley, ChinaTrust to drop AIG unit bid? (Dealscape – Private capital).

Track these at Recovery.gov in time | NY Times

The New York Times > US > Image > Transportation Projects Across the Nation.

More to the Banking saga | PE enters fray

U.S. regulators are drawing up rules that would make it easier for private equity firms to acquire troubled banks, aiming to free up more funds to recapitalize lenders, the Financial Times reported, citing people close to the situation.

The plan, which has yet to be finalized, may require private equity companies to inject substantial capital into lenders and to agree not to sell them for at least two years, the newspaper reported.

Obama administration officials continue to stress concerns about ensuring sufficient capital in the financial system, even as several financial institutions have begun lining up to return funds borrowed under the governments $700 billion troubled asset relief program to cope with the financial crisis.

The paper cited analyst estimates that private equity firms could provide up to $50 billion to recapitalize banks.

The Federal Deposit Insurance Corporation, which is charged with taking over failed lenders, is leading the drafting of the new rules, the paper quoted people familiar with the situation as saying.

The FDIC board, which also includes representatives from other banking regulators, is expected to discuss the matter in the next few weeks, it said.

Buy-out funds wanting to buy a troubled bank would have to disclose performance measures and marketing materials to allay fears that they might use the banks to subsidize other companies in their portfolio, it added.

The Federal Reserve has limited private equity groups to bank stakes of less than 25 per cent, reflecting concerns over conflicts of interests, but the latest crisis has prompted regulators to take a softer stance, the paper said.

via U.S. drafting rules to spur PE bank buyouts: report | Reuters .

The Hedge Fund deals club – Dealbook – NYtimes.com

Highbridge Capital Management’s deal to sell the rest of itself to JPMorgan Chase may be one of many similar transactions to come, The Deal reports.

As smaller hedge funds have found themselves rocked by the financial crisis, industry watchers have predicted that consolidation may be on the way, particularly for hedge funds looking for the safety in the arms stronger private fund managers or larger institutions, The Deal said.

And such dealmaking has already begun heating up. Aside from the Highbridge deal, The Deal noted that Cheyne Capital Management’s acquisition of Altedge Capital and GLG Partners‘ deal to buy Société Générale Asset Management UK.

Furthermore, the publication said, bigger hedge fund firms such as Man Group and RAB Capital are looking for deals on the horizon.

via Is JPMorgan’s Highbridge Deal Part of a Larger Trend? – DealBook Blog – NYTimes.com.

President steers $275b to housing – The Boston Globe

President Obama unveiled a $275 billion plan yesterday to help as many as 9 million homeowners avoid foreclosure and keep mortgage rates low in the most aggressive effort yet to stabilize the US housing market.

Warning that doing nothing would cost all Americans, Obama presented a three-part plan that contains $75 billion to help modify loans for as many as 4 million struggling homeowners, a change in mortgage rules to help as many as 5 million homeowners refinance into lower-cost loans, and a pledge of $200 billion to bolster mortgage giants Fannie Mae and Freddie Mac.

Housing advocates praised the plan as ambitious, with cash incentives to lenders and borrowers to help stop the bleeding that has left nearly 10 percent of US homeowners either in foreclosure or behind on their mortgages. The plan, which uses federal money that was previously authorized, incorporates many proposals suggested over the past six months as the housing crisis has worsened.

“It’s bold, and the amounts of money they set aside are large and important,” said Barry Zigas, director of Housing Policy for the national advocacy group the Consumer Federation of America. “I hope . . . that it will have a significant impact on the market.”

Obama said the so-called Homeowner Affordability and Stability Plan aims to “arrest the downward spiral” in the housing market that has crippled the US economy and spurred a credit crunch. He said the plan aims to rescue families who have played by the rules but are struggling to save their homes either because their property values plunged or because they bought unmanageable subprime loans.

“In the end, all of us are paying a price for this home mortgage crisis,” Obama said at a high school in the Phoenix suburb of Mesa. “And all of us will pay an even steeper price if we allow this crisis to deepen – a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, then every American will benefit.”

via President steers $275b to housing

RBS says good interest in Asia assets for sale | Deals | Reuters

Part-nationalized Royal Bank of Scotland RBS.L has received good interest from potential buyers for its Asian assets, its chief executive said on Friday.

“Were seeing good levels of interest, but it would be premature to declare victory with respect to price or executability,” RBS Chief Executive Stephen Hester told reporters after a shareholder meeting.

“Were in the process of working through expressions of interest, but were not at the stage where bids you can rely on are being called for,” he said.

RBS asked potential bidders to register their interest by April 1, Reuters reported last month, citing people familiar with the matter.

RBS is retrenching to its core businesses and plans to exit or significantly scale back in up to 36 of the countries where it operates globally.

HSBC HSBA.L0005.HK, Standard Chartered STAN.L2888.HK and Australia and New Zealand Banking Group ANZ ANZ.AX are all considering bids for the Asian assets, separate sources with direct knowledge of the matter have previously told Reuters.

All of the assets in the region could fetch around $2 billion, although RBS is also considering offers for assets in individual countries, sources have said.

via

RBS says good interest in Asia assets for sale

| Deals

| Reuters

.

Citi, Morgan Stanley to Combine Brokerages?

Morgan Stanley is likely to pay Citigroup between $2 billion to $3 billion for a 51 percent stake in the brokerage Smith Barney, a person close to the negotiations said. (Read TIME’s “Bailout Report Card”)

Morgan Stanley would then have the option to buy Smith Barney over the next three to five years, the person said. The person spoke on condition of anonymity because he was not authorized to speak about the ongoing talks.

If negotiations proceed through the weekend as they have been, an announcement could come as early as Monday, the person said.

Word of the negotiations came as investors digested news Friday that Robert Rubin, a senior adviser to Citi who has drawn heavy criticism, would resign and would not seek another term on the board.

A combination of the brokerage units would help Citigroup get more much-needed cash and cut costs, said Aite Group analyst Alois Pirker. The benefit for Morgan Stanley, Pirker said, would be a bigger staff to compete with other growing brokerages — particularly Merrill Lynch, which recently was acquired by Bank of America Corp.

The deal may also lead to a full-fledged merger between the two banks, he speculated.

“The ultimate goal could be to merge the two entities fully,” Pirker said. “Morgan Stanley needs deposits, theres no doubt about that. They wont get that by telling brokers to get deposits from their clients.”

Morgan Stanley applied to become a bank holding company last fall to get loans from the government and collect deposits — one of the few reliable sources of funding these days with the credit markets still squeezed.

The government is not driving the negotiations between Citigroup and Morgan Stanley, people with knowledge of the situation said. They also spoke on condition of anonymity because they were not authorized to speak about the matter.

There were no talks scheduled for this weekend between the Treasury Department and Citigroup officials.

via Citi, Morgan Stanley to Combine Brokerages? – TIME.

Twitter Updates

    follow me on Twitter

    America didnt jump off the cliff – it was Bushed – Opinion – smh.com.au

    We like our failed presidents to be Shakespearean, or at least large enough to inspire Oscar-worthy performances from magnificent tragedians. So here, too, George Bush has let us down. He is not a memorable villain so much as a sometimes affable second banana whom Will Ferrell can nail without breaking a sweat. He is smaller than life.

    The last NBC News/Wall Street Journal poll on Bushs presidency found that 79 per cent of Americans will not miss him. He is being forgotten already, even if hes not yet gone. You start to pity him until you remember how vast the wreckage is, stretching from the Middle East to Wall Street to Main Street and even into the heavens, which have been a safe haven for toxins under his passive stewardship.

    The one indisputable ability of his White House was to create and sell propaganda both to the public and the press. Now that bag of tricks is also empty. In what was intended as a farewell victory lap to show off Iraqs improved post-surge security, Bush was reduced to ducking shoes.

    Iraq burned, New Orleans flooded, and Bush remained oblivious to each and every pratfall on his watch. Americans essentially stopped listening to him after Hurricane Katrina hit in 2005, but he still doesnt grasp the finality of their defection.

    Bush is equally blind to the collapse of his propaganda machinery. Almost poignantly, he keeps trying to hawk his goods in these final days. Though no one is listening, he has given more exit interviews than either Clinton or Reagan. Along with old cronies like Karl Rove, he has embarked on a Bush “legacy project”, as Stephen Hayes of The Weekly Standard described it on CNN.

    via America didnt jump off the cliff – it was Bushed – Opinion – smh.com.au.