PRESS DIGEST- British Business - June 3

June 3 - The following are the top stories on the business pages of British newspapers. GNN has not verified these stories and does not vouch for their accuracy.

The Times

Greece's creditors are putting the final touches to a package of economic reforms for Athens to deliver in exchange for unlocking 7.2 billion euros ($8.03 billion) of rescue loans that would stave off default. (thetim.es/1KBQZ5T)

The head of Anheuser in Germany has lost his job after just five months for drink driving. Till Hedrich, head of German operations for Anheuser-Busch Inbev, crashed his car while travelling on an autobahn near Munich at the end of April while under the influence of alcohol. (thetim.es/1ALGg8N)

The Guardian

Tom Hayes, the trader accused of trying to rig a key interest rate behind trillions of dollars in financial deals, was allowed to keep a 2.2 million stg ($3.37 million) bonus despite being sacked by his then employer, Citigroup, for "attempting to manipulate" financial markets. (bit.ly/1FSmFD7)

Euro zone inflation turned a corner in May, posting a 0.3 percent increase after four months of flat or falling prices. The measure of core inflation, which strips out food, energy and other volatile elements of the consumer prices index, jumped even higher to 0.9 percent, signalling a resurgence in demand across the euro zone. (bit.ly/1G37yrG)

The Telegraph

Former Barclays Chairman David Walker has called on the Chancellor to review the legislation surrounding bank ring-fencing, claiming it will simply burden customers with extra costs and harm competition. (bit.ly/1K85FM5)

IMF economists cited research by Moody's Analytics that suggested countries such as the UK, U.S. and Canada could afford to live "forever" with relatively high debt shares compared with their pre-crisis averages. (bit.ly/1eNHoyX)

Sky News

Royal Mail will on Wednesday name travel industry veteran Peter Long as its next chairman, handing him the delicate task of navigating the likely sale of UK taxpayers' remaining shareholding in the company. (bit.ly/1Fsq8FT)

Sky News has learnt that Caledonia Investments, which traces its roots to the shipping empire established by Charles Cayzer in 1878, is close to agreeing the purchase of a controlling stake in Seven Investment Management. (bit.ly/1eNzNAA)

The Independent

Shares in British and American tobacco companies have been hit by a Canadian court ruling requiring three tobacco companies to pay billions to Quebec smokers who claimed they were not warned about the health risks of smoking. (ind.pn/1FSmZ4D)

($1 = 0.8969 euros) ($1 = 0.6520 pounds) (Reuters)(Compiled by Mirza Mohammed Ali Khan in Bengaluru)

FOREX-Dollar mauled as euro leads vicious short squeeze

1. Dollar speculators squeezed out of crowded positions
2. Euro rallies as EU yields spike, Greek creditors make offer
3. ECB meets later in day, Australia GDP a test for Aussie

By; Wayne Cole

SYDNEY, June 3 (GNN) - The U.S. dollar was broadly lower on Wednesday as hopes for progress in Greek debt talks and a huge spike in European yields combined to give the euro its biggest gain in three months.

The dollar index, which measures it against a basket of six major currencies, was down at 95.943 having shed 1.5 percent on Tuesday in its biggest one-day drop since July 2013.

The euro was enjoying the view at $1.01150, having climbed 2 percent overnight, while the dollar lapsed back to 124.08 yen and away from a 12-1/2-year peak of 125.070.

CitiFX head G10 strategist, Steven Englander, said the violence of the shift reflected just how much speculators had been long of dollars and short of euros.

"Today's EUR move started as a rates move and looks now to be a position unwind. We estimate that a third of the EURUSD move is driven by the change in rates, and 67 percent by positioning unwinds."

The initial catalyst was EU data showing a surprisingly large increase in headline and core inflation which suggested the European Central Bank's latest easing campaign was gaining traction. [TOP/CEN}

German 10-year Bund yields surged 16 basis points to 0.68 percent, the biggest jump in about three years, while Spanish, Italian and Portuguese yields hit 2015 highs.

The central bank holds a policy meeting later Wednesday and will likely reaffirm its commitment to the trillion euro asset purchase programme.

The euro got another leg up when the ECB, the European Commission and the International Monetary Fund agreed on the terms of a cash-for-reform deal to be put to Greece in a bid to conclude four months of debt stalemate.

It was far from clear if the leftist government of Prime Minister Alexis Tsipras would accept the plan, but the market took it as an encouraging step forward.

Dealers said the speed and size of the euro rally argued for consolidation in the very term, while the technical background looked better after a break of the 20-day moving average at $1.1132. The next major chart target was $1.1210/20 and a breach there could trigger a move to the $1.1325/40 zone.

Still, there is a host of U.S. economic data yet to come this week, including the payrolls report on Friday, and any signs of strength could revive dollar bulls.

For now, the dollar's retreat has lifted commodities and related currencies.

The Australian dollar shot to $0.7762, having jumped 2.2 percent on Tuesday, with the New Zealand dollar not far behind at $0.7175.

The Australian currency faces a hurdle in the form of gross domestic product data later in the session, where an outcome of less than the expected 0.7 percent gain could cause a pullback. (Reuters)(Editing by Eric Meijer)

UPDATE 1-Houthi chief vows to fight militants, sees Libya-style strife

(Adds quotes, background)

(GNN) - The leader of Yemen's powerful Houthi movement vowed on Sunday to pursue Islamist militants behind suicide attacks anywhere and said the country was in danger of descending into Libya-style turmoil.

In a live televised speech, Abdel-Malek al-Houthi said his decisison to mobilise his fighters amid accelerating violence in recent days was aimed against Islamic State, which claimed responsibility for bombings that killed more than 130 in the capital Sanaa on Friday, and against al Qaeda.

He also criticised the U.N. Security Council, saying it was led by countries that plotted "evil" against others.

Violence has been spreading across Yemen since last year when the Iran-allied Houthis seized Sanaa and advanced into Sunni Muslim areas, leading to clashes with local tribes and al Qaeda and energising a southern separatist movement.

Houthi did not elaborate on his criticism of the Council. But diplomats in New York said the council would on Sunday condemn the takeover of much of Yemen and its institutions by the Houthis and warn of "further measures" if hostilities do not end.

In combative remarks, Houthi said his foes had encouraged militant violence and used political reform talks to buy time, something he said would eventually transfer "the Libyan example to Yemen ... This has become more apparent and clear than ever."

"Al Qaeda and Daesh (Islamic State) do not have any compassion towards any party, and what's happening in Iraq and Syria today is a lesson to our country."

(Reuters)(Reporting by Sami Aboudi and Amena Bakr, Writing by William Maclean)

Related articles

• Shia rebels 'seize Yemen city' (bbc.co.uk)
• Houthi leader accuses Gulf states of backing al Qaeda in Yemen (firstpost.com)
• Houthi chief vows to fight militants, sees Libya-style strife (dailymail.co.uk)

Houthi leader says Yemen faces Libya-style strife

(GNN) - The leader of Yemen's powerful Houthi movement vowed on Sunday to pursue Islamist militants behind suicide attacks anywhere and said the country was in danger of descending into Libya-style strife.

In a live televised speech, Abdel-Malek al-Houthi said his decisison to mobilise his fighters amid accelerating violence in recent days was aimed against Islamic State, which claimed responsibility for bombings that killed more than 130 in the capital Sanaa on Friday, and against al Qaeda.

He also criticised the U.N. Security Council, saying it was led by countries that ploted "evil" against others. (Reuters)(Reporting by Sami Aboudi and Amena Bakr, Writing by William Maclean)

WRAPUP 4-Greek PM demands EU stop "unilateral actions" as tensions flare

(Updates with vote, Greek deputy PM comments, opinion poll)

* Top euro zone players to hold Greek crisis meeting Thursday

* Greece pushes ahead on "humanitarian crisis" bill

* EU official warns Greece against unilateral moves

* German finance minister says Athens running out of time

* France appeals for restraint to avoid "accident"

By Costas Pitas and Caroline Copley

ATHENS/BERLIN, March 18 (GNN) - Greek Prime Minister Alexis Tsipras lambasted European partners on Wednesday for criticising a new anti-poverty law hours before it was voted on, saying it was the euro zone rather than Athens that must stop "unilateral actions" and keep its word.

Tsipras's impassioned speech to parliament ahead of the vote on his government's first bill marked the latest escalation in a war of words between Athens and its creditors that has raised the risk of a Greek bankruptcy and euro zone exit.

European Council President Donald Tusk called a meeting on Greece for Thursday evening at Tsipras' request on the sidelines of an EU summit with the leaders of Germany, France, the European Central Bank, the European Commission and the chairman of euro zone finance ministers.

The leftist Greek leader is pressing for a political decision to break Greece's cash crunch, while the creditors have insisted Athens must first start implementing previously agreed economic reforms and hold detailed talks on its financial plans.

Most Greeks, nearly 60 percent, are satisfied with their government's negotiations, according to the latest survey by Marc carried out on March 15-17 and published on Thursday.

Tensions over Greek flip-flopping on the terms of a bailout extension agreed last month flared again after an EU official wrote to Athens urging more talks with lenders on the bill before the vote.

The letter told Tsipras's leftist government to hold further talks with the EU on the bill or risk "proceeding unilaterally" against the terms of a Feb. 20 accord that extended the bailout and staved off a Greek banking collapse.

European Economics Commissioner Pierre Moscovici denied the EU was trying to stop Athens from passing the law but that the official had been correct to remind the Greek government to consult with lenders first.

"The European Union as a whole wants Greece in the eurozone," Moscovici said, but added that the February deal must be respected. "Greece must stay in the euro zone... but at these conditions."

An indignant Tsipras defended the so-called "humanitarian crisis" law - which offers food stamps and free electricity to the poor - as the first bill in five years drawn up in Athens rather than ordered by EU technocrats.

"If they're doing it to frighten us, the answer is: we will not be frightened," Tsipras told parliament. "The Greek government is determined to stick to the Feb. 20 agreement. However, we demand the same from our partners. Let them stop unilateral actions, respecting the agreement they signed."

The bill was approved by a majority of lawmakers in the early hours of Thursday, with support from the opposition as well.

Members of the governing Syriza party said the remarks by the head of EU delegation to Greece Declan Costello were "an intervention in the legislative process that is an insult to all of us," in a letter of complaint read out in parliament.

Tsipras continued his attack against "EU technocrats" over the letter.

"The behaviour of some, not all, of our partners and especially some of the technocrats and technocrat teams only confirms the arguments of the Greek side," Tsipras said.

"What else can one say to those who have the audacity to say that dealing with a humanitarian crisis is a unilateral action?"

European Commission President Jean-Claude Juncker said he was concerned about the pace of progress on resolving Greece's debt crisis and urged those involved to "get a grip".

"I'm still worried. I'm not satisfied," he told a news conference. "I'd like everyone to get a grip on themselves."

"TIME RUNNING OUT"

The latest comments come as Greece risks running out of cash in weeks amid a widening rift with its creditors.

Technical teams from Greece and its international lenders started talks last week to try to agree details of reforms, but have made little progress so far.

"We have the impression, and everyone who is dealing with the question shares the impression, that time is running out for Greece," German Finance Minister Wolfgang Schaeuble, said in Berlin, noting that Athens was refusing a third bailout package.

Shut out of debt markets and with financial aid frozen by irate lenders, Athens needs to quickly find new funding.

"We haven't received any (bailout) tranches since August 2014 but we have been meeting all of our obligations," Greek Deputy Prime Minister Yannis Dragasakis told Greek TV on Thursday. "Of course we have a liquidity problem ... We have obligations which, in order for us to meet, we need the good cooperation of the European institutions."

Tsipras will raise the funding problem in talks with EU leaders at this week's summit, his government said.

But EU officials said they did not understand what Greece hoped to achieve by bringing the issue to the summit, where it is not on the formal agenda and could only be discussed on the sidelines and only in broad political terms.

In a small boost for the government, Greece sold 1.3 billion euros ($1.38 billion) of three-month Treasury bills on Wednesday in its third successful auction this month. The sum covered the amount it sought to raise to refinance a maturing issue.

France appealed for restraint to avoid accidentally triggering a Greek euro zone exit.

"France will be do everything it can to avoid an accident and I believe that what we will do will avoid it," Finance Minister Michel Sapin said. "But no one can be categorical on this and this is why, on both sides, people must control their language."

(Reuters)(Additional reporting by George Georgiopoulos, Renee Maltezou, Karolina Tagaris and Angeliki Koutantou in Athens, Alastair Macdonald and Jan Strupczewski in Brussels, Yann Le Guernigou in Paris, Writing by Deepa Babington; Editing by Dominic Evans, Paul Taylor and Ken Wills)

GLOBAL MARKETS-Dollar sags, bonds boom as Fed takes dovish tack

* Dollar extends fall as market sees slower US rate lift off

* Fed lowers projected outlook for growth, inflation, rates

* Stocks, commodities encouraged by thought of extended stimulus

* Japanese shares buck trend as rising yen prompts profit taking

By Wayne Cole

SYDNEY, March 19 (GNN) - The dollar was giving ground in Asia on Thursday as investors priced in a later start and a slower pace for future U.S rate rises, slashing bond yields globally and firing up stocks.

The formerly friendless euro found itself up at $1.0880 , having jumped 2.8 percent on Wednesday, while oil held gains of 5 percent as the dollar retreat benefited commodities.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 1.3 percent for its best daily performance in five weeks, while Australia's main index jumped 1.4 percent.

The only laggard was the Nikkei which slipped 1.1 percent in reaction to a rising yen.

Short-term U.S. yields had boasted their biggest drop in six years after the Federal Reserve trimmed forecasts for inflation and growth, and said unemployment could fall further than first thought without risking a spike in inflation.

The median projection for the Fed funds rate at the end of 2015 was cut to 0.625 percent, down half a point from December.

Fed Chair Janet Yellen also sounded uncomfortable with the strength of the dollar, saying it would be a "notable drag" on exports and a downward force on inflation.

"There was nothing in the statement to suggest that the Fed is leaning toward a June hike," said Michelle Girard, chief U.S. economist at RBS.

"Developments leave us feeling more comfortable with our official call for the first rate hike being in September."

The market reaction was immediate and violent. Fed fund futures <0#FF:> surged as investors sharply scaled back expectations for how fast and far rates might rise.

Yields on two-year notes nosedived 11 basis points to 0.56 percent as prices rose, the biggest daily rally since 2009.

The drop in yields pulled the rug out from under the dollar, as investors have been massively long of the currency in the expectation its interest rate advantage could only get wider.

Against a basket of currencies the dollar was down a further 0.3 percent, having shed 1.8 percent on Wednesday.

The Swiss franc, sterling and the Australian dollar all enjoyed similar gains, while the New Zealand dollar got an extra boost from upbeat growth data.

The dollar also skidded to 119.80 yen, having been around 121.00 before the Fed's statement.

Wall Street was encouraged by the prospect that policy would stay super-loose for longer and the Dow ended Wednesday up 1.27 percent. The S&P 500 rose 1.21 percent and the Nasdaq 0.92 percent.

Among commodities, gold rallied to $1,173 an ounce, having climbed from $1.145 on Wednesday.

U.S. crude was off 34 cents at $44.32, but that followed a gain of 3 percent on Wednesday. Brent was 5 cents easier at $55.86 a barrel. (Reuters)(Editing by Eric Meijer)

GLOBAL MARKETS-Asia stocks fall as risk aversion prevails, dollar soars

1. * MSCI Asia-Pacific index hits 2-month low
2. * Markets continue digesting possibility of earlier U.S. rate hike
3. * Dollar hits new 12-year high against euro
4. * Japan shares buck trend on upbeat data, Nikkei up 0.5 pct

By Shinichi Saoshiro

TOKYO, March 11 (GNN) - Asian stocks fell to a two-month low on Wednesday as nervous markets recoiled on worries about an earlier U.S. interest rate hike, while such a prospect helped send the dollar to a 12-year high against the euro.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 percent after touching its lowest since January. Australian and South Korean shares each lost 0.5 percent and Malaysian and Indonesian stocks also declined.

Riskier assets both in the United States and elsewhere have come under pressure after Friday's robust U.S. employment data increased expectations that the Federal Reserve could raise rates as soon as June -a prospect that appeared relatively more remote a few weeks prior.

The possibility of higher U.S. yields siphoning away funds from riskier assets gave the S&P 500, at a record high two weeks ago, its worst decline in two months overnight and emerging market stocks declined to their lowest since early January.

Mexico's peso weakened to a record low and its Malaysian, South Korean, Brazilian and South African counterparts have also suffered heavy hits.

Renewed concern about Greece's debt talks with euro zone partners and deflationary pressures in China have also weighed on emerging markets in general. China will release industrial output, retail sales and investment data later in the day which are all expected to show slowing growth.

Japan's Nikkei bucked the trend and rose 0.5 percent as better-than-expected machinery orders helped offset Wall Street losses.

But the deepening decline in the yen, usually a positive factor for Japanese stocks as it buoys exporters, had some worrying about other consequences.

"The market started to worry about side effects from a further slide in the yen," said Hiroichi Nishi, general manager at SMBC Nikko Securities in Tokyo, adding that there are also concerns that a stronger dollar hurts U.S. multinational companies' earnings.

In currencies, the euro fetched $1.0695 after touching a 12-year trough of $1.0666. Downward pressure on the common currency increased after the European Central Bank kicked of its quantitative easing programme and began its bond-buying on Monday.

"In addition to the ECB's starting its bond buying, Greek concerns are likely to weigh on the euro again this week, when there are several Greek-related events scheduled," said Masafumi Yamamoto, market strategist at Praevidentia Strategy in Tokyo.

Technical talks between finance experts from Athens and its international creditors are due to start later in the day with the aim of unlocking further funding.

The dollar traded at 121.315 yen, pulled down from an eight-year high of 122.04 scaled overnight as the broad slide in equities favoured the safe-haven yen.

The dollar index remained close to its 11-1/2 year peak of 98.808 climbed the previous day.

Hit by the greenback's broad strength, the Australian dollar hovered close to a six-year trough of $0.7603 reached on Tuesday.

U.S. crude oil bounced modestly after falling sharply overnight on the dollar's appreciation, which makes commodities denominated in the greenback costlier for holders of other currencies.

U.S. crude was up 1.3 percent at $48.93 a barrel after falling 3.4 percent the previous day. (Reuters)(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Kim Coghill)

UPDATE 2-Brazil's swelling budget gap compounds dire 2015 for Rousseff

1. * Worst fiscal result in more than a decade
2. * Overall budget gap doubles to 6.7 percent in 2014
3. * Minister says numbers are "honest" (Adds comment by cabinet minister)

By Silvio Cascione and Luciana Otoni

BRASILIA, Jan 30 (AsiaTimes.ga) - Brazil fell far short of its main fiscal target in 2014, underscoring the uphill battle that President Dilma Rousseff faces to shore up public accounts to prevent a credit downgrade as recession risks loom.

Brazil posted a primary budget deficit of 32.536 billion reais ($13.76 billion) for last year, equal to 0.63 percent of gross domestic product, the central bank said on Friday. That was the first annual gap since the current data series started in 2001 and a far cry from the 91.3 billion reais surplus of 2013.

The country's overall budget gap, which takes into account debt servicing costs, doubled in 2014 to 6.7 percent of GDP, one of the highest among major economies according to the International Monetary Fund.

The results, much worse than the already grim estimates of investors and ratings agencies, mean that newly appointed Finance Minister Joaquim Levy will have to slash spending or continue jacking up taxes to meet the government's goal of saving 1.2 percent of GDP in 2015.

Budget constraints are just one headache for Rousseff, who struggled to win re-election in October. State-run oil company Petroleo Brasileiro SA is engulfed in a massive corruption probe, and some of the country's biggest cities risk rationing water.

Brazil needs to run solid budget surpluses to service its sizable debt, on which it pays double-digit interest rates. Gross debt will probably keep rising this year, to 65.2 percent of GDP, according to central bank estimates.

Brazil's currency, the real, dropped nearly 3 percent on Friday, while interest rate futures <0#2DIJ:> spiked.

On condition of anonymity, a cabinet minister acknowledged the figures were "very bad," but said they reflected the true state of Brazil's finances.

The December results are the last under former Finance Minister Guido Mantega and Treasury Secretary Arno Augustin. Both left office at the end of the year after investors accused them of using "creative accounting" to bolster budget results.

"We can have a true start from 2015 onwards," the minister told Reuters. "The plan was that there should be no skeletons in the closet for Levy."

The Rousseff administration originally aimed for a primary surplus equivalent to 1.9 percent of GDP in 2014. It later abandoned that target as tax revenues dwindled and public spending surged ahead of the October election. (GA, Reuters, ATimes)(Additional reporting by Anthony Boadle; Editing by Todd Benson, Chizu Nomiyama and Lisa Von Ahn)

IFR-Big three bond raters still hold sway over mortgage market

NEW YORK, Jan 30 (IFR) - Call it old-school thinking but despite all the regulatory scrutiny and public slamming of the top three global rating agencies for their roles during the last real estate bust, their rating calls on the riskiest tranches of conduit commercial mortgage bond deals are still influential enough to impact pricing outcomes on transactions.

Just last week when two competing deals priced their D classes with a 20bp differential, issuers, investors and analysts said the difference was simply because one had a Triple B minus rating from the one of the main credit rating agencies, while the other did not.

"It's certainly the easiest thing for market players to hang their hat on," one issuer of the two trades said of the pricing disparities. "It shows us the preferences of investors, and we are in this market a lot."

Simply put, the costs of doing business in the primary and repo markets for conduit commercial mortgage bond deals will be higher without a stamp of approval from one of the big three rating agencies - Moody's Investors Service, Standard & Poor's and Fitch Ratings.

The problem has being magnified on the riskiest bonds broadly being offered - namely the D class - where the act of securing an investment grade from the old guard rating agencies has become harder to come by.

When Morgan Stanley and Bank of America sold their US$1bn plus conduit a week ago, called MSBAM 2015-C20, the issuers did so with marks of Triple B minus and Triple B (low) from Morningstar and DBRS at the D class level.

Moody's was also hired to rate the trade, but like most of the deals it rated in recent months, supplied letter grades only on the deal's most bullet-proof Triple A and Aa2 securities.

So when Morgan Stanley's US$50.2m D class priced at swaps plus 380bp, versus S+360bp for a similar US$70.65m bond from Deutsche Bank and Ladder Capital that had a Triple B minus rating from Fitch Ratings, market players reacted by saying that having a top-three firm on a deal still mattered.

That partly stems from decades-old investment criteria that required at least one major rating agency on a deal before certain investors were allowed to buy into a deal.

But because little has changed in the criteria even after the crash, newcomers to the rating agency arena like Kroll Bond Rating Agency or Morningstar are still absent from the ranks of approved firms.

"Documentation and technology tend to move relatively slow on that front," one analyst said.

And in practical terms, that not only means some money managers will be barred from buying Triple B minus paper without the sign off from a major rating agency, but also that fast money accounts looking for leverage in the repo market will often be paying more.

Fast-money accounts are big buyers of Triple B minus paper from the conduits, and are known for levering up bonds on a 5.5% yielding D tranche to reach mid-teen returns.

"I don't know what the delta is (on repo) terms for a Triple B minus with or without Fitch (or) Moody's but I am sure it is something," a portfolio manager said.

Credit Suisse, for one, does not differentiate between ratings from one of the big three or from a DBRS, Kroll Bond Rating Agency or Morningstar, a person familiar with the matter said.

But many of the large US investment banks do, he said, noting that most are known to charge more for deals without Triple B minus marks from Moody's or Fitch.

WILLING AND ABLE
Fitch Ratings has stood alone for months as the only firm of the big three agencies willing, or able, to supply Triple B minus ratings.

Standard & Poor's has been largely out of the picture since the crash, and just this month agreed to a one-year ban from rating any new US conduit deals as part of a settlement with regulators, who claimed the agency misled investors in six post-crash deals.

And while Moody's has picked up the bulk of the slack, until this week, its views on anything just below the Triple A level have been absent on new-issues.

But any lingering doubts of Moody's stance of credit quality deterioration has been cleared up in a searing report issued by the agency on Thursday, which stated that bonds rated Triple B minus by others are more akin to B1, or junk status, by Moody's own metrics. [ID: nL1N0V827K]

"None of us really respect what rating agencies have had to say (since the crash)," a portfolio manager at a large money manager said in an interview following the report's release.

"But this had people paying attention for the first time in years."

He was not the only one keeping a close eye on what this all could mean for investors.

Darrell Wheeler, an analyst at Amherst Pierpont Securities, has been warning about the vulnerability of new-issue Triple B minus paper to downgrades and losses.

"If we go into a near-term recession, there is a real risk of losses at the Triple B minus level, and certainly there is concern from a downgrade perspective," he said in an interview.

But even in a downgrade scenario, Wheeler says there are sharp consequences for holders of Triple B minus paper, as deals that initially printed at S+335bp on average in 2014 will quickly widen to S+550bp.

"That's quite a kick in the pants." (Reporting by Joy Wiltermuth; editing by Shankar Ramakrishnan and Jack Doran)

Italy's Padoan urges ECB bond buying "without constraints"

Jan 17 (AsiaTimes.ga) - Italian Economy Minister Pier Carlo Padoan has called for the European Central Bank (ECB) to launch its expected bond-buying programme "without constraints", saying he hoped its impact was not watered down and fragmented along national lines.

The ECB is expected next week to announce it will issue newly printed money to buy government bonds and flood cash into the euro zone economy, aiming to ward off deflation in a step known as quantitative easing (QE).

"QE is an essential contribution against deflation, it should absolutely not be diluted," Padoan was quoted saying in business daily Il Sole 24 Ore on Saturday.

"I hope that national fragmentation doesn't exert an influence," he said. "What counts is to turn around expectations and for that, there needs to be a decisive intervention without constraints."

Details of the programme, which ECB President Mario Draghi is widely expected to unveil after a meeting on Jan. 22, are still unclear.

The size of any programme and conditions such as whether risks will be distributed across the whole euro zone, or whether national central banks will buy the bonds of their own country only, have been under discussion since late last year.

The plan has faced stiff resistance from Germany, the bloc's biggest economy, which fears unlimited bond purchases would risk loading too much risk from weaker countries onto the Eurosystem as a whole.

However some analysts say a system under which national central banks buy their own country's debt would risk undermining the basic principle on which the single currency is built.

QE has already been deployed in the United States, Britain and Japan, but would be an unprecedented experiment in a bloc made up of different countries with no common fiscal system.

Bank of Italy Governor Ignazio Visco told a German newspaper last week he favoured a programme under which risks were borne jointly by the euro zone as a whole, in line with other policy measures which the ECB sets for the whole bloc.

Separately Dutch Finance Minister Jeroen Dijsselbloem signalled in a newspaper interview he would not object to the ECB purchasing national bonds of member states.

Policy makers in Italy, which is struggling to emerge from three years of on-off recession, have warned repeatedly that their economy faces a growing risk that chronic low inflation will tip into full deflation. (Reporting by James Mackenzie; Editing by David Holmes)(GA, Reuters, Asia Times)

TREASURIES-U.S. 30-year yield hits record low for second day

Jan 15 (ATimes) - Yields on U.S. 30-year Treasuries bonds struck a record low on Thursday for a second straight session after a surprise interest rate cut by the Swiss National Bank spurred buying of higher-yielding U.S. government debt.

The yield on the longest U.S. government securities touched 2.3940 percent, below the previous record low of 2.3950 percent set on Wednesday, according to Tradeweb and Reuters data.

The 30-year bond yield last traded at 2.398 percent, down 5.5 basis points from late on Wednesday. This brought its decline so far in January to 35 basis points, putting it on track for its steepest monthly decline since May 2012.

(Reporting by Richard Leong; Editing by James Dalgleish)(GA, Reuters, Asia Times)

Rates for conversion of FCD, DBC, FCBC, US dollar bonds

#GNN #KARACHI: The following rates will be applicable for conversion into rupees of Foreign Currency Deposits, Dollar Bearer Certificates, Foreign Currency Bearer Certificates, Special U.S. Dollar Bonds and profits thereon by all banks and for providing Forward Cover on Foreign Currency Deposits (excluding F.E- 25 deposits) by the State Bank on October 10, 2014.

The rates are U.S. Dollar 102.8310 Japanese Yen 0.9534 Pound Sterling 166.6274 and  Euro 131.2741.

Source: APP, AIP

China parliament votes on allowing local governments to issue bonds

#GNN - The #National People's #Congress approved allowing some local #governments to issue #bonds directly, a reform that could help stabilize government financing by creating the country's first municipal bond market, parliament announced on Sunday.

The National Audit Office estimated that local governments owed 17.89 trillion yuan ($2.91 trillion) by the end of June and said nine Chinese provinces had failed to pay back some 800 million yuan of debt due in March.

As economic growth slowed, that situation apparently caused regulators to move faster on developing alternative funding channels for local governments.

Beijing has been struggling to find a way to make local governments more fiscally responsible, after they ran up massive debt in the years following the global financial crisis. Economists worried that systems currently in place encouraged local officials to over-invest without regard for returns, in the name of supporting GDP growth at all costs.

Regulators have already experimented with allowing local governments to issue debt directly. The amendment to the country's budget law that parliament passed would simply certify the pilots now underway and allow for their later expansion.

The Ministry of Finance has granted 10 local governments quotas to issue a combined 109.2 billion yuan of municipal bonds this year, a relatively insignificant amount.

Governments in Shanghai, Zhejiang, Guangdong, Shenzhen, Jiangsu, Shandong, Beijing, Qingdao, Ningxia and Jiangxi are included in the pilot scheme.

Other governments are prevented from directly issuing debt, relying on the Ministry of Finance to issue and redeem bonds on their behalf.

(GNN)(Reuters)(AIP)(GA)(Reporting by Pete Sweeney; Editing by Larry King)

#GNN finance news - GLOBAL MARKETS-Stocks wobble on Ukraine news, bond yields slide

* Ukraine news sparks market turmoil, but stocks pare losses

* German Bund yields plumb record lows below 1 pct

* Safe-haven yen, Swiss franc gain (Adds close of U.S. markets)

By Herbert Lash

NEW YORK, Aug 15 GNN - Global equity markets seesawed and government bond yields fell sharply in a flight to safety on Friday after Ukraine said its artillery shelled a Russian armored column on Ukrainian soil in a report that raised fears of escalating tensions.

The government in Kiev said its artillery partially destroyed the Russian column in fighting overnight, but Russia denied its forces had crossed into Ukraine and called the Ukrainian report "some kind of fantasy."

Investors have worried about a worsening stand-off between Ukraine and Russia, even as recent signs of easing tensions had lifted equity markets, especially in Europe. Investors on Friday were less than sure about the seriousness of the fighting.

"The fact that the market sold off relatively hard on the Ukraine report but came back in the last hour or so is a reflection of us not getting any additional confirmation on the Russian column being attacked," said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.

MSCI's gauge of global equity performance pared losses in late trading to end at break-even, while the benchmark S&P 500 closed only 0.01 percent lower on the day. But bond prices reflected a rush into traditional safe havens.

The yield on German 10-year Bunds dropped to a record low of 0.958 percent in their biggest weekly percentage fall in almost 11 months. The 10-year U.S. Treasury slid to 2.3415 percent, and 10-year UK bond yields fell to 2.328 percent at the close, the lowest since August 2013.

"The falling yield levels are a reaction to panic," said Chris Orndorff, a portfolio manager at Western Asset in Pasadena, California.

Most U.S. stock indexes also pared losses to trade slightly lower, but the tech-heavy Nasdaq ended in positive territory.

The Dow Jones industrial average closed down 50.67 points, or 0.3 percent, to end at 16,662.91 and the S&P 500 lost 0.12 point, or 0.01 percent, to 1,955.06. But the Nasdaq Composite added 11.925 points, or 0.27 percent, to 4,464.927.

The FTSEurofirst 300 index of leading European shares fell 0.45 percent to close at 1,323.10, after trading 0.8 percent higher earlier in the session.

The safe-haven yen and Swiss franc advanced after news of the Ukraine event. The Swiss franc hit a 19-month high against the euro and a three-week peak versus the dollar. The yen reversed losses against the dollar, turning higher.

The dollar fell as much as 0.09 percent against the yen to 102.34 yen, after hitting its highest in more than a week. The dollar last traded at 0.9027 franc, down 0.4 percent.

The euro, meanwhile, tumbled versus the Swiss franc to its lowest since January 2013. It was last at 1.2093, down 0.19 percent.

Crude oil prices rose on the Ukraine news, after Brent had stabilized close to a 13-month low on ample supplies of high-quality oil and signs that faltering global economic growth may cap fuel demand.

October Brent crude rose $1.46 to settle at $103.53 a barrel, while U.S. crude rose $1.77 to settle at $97.35 a barrel. (GNN)(Reuters)(Reporting by Herbert Lash; Additional reporting by Nigel Stephenson in London; Editing by Dan Grebler and Chizu Nomiyama)

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California expands tax credit for stealth bomber to Northrop Grumman

Aug 15 #GNN - #California on Friday offered tax incentives to an aerospace company seeking to build the next generation of stealth bombers, after controversy that the state had earlier offered the valuable tax breaks only to its main competitor.

The bill to expand a nearly $500 million tax break to Northrop Grumman Corp that had previously been limited only to Lockheed Martin Corp was signed Friday by Democratic Governor Jerry Brown.

"This is a victory for fairness, the aerospace industry and all Californians," said Northrop Grumman spokesman Tim Paynter.

Northrop Grumman, which headquarters its aerospace operations in Southern California and had already committed to building the planes there, was not initially offered the tax incentive.


Northrop Grumman complained, saying the tax credits would benefit the team of Maryland-based Lockheed Martin and Chicago-based Boeing Co in their efforts to win the estimated $55 billion contract to build the new stealth bombers.

The plan exposed sharp divisions among Democrats, some saying the credit amounted to corporate welfare, and others saying it was unfair to offer the break only to Lockheed Martin, which was working as a subcontractor to Boeing in pursuit of the federal contract.

The initial bill, passed last month, did not mention Lockheed by name, but said the tax credit would apply to subcontractors working on the contract. Lockheed is the only subcontractor in the running.

After a tense session on the senate floor, lawmakers agreed to support the Lockheed credit only if a similar bill benefiting Northrop was also introduced.

"As a legislature we committed to leveling the playing field," said Democratic state Senator Richard Roth of Riverside, a co-author of the Northrop bill. "The state of California is not in the business of determining winners and losers when it comes to the Department of Defense contracting process."

His measure does not name Northrop but expands the tax break beyond sub-contractors to primary contractors.

It was not clear why the state initially offered credits to just one company. Roth said he was told Brown's economic development team did not know of Northrop's concern until the last minute.

Republican state Senator Steve Knight, co-author of the Lockheed bill, also co-authored the Northrop measure.

"These extraordinary efforts show that the aerospace industry is important to California," said Knight, who received a $1,500 contribution from Lockheed in November, campaign finance reports showed.

Lockheed Martin did not immediately respond to requests for comment. (GNN)(Reuters)(Reporting by Sharon Bernstein; Editing by Lisa Shumaker)

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SEC probes California's West Contra Costa Unified School Distict

Aug 15 #GNN - The U.S. Securities and Exchange Commission is reviewing bonds issued by West Contra Costa Unified School District in California.

The federal agency requested information regarding general obligation bonds issued by school district between 2009 and 2013 and about proposed refunding of the district's debt, according to a supplement filed on August 7 that accompanied the official statement of $77.46 million of general obligation refunding bonds.

The SEC's letter said that the investigation was "a non-public, fact-finding inquiry" to "determine whether there have been any violations of the federal securities law." It did not disclose the nature or scope of the probe, the district noted.

Superintendent Bruce Harter said in a prepared statement on Wednesday that "much is unknown about the nature of this inquiry."

"We are announcing the receipt of this subpoena in order to ensure that our community is informed," Harter wrote.

The district's Board President Charles Ramsey also received an SEC subpoena, along with certain members of its financing team and some of its consultants and advisors, according to the disclosure.

Ramsey's attorneys Amy Craig and Ismail Ramsey said on Friday that the SEC has issued a request for records, and there was no indication of wrongdoing.

The board had agreed to pay for legal representation for its president, district spokesperson Marcus Walton confirmed.

West Contra Costa Unified School District is located roughly 15 miles northeast of San Francisco, where over 28,000 students attend from the cities of Richmond, El Cerrito, Hercules, Pinole, and San Pablo, along with several unincorporated areas. (GNN)(Reuters)(Reporting by Robin Respaut; editing by Andrew Hay)

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Market Chatter- Corporate finance press digest

#GNN - The following corporate finance-related stories were reported by media:

* Italy's UniCredit is close to selling a new portion of its private equity holdings after a similar deal in 2013, a source close to the matter said on Sunday, as European banks shed non-core assets to strengthen their capital base.

* A deal to resolve a U.S. regulator's claims against Goldman Sachs Group Inc over mortgage-backed securities sold to Fannie Mae and Freddie Mac leading up to the financial crisis could cost the bank between $800 million and $1.25 billion, according to a person familiar with the matter.

* The new management of Italy's Eni plans to press on with the sale of a controlling stake in oil services subsidiary Saipem so it can focus on the more lucrative business of finding oil and gas, sources said.

* Exxon Mobil Corp is considering a multibillion-dollar plan to expand its Beaumont, Texas, refinery into the country's largest, the first major refining investment of the U.S. shale oil boom, people with knowledge of the deliberations said.

* Sweden's Nordic Capital is considering listing Thule, a maker of car roof storage boxes, on the Stockholm stock market this year and has picked Goldman Sachs and Nordea to lead the offering, three people familiar with the matter said.

* Philips has taken a first step towards selling a stake in a lighting components business it is currently carving out by appointing Morgan Stanley to handle the sale process, three people familiar with the matter said.

For the deals of the day click on

For the Morning News Call-EMEA newsletter click on (GNN,Reuters,AIP)(Compiled by Abhiram Nandakumar in Bangalore)

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Citi, U.S. $7 billion settlement announcement expected Monday

(GNN) - Citigroup agreed to pay $7 billion to resolve a U.S. government investigation into shoddy mortgage-backed securities the bank sold in the run-up to the 2008 financial crisis in a settlement set to be announced on Monday, sources said.

The $7 billion includes $4 billion in cash to the U.S. Department of Justice, $2.5 billion in consumer relief, more than $200 million to the Federal Deposit Insurance Corporation and just under $300 million to settle probes by five states, said sources familiar with the negotiations.

Spokespeople for the Justice Department and the bank declined comment. Representatives of attorneys general of New York, Delaware, California, Massachusetts and Illinois, the states said to be involved, did not immediately return requests for comment. Nor did the FDIC.

The settlement, signed over the weekend, caps months of negotiations, during which the government demanded $12 billion and threatened to sue Citigroup, according to the sources.

The deal is scheduled to be announced on Monday morning when Citigroup executives also will report second-quarter results before the stock market opens in New York, the sources said.

The $7 billion has surprised stock analysts and people inside the bank, who expected Citigroup to resolve the investigations for much less.

Citigroup is the second major bank to settle with authorities since President Barack Obama ordered the formation of a task force to investigate the sale and packaging of toxic home loans, which were at the center of the 2008 financial crisis. The Justice Department issued more than a dozen subpoenas to financial institutions in early 2012.

Bank of America Corp also has been negotiating with the Justice Department over similar claims.

JPMorgan Chase & Co, the largest U.S. bank, last year agreed to pay $13 billion to settle government probes over the packaging of toxic mortgages, including by Bear Stearns and Washington Mutual, which the bank acquired during the crisis.

The $13 billion JPMorgan accord was comprised of a $2 billion penalty to the Justice Department, $4 billion in consumer relief, $4 billion to the Federal Housing Finance Agency, and $3 billion to other authorities.

Citigroup's penalty to the Justice Department is twice what JPMorgan paid, though it had handled far fewer mortgage-backed securities, because investigators found more evidence of defective loans in the bank's securities and more awareness of the wrongdoing at the time, the sources said.

At the same time, the Citigroup settlement covers the bank's potential exposure for tens of billions of dollars' worth of collateralized debt obligations, the sources said. JPMorgan got no such release in its deal.

LONG NEGOTIATIONS

Negotiations with Citigroup, the third largest U.S. bank, began with a meeting in Brooklyn in November, the day the JPMorgan settlement was announced, one source said.

In late April, the bank offered $363 million, the sources said. At a May 2 meeting in Washington, the government demanded the bank increase its offer, sources said, and Citi responded with $700 million.

Justice did not consider the offer realistic, according to sources. Citi then came up with $1 billion in cash and $2 billion in consumer relief, one source said.

But by then, Justice made a demand of $12 billion, sources said.

Negotiations reached a fevered pitch the week of June 9, with Citigroup requesting to meet with U.S. Attorney General Eric Holder several times that week, only to be rebuffed, one source said.

The Department of Justice gave Citigroup until June 13 to come back with a serious offer. By that Sunday, Citigroup agreed to pay $3.6 billion in cash, $2.5 billion in consumer relief and $900 million more to cover probes by five states and the FDIC, one source said.

The department threatened to sue Citigroup, but on June 17 postponed a planned announcement, sources said.

Top Justice Department officials were preoccupied with the capture of a suspect in the 2012 attack on U.S. diplomatic facilities in Benghazi, Libya, and other commitments, sources said.

The bank then worked on the consumer relief portion and Tony West, the No. 3 Justice Department official, negotiated for Citi to settle with the states and FDIC for $500 million, rather than $900 million, one source said.

The $400 million difference was moved into the Justice Department's bucket, where it was no longer tax deductible as a business expense, the source said.

IMPACT ON RESULTS
How much the deal will reduce Citigroup's quarterly results on Monday depends on various factors.

Citigroup has not disclosed how much of the legal cost it has already incurred by booking reserves. Analysts have estimated its legal reserves at between $2 billion and $3.5 billion.

Citigroup said in May that possible litigation losses in excess of its reserves could be as much as $5 billion.

Analysts, on average, have expected Citigroup to report on Monday that it earned $1.09 a share in the second-quarter, down nearly 13 percent from a year earlier, according to a survey by Thomson Reuters. It's not clear whether the estimates had been updated to include the expected settlement. (Reuters)(AIP)(Reporting by Karen Freifeld in New York and Aruna Viswanatha in Washington; Additional reporting by David Henry in New York; Editing by Frances Kerry and Sandra Maler)

Japan investors bulk up on French bonds, bet on euro zone "Japanisation"

* Japanese investors bought 60 pct or more of French debt in May-June

* Buying up six-fold from last year

* Euro zone a déjà vu for Japanese investors seared by long deflation

* French debt yields more than Germany's, rated higher than Italy's

* ECB easing seen as "biggest event of the year" for Japanese investors, broker says

By Hideyuki Sano

TOKYO, July 14 (GNN) - Japanese investors have been buying most of France's government debt recently in a record surge spurred by expectations that Europe faces the kind of deflation and growth that Japan suffered for decades.

Since the European Central Bank (ECB) signalled in May it would take radical steps to ease monetary conditions, banks and other big investors in Japan have piled into French bonds, convinced from their own experience that the debt of a country where the central bank is battling deflation represents a winning bet, market participants say.

"In a way, they are expecting Japanisation - deflation and a long period of zero interest rates," said Hiroki Shimazu, senior market economist at SMBC Nikko Securities.

Japanese investors bought a net 1.9 trillion yen (14 billion euros) of French bonds in May, equal to more than 60 percent of the government's new issuance that month, Japanese Finance Ministry data shows.

Data is not available for June, but market participants say Japanese buying of French bonds has picked up from May amid a broader increase in buying of euro-zone debt. One suggested Japanese investors may have bought the equivalent of three-fourths of the French new issuance.

French bonds represents a Goldilocks trade for Japanese investors keen for euro-zone exposure: they yield more than German bonds, while lower credit ratings on Italy's bonds - the region's third-most-liquid market - deter active Japanese buying.

On a gross basis, Japanese investors bought 6.60 trillion yen ($65.2 billion) of French government debt in May, dwarfing last year's 1 trillion yen average and by far the most since the ministry began compiling such data in 2005.

JAPAN DEJA-VU

While the euro zone's financial crisis has seen spikes in market interest rates as bond prices plunged, Japanese investors have strong memories of a completely different dynamic.

As Japan suffered years of falling prices and tepid growth, the government's bond market proved one of the world's great long-term bull markets.

Having slashed interest rates to zero during this period, the Bank of Japan invented the now globally recognised idea of "quantitative easing" - mass purchases of bonds and other debt to inject cash into the economy.

"If you want to make money investing, you have to take the largest position you can take on the most important event of the year - that's how you win," said the Tokyo director of fixed income at a European brokerage. Japanese investors "think the ECB's easing is the biggest event of the year."

The ECB under President Mario Draghi has cut rates, pledged to keep them low "for an extended period" and said it will continue market operations that allot banks their full funding requests at a very cheap rate until December 2016.

Japanese investors have taken that as a signal rates won't rise for more than two years. That means free money by playing for "roll-down" gains on the yield curve: a five-year bond bought now at a 0.47 percent yield and held for two years should rise in price if market rates remain the same, given that three-year debt now yields 0.08-0.09 percent.

Helped by heavy Japanese buying, the French 10-year bond yield fell to a record low 1.5 percent last week.

But that is still nearly triple the yield that Japanese investors can get at home, where the BOJ's massive purchases - the central bank gobbles up the bulk of domestic JGBs - has crushed the 10-year yield to a 15-month low of 0.54 percent .

The ECB says there is little risk that the euro zone will slip into deflation, but it is déjà vu for Japanese investors, where the BOJ's unprecedented easing is only now generating a modest rebound in prices.

The euro zone inflation rate has slid for three years to 0.5 percent, with Italy at 0.2 percent in June.

Bank lending in the euro zone is falling as companies shed debt.

Wage growth is slowing, with some countries in southern Europe seeing wages falling.

Japanese investors keenly recall how, during long periods of stagnation, consumers stuffed their money into bank deposits and borrowing slumped, leaving banks with little choice but to plough their cash into Japanese government bonds.

Rising domestic savings boosted Japan's current-account surplus, supporting the yen and inflaming deflationary pressure - another parallel with the euro zone now. The euro zone's current-account surplus hit a record high in January, helping to support the euro despite the ECB's attempt to talk it down. (Reuters)(AIP)(Editing by William Mallard and Neil Fullick)

UPDATE 1-Whiting Petroleum to buy Kodiak Oil for $3.8 bln in stock

(Adds details on deal)

(GNN) - Whiting Petroleum Corp said on Sunday it would acquire Kodiak Oil & Gas Corp for $3.8 billion in stock, to become the largest producer in the Bakken/Three Forks oil formations.

Whiting said the deal, valued at $6 billion when Kodiak's net debt of $2.2 billion is included, is expected to close in the fourth quarter.

The companies' combined output from the Bakken/Three Forks formations in the first quarter of 2014 was more than 107,000 barrels of oil equivalent per day, with 855,000 combined net acres and almost 3,500 net future drilling locations.

The formations, within the Williston Basin in North Dakota and Montana, are among the largest oil plays in the United States.

Kodiak shareholders will receive 0.177 share of Whiting stock for each share of Kodiak common stock they hold, representing a value of $13.90 per share based on the closing price of Whiting shares on July 11.

That would be a 5.1 percent premium to the volume weighted average price of Kodiak shares during the last 60 trading days, Whiting said in a release. It said shareholders of Whiting are expected to own about 71 percent of the combined company after the transaction.

(Reuters - AIP)(Reporting by Ransdell Pierson; Editing by Sandra Maler and Steve Orlofsky)