New York regulator Lawsky aims at Deutsche Bank over Libor - FT

(GNN) - Benjamin Lawsky, New York state's financial services regulator, has added himself to the regulators investigating Deutsche Bank AG for manipulation of the Libor benchmark borrowing rate, the Financial Times reported on Sunday, citing unnamed sources.

The New York Department of Financial Services' probe of the German bank marks the first Libor investigation for the regulator. Deutsche Bank is currently negotiating a settlement with the U.S. Justice Department, the newspaper said.

Lawsky's department regulates banks with charters in New York as well as foreign banks with branches in the state. He is not investigation other banks, which have already settled with the government, the Financial Times said.

In a little over two years, regulators have looked into more than a dozen banks and brokerages over allegations they manipulated benchmark interest rates such as Libor and Euribor, which are used to price trillions of dollars of financial products from derivatives to mortgages and credit card loans. (Reuters)(Reporting by Caroline Humer; Editing by Jonathan Oatis)

Seacoast Banking to gain from Florida's growth -Barron's

(GNN) - Seacoast Banking Corp. of Florida is set to gain from economic growth in the state, where more than 700 new residents are added per day, weekly newspaper Barron's reported in its March 23 edition.

The shares look inexpensive and in the next 18 months could move up by 20 percent as the bank's loan growth and earnings pick up, Barron's said. FIG Partners analyst Christopher Marinac told the newspaper that the shares are worth $16. In a buyout, the stock would likely fetch more, Barron's wrote.

The bank's biggest shareholder, CapGen Financial Group, has had its stake for six years and may be looking to exit either through a secondary stock offering or a sale, it said.

Seacoast's shares closed at $13.60 on Friday.

(Reuters)(Reporting by Caroline Humer; Editing by Leslie Adler)

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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)

Allianz in $700 mln deal with Goldman to hedge CPIC stake-terms

(GNN) - German insurer Allianz has struck a $700 million deal with Goldman Sachs to protect most of its stake in China Pacific Insurance Group Co Ltd (CPIC), according to a term sheet of the deal seen by Reuters.

Goldman Sachs sold 147.7 million Hong Kong traded shares of CPIC at a price of HK$36.77 each to hedge an equal position of Allianz in the Chinese insurer, the terms showed. That's equivalent to about 60 percent of the Allianz stake in CPIC.

Goldman acted as sole bookrunner for the transaction.

(Reuters)(Reporting by Fiona Lau of IFR and Elzio Barreto; Editing by Miral Fahmy)

Startups, Late-Stage Valuations, And Bull

(GNN) - Bill Gurley, a general partner at Benchmark, makes news mostly because he says what other venture capitalists will tell you while drunk, but does so while on the record. It’s refreshing in a way.

Most recently, Gurley made the point that the tech and investment industries are shoving nine and ten-figure sums of cash into startups while not enjoying a full dig into their financials. In the age of the mega-round, the issue isn’t a small one: Gurley thinks that some people are investing from the hip and not from the spreadsheet.
Here’s the quote:

“Pay attention,” Gurley said. “These companies aren’t going through a proper audit process. … We’re drifting from high-margin businesses to ever-increasing low-margin businesses in terms of what we’re saying are unicorns. Be careful. I don’t think it’s sustainable if you extrapolate that way.”

Placing the low-margin bit aside, the point about vetting companies is disturbing. If huge sums of money are going into companies that are not properly audited, there is more risk in the market than was perhaps understood. And more risk, in this case, doesn’t mean more potential reward — it means more un-hedged downside.

I talked with Gurley on the phone for a minute on the auditing point and he noted that some companies are raising massive rounds off of a Power Point deck, and not an S-1. The implication is simple: When you go public, you undergo a financial root canal, exposing your strengths and weaknesses alike. Massaged decks aren’t like that. And as the market remains flush with bored capital, it seems perfectly happy to shovel it into the maws of companies that report less than you might want before valuing them north of a billion.

(Before I hand the floor to others, I have to ask: Do any of these companies know how to GAAP their top line? I hear endless talk of run rates, and 18-month-away cash flow breakeven, but desperately little when it comes to material profitability.)

Is Gurley Full Of Shit?

Not really, it seems. I reached out to a number of venture capitalists that I think are not stupid, asking for response to Gurley’s point on a lack of auditing of firms receiving late-stage capital in large doses. Here’s what they had to say:

Matt Murphy of Kleiner Perkins told me that there are “definitely some rounds that go on where the entrepreneur doesn’t want to provide detailed data,” but that sort of behavior is a “red flag.” Murphy went on to note that if a company wants to work with a firm, “they will ultimately provide” the information. “Firms who invest without it,” Murphy concluded, “are playing a dangerous game.”

Jason Lemkin of Storm Ventures had some hot words for the current market:

I know many very successful VCs that didn’t do a single new investment last year because of valuations. Many. But, those that simply chase returns are doing very little diligence these days. They will get burned. And it’s not just VCs. Who does diligence on AngelList? No one. No one.”

Josh Felser of Freestyle Capital made a different point, noting that “FOMO has been elevated to a higher status than it used to be and that can’t be good long term.” FOMO, or the ‘fear of missing out’ is a general term for being terrified in the face of an opportunity passing you by — what if all the cool kids do it? And if you think that the cool kids are doing it, why aren’t you? And all of a sudden, $35 million in at a $1 billion pre-money valuation suddenly seems like a deal.

Ron Heinz of Signal Peak Ventures was blunt:

The ‘Unicorn Effect’ has permeated Silicon Valley and created lofty valuations that are likely unsustainable over the long-term. While we fully expect sophisticated investors to complete thorough due diligence, enthusiasm for exceptional upside is clearly driving valuations higher in some instances.

Shade.
Aziz Gilani of the Mercury Fund feels similarly:

I generally agree with Bill’s warning on valuations. This scenario reminds me of the old maxim: ‘You pick the valuation and I’ll pick the terms’. Right now, some funds are giving in to founder desires for ‘unicorn’ raises and valuations in exchange for relatively onerous terms.

I presume that that is a subtweet of Box’s last round of private capital.
Continuing, here is Jacob Mullins, formerly of Shasta Ventures, and currently of Exit Round, a company that helps unwind failed startups:

Today, with stagnancy in the public markets, we’re seeing a large inflow of institutional investors, hedge funds and large private equity with far less experience in VC who are piling money into late stage venture rounds in order to find Alpha. This is increasing the availability of capital and thus increasing valuations and size of fundraises. But these firms often don’t understand the true risks in venture, nor do they necessarily care because of their risk tolerance with respect to the capital they are putting at work. They invest on the backs of other big VC names assuming that its a safe bet; but in venture, companies rarely are.

It’s a vicious capitalistic cycle, because venture investors love having this deluge of easy capital and skyrocketing valuations because it increases the overall holding value of their portfolios.

Chris Calder of Epic Ventures noted that return is concentrated, and expensive:

I think the quality of diligence is there, but because private equity is illiquid, returns are concentrated in a few companies, and there are only so many opportunities to invest (I.e. illiquidity), people are willing to pay up to get exposure. [And] So validation growth becomes lumpy.

Summing the above, it seems, and I know this will shock some of you, that we are currently sunning in the glow of a general asset bubble inside of technology, the result of which is that many funds are willing to buy not just next year’s growth at today’s prices, but profits that are a decade hence. When money is that generous, why not take it?

Just keep in mind that the business cycle is just that: A cycle. And according to that one dead physicist, whatever goes up tends to come down a bit. It’s like the inverse of rent in San Francisco.

UK's Cameron backs ex-HSBC chairman Green going before parliament -spokesman

Feb 11 (GNN) - British Prime Minister David Cameron would support HSBC's former executive chairman Stephen Green going before lawmakers to answer questions about what he knew about tax avoidance at the bank's Swiss arm, his spokesman suggested on Wednesday.

Cameron appointed Green, a British peer, to be a trade minister in 2010 and his spokesman has said he thinks Green, who is no longer in government, did a good job.

Asked on Wednesday if Cameron felt it would be useful for Green to appear before a parliamentary committee to explain what he knew about possible wrongdoing at HSBC's Swiss arm, his spokesman said it wasn't a decision for the prime minister but that he favoured people accounting for themselves.

"The prime minister's sort of point of principle, you know, is that he's always of the view wherever possible it is (desirable for individuals to testify)," Cameron's spokesman told reporters.

"He would support the idea of people coming before select committees and answering questions that parliamentarians have," he added.

So far, Green has not commented.

A panel of British lawmakers said earlier this week they planned to open an inquiry into HSBC Holdings Plc HSBA.L, after media reports that the bank helped wealthy customers dodge taxes and conceal millions of dollars of assets.

It has not yet disclosed who it would like to question. (Reuters)(Reporting by Andrew Osborn; Editing by Guy Faulconbridge)

Deloitte CEO Joe Echevarria to retire and pursue public service

Aug 15 #GNN - Deloitte LLP's Chief Executive Officer Joe Echevarria plans to retire later this month to follow his interest in public service, the accounting and consulting firm said on Friday.

Deloitte's board has named Chief Financial Officer Frank Friedman as the CEO pending completion of a formal leadership election, which is under way.

Echevarria, who joined Deloitte in 1978 and became the CEO in 2011, said, "I have determined that this is the right time in my life to pursue my passion for public service.

"Given my roots, inner-city Hispanic from the South Bronx - I am especially looking forward to continuing my role as co-chair with" former basketball star Earvin "Magic" Johnson on "the My Brother's Keeper Initiative, which is focused on helping boys and young men of color succeed."

President Barack Obama launched My Brother's Keeper this year to improve health, education and employment opportunities for black and Latino boys and young men. Under this initiative, the president asked leading U.S. foundations and corporations to partner with school districts, for example, to help these boys stay in school and get job training.

Echevarria also serves on the President's Export Council, the main national advisory committee on international trade, according to his bio on Deloitte's website. In 2013, he was a member of the Presidential Council on Election Administration.

Deloitte LLP is the member firm of Deloitte Touche Tohmatsu Limited, a UK private company. Subsidiaries of Deloitte LLP include audit firm Deloitte & Touche LLP. (GNN)(Reuters)(Reporting by Lehar Maan in Bangalore; Editing by Jan Paschal)

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India's Jaiprakash to sell hydro plants to Reliance Power

#GNN - #India's Jaiprakash Power Ventures Ltd on Monday said it plans to reduce debt by selling three hydropower plants to a subsidiary of Reliance Power Ltd, including two plants involved in a sale that collapsed last week.

The sale of Jaiprakash's entire hydropower portfolio, which has an aggregate capacity of nearly 1,800 megawatts, would make Reliance the country's largest private provider of hydroelectric power.

Jaiprakash in a statement said it has entered into an exclusive memorandum of understanding with Reliance CleanGen Ltd, which with Reliance Power is part of billionaire Anil Ambani's Reliance Group Holdings Inc.

Jaiprakash did not disclose the terms of the sale.

The announcement followed the collapse last week of a plan by Jaiprakash and parent Jaiprakash Associates Ltd to sell two of the three plants for $1.6 billion to an Abu Dhabi-led consortium.

Representatives of Reliance Power could not immediately be reached for comment.

Shares of Jaiprakash Power were 5.2 percent higher in early Monday trade, compared with a flat benchmark index. Shares of Reliance were up 2.4 percent.

(GNN,Reuters,AIP)(Reporting by Tommy Wilkes; Editing by Christopher Cushing)

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Obama could curb corporate 'inversions' on his own -ex-U.S. official

#GNN - #President Barack Obama could act without congressional approval to limit a key incentive for U.S. corporations to move their tax domiciles abroad in so-called "inversion" deals, a former senior U.S. Treasury Department official said on Monday.

By invoking a 1969 tax law, Obama could bypass congressional gridlock and restrict foreign tax-domiciled U.S companies from using inter-company loans and interest deductions to cut their U.S. tax bills, said Stephen Shay, former deputy assistant Treasury secretary for international tax affairs in the Obama administration. He also served as international tax counsel at Treasury from 1982 to 1987 in the Reagan administration.

In an article being published on Monday in Tax Notes, a journal for tax lawyers and accountants, Shay said the federal government needs to move quickly to respond to a recent surge in inversion deals that threatens the U.S. corporate tax base.

"People should not dawdle," said Shay, now a professor at Harvard Law School, in an interview on Friday about his article.

If the administration were to take the steps he discusses, Shay said, some of the many inversion deals that are said to be in the works might be halted in their tracks.

The regulatory power conferred by the tax code section he has in mind, known as Section 385, is "extraordinarily broad" and would be a "slam dunk" for the Treasury Department, he said.

A recent sharp upswing in inversion deals is causing alarm in Washington, with Obama last week urging lawmakers to act soon on anti-inversion proposals from him and other Democrats. But Republican opposition has blocked Congress from moving ahead.

Meantime, investment bankers and tax lawyers are aggressively promoting inversion deals among corporate clients, with U.S. drugstore chain Walgreen Co one of several companies known to be evaluating such a transaction.

Medical technology group Medtronic Inc, based in Minnesota, and drug maker AbbVie Inc, of Illinois, are in the midst of inverting to Ireland by buying smaller Irish rivals and shifting their tax domiciles to that country.

The biggest attraction of inversions for U.S. multinationals is putting their foreign profits out of the reach of the U.S. Internal Revenue Service. But another incentive is to make it easier to do so-called "earnings stripping" transactions.

This legal strategy involves making loans from a foreign parent to a U.S. unit, which can then deduct the interest payments from its U.S. taxable income. Plus, the foreign parent can book interest income at its home country's lower tax rate.

Section 385 empowers the Treasury secretary to set standards for when a financial instrument should be treated as debt, eligible for interest deductibility, and when it should be treated as ineligible equity.

If a corporation has loaded debt into a U.S. unit beyond a certain level, Section 385 could be used by the government to declare the excess as equity and ineligible for deductions.

"The stuff I'm describing should be putting a crimp in tax-motivated deals," Shay said. (GNN,Reuters,AIP)(Editing by Eric Walsh)

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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)

RPT-China aviation boom brings first aircraft lessor IPO in Asia

(Repeats story published on Friday, no changes in text)

* CALG to spend $100 mln IPO proceeds on new aircraft

* China plane leasing market seen growing 50 pct by 2018

* Profitability may wilt as competition heats up

By Anshuman Daga and Fang Yan

SINGAPORE/BEIJING, July 11 (GNN) - As China's aviation market booms, local aircraft leasing companies are raising funds in finance hubs like Hong Kong and Singapore in a bet they can win market share from the international players that dominate the industry.

With the country's growing middle class fueling a surge in travel, Boeing Co estimates Chinese airlines will need nearly 6,000 new jets over the next 20 years, valued at $780 billion. Many of those aircraft will be leased rather than bought as carriers seek to cap long-term commitments: China's 800-plane leasing market is set to grow 50 percent by 2018, according to consultancy Ascend.

Friday's market debut in Hong Kong of Asia's first listed plane lessor, China Aircraft Leasing Group Holdings Ltd (CALG) , is the clearest example so far of local players chasing expansion. CALG said the nearly $100 million it raised in its initial public offering will be mostly spent on acquiring aircraft to try to expand its 3 percent share of the market.

More IPOs are possible, but a more common tack for the leasing arms of big Chinese banks, such as Industrial and Commercial Bank of China (ICBC), Bank of Communications and Bank of China, is to set up subsidiaries in the aircraft financing hubs of Singapore and Dublin to raise funds.

"A lot of the local companies are arms of the big Chinese banks and they are taking leverage of the connections. The relationships the parents have helped them to get business," said Ilya Ivashkov, a New York-based senior director at Fitch Ratings.

Chinese lessors are expected to corner 55 percent of the local market by 2018, up from 38 percent last year, CALG said in its IPO prospectus, quoting consultancy Ascend.

To do that, though, they'll face stiff competition in the world's fastest-growing aviation market from the biggest global aircraft lessors, International Lease Finance Corp, now part of AerCap, and GECAS, a unit of General Electric.

PRICING PRESSURE

"Major foreign leasing companies have been speeding up their expansion in China. As such, the competition will become more and more fierce down the road," said Mark Jiang, managing director of aviation finance at ICBC Financial Leasing.

The presence of deep-pocketed players in the aircraft leasing sector means smaller players will find it hard to make money, analysts said, even if they do grab market share. Lessors book revenue from renting out their planes.

"The one issue with having a lot of capital flow into the sector at once is that it's going to result in more competitive pricing and more competitive lease terms," said Fitch's Ivashkov.

He said that with new plane leases extending to 10-15 years, the jury is still out on whether the smaller players would be profitable. "It will ultimately be organic growth or consolidation," he said.

CALG, whose shares rose as much as 3 percent on their market debut, is partly owned by a subsidiary of state-backed financial conglomerate China Everbright Group.

The lessor counts China Southern Airlines Co. Ltd and China Eastern Airlines Corp Ltd among its customers, and plans to double its fleet to 64 before the end of 2016. The aircraft operated by China's airlines are generally younger than that of the world.

CICC, China Everbright International and CCB International were joint bookrunners on CALG's IPO. (Reuters)(AIP)(Editing by Miyoung Kim and Kenneth Maxwell)

UPDATE 5-Political novice wins power in Slovenia, hints at revisiting economic reform plan

* Euro zone country narrowly avoided international bailout

* Son of Olympic athlete wins, must lead recovery

* PM frontrunner cool on some privatisations

* Investors wary of backsliding (Updates with official count)

By Marja Novak and Zoran Radosavljevic

LJUBLJANA, July 13 (GNN) - Centre-left political novice Miro Cerar led his party to victory in Slovenia's election on Sunday, indicating he would rewrite a reform package agreed with the European Union to fix the euro zone member's depleted finances.

The result will test investor nerves, given Cerar's hostility to some of the big-ticket privatisations that the EU says are key to a long-term fix for Slovenia, which narrowly avoided having to seek an international bailout for its banks last year.

Cerar's six-week-old SMC party won 34.8 percent of the vote, which translates to 36 seats in the 90-seat parliament. That would give the 50-year-old law professor the strong mandate his recent predecessors have lacked, potentially going some way to restoring political stability after years of turbulence and weak government.

The centre-right SDS party was in second place with 20.6 percent and a string of smaller centre-left parties also won seats and were lining up to join Cerar in government.

Success for Cerar, whose Olympic gymnast father was one of Slovenia's greatest ever sportsmen, is punishment by voters for the traditional parties, tarnished by corruption scandals and years of economic turmoil in the ex-Yugoslav republic.

Outgoing Prime Minister Alenka Bratusek called Sunday's snap election after losing public confidence. Cerar's government will now oversee a raft of crisis measures agreed with the EU to reduce Slovenia's budget deficit and remake an economy heavily controlled by the state.

Cerar, however, opposes the sale of telecoms provider Telekom Slovenia and the international airport, Aerodrom Ljubljana, fuelling investor fears of backsliding.

Suggesting he planned to revisit the crisis programme agreed under the previous government, Cerar told Reuters: "Our party will aim for Slovenia to fulfil its EU obligations but within that we will seek our own ways to reach these goals in the best way for Slovenia."

He said his cabinet would immediately consider which companies would remain in state hands and what to do with the rest. "I'll do my best to have our privatisation programme in place this year," he said. "This will be one of the priorities of the government."

REFORM DOUBTS

The outgoing government suspended the privatisation process this month pending the formation of a new government, which is not expected before mid-September.

Cerar will have to find other ways to raise cash if he is to meet a target agreed with the EU to slash back Slovenia's budget deficit to 3 percent of output by 2015, from a forecast 4.2 percent this year.

He will form the fourth government since the 2008 financial crisis, which shredded Slovenia's reputation as an economic trailblazer in ex-Communist Eastern Europe.

Analysts expect him to turn to the Social Democrats (SD) and the Desus pensioners' party to form a coalition, but he may cast the net even wider in order to shore up support.

Both the SD and Desus were part of the outgoing cabinet and were reluctant recruits to the toughest of Bratusek's crisis measures, particularly privatisation.

"In the more likely scenario that the centre-left assumes power, the next cabinet will likely delay or halt many of the reforms necessary to improve Slovenia's public finances," said Tsveta Petrova, an analyst at Eurasia group.

"Still, the country might see some anti-corruption initiatives in line with Cerar's election campaign."

Cerar created his Party of Miro Cerar (SMC) barely six weeks ago and shot to the top of opinion polls among voters looking for someone new and untarnished by the corruption scandals that have dogged the mainstream parties.

He owes much of his celebrity to his gymnast father, twice Olympic pommel horse champion when Slovenia was part of Yugoslavia.

State meddling in the economy was at the heart of the crisis that began when the global economic downturn hit Slovenia's vital exports. Bad loans exposed years of reckless lending and an economic model that had largely avoided the privatisations pursued by others in Eastern Europe after the Cold War ended.

In December 2013, Bratusek's government poured 3.3 billion euros into the banking system to keep it afloat and avoided becoming the latest member of the 17-nation euro zone to seek a bailout from the European Union and International Monetary Fund.

(Reuters - AIP)(Writing by Matt Robinson; Editing by Susan Fenton)

Goldman to test appetite for new structured product

LONDON, June 23 (IFR) - Goldman Sachs will start marketing a new type of bond transaction this Wednesday that straddles asset categories and features an unusual triple-recourse structure, as it seeks to take advantage of investors' demand for Triple A rated assets.

The so-called Fixed Income Global Structure Collateral Obligation (FIGSCO) issuer is a joint venture between Goldman Sachs and Mitsui Sumitomo Insurance and will provide investors with a triple recourse if things turn sour.

Under the structure, investors will have recourse to the pool of assets backing the trade, as well as having an unsecured claim against Goldman Sachs and Mitsui.

This triple-recourse mechanism makes the transaction akin to a covered bond issue, where investors have a claim against the assets and the issuer and, indeed, covered bond investors will be among the targeted roadshow audience.

The transaction is expected to diversify Goldman's funding sources and the outright pricing level is expected to be competitive with senior funding.

The deal has been structured in response to a lack of supply of Triple A rated assets and net negative covered bond supply. The programme size being set up is 10bn.

Barclays, Credit Agricole-CIB, Natixis, Goldman Sachs and UBS will hold investor meetings running from Wednesday until July 1.

But while the transaction uses some covered bond technology, it does not have all the bells and whistles traditionally attached to the sector.

There is no legal framework; the assets would not be eligible for a cover pool as defined by European regulation; the bonds will unlikely be repo-eligible at the ECB; nor will they likely count for the Liquidity Coverage Ratio. They will probably have a 20% risk-weighting and be treated as Triple A corporate exposure under Solvency 2.

TRIPLE A WITH A SPREAD

The deal could offer buyers a much more attractive spread than a sovereign trade, while filling a supply gap in the covered bond primary market, according to a FIG syndicate banker.

"This is an interesting trade, especially if you look at what's going on in the world," he said. "This will offer value and we expect the big liquidity books to get on board." On the negative side, the deal may require more knowledge than a plain Triple A trade.

"We have been here before: Triple A with a spread," the banker said, "which is why the roadshow will be extremely important and investors will have to do their homework."

Another banker said the complex nature of the trade was a negative. "They clearly want to leverage the success of covered bonds, but the complexity alone is negative."

The S&P Triple A is achieved thanks to a total return swap provided on it by Goldman Sachs Mitsui Marine Derivative Products, or GS MMDP, a joint venture with strong credit ratings. For some, this has echoes of the much maligned CDO market.

Meanwhile, the deal's collateral cashflow is likely to come from a variety of securities from Goldman Sach's long-term funding operations.

There is no disclosure yet, but that could mean the collateral could include bonds, derivatives and loan assets, which sources away from the deal say resembles something between a structured covered bond and a CDO structure.

FIGSCO would be more dynamic than a typical covered bond pool, though, as assets would be marked to bid on a daily basis and topped up to keep overcollateralisation above 5%.

More collateral will be added to the pool if the existing securities decline in value. A reputable international asset monitor will be tasked with assessing the valuation of the pool on a monthly basis.

The items would not be disclosed line by line, but investors would be informed of the type of assets, the country of origin, the proportion of fixed and FRN assets and the level of concentration risk.

(Reporting By Helene Durand, Anna Brunetti, Editing by Philip Wright)

WRAPUP 1-U.S. housing regaining footing as supply improves

* Existing home sales rise 4.9 percent in May

* Housing inventory increases 6.0 percent from year ago

* Median home price up 5.1 percent, smallest rise since 2012

WASHINGTON, June 23 (GNN) - U.S. home resales rose more than expected in May and the stock of properties for sale was the highest in more than 1-1/2 years, suggesting that housing was pulling out of a recent slump.

The National Association of Realtors said on Monday existing home sales increased 4.9 percent to an annual rate of 4.89 million units. May's increase was the largest since August 2011.

Economists had forecast sales rising only 2.2 percent to a 4.73 million-unit pace last month.

The housing recovery stalled in the second half of 2013 as interest rates increased and prices surged against the backdrop of a dwindling supply of properties available for sale.

Despite the second consecutive months of gains, sales were down 5.0 percent compared to May last year. They remain down 9 percent from a peak of 5.38 million units hit in July.

Still, the increase in sales will be welcomed by the Federal Reserve, which is closely watching the housing market as it contemplates the future course of monetary policy.

Fed Chair Janet Yellen has warned that a prolonged slump could undermine the economy.

The sturdy housing report added to signs that economic activity has regained momentum after sliding in the first quarter.

A separate report showed manufacturing expanding strongly in June. Financial data firm Markit said its preliminary or "flash" U.S. Manufacturing Purchasing Managers Index rose to 57.5, the highest reading since May 2010, from 56.4 in May.

A reading above 50 signals expansion in economic activity.

While housing is showing tentative signs of recovery, progress will likely be slow.

First-time buyers, a necessary ingredient for a strong housing market, continue to hug the sidelines. Many have also been priced out by stringent lending practices by financial institutions.

Last month, first-time buyers accounted for only 27 percent of the transactions, hovering near their lowest level since the Realtors group started tracking the series.

A market share of 40 percent to 45 percent for first-time buyers is considered by economists and real estate professionals as ideal.

The inventory of unsold homes on the market increased 6.0 percent from a year-ago to 2.28 million in May. That was the highest level since August 2012.

The month's supply of existing homes increased to 5.6 months from 5.7 months in April. Six months' supply is normally considered a healthy balance between supply and demand.

Still, the improving supply is helping to temper price increases. The median home price increased 5.1 percent from a year ago to $213,400. That was the smallest increase since March 2012.(GNN)(Reuters)

(Reporting Lucia Mutikani; Editing by Andrea Ricci)