Why has the rouble rebounded? | beyondbrics:
"The Russian rouble has moved from above 70 to the US dollar in late January to around 50 in mid-April, making it one of the best-performing currencies in the world this year. This is particularly remarkable as the dollar has been quite strong during this period, continuing to appreciate against the euro. So, what is behind this sudden rouble strength?
For most of last year, the rouble traded on the oil price and geopolitics, so it could be assumed that either of those two factors has changed materially. The oil price has moved from $56 to $60 per barrel this year, and the so-called Minsk II agreement was reached on February 12. Is that enough to explain the recovery? Probably not, especially considering that the oil price has been flat over the past two months while the rouble rallied the most. The rouble thus seems to have de-correlated from the oil price, at least partially and temporarily. And there has been fairly broad international scepticism over the Minsk II agreement (which we do not share by the way), making it difficult to believe that that is the reason behind the rouble’s strength.
But what about the Russian economy in general and monetary policies in particular? The fact that the economy stayed in positive territory in 2014 – 4Q14 growth came in better than expected at 0.3 per cent – only gives weak comfort, as the more recent investment and consumption data imply the economy is decelerating rapidly, with the Economics Ministry estimating that growth fell 2.3 per cent y-o-y in February. More importantly for the currency, inflation accelerated more than anticipated, from 11.4 per cent to 16.7 per cent, and the policy rate was slashed by 300 bp, to 14 per cent, during the first quarter. This is hardly a combination that suggests currency strength."
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Friday, 17 April 2015
Ukraine’s creditors are pushing it towards default | beyondbrics
Ukraine’s creditors are pushing it towards default | beyondbrics:
"After a lull of several weeks, an upsurge of fighting near Donetsk is once again threatening Ukraine’s fragile ceasefire. A resumption of the Russian-backed offensive had been widely expected to follow last weekend’s Orthodox Easter celebrations, although Vladimir Putin’s precise intentions remain unclear. Is this the next phase of a slow-motion land grab, with Mariupol possibly the next target, or is it just a means of ratcheting up the pressure in an effort to force new concessions? Either way, Ukraine is going to need a lot more international support to weather the crisis.
Unfortunately, the armed separatists and their Russian sponsors are not the only groups of militant rejectionists working to undermine the Ukrainian authorities. On Wall Street and in the City of London, other kinds of insurgents are digging in for a fight. They can be found among the creditors holding around $20bn of Ukraine’s sovereign debt, including groups of speculators who have started acquiring debt on the cheap in the hope of making large short-term profits. Together they form the backbone of opposition to an IMF-backed restructuring plan intended to save Ukraine $15bn in medium-term debt servicing costs, without which the country is likely to become insolvent.
The deadline for an agreement falls at the end of May and the parties meet in Washington tomorrow when Natalie Jaresko, Ukraine’s finance minister, and the IMF are expected to reiterate to bondholders their view that restructuring is the only way to make Ukraine’s debt position sustainable. Jaresko wants to begin negotiations on a package that would include a mix of payment rescheduling, lower interest rates and a reduction in the face value of Ukraine’s bonds – a haircut, in industry parlance. In response, Ukraine’s largest creditor, Franklin Templeton Investments, has sought to pre-empt talks by rejecting a haircut. In what looks like an attempt to hijack the process, it has formed its own ad hoc committee intended to represent the interests of creditors. Departing from accepted practice, it has refused to reveal the committee’s membership, making it impossible for Ukraine to know who it is dealing with.
A critical first battle involving the proposed rescheduling of debts owed by the State Export-Import Bank of Ukraine (Ukreximbank) suggests a hardening of attitudes among some creditors. The bank’s debts are included in the IMF’s restructuring requirements but a bondholder’s meeting called to discuss a three-month extension on repayments due at the end of April recently ended without agreement. Again, the unwillingness to reschedule payments is in effect a refusal to begin negotiations on full restructuring. Blame is being attributed to hedge funds that have been hoovering up bonds at forty or fifty cents in the dollar. Their goal is to secure windfall profits by forcing repayment in full, even though this would wreck the IMF’s support programme."
'via Blog this'
"After a lull of several weeks, an upsurge of fighting near Donetsk is once again threatening Ukraine’s fragile ceasefire. A resumption of the Russian-backed offensive had been widely expected to follow last weekend’s Orthodox Easter celebrations, although Vladimir Putin’s precise intentions remain unclear. Is this the next phase of a slow-motion land grab, with Mariupol possibly the next target, or is it just a means of ratcheting up the pressure in an effort to force new concessions? Either way, Ukraine is going to need a lot more international support to weather the crisis.
Unfortunately, the armed separatists and their Russian sponsors are not the only groups of militant rejectionists working to undermine the Ukrainian authorities. On Wall Street and in the City of London, other kinds of insurgents are digging in for a fight. They can be found among the creditors holding around $20bn of Ukraine’s sovereign debt, including groups of speculators who have started acquiring debt on the cheap in the hope of making large short-term profits. Together they form the backbone of opposition to an IMF-backed restructuring plan intended to save Ukraine $15bn in medium-term debt servicing costs, without which the country is likely to become insolvent.
The deadline for an agreement falls at the end of May and the parties meet in Washington tomorrow when Natalie Jaresko, Ukraine’s finance minister, and the IMF are expected to reiterate to bondholders their view that restructuring is the only way to make Ukraine’s debt position sustainable. Jaresko wants to begin negotiations on a package that would include a mix of payment rescheduling, lower interest rates and a reduction in the face value of Ukraine’s bonds – a haircut, in industry parlance. In response, Ukraine’s largest creditor, Franklin Templeton Investments, has sought to pre-empt talks by rejecting a haircut. In what looks like an attempt to hijack the process, it has formed its own ad hoc committee intended to represent the interests of creditors. Departing from accepted practice, it has refused to reveal the committee’s membership, making it impossible for Ukraine to know who it is dealing with.
A critical first battle involving the proposed rescheduling of debts owed by the State Export-Import Bank of Ukraine (Ukreximbank) suggests a hardening of attitudes among some creditors. The bank’s debts are included in the IMF’s restructuring requirements but a bondholder’s meeting called to discuss a three-month extension on repayments due at the end of April recently ended without agreement. Again, the unwillingness to reschedule payments is in effect a refusal to begin negotiations on full restructuring. Blame is being attributed to hedge funds that have been hoovering up bonds at forty or fifty cents in the dollar. Their goal is to secure windfall profits by forcing repayment in full, even though this would wreck the IMF’s support programme."
'via Blog this'
Iran car lovers hope for nuclear deal dividends - FT.com
Iran car lovers hope for nuclear deal dividends - FT.com:
"A tongue-in-cheek TV report this year highlighted just how fed up Iranians are with one of their most well-used cars. A Painful Choice — a segment on a news programme — showed several dozen Kia Prides lined up at the border for export to Iraq.
“Now for Iraqi people, the question is whether Pride is more dangerous than Daesh (Isis),” the reporter joked, referring to the Islamic State of Iraq and the Levant, the jihadi movement that has overrun swaths of Syria and Iraq.
Tough western sanctions mean Iranians looking to splash out on a new car have few options. The Kia Pride, made in Iran by Saipa, is one of them. It accounts for 40 per cent of the cars on the country’s roads — and is increasingly becoming a national joke."
'via Blog this'
"A tongue-in-cheek TV report this year highlighted just how fed up Iranians are with one of their most well-used cars. A Painful Choice — a segment on a news programme — showed several dozen Kia Prides lined up at the border for export to Iraq.
“Now for Iraqi people, the question is whether Pride is more dangerous than Daesh (Isis),” the reporter joked, referring to the Islamic State of Iraq and the Levant, the jihadi movement that has overrun swaths of Syria and Iraq.
Tough western sanctions mean Iranians looking to splash out on a new car have few options. The Kia Pride, made in Iran by Saipa, is one of them. It accounts for 40 per cent of the cars on the country’s roads — and is increasingly becoming a national joke."
'via Blog this'
Saudi firm, Bunge to buy majority stake in Canadian grain handler | Reuters
Saudi firm, Bunge to buy majority stake in Canadian grain handler | Reuters:
"Saudi Arabia's state-owned agricultural investment firm and U.S. grain trader Bunge Ltd will buy a controlling stake in Canadian grain handler CWB in a bold move by the Gulf state to secure food supplies.
G3 Global Grain Group, a joint venture of Bunge and Saudi Agricultural and Livestock Investment Co (SALIC), said on Wednesday it will buy a 50.1 percent stake in CWB for C$250 million ($201 million).
The remaining stake will be held in trust for Canadian farmers with G3 having an option to buy them out after seven years. Farmers owned an equity stake in CWB, formerly known as the Canadian Wheat Board, until the government stripped it of its Western Canadian grain monopoly in 2012."
'via Blog this'
"Saudi Arabia's state-owned agricultural investment firm and U.S. grain trader Bunge Ltd will buy a controlling stake in Canadian grain handler CWB in a bold move by the Gulf state to secure food supplies.
G3 Global Grain Group, a joint venture of Bunge and Saudi Agricultural and Livestock Investment Co (SALIC), said on Wednesday it will buy a 50.1 percent stake in CWB for C$250 million ($201 million).
The remaining stake will be held in trust for Canadian farmers with G3 having an option to buy them out after seven years. Farmers owned an equity stake in CWB, formerly known as the Canadian Wheat Board, until the government stripped it of its Western Canadian grain monopoly in 2012."
'via Blog this'
IAG pulls out of trade body over Gulf carriers spat - FT.com
IAG pulls out of trade body over Gulf carriers spat - FT.com:
"International Airlines Group has walked away from the European airlines trade body because of a spat over the threat posed by the fast-expanding Gulf carriers.
The parent company of the UK flag carrier British Airways and the Spanish airline Iberia said on Thursday that it had pulled out because of a difference of opinion with other members of the Association of European Airlines.
Qatar Airways became the largest shareholder in IAG when it bought a near 10 per cent stake in January, and the UK-based airline group has taken a conciliatory line with the Gulf carriers led by Emirates Airline."
'via Blog this'
"International Airlines Group has walked away from the European airlines trade body because of a spat over the threat posed by the fast-expanding Gulf carriers.
The parent company of the UK flag carrier British Airways and the Spanish airline Iberia said on Thursday that it had pulled out because of a difference of opinion with other members of the Association of European Airlines.
Qatar Airways became the largest shareholder in IAG when it bought a near 10 per cent stake in January, and the UK-based airline group has taken a conciliatory line with the Gulf carriers led by Emirates Airline."
'via Blog this'
Emirates Airline to replace GE-Pratt & Whitney with Rolls-Royce as engine supplier | The National
Emirates Airline to replace GE-Pratt & Whitney with Rolls-Royce as engine supplier | The National:
"Emirates Airline is expected to announce that it will take Rolls-Royce engines for up to 50 of its A380 aircraft, replacing the previous supplier GE-Pratt & Whitney, a source familiar with the matter told The National.
Emirates will buy the Rolls-Royce-made Trent 900 to power the superjumbos it ordered from Airbus at the Dubai Airshow in November 2013, the source said.
After the deal, Emirates will operate its A380 fleet, the world’s largest, with a mix of Trent 900s and GE-Pratt Whitney’s Engine Alliance GP7200s."
'via Blog this'
"Emirates Airline is expected to announce that it will take Rolls-Royce engines for up to 50 of its A380 aircraft, replacing the previous supplier GE-Pratt & Whitney, a source familiar with the matter told The National.
Emirates will buy the Rolls-Royce-made Trent 900 to power the superjumbos it ordered from Airbus at the Dubai Airshow in November 2013, the source said.
After the deal, Emirates will operate its A380 fleet, the world’s largest, with a mix of Trent 900s and GE-Pratt Whitney’s Engine Alliance GP7200s."
'via Blog this'
Amlak ready to resume DFM trading after six-year absence | The National
Amlak ready to resume DFM trading after six-year absence | The National:
"Amlak Finance said its shareholders had approved a plan to readmit its shares for trading on the Dubai Financial Market after an absence of six years.
The Sharia-compliant mortgage lender, which is 45 per cent owned by Emaar Properties, announced that shareholders at its annual general meeting on Thursday gave the go-ahead for readmission.
Ratification by shareholders is one of the requirements to win final regulatory approval from the Securities and Commodities Authority for Amlak’s shares to resume trading."
'via Blog this'
"Amlak Finance said its shareholders had approved a plan to readmit its shares for trading on the Dubai Financial Market after an absence of six years.
The Sharia-compliant mortgage lender, which is 45 per cent owned by Emaar Properties, announced that shareholders at its annual general meeting on Thursday gave the go-ahead for readmission.
Ratification by shareholders is one of the requirements to win final regulatory approval from the Securities and Commodities Authority for Amlak’s shares to resume trading."
'via Blog this'
ADIA sells 6.6% Deutsche Annington stake after stock climbs | GulfNews.com
ADIA sells 6.6% Deutsche Annington stake after stock climbs | GulfNews.com:
"Abu Dhabi Investment Authority (ADIA) sold its 6.6 per cent stake in Deutsche Annington Immobilien SE, according to an emailed statement. ADIA, the world’s second-biggest sovereign wealth fund, sold 23.5 million shares there were offered at €30.80 (Dh121.01, $32.91) to market price each, according to a term sheet obtained by Bloomberg. Deutsche Annington is Germany’s biggest residential landlord, with 350,000 apartments in cities including Berlin and Dortmund. Bank of America Corp was the sole bookrunner on the share sale, the terms showed. Sovereign wealth funds are among the biggest investors in Germany’s housing sector. They have sought to take advantage of rising home prices and rents."
'via Blog this'
"Abu Dhabi Investment Authority (ADIA) sold its 6.6 per cent stake in Deutsche Annington Immobilien SE, according to an emailed statement. ADIA, the world’s second-biggest sovereign wealth fund, sold 23.5 million shares there were offered at €30.80 (Dh121.01, $32.91) to market price each, according to a term sheet obtained by Bloomberg. Deutsche Annington is Germany’s biggest residential landlord, with 350,000 apartments in cities including Berlin and Dortmund. Bank of America Corp was the sole bookrunner on the share sale, the terms showed. Sovereign wealth funds are among the biggest investors in Germany’s housing sector. They have sought to take advantage of rising home prices and rents."
'via Blog this'
Arabtec chairman and founder set to leave after board omission | GulfNews.com
Arabtec chairman and founder set to leave after board omission | GulfNews.com:
"Arabtec Holding Co Chairman Khadem Al Qubaisi and founder Riad Kamal are poised to leave the construction company after their names were omitted from a list of nominees for the board.
Nabil Al Kendi was also excluded from the list of 16 people seeking membership of the board at the UAE’s largest publicly-traded contractor, according to a regulatory filing posted on Dubai bourse’s website on Thursday.
Al Qubaisi was at the helm of Arabtec when it triggered a crash in Dubai’s stock in June after a dispute with Chief Executive Officer Hasan Ismaik led to his resignation and the subsequent dismissal of top managers. Al Qubaisi is the managing director of International Petroleum Investment Co, known as IPIC. He’s also chairman of Aabar Investments PJSC, which owns 36.11 per cent of Arabtec."
'via Blog this'
"Arabtec Holding Co Chairman Khadem Al Qubaisi and founder Riad Kamal are poised to leave the construction company after their names were omitted from a list of nominees for the board.
Nabil Al Kendi was also excluded from the list of 16 people seeking membership of the board at the UAE’s largest publicly-traded contractor, according to a regulatory filing posted on Dubai bourse’s website on Thursday.
Al Qubaisi was at the helm of Arabtec when it triggered a crash in Dubai’s stock in June after a dispute with Chief Executive Officer Hasan Ismaik led to his resignation and the subsequent dismissal of top managers. Al Qubaisi is the managing director of International Petroleum Investment Co, known as IPIC. He’s also chairman of Aabar Investments PJSC, which owns 36.11 per cent of Arabtec."
'via Blog this'
U.S. Oil Glut Sending a Bad Omen to Europe’s Thriving Refiners - Bloomberg Business
U.S. Oil Glut Sending a Bad Omen to Europe’s Thriving Refiners - Bloomberg Business:
"The biggest crude glut in the U.S. since the 1930s means one thing for European refiners: The highest margins in eight years won’t last.
U.S. plants, ending seasonal maintenance, will push down European prices with rising exports, particularly of diesel and jet fuel, as they eat into a domestic stockpile of almost half a billion barrels of crude. The shipments will help reduce the continent’s third-quarter processing margins by about 42 percent, predicts Wood Mackenzie Ltd.
Europe’s refineries profited this year from slumping oil prices and increased demand from West Africa, Latin America and even the U.S. Their revival will be short-lived. As much as 1.4 million barrels a day of capacity in Europe could be forced to shut by 2020 because of higher cost, according to McKinsey & Co."
'via Blog this'
"The biggest crude glut in the U.S. since the 1930s means one thing for European refiners: The highest margins in eight years won’t last.
U.S. plants, ending seasonal maintenance, will push down European prices with rising exports, particularly of diesel and jet fuel, as they eat into a domestic stockpile of almost half a billion barrels of crude. The shipments will help reduce the continent’s third-quarter processing margins by about 42 percent, predicts Wood Mackenzie Ltd.
Europe’s refineries profited this year from slumping oil prices and increased demand from West Africa, Latin America and even the U.S. Their revival will be short-lived. As much as 1.4 million barrels a day of capacity in Europe could be forced to shut by 2020 because of higher cost, according to McKinsey & Co."
'via Blog this'
MIDEAST STOCKS-Strong oil lifts Gulf; Dubai property stocks surge | Reuters
MIDEAST STOCKS-Strong oil lifts Gulf; Dubai property stocks surge | Reuters:
"Oil's rally supported stock markets across the Gulf on Thursday, while Dubai property stocks surged after the emirate's biggest listed real estate developer announced a bullish 2015 profit forecast.
Brent crude hit 2015 highs above $63 per barrel after a rally of more than 5 percent in the previous session, and analysts said more price rises were likely despite market oversupply. The price pulled back slightly later in the day but stayed above $62.
The main Saudi stock index climbed 1.0 percent to 9,251 points as petrochemicals giant Saudi Basic Industries , which is poised to benefit from oil's rebound, jumped 2.1 percent."
'via Blog this'
"Oil's rally supported stock markets across the Gulf on Thursday, while Dubai property stocks surged after the emirate's biggest listed real estate developer announced a bullish 2015 profit forecast.
Brent crude hit 2015 highs above $63 per barrel after a rally of more than 5 percent in the previous session, and analysts said more price rises were likely despite market oversupply. The price pulled back slightly later in the day but stayed above $62.
The main Saudi stock index climbed 1.0 percent to 9,251 points as petrochemicals giant Saudi Basic Industries , which is poised to benefit from oil's rebound, jumped 2.1 percent."
'via Blog this'
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