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EURO CORP-Credit spreads tighten, Lafarge sells 2-part bond
Reuters: [2008-05-19 17:21:00]
By Natalie Harrison
LONDON, May 19 (Reuters) - French cement maker Lafarge brought a two-part euro bond sale to the market on Monday, as credit spreads tightened further despite continued debate about whether the credit crisis was over the worst.
By 1503 GMT, the Markit iTraxx Crossover index <ITCRS5EA=GFI>, made up of 50 mostly "junk"-rated credits, was at 401 basis points according to data from Markit, 14 basis points tighter versus late on Friday.
The investment-grade iTraxx Europe index <ITRAC5EA=GFI> was at 66 basis points, 2 basis points tighter.
"We're tighter in the absence of any big news and credit is using stocks as a guide of where to go, although volumes are light there as well. We're definitely heading into the (quiet) summer," a trader said.
Credit spreads have staged a strong rally since the cut-price sale of Bear Stearns <BSC.N> in March, but uncertainty is growing as to whether the tightening has been overdone, with some strategists surprised by how long the rally has lasted.
European Central Bank President Jean-Claude Trichet warned on Monday the end of the credit crunch was not in sight and that the world was experiencing an "ongoing and very significant market correction".
"I think what Trichet said is probably true. I think U.S. politicians have an incentive to say the worst is over as there is an election coming up," the trader said.
"I don't think the market really believes the worst is over, apart from in financials maybe. But I do think we are going to have to wait for the third quarter before we start to see a bigger impact on the consumer and corporates."
Some fund managers remain relatively upbeat, however.
James Gledhill, head of fixed income at New Star Asset Management, for example, said financial bonds still offer good value.
"We're pretty positive about credit spreads and we think we can perform well," said Gledhill on a teleconference on Monday.
"But I would not want people to get the message that we are blinkered, with rose-tinted glasses, and think the economy is going to be perfect from now on.
"We think we are going to see a weak economy but, because of how weak credit has been, even in that environment we think credit can perform."
In terms of data on Monday, the Conference Board's Leading Economic Indicators showed the U.S. economy was weak but has sidestepped a recession. The news helped lift U.S. stocks as fears about the economic outlook eased.
Other key data this week includes Germany's ZEW economic sentiment index on Tuesday and the Ifo index of German business sentiment on Wednesday [ECI/EURO].
In the U.S., the highlights in a relatively quiet week for economic releases are the producer price index on Tuesday and existing home sales on Friday [ECI/US].
Elsewhere on Monday, the primary market saw a new bond sale from Lafarge.
The French company set final guidance on a 750 million euro ($1.17 billion), three-year bond at mid-swaps plus 125 basis points, and a seven-year bond of the same size at mid-swaps plus 170 basis points [ID:nL1961991]. (Reporting by Natalie Harrison; editing by David Hulmes)
((natalie.harrison@reuters.com; +44 207 542 2687; Reuters Messaging: natalie.harrison.reuters.com@reuters.net))
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Keywords: MARKETS BONDS EUROCORP
UPDATE 1-Ukraine postpones chemical plant sell-off -PM
Reuters: [2008-05-19 13:23:00]
(adds details, quotes)
By Yuri Kulikov
KIEV, May 19 (Reuters) - Ukraine's government, long at odds over economic policy with the country's president, has postponed the privatisation auction of a major chemical plant that was due to take place on Tuesday, Prime Minister Yulia Tymoshenko said.
"In order to protect people, we have agreed that all privatisation events scheduled for tomorrow are being postponed," Tymoshenko told a news conference on Monday after an extraordinary cabinet meeting.
Tymoshenko had planned the selloff of the Odessa Port plant for Tuesday in the government's offices.
President Viktor Yushchenko has barred the sale three times, including last week by decree, on grounds that the plant was of strategic importance.
He also said a sale must not include an adjoining pipeline and export terminal, saying any buyer would secure control over it and could exclude other producers.
The plant near the Black Sea port of Odessa has been one of the flashpoints of confrontation pitting Yushchenko against Tymoshenko as Ukrainian politicians gear up for a presidential election expected early in 2010.
The State Property Fund last week said three companies - Yevrokhim from Russia, Nortima from Ukraine and Nitrofert from Estonia - had proposed taking part in the auction. Ministers had set a starting price of almost $600 million.
Tymoshenko backed Yushchenko in the 2004 "Orange Revolution" protests that swept pro-Western liberals to power in 2004, but was sacked as his first prime minister within seven months. Restored to office last December, she and Yushchenko have since sniped constantly over the economy.
Tymoshenko said on Monday she had acted to prevent any breakup of the liberal "orange" coalition in parliament which underpins her government.
The prosecutor general said earlier a criminal case had been opened against Andriy Portnov, appointed by the government to head Ukraine's privatisation authority, the State Property Fund.
Portnov was accused of attempting to conduct a privatisation illegally. Other civil servants were also named in the case.
Tymoshenko said the proceedings were aimed at her and her government. "This criminal case has been launched against me, the government and against honest privatisation," she said. (Writing by Ron Popeski) ((Kiev bureau; +380 44 244 9150 Reuters Messaging:ronald.popeski@reuters.com@reuters.net))
Keywords: UKRAINE PRIVATISATION/
Alitalia denies having trouble paying staff wages
Reuters: [2008-05-19 12:06:00]
ROME, May 19 (Reuters) - Alitalia SpA <AZPIa.MI> denied it was having difficulty paying its staff as the troubled airline waits to see if any new investors can save it from bankruptcy.
Comments on television by Antonello Soro, a centre-left deputy, that Italy's flagship carrier was having trouble paying salaries were "totally groundless," the company said in a statement on Monday.
Silvio Berlusconi's government could name a new chief for Alitalia this week to replace former chairman Maurizio Prato, who resigned last month after the airline's sale to Air France-KLM <AIRF.PA> collapsed, union sources said on Friday.
Prato's replacement will hold both the chairman and the chief executive titles at the state-controlled airline, which is close to bankruptcy and has been unable to find a buyer despite being on the block for more than a year.
Alessandro Benetton on Monday reiterated that his family would look favourably on an Italian project to save the company, if one emerged.
"We would look very favourably at an Italian project, you absolutely need a partner from the sector who has the technical and operating competence," he said on the margins of a conference in Milan.
"If other Italians grouped around this, we would certainly give it a good look," he added. (Reporting by Gavin Jones; Additional reporting by Cristina Carlevaro in Milan; Editing by David Holmes) ((gavin.jones@reuters.com; +39-06-8522-4232; Reuters messaging: gavin.jones.reuters.com@reuters.net))
Keywords: ALITALIA/WAGES
EURO CORP-Spreads pare gains, track U.S. stock futures
Reuters: [2008-05-19 10:37:00]
By Richard Barley
LONDON, May 19 (Reuters) - European credit spreads pared early gains as U.S. stock futures turned negative and debate persisted over whether the credit crisis was drawing to a conclusion.
By 0750 GMT, the investment-grade Markit iTraxx Europe index <ITRAC5EA=GFI> was at 67.75 basis points, according to data from Markit, 0.25 basis points tighter than late Friday.
The iTraxx Crossover index <ITCRS5EA=GFI>, made up of 50 mostly "junk"-rated credits, was at 411 basis points, 4 basis points tighter.
The indexes rallied throughout last week, returning close to the lows for the current series 9 iTraxx contracts, as U.S. economic data came in mostly better than expected .
"We're slightly wider from the open now," said a trader in London. "We're tracking futures."
Analysts were split on the path of spreads.
"We see little to reverse the current tightening trend in the week ahead," Suki Mann, credit strategist at SG CIB, wrote in a note to clients. "The European earnings season is winding down, and while the primary pipeline still looks solid, we do not think supply will derail the credit markets.
"Protection is oversold -- but not as oversold as it was at the beginning of Q4 last year. So we suspect the main contracts can continue to tighten in the week ahead."
Strategists at UniCredit (HVB) acknowledged that the recent recovery in credit derivatives markets had lasted longer than they expected, but warned that predictions of the end of the credit crisis could yet be premature.
"A disappointment on the macro front is the most obvious potential source of further adversity for credit markets," wrote Jochen Felsenheimer, head of credit strategy. "The latest improvement of sentiment looks to us as wishful thinking rather than marking the spread reversal in credit markets."
He advised investors to consider increasing short positions with the iTraxx indexes at these levels or to buy both cash bonds and credit protection -- a so-called negative basis trade.
Jean-Claude Trichet, president of the European Central Bank, warned on Monday that the world was experiencing an "ongoing and very significant market correction".
In the cash bond market, the FTSE Euro Corporate Bond Index <EUCRAVSPG=> showed investment-grade corporate bonds in euros yielding an average 111.2 basis points more than similarly dated government bonds, 0.6 basis points less on the day.
In underlying government bond markets, the yield on the interest rate sensitive two-year Schatz <EU2YT=RR> was 3.966 percent, 2.8 basis points less on the day. The 10-year Bund <EU10YT=RR> yielded 4.165 percent, 1.3 basis points less.
The 10-year euro swap rate <EURAB6L10Y=> was 4.577 percent.
(editing by Elizabeth Fullerton) ((richard.barley@thomsonreuters.com; +44 20 7542 7770; Reuters Messaging rm://richard.barley.reuters.com@reuters.net))
* Reuters clients can view related news by double clicking on:
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[DBT] Debt reports
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[HYD] High-yield bonds
[ABS] Asset-backed securities
[CDV] Credit derivatives news
[AAA] Credit ratings news
[TOP/DBT] Top fixed income news
[TOP/CREDIT] Top credit news
Other market reports:
[GVD/EUR] Euro government debt report
[US/] U.S. Treasury market report
[USC/] U.S. corporate bond report
[.EU] European stock market report
[.L] UK stock market report
[.N] Wall Street report
Guides:
For prices or rates, double click on: <EUROBONDS>
For credit ratings, double click on: <RRS0001>
For credit derivatives, double click on <CDSINDEX>
For top corporate bond issuers, double click on <0#TOPISSUER>
Keywords: MARKETS BONDS EUROCORP
CHRONOLOGY-Timeline of Microsoft's pursuit of Yahoo
Reuters: [2008-05-18 23:58:00]
May 18 (Reuters) - Microsoft Corp <MSFT.O> said on Sunday it is in contact with Yahoo Inc <YHOO.O> about an alternative deal that would not involve a full acquisition.
Such a move could save Yahoo from fighting a proxy battle with financier Carl Icahn.
Following is a timeline of key events in Microsoft's pursuit of Yahoo, stretching back more than two years, when Yahoo's financial results began weakening and private talks started in which Microsoft sought to merge with the web pioneer.
Early 2006 - Yahoo begins to report a string of disappointing quarterly results that stretches over the next two years, reflecting competitive missteps by the company, market share gains by rival Google Inc <GOOG.O>, changes in the online advertising landscape and weakening spending in some ad segments.
Late 2006/early 2007 - Microsoft and Yahoo discuss various partnerships, including a merger.
2007
February - Yahoo, under the leadership of previous Chief Executive Terry Semel, tells Microsoft it is not the right time to discuss a takeover, as the Yahoo board sees great potential from new advertising technology and internal changes.
June 12 - A strong minority of Yahoo shareholders challenges Yahoo's direction, as CEO Semel comes under fire. Nearly a third of votes cast at the company's annual shareholder meeting oppose some of Yahoo's directors.
June 18 - Yahoo co-founder Jerry Yang takes over as chief executive as Semel steps aside. Semel remains Yahoo chairman.
2008
Jan. 31 - Microsoft CEO Steve Ballmer makes a $44.6 billion, $31-per-share cash-and-stock takeover offer to Yahoo's board. Semel resigns as chairman and is replaced by Roy Bostock.
Feb. 1 - Microsoft makes the offer public. Its shares fall 6.6 percent to $30.45; Yahoo shares rise 48 percent to $28.38.
Feb. 11 - Yahoo rejects the Microsoft offer as too low.
Feb. 13 - MySpace owner News Corp <NWSa.N> and Yahoo discuss a tie-up, according to a source.
March 18 - Yahoo gives financial forecasts for the next two years, in an effort to prove it is worth more than Microsoft bid.
March 28 - One of seven face-to-face meetings takes place between the "senior-most" executives of Microsoft and Yahoo to discuss the bid. Yahoo asks how Microsoft would handle regulatory issues, including antitrust concerns, tied to a merger.
April 4 - People familiar with the matter say Microsoft is evaluating its bid for Yahoo because the Internet company may have lost value since Microsoft first made its offer.
April 5 - Microsoft sets a three-week deadline for Yahoo to negotiate and reach a deal or face a proxy fight and a possible cut to the bid.
April 7 - Yahoo again rejects Microsoft and says it is open to a higher price.
April 9 - Yahoo says it will test Google search ads on its site, which could be more lucrative than selling its own search ads. Sources say Yahoo and Time Warner Inc <TWX.N> are in parallel talks to join Time Warner's AOL and Yahoo.
April 15 - At another meeting between between Yahoo and Microsoft executives and their financial advisers, Yahoo asks about Microsoft's integration plans and Yahoo raises a list of "key non-price deal terms" it believes are critical.
April 26 - Microsoft's deadline to Yahoo passes.
April 30 - Ballmer flies to California for talks with Yahoo CEO Yang.
May 3 - Yang meets Ballmer in Seattle. Microsoft raises its offer to $33 per share, or $47.5 billion. That is about $5 billion over the value of the previous offer at the time. Yahoo wants $37 per share, or about $5 billion more. Late in the day, Ballmer calls off the talks.
May 15 - Carl Icahn proposes a 10-member dissident board slate for election at Yahoo's annual shareholder meeting in July. Icahn says he now holds a 4.3 percent stake in Yahoo, including 9.9 million shares and 49 million call options. Yahoo Chairman Bostock replies to Icahn that "none of the alternatives we are considering would preclude us from entering into a transaction with Microsoft or any other party."
May 18 - Microsoft says it has raised with Yahoo an "alternative" deal that would not involve the software maker buying all of the web company but says it could reconsider pursuing a full acquisition.
July 3 - Yahoo's annual meeting is planned for July 3.
Sources: Letters between Microsoft, Yahoo and Icahn; Reuters stories. (Compiled by Eric Auchard and Peter Henderson; Editing by Braden Reddall and Gerald E. McCormick) ((E-mail: eric.auchard@thomsonreuters.com)) Keywords: YAHOO MICROSOFT/TIMELINE
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