Browsing all articles tagged with bond

Banks In The Dark Over $15 Billion of Promised Rosneft M&A business

Banks that assist Russian oil company Rosneft finance its $55 billion buyout of rival have been left waiting for their payback a share in $15 billion in asset sales projected to follow the deal.

State oil company Rosneft’s takeover of this year aimed to generate a major oil group producing more oil than however it also tightened the Russian government’s grip on the country’s energy sector.

The asset sales promised by Rosneft Chief Executive Igor Sechin would offload less-profitable businesses to turn the company into the major oil player the CEO has stated he wants it to be. The delay demonstrate Rosneft has a lot on its plate integrating and that the sales are on the back burner.

Rosneft had dangled the juicy divestment mandates at the banks in exchange for a $29.8 billion loan the largest in Russia’s history on good terms, all the lending banks are waiting. We thought asset sales and refinancing bonds would kick start straight following the closing.

Rosneft’s slow motion is annoying the banks as they would earn fat fees from advising the oil giant on the asset sales this year, which would assist boost M&A revenues in an otherwise arid deal making landscape.

M&A activity across all sectors is losing 7 percent in Europe, Africa and Middle East since January partly due to the impact of the euro zone crisis on business confidence.

Banks that uphold big balance sheets throughout the financial crisis have been hoping to use this muscle to win lucrative M&A advisory business from competitor which had to shrink partly to meet tough European capital rules.

Banks frequently use their balance sheets to offer cheap loans to corporate clients to secure higher margin business such as share or bond issues or M&A work.

Big balance sheets helped Deutsche Bank and Barclays to achieve number 2 and 3 rankings in M&A league tables previous year, challenging US rival Goldman Sachs which had the top slot.


ECB Cuts Interest Rates, Open to Further Action

The European Central Bank cut interest rates for the first time in 10 months on Thursday and held out the likelihood of further policy action to hold up the recession hit euro zone economy.

Responding to a fall in euro zone inflation well below its target level and growing unemployment, the ECB lowered its main rate by a quarter percentage point to a record low 0.50 percent.

Mario Draghi, ECB President promising to provide as much liquidity as euro zone banks require well into coming year and to help smaller companies get access to credit, also indicated that some policymakers had pushed for a bigger cut.

He told a news conference after the ECB’s Governing Council met in Bratislava, there was a very, very strong existing consensus towards an interest rate cut. Within that, there was a prevailing consensus for a cut of only 25 basis points.

The ECB was also technically prepared to cut its deposit rate from the current zero percent into negative territory, meaning it would begin charging banks for holding their money overnight.

Such a move could encourage the banks to lend out money rather than hold it at the ECB, although it would also almost certainly have a big impact on banks own operations and major implications for funding and bond markets.

Draghi said the ECB could cope with these, a departure from his prior statements.

There are several unintentional consequences that may stem from this measure, we will address and cope with these consequences if we make a decision to act. And we will again look at this with an open mind and we placed ready to act if needed.

Acknowledging that, the ECB stated it would prime banks with as much liquidity as they need until at least July 2014 and look at ways to enhance lending to smaller companies, which are the lifeblood of Europe’s economies however have been starved of credit in many countries.


Precious Metal Holds Near 1 week Low, ETFs Outflows Persist

Precious metal held near its weakest level in practically a week on Thursday, following declines in holdings of exchange traded funds, equities and other commodities overshadowed the US Federal Reserve’s decision to uphold its loose monetary policy.

Prices fall $225 per ounce between April 12 and 16 on fears of a withdrawal of the Fed’s monetary stimulus and after the International Monetary Fund and the European Central Bank asked Cyprus to sell reserves as part of a bailout deal.

While the Fed’s money-printing to buy assets could stoke inflation, yellow metal has been overwhelmed by fears of sales by central banks and a fall in global bullion ETF holdings to their lowest since September 2009.

However this is unlikely to be sold on the open market. I consider another central bank will be buying it. China’s physical demand is still strong. This morning they are perhaps keeping a lookout to see where the market is going before purchasing.

Precious metal fell $3.05 per ounce to $1,453.69, having shed more than 1 percent in the previous session its largest daily drop since gold’s historic decline in mid-April. It smash a low of $1,439.74 on Wednesday, the weakest since April 25.

Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said that people are more wary as yellow metal has been trading within the same trading band. Moreover, Europe has agreed on a loan deal for Cyprus, and one of the terms state that assets in bullion might be sold.

US gold for June delivery stood at $1,453.70 per ounce, climbed up $7.50.

In its statement subsequent a two-day meeting, the Fed reiterated it would carry on to buy $85 billion worth of bonds each month to support a moderately expanding economy that still has too high an unemployment rate.

Investors are now waiting for US non-farm payrolls report for April scheduled for release on Friday, which will signal the longer term predictions for the Fed’s monetary stimulus.

However instead of rallying on the news, yellow metal tracked other markets lower on renewed doubts over the Chinese and US economies following the latest economic data from both countries elevated doubts about the strength of the global economy.

The US economy is likely to have added 145,000 jobs.

March’s number chop down far short of expectations at 88,000, triggering a sell-off in riskier assets. Precious metal for June delivery added $9.70, or 0.7%, to $1,456 per ounce.

China’s factory sector growth eased in April as new export orders chop down for the first time this year, a private survey showed on Thursday, suggesting the euro zone slump and sluggish US demand may be risks to China’s economic recovery.


Gold Rise to 1 Week High, Central Bank Purchases Hold up

Bullion climbed to its highest in more than a week on Thursday, enhanced by prospects of more central bank buying following a recent steep sell off in the gold, as a firmer euro also underpinned prices.

Turkey and Russia raised their gold reserves in March, the International Monetary Fund stated on Wednesday raising their holdings ahead of the spectacular plunge in prices this month that shocked ardent yellow metal investors and bulls.

Central bank purchases and surging physical demand helped precious metal bounce from a two year trough about $1,321 per ounce hit previous week. However daily outflows from exchange-traded funds, reflecting sagging investor confidence capped gains.

Gold reversed early losses and stood at $1,445.56 per ounce by 0621 GMT, climbed $14.76. It strike a high of $1,447.66 per ounce earlier in the session its loftiest since April 15 the day it posted its largest ever daily slump in dollar terms.

Bullion is torn between an increase in demand for jewellery and coins, and investors in ETFs cutting exposure because they became gradually more convinced the US Federal Reserve will look to end its bullion friendly bond buying programme by the end of 2013 or beginning of 2014.

Joyce Liu, an investment analyst at Phillip Futures in Singapore said if the price breaks above $1,447-$1,450 levels, there will be more upward momentum. If it does not we may see a further dip in precious metal prices.

Premiums for gold bars soared to multi year highs in Asia following a spate of physical buying ran down supplies, with dealers in top consumer India expecting a surge in imports this month.

Holdings of the greatest gold backed ETF, New York’s SPDR Gold Trust slump 0.38 percent on Wednesday from Tuesday, their lowest since late 2009.

Dealer in Singapore said strong physical buying in China is overflowing into Hong Kong. I heard if you have gold bars now people will buy them at $2.50 to $3.00 premiums.

US gold for June delivery climbed more than 1 percent to as high as $1,447.50, its largest since April 15, however some dealers cautioned the current rebound in cash and gold futures was far from sustainable.

Gold futures rise on Thursday in electronic trade, on track for a second consecutive proceed supported by strengthening physical demand for the gold and downbeat US economic figures.


Gold Plunge on Stronger US Greenback, ETF outflows

Yellow metal knock down more than 1 percent on Tuesday as a stronger US dollar put pressure on prices and as the outflow from the world’s leading gold exchange-traded fund known as ETF accelerated and accentuated an investor shift towards equities and other assets.

At the midsession, bullion along with markets in stocks, oil, bonds and other commodities, was roiled temporarily by a bogus report of explosions at the White House. Bullion pulled up off its lows on the fake report.

The early turn down retraced some of gold’s 1.6 percent rally from a day earlier, which was encouraged by strong physical purchases.

Heraeus Precious Metals Management metals trader David Lee said that he believe the whole commodities space came off because of the weak PMI out of Europe and the weak PMI out of China, particularly Germany. That combination is dragging everything from silver to copper to platinum and palladium down. And yellow metal is going down in sympathy as it’s part of the basket.

Traders stated gold prices chop down to session lows in overnight dealings when the US dollar firmed in reaction to weaker April manufacturing statistics from both Germany and China, and then lingered at the lower levels.

Shortly following 1 p.m. (1700 GMT), precious metal prices pulled up off their lows, US government debt prices surged briefly and stocks knock down sharply following a false tweet from the Associated Press stated there had been two explosions at the White House and that President Barack Obama had been injured.

Gold knock down 1.4 percent to a session low of $1,405.44 per ounce and had pared losses to $1,412.70 by 3:14 EDT (1914 GMT), off 0.87 percent. Precious metal has dropped 15 percent this year.

US gold futures for June delivery were losing 0.61 percent at $1,412.30 per ounce.

Traders said gold’s retreat off the one week high it reached a day earlier reproduce investor nervousness regarding holding on to precious metal positions for long. Many yellow metal bulls were caught by surprise a week ago when bullion slid to its biggest-ever daily loss in Greenback terms.

Gold was also under pressure from a strong dollar and bounce back of equity markets following sales of new US single family homes climbed in March, indicating the housing market recovery remains on track.

Commerzbank analyst Carsten Fritsch said that bullion is lower as well as other commodities, including base metals oil and crude, which knock down following weaker than expected economic data out of China and Europe, which gave a boost to the dollar.

In other markets, copper knock down to an 18-month low and crude oil was down nearly 1 percent because data revealed a slowdown in business activity in Germany and China in April. The figures heightened worries over global growth.


Precious Metal Pares losses, However Equities Attract Investors

Precious metal pared early losses on Tuesday as speculators and jewellers looked for good deal, however the yellow metal was under downward pressure following US stocks gained ahead of an earnings season that is expected to illustrate modest growth.

Ronald Leung, chief dealer at Lee Cheong precious metal Dealers in Hong Kong said that he can observe the chart point does not look good. The stock markets and bond are more interesting than gold.

He think $1,585 is the crucial point. If it can break above this level, another bull run or small covering will push up the market to $1,600 per ounce.

Speculators have also slashed their bullion net longs as the yellow metal typically seen as a safe haven asset ignored worries on the Korean peninsula and investors moved their money to equities, looking for better returns, despite concerns regarding the health of the US economy.

Precious gold knock down to as low as $1,569.94 per ounce and stood at $1,576.00 by 0628 GMT, increased $ 2.91. It sink to a 10-month low previous week following an unprecedented monetary stimulus from the Bank of Japan and expect for another European Central Bank rate cut failed to stem heavy selling of bullion by funds.

Yellow metal rallied to an 11 month high in October last year following the US Federal Reserve announced its third round of aggressive economic stimulus, lifting fears the central bank’s money printing to buy assets will stoke inflation. Gold has slumped around 6 percent so far this year following having posted annual gains in the past 12 consecutive years.

George Soros, Institutional investor stated that gold had been destroyed as a safe haven asset, however added that he expects continued central bank buying to support prices.

US gold for June delivery was at $1,576.10 per ounce, climbed $3.60.

Gold future for June delivery added $3, or 0.2%, to $1,575.50 per ounce during Asian trade. The move erased Monday’s loss that left June precious metal at $1,572.50 on the Comex division of the New York Mercantile Exchange.


Gold Rallies as Weak US jobs Statistics Affirms Federal Reserve Easing

Precious metal rallied over 1.5 percent on Friday, its highest one day addition since November, because disappointing US job statistics fueled expectations the Fed will carry on its bullion friendly bond purchases.

The metal break it’s three consecutive days of sharp losses following the Labor Department stated US employers in March hired at the slowest rate in nine months, adding just 88,000 non-farm posts. Heavy bullion short covering and quick losses in US equities also lifted gold prices.

Yellow metal is used by many as a hedge against inflation which can be brought on by central banks monetary stimulus. Gold still lost over 1 percent for the week for one of its sharpest weekly turn down since the start of the year.

The weak jobs statistics condensed the chance the Fed would change its current $85 billion monthly purchases of mortgage backed Treasuries and securities known as qualitative easing in a bid to enhanced economic growth.

Bill O’Neill, partner of commodities investment firm LOGIC Advisors said that the payrolls report gives more credibility to the idea that they are not going to see any reduction in QE3. It’s just a knee-jerk response and he don’t think it necessarily indicates that the market has bottomed out here.

Heavy outflows from precious metal’s exchange traded funds and sharp losses of prominent gold bull John Paulson’s precious metal fund also weighed on investor sentiment.

Bullion accelerated additions throughout the session on the payrolls statistics and was climbed 1.7 percent at $1,579.60 per ounce (1854 GMT), having earlier strike a high at $1,580.80 per ounce.

Trading volume, however was relatively feeble given the sharp rally. Turnover was at about 200,000 lots, in line with its 30 day average.

Yellow metal’s response to the payrolls report was principally strong as previous advances in the labor market had fueled discussion within the US central bank regarding whether to cut back the third round of bond purchases, possibly as soon as this summer.

Gold futures closed more than $20 per ounce higher on Friday, paring their loss for the week because a disappointing US jobs report pressured the US dollar and contributed to a slip in the stock market.

Gold future for June delivery climbed $23.50 or 1.5%, to settle at $1,575.90 per ounce on the Comex division of the New York Mercantile Exchange.


Federal Reserve Doves In No Rush To Scale Back Asset Purchases

Primary supporters of the Fed’s bond buying program are not rushing to scale back the swiftness of purchases as the job market improves.

Charles Evans, the president of the Chicago Federal Reserve Bank and a leading architect of the Fed’s specially loose policy, advice a go-slow approach to making any alteration to the $85 billion per month purchases of mortgage and Treasury’s backed securities.

Charles Evans further said that he assumed this is the summit where we have to be patient and let our policies work.

He further said that he prefer and suppose it is best that we carry on to provide strong confidence that we are going to be doing appropriate accommodative policies to get the economy going another time.

Fed will have to have assured that the economy was on solid footing in the second half of the year prior to changing policy. That could simply mean that we require to work our way through the second half prior to we have sufficient confidence that growth is strong enough.

Some other Fed officials are excited for the Fed to diminish the asset purchases. A few believe the Fed should start narrowing as soon as possible.

The Fed is currently buying $40 billion of mortgage-backed securities and $45 billion in long-term Treasury’s per month. Following a two day conference previous week, Ben Bernanke, Fed Chairman said that the Fed wanted to be convinced that current improvement in the labor market was sustainable prior to imitating the purchases.

William Dudley, the president of the New York Fed said that he expected the fed would ultimately scale back the speed of the purchases.

Although Evans argued that the asset purchases were helping the economy. He can not perceive that those are the bound for doing less.  He want to be really careful regarding the signal that reducing bond buying would be.

Evans stated that he was open-minded and a couple of months of job growth above 300,000 would get his concentration and in February, 236,000 jobs were created.


Cyprus bank Impose Risks Perilous Euro Zone Precedent

A strike imposed on Cypriot bank shareholders by the euro zone has surprised and alarmed bankers and politicians who fright the currency bloc has set a standard that will upset citizens and investors equally.

On Friday, euro zone finance ministers agreed a 10 billion euro which is equal to $13 billion bailout for the suffering Mediterranean island and stated while so much of its debt was rooted in its banks, that sector would have to tolerate a huge part of the burden.

The ECB’s vowed to buy euro zone government bonds in infinite amounts if needed has calmed the stressed currency bloc for the previous five months. Although if investors worried regarding the Cypriot template could be frequent in any future rescues, that calm could be devastated.

Without a bailout Cyprus bank would default, which could loosen the investor confidence promoted by the ECB.

Bankers, Politicians and analysts stated that the tax could weaken banks in other euro zone countries, even though the ministers forced it was a one off and Cyprus represents just 0.2 percent of euro zone economic yield.

Annalisa Piazza, at Newedge Strategy said that the extraordinary move is an extreme measure, and in our outlook it will extend some fright across the EMU margin and we cannot rule out some capital outflows. In the short run we anticipate some effects on margin bond yield spreads and some deteriorating of the euro zone cannot be ruled out.

Euro zone officials made a point of saying they would observe any symbols of money moving out of Cyprus however did not say how they might respond in the event.

Joerg Asmussen, ECB legislator said for us Cyprus is systemically relevant, regardless of the small size of the economy, disorderly developments in Cyprus could weaken the significant growth made in 2012 in stabilizing the euro zone.


Federal Reserve To Hold Course On Stimulus Despite Debate Regarding Risks

Federal Reserve officials will spend much of a conferences during coming week debating the possible risks from the central bank’s stimulus plan, however Chairman Ben Bernanke has previously signaled he believes the costs of inaction are even superior.

The US central bank seems to keep buying $85 billion a month in Treasury bonds and mortgage in an effort to support investment and strengthen a weak economic recovery.

A push of current statistics, from manufacturing and retail sales to employment, has exposed that the economy gathering some steam. Still the unemployment rate remains disturbingly high at 7.7 percent, as low inflation makes policymakers comfortable that there is a lot of scope to let the economy run.

Chairman Ben Bernanke said on March 1 that in the light of the reasonable pace of the recovery and the continued high level of economic limps, dialing back accommodation with the goal to prevent unnecessary risk taking in some areas create its own risks to development, price stability and financial stability.

The US central bank will expectedly nod to the recovering economic conditions when it concerns a report at 2 p.m. (1800 GMT) on Wednesday at the end of its two day conference. In prediction complementary the declaration, it is expected to smack up projections for economic growth and lower forecasts for unemployment.

However it is also possible to renovate its promise to keep buying bonds until the employment positions are improves considerably.

It is a view that is not without resistance within the central bank. A number of Fed officials have become ever more vocal regarding the program’s possible side effects, including the likelihood of financial instability and asset bubbles or future inflation.