QUOTE OF THE DAY
“The growth slowdown this year will be faster than many expect.”
Diana Choyleva, Lombard Street Research economist, on China’s economy Article, 1D
Sale try flops; Entergy to keep nuke plants
Entergy Corp. has ended efforts to shed nuclear power plants that sell electricity on wholesale markets, Chief Executive Officer Leo Denault said.
Entergy didn’t receive any offers that would make a sale preferable to keeping the plants, he said on the New Orleans-based company’s earnings conference call Tuesday.
Denault said in November that the company had been trying for several years to separate its wholesale commodities business, which owns and operates six nuclear-power plants, from the utility.
The plants include Indian Point, north of New York City, and Vermont Yankee, which Entergy has said it will close this year after failing to find a buyer.
Portugal raises $4 billion in bond sale
LISBON, Portugal - Bailed-out Portugal took a big step toward gaining full access to credit markets by raising about $4 billion from a sale of 10-year bonds Tuesday.
The bonds are considered a benchmark of market faith, and Portugal’s ability to tap investors for cash over a long-term horizon is a sign that confidence in the country’s economic future is returning.
Portugal, one of 18 European Union countries using the euro currency, needed a $106 billion rescue in 2011 to avoid bankruptcy as jittery investors refrained from lending it money. The bailout money runs out in June, and the government wants to re-establish market access before then.
The 10-year bond sale was the first of its kind since the bailout - Portugal has raised money through shorter-dated offerings over the past few years. The government debt agency said it paid an affordable interest rate of 5.11 percent, with demand exceeding threefold the amount on offer. When Portugal was effectively locked out of bond markets, investors were pricing in rates above 7 percent.
Portugal isn’t the only bailed-out eurozone country that appears to be throwing off the shackles. Ireland exited its bailout program at the end of last year as the financial gloom over debt-heavy Europe has gradually lifted. Cash-rich investors, meanwhile, are looking for opportunities for healthy returns.
Review still sees risk to Cyprus economy
Cyprus’ economic outlook remains subject to “significant risk” even after its economy contracted less than expected last year, debt monitors said at the end of a quarterly review of Cyprus’ adjustment program.
While the country’s fiscal performance has been better than expected, it faces challenges arising from banks’ high proportion of loans in arrears as well as capital controls that remain in effect, the European Commission, European Central Bank and International Monetary Fund, collectively known as the troika, said in a statement Tuesday.
“While the program remains on track, Cyprus still faces significant risks,” according to the statement.
“Continued full and timely policy implementation remains essential for the success of the program.”
Cyprus’ gross domestic product contracted about 6 percent last year and will shrink 4.8 percent this year before expanding about 1 percent in 2015, the troika said. The shallower recession last year and “prudent budget execution” helped Cyprus outperform its 2013 fiscal targets by a “considerable margin,” the statement said.
- Bloomberg News
Investors worry data on Chinese leaked
AutoNavi Holdings Ltd. became the second Chinese company in two weeks to see its shares surge in the days leading up to a takeover announcement, raising concern among investors that details of transactions are being leaked.
American depository receipts of AutoNavi, an online map-content provider, jumped 13 percent Thursday through Friday, the most among the biggest Chinese stock traded in New York, before Alibaba Group Holding Ltd. offered to buy the shares this week. Shanda Games Ltd., an operator of online games, soared 34 percent in the seven days before saying Jan. 27 that it plans to take its company private.
The pre-buyout rallies add to investor concerns that the market for Chinese shares trading in the U.S. lacks transparency as short sellers, including Carson Block, say companies are overstating earnings while U.S. regulators bar accounting firms from conducting audits in the Asian nation. At least 35 Chinese companies have announced buyout deals to withdraw their U.S. listings since early 2011 in part because those concerns depressed their stock valuations.
These stock gains create “distrust within the markets,” said Timothy Ghriskey, chief investment officer at New York-based Solaris Group LLC. “It doesn’t generally bode well for markets where that occurs regularly.”
John Nester, a spokesman for the Securities and Exchange Commission, declined to comment. Emails to AutoNavi’s external spokesmen at Ogilvy Financial weren’t immediately returned, and Alibaba’s Hong Kong-based spokesman, John Spelich, didn’t respond to an email.
-Bloomberg News
Puerto Rico praised, but debt labeled junk
SAN JUAN, Puerto Rico - The last of three major credit-rating agencies downgraded Puerto Rico’s debt by two notches to junk status Tuesday.
Fitch Ratings praised the U.S. territory for responding quickly to economic challenges but noted the economy remains weak and its access to the bond market is impaired.
The agency also said Puerto Rico’s bonded debt levels and unfunded pension liabilities are very high compared with U.S. states and that recent downgrades have led to a potential $1 billion in new liquidity demands.
“Puerto Rico’s current management has repeatedly shown its ability and willingness to take quick action to address financial challenges and external market concerns,” Fitch said. “However, underlying the need for these measures is the very difficult economic, financial and market situation that management continues to confront.”
- The Associated Press
Business, Pages 26 on 02/12/2014