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Sunday, November 14, 2010

Corporate bond sales fell to a minimum of three months in Europe this week

Corporate bond sales fell to a minimum of three months in Europe this week as the region's worsening debt crisis facing the emitters outside the largest increase in borrowing costs since May.

Sales fell 23 percent to 4.8 billion euros (6.6 billion U.S. dollars) from the previous week, the lowest since Aug. 15, according to data compiled by Bloomberg. ArcelorMittal, the world's largest steelmaker, and HSBC Holdings Plc led sales with each raising 1 billion euros (1.4 billion).

investor concerns that the most indebted countries in the euro region will have a rescue plan led to records of performance bonds in Ireland and Portugal. The evils sovereign debt burden on the corporate credit where yields on the investment-grade debt rose 10 basis points to 173 basis points above the benchmark German debt, according to Bank of America Merrill Lynch indexes.

"The weakness induced by the sovereign that has plagued the markets for two weeks added to the lower liquidity and left markets in a fragile state," wrote Juan Esteban Valencia, a credit strategist at Societe Generale SA in London, in a note to investors. "As expected, cash differentials have been increasing."

The leaders of the governments of the region surrounding the euro are struggling to convince investors remain viable amid burden of mounting debt. Group of 20 leaders in Seoul talks about the debt crisis of Ireland as the yield premium on the bonds of Ireland in relation to German bonds rose to a record yesterday.

Adjournment Doux

The market turmoil prompted Doux SA, Europe's largest producer of chicken, to postpone the sale of bonds in the first place, according to a person familiar with the transaction. The Chateaulin, France-based company planned to raise up to 400 million euros for seven years, high-yield notes.

ArcelorMittal cut its borrowing costs by almost half of its new notes for seven years, aided by near-record low yields on benchmark government debt. The Luxembourg-based steel maker sold 1 million of debt at a price of 4.742 percent, which issued the same amount of similar notes maturing in May 2009 to 9.5 percent, according to data compiled by Bloomberg.

Benchmark yields on government bonds are kept low by the attempts of political leaders "to stimulate growth. Ten-year German bund yield fell to 2.43 percent from 3.43 percent in early 2010. Security Government of reference in Europe reached a record low of 2.087 August 31, according to Bloomberg data.

HSBC, the largest bank in the United Kingdom, sold 1 million of securities maturing in 2017 with a yield of 78 basis points more than benchmark swap rate, according to Bloomberg data. Lender Banca SpA ICCRE also sold the notes, the issuance of € 400 000 000 of floating rate debt in two years.

Delta Lloyd NV, the Dutch unit of London-based insurer Aviva Plc, raised € 575,000,000 of bonds of seven years producing 190 basis points more than the swaps, according to Bloomberg data.

Japanese bond futures gained for the first time in six days

Japanese bond futures gained for the first time in six days as signs of slowing growth in Europe supported the demand for the safety of government debt.

Benchmark comparing its biggest weekly decline since September of regional stocks tumbled. The extra yield offered by 20-year bonds on the 10-year debt was near the widest in over two years before the auction of the securities of longer maturity.

"The decline in stocks prompted investors to unwind their short positions in bond futures," said Kazuya Ito, a fund manager at Daiwa SB Investments Ltd. in Tokyo. "Medium-term bonds were bought amid bargain hunting."

bond futures to ten years for December delivery gained 0.17 to 142.59 at the 3 pm close of Tokyo Stock Exchange. The Nikkei 225 Stock Average lost 1.4 percent, comparing its advance this week to 1 percent. The MSCI Asia Pacific Index of regional shares fell 1.5 percent today.

The yield on the benchmark 10-year-old lost a basis point to 0.995 percent as of 15:31 in Tokyo at Japan Bond Trading Co., the largest broker of interbank debt. The price of the warranty of 1 percent due September 2020 rose 0.089 yen to 100,044 yen. Production rose 6.5 basis points this week, the most since the five days ended Sept. 3.

The European gross domestic product grew 0.5 percent in the third quarter, half as fast as in the previous three months, according to economists' estimates compiled by Bloomberg. The office of the European Union statistics will release the report today.

The spread between yields on Japan's 20 - and 10-year bonds was 90 basis points, after reaching 90.9 basis points on Oct. 29, the highest since March 2008.

The 20-year auction

"The movements of the debt of 20 years would suggest investors are already preparing for the auction next week," wrote Kazuhiko Sano, chief strategist at Tokai Tokyo Securities Co., one of 24 primary dealers required to bid at the sales of public debt, in a report released today.

The Ministry of Finance will sell 1.1 trillion yen (13.4 billion euros) of debt to 20 years on 18 November. Intermediaries often reduce holdings of bonds before an auction in case prices decline before they can transmit the new securities to investors.

Gains in bonds were tempered as the yen trading near a one-month low reassurance to a stronger currency will hurt the profits of exporters. The yen has fallen 1.4 percent against the dollar this week, the biggest drop since the period ended Sept. 17. 82.80 reached on 10 November, the lowest since Oct. 7.

"With the yen in the midst of a correction, national actions may rise further," said Shinji Nomura, chief debt strategist in Tokyo at Nikko Cordial Securities Inc., one of 24 primary dealers required to bid at sales public debt. "The environment is unfavorable for the Japanese bond market, sending investors to the bank debt."

Dubai Shares Drop & Qatar and UAE stock markets will be closed from tomorrow and resume trade on 21 November to mark the holiday of Eid al-Islam al-Adha

Dubai shares retreated for a third day, so a decline in the Gulf, after global markets slumped on concern of some European countries will have difficulty paying the debt and investors cut holdings before a Muslim holiday.

Emaar Properties PJSC, builder of the world's tallest skyscraper in Dubai, led to the fall and Emirates NBD PJSC, the biggest lender in the UAE 'by assets, fell 0.9 percent. The DFM General Index fell 0.4 percent to 1,685.52, at 11:52 pm in Dubai. Bloomberg GCC 200 Index of regional stocks fell to 0.2 percent. markets of Saudi Arabia and Kuwait are closed today for Eid.

Gulf stocks are falling due to a "weak international leadership," said Tarek Lotfy, CEO of Dubai Ltd., based Arqaam Capital "Most market participants are out of the week, so it is expected that volumes remain low. "

U.S. and new market shares fell last week as concerns about the debt crisis intensified in Europe and raised speculation that China will raise interest rates. The Group of 20 leaders gathered in Seoul Ireland discussed the problems of debt amid speculation that the EU has to intervene with a rescue plan. 500 of Standard & Poor's fell 2.2 percent last week, its biggest weekly decline in three months. The MSCI Emerging Markets Index fell 3 percent last week, the most since the week ended Aug. 13, while the Stoxx Europe 600 index fell 0.7 percent.

Qatar and UAE stock markets will be closed from tomorrow and resume trade on 21 November to mark the holiday of Eid al-Islam al-Adha. Kuwait is closed until November 18 and Bahrain will be closed from November 16 to November 18.

The decline in oil

Crude oil for December delivery fell 3.3 percent to $ 84.88 a barrel on the New York Mercantile Exchange on 12 November. The six nations of the Gulf Cooperation Council, including the UAE and Saudi Arabia, supplying a fifth of the world's oil.

About 48 million shares traded today in Dubai, compared with a six-month daily average of 117 million shares. Emaar fell as much as 2.2 percent to 3.59 dirhams, the lowest intraday level since 09 November, and traded at 3.65 dirhams. UAE fell for the first time in eight days to 3.30 dirhams.

In Israel, the TA-25 Index fell 0.8 percent to 1230.5, its lowest level since October 10 in Tel Aviv. The yield of 5 percent of Israel Mimshal Shiklit due January 2020 rose 8 basis points to 4.57 percent.

Abu Dhabi measure has lost 0.3 percent and the benchmark stock index fell 0.2 Oman percent. Bahrain All Share Index little changed, while Qatar QE index rose less than 0.1 percent.

U.S. Stocks as the fall of S & P 500 has biggest weekly decline in three months

U.S. stocks fell, giving the Standard & Poor's 500 Index its biggest weekly decline in three months, as concern about the debt crisis in Europe intensified speculation that China will raise interest rates grew and Cisco Systems Inc. 's loss projection analysts estimated.

Alcoa Inc., Hewlett-Packard Co. and JPMorgan Chase & Co. has recalled more than 3.2 percent to help lead to losses in the Dow Jones Industrial Average. Cisco, the world's largest maker of networking equipment, plunged 17 percent in the biggest weekly decline in two years. Boeing Co., the largest aerospace company, fell 11 percent after the suspension of flights of the 787 Dreamliner, while investigating a fire in a test aircraft.

The S & P 500 lost 2.2 percent to 1,199.21, snapping a five-week concentration. The Dow Jones fell 251.50 points, or 2.2 percent, to 11,192.58, after gaining 14 percent since late August and up to a maximum of two years.

"There remains a risk, at risk, market-off," said Mike Ryan, director of New York's wealth management research for the Americas at UBS Financial Services Inc., which oversees about 641 billion U.S. dollars. "There is a sense of 'toppiness', with some concern about what is happening in the euro area. We had this huge face and it is not surprising when these issues emerge risk seeing markets around the world look concerned. "

The S & P 500 gained 20 percent from its low in July 2010 amid improving profits and speculation that the Federal Reserve will stimulate growth by pumping more money into the financial markets. Earnings per share exceeded estimates by 76 percent of the 433 companies in the index that was reported from the 07 of October, according to data compiled by Bloomberg.

'Significant' selloff

Gary Shilling, who predicted the collapse of U.S. housing, says the stock market is overvalued and predicts a "significant" wave of sales within a year, the Federal Reserve will not stimulate economic growth through technique was also used last year, known as quantitative easing.

"I do not think it's enough to make a big difference," said Shilling, 73, president of investment research firm A. Gary Shilling & Co. in Springfield, New Jersey, in a telephone interview. "The sooner QE1 did not and do not believe this, either. The economy is weak and not much of a shock to push it into negative territory. I do not think that is enough to justify where stocks are now."

The MSCI World Index published the third weekly decline in a month and the euro fell to a six-week low against the dollar and German finance ministers, French and British met at the Group of 20 nations meeting in the debt crisis Ireland. The benchmark for developed countries fell 0.9 percent yesterday amid speculation that China will raise interest rates.

"Everything is red '

"Everything is red," said John Lynch, chief equity strategist at Wells Fargo Funds Management, which oversees 465 billion U.S. dollars. "We've had a good sprint. I believe that fiscal policy is the key here now."

The S & P 500 Finance was the biggest drop among 10 industries this week, falling 4 percent.

Tech stocks in the S & P 500 fell 3.2 percent after Cisco said revenue in the second fiscal quarter will be about 10.1 billion U.S. dollars to $ 10.3 million. Excluding some costs, profit will be 35 cents per share maximum. Analysts projected sales of $ 11.1 billion and earnings of 42 cents on average, according to estimates compiled by Bloomberg.

Cisco shares had the biggest daily drop since July 1994 on 11 November and dropped 17 percent to $ 20.15 a week.

Boeing

Boeing plunged 11 percent to $ 63.09. Chief executive Jim McNerney on Nov. 11, said the company should know "quite quickly" if the fire this week aboard a 787 Dreamliner affect the entry of the aircraft in service, which is almost three years late.

Intel Corp. gained 1.4 percent to $ 21.53. largest chipmaker in the world said it will increase its quarterly dividend 14 percent to 18 cents per share, beginning with the payment stating the next quarter as a rebound in demand for personal computers increases their profits.

The quarterly reports scheduled for next week include Home Depot Inc. and Lowe's Cos., the largest U.S. merchants Home Improvement and Wal-Mart Stores Inc., the world's largest retailer. Dell Inc., the world's third largest personal computer, Staples Inc., the largest retailer of office supplies, and HJ Heinz Co., the largest maker of ketchup, you must also report the results.

Retail sales probably rose in October for the fourth month and factory production rebounded, adding to evidence the U.S. recovery collected at the beginning of the fourth quarter, economists said before reports next week.

Blockbuster, BioSante, Fortune Brands, Hyatt Hotels: United States Equity Preview

Shares of the following companies may have unusual movements in U.S. trading on 15 November. Stock symbols are in parentheses.

Aastrom Biosciences Inc. (ASTM U.S.): The developer of treatments for human tissue repair using stem cells said Atek Medical LLC granted exclusive rights to manufacture products of the cellular carrier deck. Aastrom also presented the plans of the Securities and Exchange Commission to sell up to $ 75 million in securities.

Accelrys Inc. (ACCL U.S.): The maker of molecular modeling software, said it will buy up to $ 6 billion in stock on 31 March.

BioSante Pharmaceuticals Inc. (BPAX U.S.): The developer of hormone replacement products reported a third quarter loss of 16 cents per share, 19 percent higher than the average of two analyst estimates.

Blockbuster Inc. (BLOAQ U.S.): The operation of video rental retailer in Chapter 11 bankruptcy reported its loss in the third quarter fell to 53.5 million U.S. dollars from 114.1 million U.S. dollars last year. Sales fell 19 percent to 736.6 million U.S. dollars.

Fortune Brands Inc. (for U.S.): The maker of Titleist golf balls, Moen faucets and Jim Beam bourbon can work on a plan to break with the investor Bill Ackman Pershing Square Capital Management LP, the Wall Street Journal.

Hyatt Hotels Corp. (H U.S.): The Pritzker family hotel chain which raised 1.09 billion U.S. dollars in an initial public offering last year was a new "buy" at Buckingham Research analyst for equity McKnight Cameron. The 12-month price target is $ 48.

Naugatuck Valley Financial Corp. (NVSL USA) and Southern Connecticut Bancorp (SSE U.S.): The two banks headquartered in Connecticut mutually agreed to terminate their merger agreement, according to a joint statement. The companies said they could not obtain regulatory approval.