| Gov’t raises $1.5B from bond issue The government raised $1.5 billion from the issuance of 15-year, US Securities and Exchange Commissioned-registered global bonds, the Department of Finance announced Tuesday. Maturing in March 2026, the newly issued bonds were priced at 99.495 percent with a coupon of 5.5 percent and a yield of 5.55 percent. “We are very pleased with the response to the transaction, with strong investor interest enabling the [Philippines] to successfully establish a new 15-year benchmark on its US dollar yield curve,” National Treasurer Roberto B. Tan said in a statement. “The deal was significantly oversubscribed” from 280 prospective investors, [showing] the confidence of the international investor community in the economic and financial prospects of the Philippines,” Tan said. Finance Secretary Cesar V. Purisima said the Philippines moved swiftly to access the US dollar bond market and achieved low-cost, long-dated offshore funding. “This continues [Malacañang’s] pro-active stance in managing its sovereign debt, extending its debt maturity profile during uncertain times for the global economy,” Purisima added. The officials said the book-building process for the offering took only 10 hours, with 22 percent of allocations going to investors based in the Philippines, 18 percent to those from the rest of Asia, and 30 percent each from the United States and Europe.
HSBC and Goldman Sachs were the joint global coordinators while UBS, JP Morgan, Citigroup and Deutsche Bank were the joint bookrunners.
The amount raised was the upper limit of the government’s target, based on Tan’s statements on Monday. Back then, Tan said the issue might reach $1.5 billion partly due to expected delays in disbursements of official development assistance. He said such delay was due to ongoing discussions about the loans and that this was not due to the calamity in Japan. Tuesday’s issuance was the government’s second foray in the global bond market this year, having raised about P54.77 billion, or $1.25 billion, through the sale of 25-year global peso bonds last January. It was also the third sortie for the Aquino administration, which also raised P44.1 billion, or $1 billion, through the float of 10-year global peso bonds in September 2010. |
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| . U.S. Stocks Retreat Amid Oil's Advance, Concern About European Debt Crisis
U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for the first time in four days, as oil rose amid unrest in Libya and concern grew that Europe won’t find an immediate solution to its debt crisis.
Walgreen Co. (WAG), the largest U.S. drugstore chain, sank 6.6 percent as profit margin fell short of analyst estimates. Carnival Corp. (CCL), the world’s biggest cruise-line operator, lost 4.5 percent after forecasting profit that missed analyst projections. Sprint Nextel Corp. (S) rose 2.5 percent after Raymond James & Associates raised its rating. Netflix Inc. (NFLX) added 4 percent as Credit Suisse Group AG lifted its recommendation.
The S&P 500 retreated 0.4 percent to 1,293.77 at 4 p.m. in New York. The gauge had rallied 3.3 percent over the previous three sessions. The Dow Jones Industrial Average declined 17.90 points, or 0.2 percent, to 12,018.63 today.
“We had a number of black swan crises back to back, and that’s always very disconcerting,” Barton Biggs, who helps oversee $1.4 billion as managing partner of Traxis Partners LP, said in an interview on Bloomberg Television’s “Street Smart with Carol Massar and Matt Miller.” “There’s still a couple black swans flapping around out there, but unless you come up with a dire scenario I think we’ll extend the rally.”
Peak
Biggs said the U.S. stock market will probably rise back to its 2011 peak from February after the S&P 500 lost as much as 6.4 percent following Japan’s biggest earthquake and as Libya’s Muammar Qaddafi attacked rebels seeking to end his 41 years as the country’s ruler. U.S. stocks rallied yesterday as concern eased that Japan will suffer a nuclear meltdown and after AT&T Inc. (T) agreed to buy T-Mobile USA Inc. for $39 billion.
The S&P 500 today snapped a three-day winning streak, the longest in about a month, as Irish notes slid and oil rose 1.6 percent to $104 a barrel. The slump in Irish notes came after EU finance chiefs settled yesterday on how to enable a permanent rescue fund to lend 500 billion euros ($712 billion) as of 2013, while remaining divided over how to get the current stopgap fund to its full capacity.
“The market is trading on the headlines,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “Things can change from minute to minute. Whenever you get things that are unknown, you start to price in higher risk. Of course, you want to buy at the bottom when the fear is so prevalent in the market. The economic recovery is strong. It’s just that there are too many unknowns right now.”
Sustained Economic Growth
Global markets are signaling that sustained economic growth will more than make up for Japan’s worst disaster since World War II, rising commodity prices and uprisings throughout the Middle East and northern Africa. Interest-rate derivatives, bond sales by the riskiest borrowers and rebounding benchmark stock indexes all show increasing confidence in the economy.
This year markets have contended with the ouster of Egyptian President Hosni Mubarak, battles between forces loyal to Libyan leader Muammar Qaddafi and rebels, protests in Saudi Arabia, Bahrain and Yemen, oil above $100 a barrel, record-high food costs and a magnitude 9.0 earthquake in Japan that killed more than 8,000 people and crippled a nuclear power plant.
“These events are not going to derail the global expansion,” said Hank Smith, chief investment officer at Haverford Trust Co., which manages about $6.5 billion in Radnor, Pennsylvania. “I’m not sure the risk is over, but the fear of it escalating and getting much worse is subsiding. The big picture remains slightly in favor of equity investors. That is, the economy is expanding, not contracting.”
More Confidence
Manufacturing strength from the U.S. to Germany and China is giving economists more confidence that the recovery from the worst financial crisis since the Great Depression will continue. Goldman Sachs Group Inc. forecasts a global expansion of 4.8 percent this year, while JPMorgan calls for 4.4 percent. The average over the past two decades is 3.4 percent.
Walgreen slumped 6.6 percent to $39.21. Gross margin, or the percentage of sales left after the cost of goods sold, was little changed at 28.8 percent in the second quarter, Walgreen said. Analysts at Barclays Plc and Citigroup Inc. estimated gross margin would widen at the chain, which operates about 7,700 locations across the U.S. and filled one in five retail prescriptions last quarter.
Carnival fell 4.5 percent to $39.16. The world’s biggest cruise-line operator said it will have fiscal second-quarter profit of 20 cents to 24 cents a share. Analysts surveyed by Bloomberg had estimated 33 cents on average.
Sprint Rallies
Sprint rallied 2.5 percent to $4.47. The third-largest U.S. mobile-phone carrier was raised to “strong buy” from “outperform” at Raymond James.
Netflix gained 4 percent to $221.39. The mail-order and online movie-rental service was raised to “outperform” from “neutral” at Credit Suisse. The share-price estimate is $280.
BJ’s Wholesale Club Inc. (BJ) rose 5 percent, the most since Feb. 3, to $48.84. Shareholder Leonard Green & Partners said it’s examining an offer for the U.S. membership warehouse chain, reviving its overtures after BJ’s began looking for suitors. [bn:WBTKR=MCP:US]
Molycorp Inc. [] surged 18 percent, the most since Dec. 6, to $52.57. The owner of the world’s largest rare-earth deposit outside China rose as mineral prices increased and concern about the impact of Japan’s earthquake abated. Chief Executive Officer Mark Smith said yesterday that rare earth prices were “significantly higher” than anticipated. |
Oil Near Two-Week High in New York on Libyan Conflict, Middle East Turmoil
Oil traded near a two-week high in New York amid concern that continued conflict in Libya threatens to prolong supply disruptions and that escalating turmoil may curtail Middle East shipments.
May futures climbed 1.8 percent yesterday as U.S. Admiral Samuel Locklear said further strikes will be launched against ground forces of Libyan leader Muammar Qaddafi in the “coming hours and days.” Prices have advanced 15 percent this year as turmoil that toppled the leaders of Tunisia and Egypt spread to Yemen, Bahrain and Syria.
“Events in the Middle East and North Africa are the main game in the crude oil market and are the thing to watch in terms of the direction of the oil price,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, told Susan Li on Bloomberg Television’s “First Up.”
Crude oil for May delivery traded at $104.95 a barrel, down 2 cents, in electronic trading on the New York Mercantile Exchange at 11:24 a.m. Sydney time. Yesterday, it rose $1.88 to $104.97, the highest since March 9. The April contract, which expired yesterday, gained $1.67, or 1.6 percent, to $104.
U.S. Defense Secretary Robert Gates said yesterday that the intensity of the military campaign in Libya will ease soon after allied forces imposed a no-fly zone, enabling rebels to push out of their eastern Benghazi stronghold.
Brent crude for May settlement traded at $115.87 a barrel, up 17 cents, on the London-based ICE Futures Europe exchange. The contract climbed 0.6 percent to $115.70 yesterday.
Japanese Rebound
Japan may see a rebound in the second half of this year, a Bloomberg News survey of economists showed. The nation may set up a reconstruction agency to oversee repairs after the March 11 earthquake, while data showed the central bank pumped record liquidity into lenders.
The country’s strongest earthquake on record triggered a tsunami that killed thousands and damaged the Fukushima Dai-Ichi nuclear power plant. Tokyo Electric Power Co. began restoring electricity at the facility yesterday, easing concern there will be a nuclear meltdown.
“With the reconstruction process around the corner there will be some upward pressure in demand in Japanrelatively to what it otherwise would have been,” Westmore said. “A marginal influence on the crude market will be a rise in oil plants fulfilling some of that lost capacity of nuclear, in terms of electricity generation.”
Japan’s refineries are processing more oil than expected, Vienna-based researcher JBC Energy GmbH said. The earthquake shut six refineries totaling about 29 percent of the country’s processing capacity, Bloomberg calculations based on Petroleum Association of Japan data show. Three of the plants remain closed, JBC analysts led by David Wech said yesterday in a note.
U.S. crude oil stockpiles rose 970,000 barrels to 350.8 million last week, according to the industry-fundedAmerican Petroleum Institute. An Energy Department report today may show inventories climbed 1.5 million barrels, rising for a third week, according to a Bloomberg News survey of analysts. |
