Tag Archives: Corporate Debt Financing / Corporate Debt

UPDATE 1-Virgin Australia is positioning itself as a mid-market airline, said the new CEO | Instant News


* Targeting about a third of the domestic market share

* Will end a decade-long corporate travel arms race

* Introducing new food purchasing options in economy class (Adds administrative details, comments Qantas CEO)

SYDNEY, Nov 18 (Reuters) – Virgin Australia will position itself as a mid-market carrier targeting about a third of the domestic aviation market share under US private equity firm Bain Capital, the airline’s new chief executive said on Wednesday. .

Virgin’s shift from being a full-service airline will mark the end of a decade-long arms race with Qantas Airways Ltd for corporate travelers involving luxurious airport lounges, celebrity chefs and reclining business seats on longer domestic flights.

“Australia already has low-cost carriers and traditional, full-service airlines, and neither would we,” Virgin Australia Chief Executive Jayne Hrdlicka said in a statement, referring to Qantas and its low-cost subsidiary Jetstar.

“Virgin Australia will be an attractive mid-range airline for customers who want good airfare and better service.”

The country’s second-largest airline said it would introduce a new food-purchase option in economy class but would retain business class seats and airport lounges in major cities. It will also continue to include checked baggage at its economy class fare. Wi-Fi and in-flight entertainment are still under review.

Virgin was removed from the stock exchange on Tuesday after Bain’s buyout closed, allowing it to exit voluntary administration.

Qantas Chief Executive Alan Joyce said he expected Virgin to appear “leaner and ruthless” given it was able to amend its charter terms as part of administrative proceedings, Australia’s closest equivalent to the US Chapter 11 bankruptcy regime.

Qantas has announced plans to achieve A $ 1 billion ($ 729.8 million) annual savings by financial year 2023 to help contain the coronavirus pandemic.

Analysts said Virgin’s market decline would give Qantas room to cut product costs or introduce fees at lower rates while maintaining its premium market position.

“We have no intention of changing Qantas products other than what we’ve been doing around COVID-19,” Joyce said in the Aviation Week webinar.

$ 1 = 1.3702 Australian dollars Report by Jamie Freed; Edited by Sam Holmes and Stephen Coates

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CEO Monte dei Paschi told the bank board facing a 2 billion euro capital gap: source | Instant News


ROME (Reuters) – CEO Monte dei Paschi told directors on Monday that the bailed-out Italian bank needed 1.5-2.0 billion euros ($ 1.7- $ 2.3 billion) in cash to avoid violation of capital requirements in the first quarter of 2021, a source with knowledge of the matter.

FILE PHOTOS: Logo of the Monte dei Paschi bank in Siena seen on the ground in downtown Siena, Italy, November 5, 2014. REUTERS / Giampiero Sposito / File Photo

Italy saves Monte dei Paschi (MPS) BMPS.MI in 2017 spent 5.4 billion euros on a 68% share. It has allocated another 1.5 billion euros to ease its re-privatization, which must take place by mid-2022.

The fate of the Tuscan bank took center stage, laying a rift in Italy’s ruling coalition after the sentences of three former executives forced the MPS to set aside more than 400 million euros for lawsuits last week, and withdrew commitments to fund managers’ legal fees. .

Bad loan terms and plans requiring 1.1 billion euros in equity are set to scrape the capital buffer held by MPS above the minimum requirement, as the pandemic triggers loan losses.

MPS presented its quarterly results on Thursday and the source said the board had asked CEO Guido Bastianini to discuss with the Ministry of Finance projections of a capital shortfall before confronting investors. MPS declined to comment.

Sources said MPS was considering stock issues and Tier 1 additions to fill the capital gap, but the losing bank could not cover the latter’s costs.

Meanwhile, MPS is considering transferring credit risks of up to 2 billion euros in loans to third parties to free up capital and buy time, the source said.

The Italian Ministry of Finance, led by prominent Democratic Party (PD) member Roberto Gualtieri, is gearing up to join forces with the MPS with a stronger counterpart, a solution suggested by former MPS CEO Marco Morelli.

But a majority in the co-ruling 5-Star Movement is pushing for share issuance to keep the bank under state control in the near future and to fund a stand-alone business plan that CEO Bastianini is working on, party sources said.

The government has issued UniCredit CRDI.MI and Banco BPM BAMI.MI as a prospective merger candidate for MPS, said the source.

But someone involved in the process said any deal was blocked by a pending MPS legal dispute if the state did not provide guarantees.

The Ministry of Finance denied reports in Italian media over the weekend that the ministry had offered to inject up to 2.5 billion euros into the MPS if UniCredit CRDI.MI took over and another 3 billion euros in deferred tax assets.

UniCredit has ruled out any M&A, but sources say they can consider MPS under the right conditions, which include a neutral impact on its balance sheet.

“The deal presents more risks than opportunities for UniCredit as legal risks will increase, CET1 (capital) neutrality will not be fulfilled and even assuming significant cost synergies, the deal reduces earnings per share from 2022-2023 by about 20%,” brokerage Equita said. .

Reporting by Giuseppe Fonte, Valentina Za and Stefano Bernabei. Edited by Jane Merriman and Barbara Lewis

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Monte dei Paschi focuses on the capital when Italy is pushing for the merger | Instant News


MILAN, 2 Nov (Reuters) – Monte dei Paschi (MPS) resumed discussions on Monday about its capital requirements while the Ministry of Finance resists political pressure to channel more money to bailed Italian lenders unless there is a merger deal, three sources close to the problem. said.

Italy must bail out the bank in 2017 and in August allocated 1.5 billion euros ($ 1.8 billion) to help smooth the path to re-privatization. But Italy’s ruling coalition is divided over a strategy to fill the capital gaps facing banks as a result of provisions against legal risks and poor loan clearance.

One of the sources said the bank was considering transferring credit risks of up to 2 billion euros ($ 2.3 billion) of loans to third parties to free up capital and buy time.

MPS declined to comment.

The bank risks violating capital regulatory requirements after setting aside more than 400 million euros for lawsuits following the sentences of three former executives. The MPS also had to finish by December 1 a spin-off of bad loans requiring 1.1 billion euros in equity.

The majority in the 5-Star Movement in Italy’s ruling coalition is pushing for the issuance of shares to keep the bank under state control in the near future and to fund a stand-alone business plan that is being worked out by MPS CEO Guido Bastianini, party sources have said.

The Treasury Department, led by leading Democrat (PD) member Roberto Gualtieri, wants to use state funds to support the MPS merger with other banks, a solution suggested by former MPS CEO Marco Morelli.

On Saturday, Gualtieri said Italy’s restructuring agreed with Brussels as a condition for the MPS to save must include a merger with a strong partner.

The government has focused on UniCredit as a potential merger candidate having previously looked at a possible deal with Banco BPM, sources said.

But someone involved in efforts to re-privatize the MPS said any deal is blocked by a pending MPS legal dispute if the state does not provide guarantees.

On Saturday, the Ministry of Finance denied reports in Italian media that the ministry had offered to inject up to 2.5 billion euros in cash into the MPS if UniCredit took over and another 3 billion euros in deferred tax assets.

UniCredit has ruled out any M&A for now, but sources say they could consider MPS under the right conditions, which include a neutral impact on its balance sheet.

“The deal presents more risks than opportunities for UniCredit as legal risks will increase, CET1 (capital) neutrality will not be fulfilled and even assuming significant cost synergies, the deal reduces earnings per share from 2022-2023 by about 20%,” brokerage Equita said. . ($ 1 = 0.8587 euros) (Reported by Giuseppe Fonte, Valentina Za and Stefano Bernabei. Edited by Jane Merriman)

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S&P affirms Australia’s ranking; marks fiscal and economic risks | Instant News


(Reuters) – Credit rating agency S&P Global Ratings on Tuesday affirmed Australia’s sovereign credit rating at ‘AAA / A-1 +’ with a negative outlook, sluggish economic and fiscal risks.

“The negative outlook reflects our view that Australia faces downside fiscal and economic risks,” S&P said in a note. bit.ly/34eqmGV on Tuesday, adding Australia’s fiscal deficit will persist and debt levels will increase in the coming years.

However, he also said that a large economic stimulus would support the country’s economic recovery amid the coronavirus crisis.

Reporting by Kanishka Singh; Edited by Himani Sarkar

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Analysis: Europe’s income optimism is waning with a resurgent virus | Instant News


MILAN / LONDON (Reuters) – The sudden tightening of social restrictions to contain the resurgent coronavirus pandemic across Europe is threatening to damage any stock market that could boost third-quarter earnings.

DAX chart of the German stock price index depicted on the stock exchange in Frankfurt, Germany, 12 October 2020. REUTERS / Staff

European powers Germany, France and Britain have announced a range of new measures, including curfews and limits on private gatherings, which have sparked concerns about the sustainability of the recovery.

Optimism about the burst of activity that followed the lifting of the national lockdown over the summer has raised hopes that the forthcoming European financial season will help the region’s stock markets emerge from the sideways moves they have been on for months.

European stocks are still down 11 percent in 2020 after COVID-19 sent the pan-European STOXX 600 index down about 40% in March.

“In the grand scheme of things, this quarter is one of recovery overall,” said chief equity strategist Sylvain Goyon at Oddo BHF in Paris.

“There are increasing expectations and there is a good chance the economic outlook will continue to be revised upwards”.

According to Refinitiv I / B / E / S / data, analysts expect companies on the STOXX 600 to report an average 36.7% decline in year-on-year third quarter revenue.

“It was better than we had last quarter but it’s still quite brutal,” said Philipp Lisibach, Head of Global Equity Strategy at Credit Suisse in Zurich, highlighting a 51% drop in European profits in the second quarter.

While corporate earnings in the third quarter of 2020 are expected to show evidence of recovery, investors will be interested in seeing forecasts for the next quarter and 2021, if any are to come.

They will scrutinize the outlook statement to see how businesses fared in the weeks following the reporting period and what the impact of the potential EU and UK failure to reach a free trade agreement.

Investors will also analyze how companies control costs and face barriers such as the stronger euro.

The predictive-beat yield of European blue chips could provide “a catalyst for equity prices to move higher”, said Kevin Thozet, member of the investment committee at asset manager Carmignac.

FROM HEADWINDS TO TAILWINDS

Despite the bouts of volatility, early results from companies such as Publicis, the No. 3rd world, or German chemical maker Covestro seems to bring better evidence of a trend.

Restoring sales of Louis Vuitton bags helped France’s LVMH withstand the impact of the coronavirus crisis in the third quarter, as the world’s largest luxury goods group reported a smaller-than-expected drop in revenue.

Also encouraging are Daimler’s results

The winner lives at the Logitech house and Reckitt Benckiser reports the results on Tuesday. Luxury goods makers Moncler and L’Oreal are reporting this weekend.

Due to relatively greater exposure to cyclical sectors, earnings trends and price performance for European equities are more associated with economic changes than for other markets such as the United States loaded with tech giants such as Apple and Amazon.

Energy and financial stocks, for example, which tend to follow economic growth closely, are expected to see their profits fall by 81.6% and 38.6% this quarter, respectively.

While this imbalance has weighed on Europe compared to the US market which has seen the S&P 500 gain 7% year-to-date, it could turn into a drag once a credible vaccine is used or a large US stimulus is approved. the economy.

“In a period where the economy continues to be under immense pressure, the lack of a growth sector is only hurting Europe, but at the same time you can make the argument that if the recovery continues there will be pretty decent catch-up potential. , “Said Lisibach Credit Suisse.

Earnings in Europe appear to be lagging behind that of the United States, where a decline in third-quarter profit is expected to be limited to 18.9% thanks to massive efforts for big technology, which got a boost from household economies during the pandemic.

Reporting by Danilo Masoni in Milan and Julien Ponthus in London; additional reporting by Sujata Rao in London; Editing by Elaine Hardcastle

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