*** CRITEO IPO >>Transaction upsized from 7.2m to 8.08m ADS + 15% greenshoe / Final pricing at $31 per share, above revised range ($27-29) / Start of trading today (CRTO US)
Barclays faces new $700m bill By Sam Jones, Hedge Fund Correspondent Barclays faces a demand to pay as much as $700m to a US hedge fund after losing a crucial appeal in a five-year legal battle that revives questions over the bank’s strategy during the financial crisis. In a judgement on Thursday, the New York supreme court of appeals overturned an earlier legal ruling in Barclays’ favour and found the bank liable for breach of contract over a vast credit derivatives transaction with Connecticut-based Black Diamond Capital.
The ruling means Barclays must return just under $300m in withheld collateral to the hedge fund. The bank is also on the hook for a further $300m-$400m in interest charges and legal costs, the Financial Times has learned. There will be another hearing to set the exact level of interest and legal costs owed by Barclays. According to a claim by Black Diamond, a leading credit-focused hedge fund with $11bn in assets under management, the fund’s contractual rights over Barclays entitle it to collect default interest at a rate of 15.6 per cent a year. Barclays disputes both the ruling, and quantum of potential damages. The bank said: “We are disappointed with and disagree with the court’s decision. We are evaluating our options with respect to an appeal.” Even if the bank is denied the right to an appeal, it may still be able to dispute the total level of damages and interest it must pay. Barclays already faces a barrage of legal costs. Last year it became the first to settle with regulators for the manipulation of benchmark Libor interest rates. In September this year, the UK’s Financial Conduct Authority castigated the bank for its “reckless” capital raising deal with Qatar, threatening a £50m fine. This month Californian authorities filed a suit to enforce $470m in penalties relating to the manipulation of US energy prices, which Barclays is contesting. The latest case gives a rare glimpse into the way in which banks such as Barclays became much more aggressive in dealing with clients – and holding on to collateral and cash – in the last quarter of 2008 as they moved to shore up their own balance sheets. Many hedge funds were hit hard as banks’ reined in the amount of financing they provided to them – or else clamped down on assets they held in custody – as part of a scramble for liquidity. Black Diamond sued Barclays in October 2008 after the bank failed to meet a $40m collateral call demanded by the hedge fund as part of a $1.5bn derivative deal the pair had entered into. After the bank paid only $5m of the call, Black Diamond declared Barclays to be in default on the whole transaction and called back all of the collateral remaining with the bank. According to the terms of the deal, as the valuation of the credit portfolio changed, both Black Diamond and Barclays were entitled to claim, or to request back, collateral as part of the deal. Barclays argued that it still had sufficient time to “cure” the default – an argument initially supported by Justice Eileen Bransten of the state supreme court in Manhattan.
Asian Market Update: Japan govt raises assessment for industrial output; NZD falls on reports Moody's considered a sovereign rating cut
***Observations/Insights*** - Baidu and Buffalo Wild Wings hit fresh 52-week highs in extended session after strong Q3 results, while high-flyers Yelp and LinkedIn lag. - Japan industrial production returns to growth in September after stumbling in August; Govt raises its assessment on output for the first time in 7 months, noting production is "picking up"; BOJ on tap for policy statement tomorrow. - China money market rates remain elevated, though the rise has paused ahead of tomorrow's PBoC decision on open market operations. - Australia new home sales were up sharply, giving RBA more ammunition to stay vigilant on housing inflation. - NZD falls after reports citing Moody's analyst suggesting the rating agency was close to joining Fitch and S&P in lowering New Zealand rating to AA from AAA.
***Economic Data*** - (JP) JAPAN SEPT PRELIM INDUSTRIAL PRODUCTION M/M: 1.5% V 1.8%E (1st rise in 2 months); Y/Y: 5.4% V 5.5%E; Japan raises assessment of industrial production (1st upgrade in 7 months) - (JP) JAPAN SEPT VEHICLE PRODUCTION Y/Y: 13.0% V -7.6% PRIOR - (KR) SOUTH KOREA SEPT INDUSTRIAL PRODUCTION M/M: -2.1% V -0.4%E; Y/Y: -3.6% V +1.9%E - (KR) SOUTH KOREA SEPT CYCLICAL LEADING INDEX CHANGE Y/Y: -0.2% V 0.3% PRIOR - (KR) SOUTH KOREA NOV BUSINESS SURVEY MANUFACTURING: 83 V 82 PRIOR; BUSINESS SURVEY NON-MANUFACTURING: 70 V 72 PRIOR - (AU) Australia Sept HIA New Home Sales m/m: 6.4% v 3.4% prior (17-month high) - (US) API PETROLEUM INVENTORIES: CRUDE: +5.9M (5th consecutive build) v +2Me
***Fixed Income/Commodities/Currencies*** - (CN) China 7-day repo rate rises by over 55bps to near 5.6% (highest since late June), 1-day repo rate up about 60bps - (CN) PBoC sets yuan mid point at 6.1412 v 6.0902 prior close (weakest setting since Oct 17) - (JP) BOJ offers to buy ¥250B in 1-3yr JGB, ¥350B in 3-5yr JGB and ¥400B in 5-10yr JGB
- USD majors are largely contained to narrow ranges in Asia with multiple central bank policy statements expected in tomorrow's session. USD saw some short-covering ahead of the Fed earlier, with EUR/USD in 20pip range around $1.3740, USD/JPY just above the ¥98.10, and AUD/USD in 30-pip range below $0.9480. BOJ is widely expected to maintain its policy stance, but more attention will be paid to its accompanying projections for GDP and inflation as part of its semi-annual outlook report. RBNZ is also expected to remain on hold, though NZIER shadow board has pointed out that its preferred alternative for a rate hike has risen since last month's decision. Separately, NZD/USD briefly fell about 40pips below $0.8220 after a report surfaced that Moody's considered a sovereign rate cut at its Sept decision.
***Speakers/Political/In the Papers*** - (CN) China may announce property tax reform at plenary meeting in Nov - Chinese press - (CN) China State Council adviser Xia Bin: China should promote yuan convertibility in more areas - Chinese press - (CN) China Development Bank (CDB) researcher: China Q4 GDP may fall to 7.7% from 7.8% in Q3 - Chinese press
- (JP) BOJ likely to raise FY14/15 GDP forecasts - Japanese press - (JP) BOJ may refocus on the first arrow of Abenomics or further monetary policy easing to sustain economic recovery - Nikkei News op/ed - (JP) Correlation between the Nikkei Stock Average and the yen is around 1-year lows; Expectation for easy monetary policy in the US is dulling USD advance against JPY - Nikkei News
- (NZ) New Zealand Institute of Economic Research (NZIER) Shadow Board again shows a narrow margin in favor of RBNZ to keep rates unchanged tomorrow; Next best option again seen as a hike - NZ press - (NZ) Concerns circulating that New Zealand could lose its AAA sovereign rating at Moody's - dealers
- (KR) Bank of Korea (BOK): Local banks' average lending rates on new household loans in Sept fell by 0.01pts to 4.54%; 2nd consecutive decline - Korean press - (KR) According to South Korea's Financial Supervisory Service (FSS), loan delinquency ratio for Korea's 18 local banks in Sept fell 0.13pts to 1.00%; 1st decline in 3 months - Korean press
- (IN) India Central Bank (RBI) Gov Rajan: Indian GDP can reach 10% - Nikkei News interview
***Equities*** Market Snapshot (as of 03:30 GMT): - Nikkei225 +1.2%, S&P/ASX +0.4%, Kospi flat, Shanghai Composite +0.4%, Hang Seng +0.7%, Dec S&P500 flat at 1,767, Dec gold -0.2% at $1,343, Nov crude oil -0.5% at $97.67/brl
US markets: - WU: Reports Q3 $0.39 v $0.35e, R$1.41B v $1.41Be; -14.0% afterhours - YELP: Reports Q3 -$0.04 v -$0.01e, R$61.2M v $59.5Me; -10.4% afterhours - WBMD: Reports Q3 $0.10 (ex items) v $0.09e, R$130.9M v $129Me; -5.0% afterhours - LNKD: Reports Q3 $0.39 v $0.31e, R$393M v $384Me; -3.3% afterhours - CZR: Reports Q3 -$6.03 v -$1.25e, R$2.18B v $2.25Be; -2.1% afterhours - FLEX: Reports Q2 $0.22 v $0.20e, R$6.41B v $6.27Be; -1.8% afterhours - AFL: Reports Q3 $1.47 adj v $1.47e, R$5.89B v $5.89Be; Raises quarterly dividend; -1.6% afterhours - GNW: Reports Q3 $0.24 v $0.26e, R$2.32B v $2.41Be; -1.5% afterhours - RYL: Reports Q3 $0.95 v $0.96e, R$576.4M v $596Me; -1.3% afterhours - AUY: Reports Q3 $0.09 adj v $0.07e, R$456.7M v $469Me; -0.4% afterhours - EIX: Reports Q3 $1.42 v $1.21e, R$3.96B v $3.43Be; -0.3% afterhours - CBI: Reports Q3 $1.12(adj) v $1.11e, R$2.99B v $2.92Be; +1.0% afterhours - GILD: Reports Q3 $0.52 v $0.48e, R$2.78B v $2.74Be; guides FY13 product sales higher; +1.0% afterhours - TTWO: Reports Q2 $2.49 v $1.65e, R$1.27B v $918Me; +2.1% afterhours - EA: Reports Q2 $0.33 v $0.12e, R$1.04B v $976Me; +3.8% afterhours - BIDU: Reports Q3 $1.48 v $1.43e, R$1.45B v $1.34Be; +5.7% afterhours - BWLD: Reports Q3 $0.95 v $0.86e, R$315.8M v $312Me; +11.2% afterhours
Notable movers by sector: - Consumer discretionary: China Shipping Container 2866.HK -3.0% (Q3 results); Esprit Holdings 330.HK +6.1% (Q3 results; appoints CPO); Japan Tobacco Inc 2914.JP +3.4% (reports of plant closure, job cuts); Shiseido 4911.JP +1.3% (JV plans) - Consumer Staples: Daio Paper Corp 3380.JP +0.5% (press speculation on H1 results) - Industrials: CSR Corp 1766.HK +1.3% (Q3 results); Air China 601111.CN +2.1% (Q3 results); GWA Group Ltd GWA.AU +0.7% (FY13 guidance); CNR Co Ltd 601299.CN +3.5% (Q3 results) - Materials: Medusa Mining Ltd MML.AU -3.8% (Q1 production results); Metallurgical Corporation of China Ltd 601618.CN +3.4% (Q3 results) - Financials: China Vanke Co Ltd 000002.CN +0.7% (Q3 results); China CITIC Bank 998.HK +3.6% (Q3 results); Mitsubishi UFJ Financial Group 8306.JP +1.8% (press speculation on H1 results); Sumitomo Mitsui Financial Group 8316.JP +1.5% (press speculation on H1 results) - Energy: Datang International Power Generation 991.HK +3.5% (Q3 results); PetroChina 601857.CN +1.8% (Q3 results) - Technology: Pegatron Corp 4938.TW +2.0% (possible Apple order); Disco Corp 6146.JP +2.1% (analyst action); Secom 9735.JP +2.0% (press speculation on H1 results) - Utilities: SDIC Power Holdings Co Ltd 600886.CN +8.0% (Q3 results); Datang Huayin Electric Power Co Ltd 600744.CN +4.2% (Q3 results); TEPCO 9501.JP -0.9% (speculation surround spinoff of cleaning operations) - Telecom: Softbank Corp 9984.JP +2.0% (press speculation on H1 results)
After Hours Summary: BWLD +10.4%, RPXC +9.6%, DWA +7.9%, BIDU +5.7%, EA +3.4%, CYNI -22.4%, INVN -14.1%, YELP -10.7% following earnings/guidance
After Hours Gainers: Companies trading higher in after hours in reaction to earnings: BWLD +10.4%, RPXC +9.6%, BBSI +8.4%, LOCK +8.1%, DWA +7.9%, BIDU +5.7%, MWA +3.5%, EA +3.4%, IPHI +3.3%, LOPE +3.2%, GPRE +2.4%, TRLA +2.4%, MOVE +2.3%, TTWO +1.3%, BGFV +1.3%, ULTI +1.1%, CBI +1%, MRCY +0.8%, GILD +0.7%, AMP +0.6%, SM +0.6%, SOHU +0.6%, DLB +0.6%, ACMP +0.3%, QGEN +0.2% Companies trading higher in after hours in reaction to news: VOLC +3.6% (announced new two-year results of largest prospective study of use of IVUS in stent placement; results suggest that use of IVUS with angiography in placing the current generation of drug-eluting stents was associated with reductions in certain serious patient events), ARIA+3.2% (Sarissa Capital Management disclosed 6.22% active stake in 13D filing; recently contacted mgmt), SYMC +3.0% (CEO disclosed 100k share purchase on 10/28 at ~$22.06 per share), MDLZ +0.9% (trading higher following WSJ story that activist investor Nelson Peltz is putting pressure on the co to cut costs)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings: CYNI -22.4%, INVN -14.1%, WU -13.3%, IACI -11.9%, YELP -10.7%, SFLY -10.1%, QCOR -9.7%, SIMG -6%, MX -5.9%, CALX -5.6%, ENTR -5.5%, WBMD -5%, RBCN -4.5%, CAP -4.1%, KTCC -4%, LNKD -3.6%, XCO -2.9%, CZR -2.7%, HTS -2.7%, CRUS -2.3%, GNW -1.9%, FLEX -1.8%, AFL -1.6%, RYL -1.3%, EXXI -1%, SONS -0.3%, EIX -0.3%, SYX -0.1%
Companies trading lower in after hours in reaction to news: AMRN -13.1% (disclosed the FDA has rescinded the ANCHOR study special protocol assessment agreement),YELP -10.7% (announced proposed $250 mln follow-on offering; co also reported earnings), PVH -0.8% (announced succession plan for Tommy Hilfiger Group; Fred Gehring to become Chairman, Tommy Hilfiger, and Vice Chairman, PVH Corp. in the second half of 2014)
Closing Market Summary: Equities Climb as Dow Jones Leads
The S&P 500 registered its fourth consecutive advance, climbing 0.6% to extend its October gain to 5.4%. The Dow Jones Industrial Average (+0.7%) outperformed the benchmark index while the Nasdaq (+0.3%) lagged after starting the session in-line with the S&P. The tech-heavy Nasdaq posted a modest advance of 0.3% after the exchange experienced an intraday data dissemination issue that prevented index quotes from being sent out for nearly an hour. However, the issue was isolated to the index while individual components traded normally. One of the components that contributed to the Nasdaq's underperformance was Apple (AAPL 516.68, -13.20). The largest tech stock lost 2.5% after its below-consensus gross margin guidance overshadowed its earnings beat on above-consensus revenue. Despite Apple's relative weakness, the technology sector (+0.5%) ended in-line with the broader market, bolstered in part by the 2.7% gain in the shares of IBM (IBM 182.12, +4.77). Big Blue rallied after the company's Board of Directors authorized an additional $15 billion for its share buyback program. Chipmakers also contributed to the sector's strength as the PHLX Semiconductor Index advanced 1.5%. Outside of technology, consumer discretionary (+0.6%) and energy (+0.7%) were the only other outperformers among cyclical sectors while financials, industrials, and materials ended with gains of 0.3% apiece.
The discretionary sector received support from homebuilders as all major builders posted gains while the iShares Dow Jones US Home Construction ETF (ITB 23.43, +0.32) rose 1.4%. Meanwhile, the energy sector was underpinned by BP (BP 45.90, +2.18) and Valero (VLO 40.21, +0.76) after both reported solid quarterly results. Among countercyclical groups, utilities (+0.1%) lagged while consumer staples (+0.9%), health care (+0.7%), and telecom services (+1.5%) outperformed. Among earnings of note, Pfizer (PFE 31.25, +0.51) settled higher by 1.7% after beating bottom-line estimates by two cents on in-line revenue.
Treasuries ended on their highs as the 10-yr yield slipped two basis points to 2.50%. With just two sessions left in October, the S&P is on track to post a solid monthly advance of 5.3%. While the month-to-date gain is impressive, the S&P 500's performance over the past 15 sessions has been even more eye-popping. Since October 8, the index has gained more than 7.0%. Investors will receive the latest policy statement from the Federal Open Market Committee tomorrow, but the markets are expecting the FOMC decision to be a non-event. Trading volume was on the light side as just over 680 million shares changed hands on the floor of the New York Stock Exchange. Today's economic data was plentiful, but did little to suggest the Federal Reserve will be eager to curtail the pace of its asset purchases in the near term. The Conference Board's Consumer Confidence Index plummeted in October, falling from an upwardly revised 80.2 (from 79.7) to 71.2 (73.1 consensus). The entire decline in confidence can be attributed to the reaction to the government shutdown and near-default by the U.S. Treasury.
Typically, confidence levels are influenced by equity trends, oil prices, labor conditions, and media reports. Other than the negative media attention on the shutdown, all of the typical components moved in a positive direction in October. If these trends continue in November, the Consumer Confidence Index should slowly return to at least September levels.
Separately, September retail sales declined 0.1% to follow an August increase of 0.2% (-0.1% consensus). The headline decline in retail sales masked an otherwise strong report, especially considering that private payroll growth was much weaker than expected. The entire decline in sales was the result of a 2.2% drop in motor vehicle demand. Motor vehicle manufacturers already showed that August sales were boosted by calendar effects stemming from an extra weekend and the Labor Day holiday. With those biases removed, sales were set to decline substantially in September, which translated into the 2.2% drop in motor vehicle sales. Total business inventories increased 0.3% in August after increasing 0.4% in July (+0.2% consensus). Also of note, September producer prices fell 0.1% after increasing 0.3% in August (+0.2% consensus). That was the first monthly decline since prices fell 0.7% in April. Food prices unexpectedly declined 1.0% in September after increasing 0.5% in August. A 17.9% drop in fresh and dry vegetables prices contributed to most of the September decline. Those prices increased 26.9% in August.
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET, October ADP Employment Change will be released at 8:15 ET, and September CPI will cross the wires at 8:30 ET. In addition, the FOMC will release its latest policy statement at 14:15 ET. On the earnings front, General Motors (GM 36.06, +0.26), Comcast (CMCSA 47.71, -0.52), and Exelon (EXC 28.05, -0.02) will report their results ahead of the opening bell.
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BN 10/29 18:48 *SONAECOM SAYS IT WILL OFFER EQUIVALENT OF EU2.45 FOR EACH SHARE BN 10/29 18:45 *SONAECOM ANNOUNCES OFFER TO BUY 24.16% OF OWN STOCK
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Sonaecom Offers to Buy as Much as 24.16% of Its Own Stock 2013-10-29 18:58:09.285 GMT
By Joao Lima Oct. 29 (Bloomberg) -- Portuguese co. says it will offer the equivalent of EU2.45 per each Sonaecom share, according to a regulatory filing. * Investors accepting offer will receive Zon Optimus shares and may also receive some cash: statement * Offer is for as many as 88.5 million Sonaecom shares: statement * NOTE Sept. 6: Zon Optimus Says New Shares to Be Listed on Lisbon Exchange From Sept. 9 {NSN MSPEEP6S972P <go>} * NOTE Aug. 26: Portugal’s Competition Authority Clears Zon- Optimus Merger {NSN MS5DNU6K50YF <go>} Statement: {NSN MVG1IWBE5TS0 <go>}
Link to Company News:{MLOPT FP <Equity> CN <GO>} Link to Company News:{SNC PL <Equity> CN <GO>} Link to Company News:{ZONOP PL <Equity> CN <GO>}
For Related News and Information: First Word scrolling panel: {FIRST<GO>} First Word newswire: {NH BFW<GO>}
To contact the reporter on this story: Joao Lima in Lisbon at +351-21-340-4570 or jlima1@bloomberg.net
To contact the editor responsible for this story: Henrique Almeida at +351-21-340-4634 or halmeida5@bloomberg.net
Sweden Meets Its Match in Tobacco
Swedish Match Faces a Raft of Foreign Rivals and Has Little Choice but to Compete at the Low End of the 'Snus' Market
Tobacco is sometimes smokeless, but it can still leave investors burned. Shares of Swedish Match fell 6.2% Tuesday, wiping out all of the year's gains, when the company reported a 10% decline in operating profit for the third quarter. Much of the weakness was in Swedish Match's home market of Sweden, where it generates about 50% of its operating profit. The trouble continues to be a raft of competitors that entered Sweden in the past couple of years to compete in the market for "snus," a moist tobacco product that users place in their mouths to absorb nicotine. The likes of Japan Tobacco, Imperial Tobacco and British American Tobacco have offered their own versions to Swedes at lower prices, taking market share from the incumbent. Indeed, Swedish Match said competition remained intense in the low-price segment during the third quarter. The foreign rivals are unlikely to let up anytime soon. Unlike Swedish Match, large tobacco corporations earn the vast majority of their profits elsewhere. That gives them an incentive to price their products very aggressively so they can build Swedish market share, even if it means sacrificing profit. Gabriela Malczynska of Barclays estimates that nonpremium snus will account for 52% of the Swedish market in 2017, up from 35% in 2012. In turn, Swedish Match has little choice but to compete at the low-end of the snus market. Unfortunately, operating margins in that category are far thinner than in the premium segment. So even if Swedish Match holds on to market share, its margins will probably suffer. One area of potential growth is the budding U.S. snus market, where Swedish Match has yet to make an operating profit but is growing quickly as consumers choose cigarette alternatives. Yet electronic cigarettes, another smokeless-tobacco product, are growing far faster and have financial backing from deep-pocketed tobacco companies such as Lorillard. There is a good chance that smokers will choose electronic cigarettes, which mimic the traditional experience, rather than snus. Even after Tuesday's stock slide, Swedish Match trades at 15.5 times consensus forward earnings, higher than almost any major tobacco company. While Swedish Match's strong brand should serve investors in the long term, now is no time to take it up.
BlackBerry Met With Facebook Last Week on Potential Bid
BlackBerry Ltd. executives flew to California to meet with Facebook Inc. last week to gauge its interest in a potential bid for the struggling smartphone-maker, according to people familiar with the matter. It remains unclear whether Facebook is interested in placing a bid. Spokesmen for both companies declined to comment. Last month BlackBerry struck a preliminary deal to go private with Canadian insurer Fairfax Financial Holdings Ltd. for $4.7 billion, or $9 a share. The due diligence period for that deal ends next week, but BlackBerry and its advisers remain open to interest from other potential bidders. The deadline for other bids is Monday. BlackBerry does have other players circling. Earlier this month The Wall Street Journal reported that Chinese computer giant Lenovo Group Ltd. was interested in a possible bid. And BlackBerry has signed a nondisclosure agreement with distressed asset specialists Cerberus Captial Management LP, people familiar with the matter have said. BlackBerry's co-founders, Mike Lazaridis and Doug Fregin are also weighing a bid, according to a Securities and Exchange Commission filing earlier this month. After years of seeing its share of the smartphone market erode, BlackBerry in August announced a wide-ranging strategic review that essentially put the company up for sale. The company wrote down nearly $1 billion in unsold smartphone inventory, and is in the process of cutting 40% of its staff.
Board approves $15B buyback program (7.6% of market cap) - The board today also authorized $15 billion in additional funds for use in the companys stock repurchase program. IBM said it will repurchase shares on the open market or in private transactions from time to time, depending on market conditions - This amount is in addition to approximately $5.6 billion remaining at the end of September 2013 from a prior authorization. With this new authorization, IBM will have approximately $20.6 billion for its stock repurchase program
Herbalife Exec: Will consider conducting share repurchases in 2014 following the new audits from the replacement auditor - conf call comments