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Weak aeroplane delivery figures this week could deliver another blow to its credit outlook

Boeing, a manufacturing pioneer, linchpin of the US defence business and survivor of a century of turbulence in the aviation industry, is facing a once-unthinkable prospect: having its debt rating cut to junk.

The aerospace giant is scheduled to detail its aeroplane deliveries for the month of May on Tuesday. The figures are expected to be a disappointment, and investors and analysts will be watching to see if the company can crank up deliveries — and free cash flow — in the second half of the year in the hopes of avoiding a downgrade.

Weak aircraft deliveries, an unclear recovery picture and a prolonged period of high debt relative to earnings have been cited by rating agencies as factors that could lead to them cutting Boeing’s rating to junk.

A drop to junk status could make it more expensive for Boeing to borrow. The sheer size of its capital structure, with nearly $58bn in overall debt, may prove difficult for high-yield buyers to digest a rush of new supply easily — sparking price swings. Boeing’s leadership has stressed the importance of maintaining investment-grade status, and investors and analysts expect the company to avoid a downgrade if at all possible.

“A balance sheet that size would have a lot of challenges financing itself in the high-yield market”, making it “a really difficult transition to high-yield”, said one asset manager who holds Boeing bonds.

“We would expect some volatility on a downgrade for sure,” said another portfolio manager at a big asset manager who holds Boeing bonds.

The aerospace giant is hovering at the lowest level of the investment-grade universe, after Moody’s joined the other top rating agencies in reducing its credit quality to “Baa3” in April — known as “BBB-minus” by its peers. At the same time, Moody’s, S&P and Fitch all lowered their outlooks on the company to “negative” — a move that can signal a higher probability of additional future downgrades.

Investors noted that Boeing’s bonds are already trading between the bottom of the investment-grade world and the top of the high-yield ladder, in a sign of its challenges to date and the changes made to its credit rating.

Among Boeing’s larger and more liquid bonds, one issued in 2020 and maturing in 2050 currently yields roughly 6.5 per cent. Another maturing in 2030 yields just under 6 per cent, while a bond maturing in 2025 yields just over 6 per cent.

Those levels are higher than the average for all triple-B rated bonds, which stood at 5.7 per cent on Thursday, according to Ice BofA data. But they are lower than the average yield of 6.7 per cent for all double-B rated bonds, the highest rung of junk.

A company spokesperson declined to comment. Chief financial officer Brian West told investors in April that as Boeing managed its balance sheet, along with improving manufacturing and the supply chain, it would “prioritise the investment-grade rating”.

Boeing has struggled with free cash flow this year. It used nearly $4bn cash in the first quarter and now expects an outflow for the year.

A ratings committee would “weigh heavily” a scenario in which Boeing’s deliveries, and therefore its free cash flow, do not improve over the course of the year, said Moody's analyst Jonathan Root.

The US Federal Aviation Administration has capped Boeing’s production of the 737 Max at no more than 38 per month. Delivering near that cap will be important for Boeing’s rating, Root said, as “a functioning commercial airplanes business forgives many sins”.

“What’s important is not the May number [of deliveries], but the trend, the slope of the line from July through December,” he said.

Six years ago, before the first 737 Max crash off the coast of Indonesia in October 2018, Boeing was rated “A” or “A2”— four notches above junk—by all three rating agencies. When a second jet crashed five months later, regulators worldwide grounded the jet for nearly two years.

The agencies dropped their ratings in late 2019 and early 2020, then again in the spring of 2020 as the Covid-19 pandemic took hold in the US, devastating demand for air travel and jets and disrupting the plane maker’s supply chain.

Boeing tapped the bond market for $25bn in April 2020 to help it weather the pandemic. It raised another $10bn six weeks ago to bolster its liquidity, as it anticipates $12bn in maturities coming due over the next two years.

Boeing’s leverage — the ratio of its total debt to earnings before interest, taxes, depreciation and amortisation — makes it an “outlier” among companies with the same credit rating, said Fitch Ratings analyst Nicholas Varone. The multiple is expected to fall from the “mid-teens” in 2024 to four times ebitda by 2026.

The “lack of a pathway back” to improved production and deliveries, and the resulting hit to cash flow, would be one factor that could trigger a downgrade to junk, Varone said. But he said he expected the company to improve in the next six to 12 months and that it was more likely to keep its investment-grade rating rather than lose it.

Investors are comforted by the reality of the commercial aviation market, where airlines only have two suppliers: Boeing and its rival Airbus.

“We think there’s a pretty low likelihood that it’ll actually get downgraded,” said Adam Abbas, head of fixed income at Harris Associates, a Boeing bondholder. “It’s a duopoly,” he noted, adding that “too much negativity is built in . . . to assume that Boeing’s issues today are going to be issues in three to five years”.

June 10 (Reuters) - Olympians including Dutch marathon runner Abdi Nageeye are using a new tool they hope will boost their medal chances this summer: tiny monitors that attach to the skin to track blood glucose levels.

Continuous glucose monitors or CGMs, were developed for use by diabetes patients but their makers, led by Abbott (ABT.N), opens new tab and Dexcom (DXCM.O), opens new tab, also spy opportunities in sports and wellness.

The Paris Olympics, which start on July 26, are an opportunity to showcase the technology - even though there is as yet no proof it can boost athletic performance.

"I do see a day where CGM is certainly going to be used outside of diabetes in a big way," said Dexcom's Chief Operating Officer Jacob Leach.

Diabetes patients remain the CGM specialist's commercial focus, he told Reuters, but Dexcom is also working with researchers on future use to optimise athletic performance. He would not disclose details.

The CGM market is already worth billions of dollars thanks to demand from diabetes patients, who use the coin-sized adhesive skin patches with a Bluetooth link to a smartphone instead of drawing blood through a finger stick. The readings help determine whether they need an insulin dose.

In March, Dexcom's Stelo device, targeting people with early-stage diabetes who are not on insulin, became the first CGM to win U.S. approval for purchase without a prescription. Launch is planned for this summer.

Abbott introduced a CGM product for amateur and elite sports users without diabetes in Europe as early as 2020 and has sponsored Kenyan marathon great Eliud Kipchoge and his team since 2021. Top athletes and their support staff have been using CGMs to optimise calorie intake and workout intensity as they prepare for sport events.

Abbott said it is targeting the non-diabetic consumer market. It is eyeing a U.S. launch for its Lingo device and smartphone app for health and wellbeing, available in Britain since January at a cost, opens new tab of 120-150 pounds ($152-$190) per month.

Sales of Abbott's FreeStyle Libre range, the most commonly used CGMs, rose 23% to $5.3 billion in 2023 on demand from diabetes patients who value their ease of use and monitoring precision. Dexcom saw 2023 revenue grow 24% to $3.6 billion.

Research firm GlobalData forecasts the lifestyle CGM market could grow nearly 15% a year to reach $9.9 billion by 2031, partly driven by users of weight-loss drugs like Wegovy who seek med-tech gadgets to support dieting efforts.

Other market researchers estimate the overall CGM market including diabetic use, with suppliers like Medtronic, opens new tab(MDT.N), opens new tab, will grow 9-10% annually over five years.

PREPARING FOR PARIS

Dutch marathoner Nageeye, who won silver at the Tokyo Olympics, said he and his coaches are monitoring blood glucose as an indicator of the body's available energy, part of his quest for an "effortless run".

CGM use has guided Nageeye, who has qualified for Paris, to work on sleeping and eating patterns so that he expends a minimum of energy during training.

"That's your energy, actually, that's your fuel. We have to monitor that," said Nageeye. His team has been sponsored, opens new tab by Abbott since April 2021.

Australian swimmer Chelsea Hodges, who won relay gold at the Tokyo Olympics, said CGMs had helped her remedy bouts of extreme exhaustion and dizziness during endurance training by making adjustments to her calorie intake and training times.

She spoke to Reuters while preparing for Paris, but recently ended her swimming career due to hip problems.

While companies see growth potential in the gadgets, sports nutrition scientists see a promising field of research.

"A big guesswork for endurance athletes has always been: am I training hard enough or am I training too hard? It seems with CGMs, we have a better understanding," said Associate Professor Filip Larsen of the Swedish School of Sport and Health Sciences.

Larsen, also chief science officer of sports performance consultancy firm svexa, opens new tab, said the firm has been analysing CGM data collected by several athletes and teams. He said svexa is not sponsored by any CGM maker.

Larsen warned, however, that there was little validated science yet on how to optimise an athlete's routines using CGMs.

"Most researchers cannot give you the exact answers. In five years, we will know 10 times as much as we do now."

But the field is abuzz with trials and experiments, including work on glucose-measuring contact lenses, opens new tab.

Sports dietician Greg Cox, associate professor at Australia's Bond University, has worked with swimmers including Hodges and rowers, triathletes and track athletes.

Results of a trial, opens new tab run by his team to test how not eating enough calories to sustain the intensity of exercise would affect endurance athletes' glucose readings have so far been inconclusive, and he said more research into CGMs was needed.

Both Cox and Larsen expressed scepticism about non-diabetic consumers using the technology for health and fitness without professional advice.

"What I see on social media is that normal, healthy people get scared when they had one banana and their blood glucose goes up really high for one hour. This is completely expected and a normal response," said Larsen.

Market leader Abbott told Reuters that understanding blood-glucose swings is key to managing one's metabolism for a healthier life.

"While glucose spikes are normal in healthy people, we also know that having fewer frequent and large spikes and crashes in glucose is associated with improved energy, mood, focus, sleep, and reduces cravings," a spokesperson said.

Partnership with private equity firm CVC has not yet borne fruit leaving clubs facing cash crunch

French football is on the verge of crisis just two years into an investment deal with private equity firm CVC Capital Partners, as the league operator struggles to find a broadcaster for the coming season and clubs brace for a summer cash crunch. 

Ligue de Football Professionnel, which operates the top two tiers of French football, has been trying to secure its next TV deal since October, but its ambitions of raising as much as €1bn from the sale have been dashed by weak demand.

Leonard Blavatnik-owned streamer DAZN and Qatari sports broadcaster beIN were the two main prospects for the 2024 to 2029 rights after the current deal with Amazon expired. 

However, the rights auction collapsed in October after failing to drum up a single bid at the reserve price of about €800mn. LFP has since been holding talks directly with interested parties, but no deal has yet materialised. LFP president Vincent Labrune has delayed the league’s annual general meeting, scheduled for the first week of June, until the end of the month, at which time he promised to “propose a definitive solution”.  

One media executive blamed “incompetence” at the league for the current situation, another called the auction process a “total shitshow”. 

A person close to the league disputed that a crisis was brewing and expressed confidence that a deal for the domestic broadcast rights would soon be reached. 

“There is a difficult negotiation under way, and the leadership of the league refuses to sell at a low price,” said the person. “But it was to be expected that the rights would not be easy to sell this cycle because it will take more time for the promise of the CVC deal to come good.”

The roots of the current crisis can be traced back to 2018, when the LFP chose to sell most of its broadcast rights to Mediapro, an unproven Chinese-backed company, for a record price of €800mn a year for 2020 to 2024. The decision to tie up with a new operator rather than long-standing partner Canal+ proved a fateful choice that is still casting a long shadow over French football.

The league season was curtailed when the pandemic hit in 2020. Mediapro stopped paying and ended up going bust in France, piling financial pressure on the clubs. In crisis, LFP sealed a cut-price deal with newcomer Amazon, further enraging Canal+ because they had paid far more for their smaller package of games under a licence with beIN.

The Vivendi-backed pay TV operator filed lawsuits against the LFP, and people close to the group say that Canal+ and Vivendi’s owner billionaire Vincent Bolloré still hold a grudge over the episode. Canal+ declined to comment.

The double hit of the pandemic and the collapsed media deal left some French football clubs close to bankruptcy, and the league warned of dire consequences if it failed to find outside investment.

“If we aren’t able to bring in new money to bounce back, the French Championship will become like the Slovenian Championship”, Labrune told a committee of French senators in 2021.

A few months later, the league agreed to sell a 13 per cent stake in a new entity responsible for all LFP’s commercial operations to CVC for €1.5bn. Upon agreeing the deal, CVC promised to “put its expertise, experience and relationships at the service of the LFP’s commercial subsidiary and support its business development ambitions”.

Labrune declared then that French football had been “saved” as clubs received an immediate cash injection. 

But now French professional football is once again in trouble. With just over 10 weeks to go until the new season kicks off, clubs are increasingly fearful of being left in the lurch without a media deal.

The LFP has mooted the idea of creating its own TV channel to carry live fixtures as a way of bypassing reticent broadcasters, according to several people with knowledge of the situation. However, analysts and media executives cast such a move as risky given the short amount of time before football restarts in the summer.  

With little visibility on future TV revenue, some French teams are unable to access bank lending and are preparing for a fire sale of players warned a senior executive at one top-tier club. “Clubs are desperate for money”, said another. “I don’t know how CVC allowed things to get so screwed up.”  

The plight of French football has not gone unnoticed by President Emmanuel Macron, who has discussed the situation directly with some club owners, according to people familiar with the matter. A visit to Paris by the Emir of Qatar in February also stoked speculation that state-owned beIN could be persuaded to step in.

However, people close to the process have cautioned that the Qatari broadcaster was unlikely to come to the league’s rescue, and would not seek a broadcast deal on its own.

“Domestic rights come with a lot of baggage. It’s a very political battle”, said one person involved in the discussions. 

The situation is complicated by the fact that beIN chair Nasser Al-Khelaïfi is also the chair of Paris Saint-Germain, the reigning French champions. Almost a quarter of Ligue 1’s TV money goes to PSG, yet it accounts for just 7 per cent of the club’s total income. For some of the smaller teams in the league, domestic broadcasting accounts for more than 60 per cent of revenue. 

Excluding money from player transfers, clubs in Ligue 1 and 2 suffered combined operating losses of €1.05bn in the 2022/23 season on revenue of €2.7bn, according to figures from French football’s financial regulator. Fees earned from selling players reduced losses to €300mn. 

The vast majority of clubs have given their backing to the CVC deal, both at the initial vote in 2022 and again last November. All clubs received money from the investment, although the amounts vary.

Yet it has still proved divisive in French football. Some club executives have questioned what, beyond the initial cash infusion, the firm has added and how its money has been distributed. Le Havre president Jean-Michel Roussier, a former Mediapro executive, told French senators that the deal was the “heist of the century” and has sued to have it cancelled.

Christophe Bouchet, former president of Olympique de Marseille, has described the deal as “catastrophic” and claims that many of those running clubs failed to read the agreement before signing up to it. 

The French league deal is one of several sports investments made by CVC in recent years, alongside moves into rugby, cricket, tennis and Spanish football. The firm had been in the running to invest in the German football league earlier this year, before widespread fan protests forced the entire process to be abandoned. Its investment in Premiership Rugby has also drawn scrutiny after three of the league’s 13 clubs collapsed last year. 

LFP, CVC and beIN declined to comment.

But people close to CVC and to LFP downplayed the bleakness of the situation in France, noting that the league’s other commercial deals — covering things such as betting data and sponsorship — had all been renewed at significantly increased rates. LFP recently appointed sports marketing agency Infront to handle the international rights sale, raising hopes of a quick deal, while the expectation remains that a domestic deal will get done before the season starts, the people said. 

But French football faces another challenge: a lack of reasons for viewers to tune in. Following the departures of Lionel Messi and Neymar from PSG last summer, Kylian Mbappé last week confirmed his move to European champions Real Madrid. The French league no longer has a global star, while the competition is increasingly dull — PSG have won the French league 10 times in the past 12 years.

Stock exchange CEO Theodor Weimer’s populist tirade reflects growing frustration among business leaders

Chancellor Olaf Scholz’s coalition has reacted with outrage to a rant from Germany’s stock exchange chief that savaged the government’s policies and said the EU’s largest economy risked becoming a “developing country”.

The speech by Deutsche Börse chief executive Theodor Weimer, which has gone viral on social media, reflects growing frustration among business leaders with Scholz’s government, a fractious coalition of Social Democrats, Greens and liberals, as it struggles to boost the economy.

They accuse it of not doing enough to deal with Germany’s woes, including a growing skills shortage, excessive bureaucracy, high energy prices and a heavy tax burden. Germany was the worst-performing major economy last year and the government has forecast that gross domestic product will only grow by 0.3 per cent in 2024.

But politicians from the governing parties were shocked by the populist tone of Weimer’s tirade, which some said evoked the rhetoric of the far-right Alternative for Germany.

“The bizarre . . . speech is more beer tent than Dax-listed company executive,” Verena Hubertz, deputy leader of the Social Democrats’ parliamentary group, told the Financial Times.

“Concrete criticism is always welcome but the indiscriminate bashing of politicians . . . damages our political culture and the prestige of the German economy,” Sandra Detzer, economic spokesman for the Greens, told the FT.

A spokesman for Deutsche Börse described Weimer as a “man of clear words” who is “not known for putting lipstick on the pig”. He said the chief executive’s comments were “largely based on conversations with international investors”, and he had already expressed them publicly “on various occasions”.

A former Goldman Sachs banker and chief executive of HypoVereinsbank, Weimer made the 17-minute speech on April 17 at a meeting of the Bavarian Economic Council, a conservative-leaning business lobby in the southern German state.

But it only surfaced on social media platform X on Friday. It was then widely shared by conservatives and rightwing economists who have long been highly critical of the coalition’s policies. 

Weimer said international investors found the Berlin government “stupid” — a view he said was shared by many of the country’s bosses — and were increasingly shunning Germany as a place to do business.

“Our image was never as bad as it is now,” he said.

Weimer, who is due to step down at Deutsche Börse by the end of the year, said international investment was only flowing into German companies because they were so undervalued. “We’ve become a junk shop,” he said.

He said he had held 18 meetings with Robert Habeck, the economy minister from the Green party, and “I can tell you: it’s an utter disaster”. The minister had started well, listened to business and done a few things right, he said, but “now the fundamentalists are coming through more and more”.

Weimer also criticised the government for, as he put it, “destroying” the country’s vital auto industry, pointing to the planned phaseout of petrol and diesel cars. Many critics of Germany’s auto-bosses have said that the car companies themselves are to blame for failing to invest enough in electric vehicles.

Weimer contrasted the situation in Germany with the attractiveness of the US, praising the way the Biden administration has provided billions in subsidies to clean technology providers under the Inflation Reduction Act.

Weimer said Germany had to stop being a “public economy” and be a “private economy”, adding: “In the US they say it doesn’t matter which old man is president — we as businessmen lead the country, and so we don’t care”.

Some German economists on social media pointed out the contradiction of demanding a smaller state on the one hand and more government subsidies on the other.

A spokesman for Scholz declined to comment.

But officials in Habeck’s economy ministry dismissed Weimer’s outburst as “pretty trite polemics”. They said the government had made huge strides in reducing bureaucracy, expanding renewable energy and simplifying immigration rules to help fill the skills gap.

They also rebuffed the suggestion that Germany was being shunned by international business, pointing to significant investments by Intel, TSMC, Eli Lilly and other big companies over the past three years.

“Most of the business chiefs I talk to have understood that the necessary modernisation of our economy won’t succeed by moaning about how ‘everything was better before’ but with energy, drive and innovation,” said Hubertz. “The dialogue with them seems to me to be a lot more productive.”

Move by Benny Gantz is aimed at forcing early elections but could complicate U.S. diplomatic effort to end war in Gaza

A centrist member of Israel’s war cabinet quit the government on Sunday over Prime Minister Benjamin Netanyahu’s handling of the war in Gaza, after a daring Israeli commando mission to rescue four hostages threatened to trip up efforts to end the conflict and free the remaining captives.

Benny Gantz, who leads the National Unity party and was one of three war cabinet members, said he was leaving the government due to a lack of long-term strategy for the war in Gaza, among other reasons.

“Fateful strategic decisions are stuck due to hesitancy and procrastination out of political considerations,” Gantz said, in televised remarks.

The Israeli government shake-up comes as U.S. and Israeli officials are set to renew a push to strike a deal with Hamas to free hostages and halt the war. But after the Israeli military rescue operation on Saturday, Israel’s strategic position in Gaza remains little changed, while the fallout may give both sides reason to harden their positions.

U.S. Secretary of State Antony Blinken is slated to sweep through the Middle East this week to invigorate efforts for a cease-fire and a broader deal with Saudi Arabia that would reduce Israel’s isolation and put the Palestinians on a path to their own state.

“By far the most effective, certain and right way to get all of the hostages out is to get a comprehensive cease-fire and hostage deal that President Biden described in public a few days ago,” U.S. national security adviser Jake Sullivan told CBS’s “Face the Nation” on Sunday.

Gantz’s move was aimed at toppling Netanyahu’s religious and right-wing coalition. But the strategy risked backfiring by empowering hawkish lawmakers less aligned with the Biden administration as Washington makes a renewed push to end the war in Gaza and free hostages held there.

In a response, Netanyahu called on Gantz to remain in the government.

“This isn’t the time to abandon the battle—it’s the time to unify forces,” Netanyahu wrote in a social-media post.

Gantz, a former head of the Israeli military, took his party into the government from the opposition shortly after Hamas’s Oct. 7 attacks. With Israelis mired in domestic unrest before the attack, the move was done to unify the country as it entered into a war. It also gave the Biden administration a like-minded moderate in the war cabinet who communicated often with officials from Washington.

Gantz’s departure from the government signifies that Israel’s unity at the start of the war has passed. The move is expected to fuel antigovernment protests and demands for early elections. Elections could happen as early as this summer, but more realistically early next year, if at all, analysts say. Gantz, in his speech on Sunday, called on Netanyahu to set an election date in the fall.

How Gantz’s strategy will affect Israel’s handling of the war is unclear.

Netanyahu could replace Gantz with hard-line lawmakers currently in the opposition or coalition partners who oppose the U.S.-backed Israeli proposal to end the war and free Israel’s hostages. He could also dissolve the war cabinet, bringing decision-making back to the regular security cabinet where his far-right coalition allies could have more sway. This could heighten divisions within the coalition itself as internal disagreements eventually become public.

Gantz and Israeli Defense Minister Yoav Gallant have both publicly complained their seats at the war cabinet table haven’t given them much influence over the war’s management.

Netanyahu, analysts say, along with the army’s top brass, is tightly in control of the war’s direction as well as the negotiations to free the hostages and end the war.

On Sunday, Israeli Foreign Minister Israel Katz said that Israel’s policy hadn’t changed and that it would continue to press Hamas militarily and pursue any avenue to free hostages while also pursuing a diplomatic solution to achieve its aims.

“Without military pressure, there won’t be any deal,” said Katz in an interview with Israel’s public broadcaster Kan.

The operation, said Yohanan Plesner, president of the Jerusalem-based Israel Democracy Institute think tank, could fuel demands in Israel for the government to agree to the deal on the table because it demonstrated that some of the hostages are still alive and how much their freedom means to Israelis. But overall, he said, there wasn’t likely to be any immediate change.

The rescue operation “has no strategic implications in terms of the grand scheme of things,” he said.

On Saturday night, thousands of demonstrators marched in Tel Aviv, protesting the way the government is conducting the war in Gaza and chanting “Now!” for a cease-fire deal.

Plesner said Saturday’s rescue operation could also strengthen those resolved to free hostages and defeat Hamas purely through military means.

The operation, wrote Israel’s hard-line National Security Minister Itamar Ben-Gvir in social-media posts, “shows there’s hope and it’s possible to defeat our enemies and return the hostages without giving in.”

Israel’s military doesn’t share that point of view.

“We know we cannot do operations to rescue all of them,” said Israeli military spokesman Rear Adm. Daniel Hagari to reporters on Saturday. “This is why we need to do everything possible to make it happen that the hostages come back home.”

Blinken is set to arrive Monday in the region, where he is expected to discuss the rescue operation and push for a cease-fire, according to an Israeli official. He will find that the country is facing many challenges beyond the war in Gaza, including a potential war with Lebanon and increasing international isolation, as well as political instability.

“Alongside the justified joy we must remember that all of the challenges Israel was dealing with…still remain,” Gantz said Saturday.

On Sunday, he said he would support the government if it backs the current Israeli proposal to free the hostages and potentially end the war.

For Hamas, the rescue operation could reinforce its request for guarantees that Israel will cease its operations in Gaza.

Yahya Sinwar, Hamas’s leader in Gaza, has said the current proposal to release hostages—broached by President Biden himself in a news conference a week ago—is unacceptable for Hamas because, in the group’s eyes, it doesn’t guarantee an end to the war.

Netanyahu has criticized the way the proposal has been characterized by Biden, arguing the outline allows for Israel to renew the war if it believes later-stage negotiations to reach a cease-fire are proving futile.

Guardian Council disqualifies prominent moderates but gives green light to one reformist MP

Iranian authorities have disqualified prominent moderates as candidates in the snap presidential election scheduled for later this month, narrowing the field to five hardline candidates and one mid-ranking reformist.

The Guardian Council, Iran’s constitutional watchdog responsible for vetting election candidates, announced the approved list on Sunday. Iran is set to hold early polls following the helicopter crash that claimed the life of Ebrahim Raisi, the country’s president.

Mohammad Bagher Ghalibaf, the current parliamentary Speaker, is seen by analysts as the leading hardline candidate.

The council disqualified Ali Larijani, Ghalibaf’s predecessor and a key figure in the 2015 nuclear deal, as well as Es’haq Jahangiri, a former reformist first vice-president. Both disqualified candidates had campaigned on platforms promising to steer the country away from its current hardline trajectory and to seek the easing of US sanctions. The Guardian Council did not provide reasons for its disqualifications.

Saeed Jalili, a former nuclear negotiator known for his opposition to engaging with western powers, was one of those approved. Among the staunchest hardliners, he is expected to be a strong rival to Ghalibaf.

In an attempt to introduce some competition from outside the hardline camp, authorities also approved Masoud Pezeshkian, a reformist member of parliament.

However, the main challenge for reformists will be to mobilise their voters, amid widespread scepticism about whether the election will have a real impact on the country’s future direction given that real power lies with the Supreme Leader Ayatollah Ali Khamenei. Analysts believe a victory for Pezeshkian would require a high turnout among the urban middle class and would depend on how the votes for hardliners were shared among the five candidates in that camp.

Reformist analyst Saeed Laylaz was hopeful that Pezeshkian’s approval marked a new chapter in Iran’s history. “His candidacy is beyond all expectations,” he told the Financial Times, predicting that it would promote a high voter turnout.  

Former reformist vice-president Mohammad-Ali Abtahi said in a post on X that the main contenders were likely to be Ghalibaf and Pezeshkian. Other candidates include hardliners Mostafa Pourmohammadi, a former minister, Amir-Hossein Ghazizadeh Hashemi, a conservative politician, and Alireza Zakani, mayor of Tehran.

The economy remains the foremost challenge for the next president, with high inflation and a dramatically weakened national currency straining the nation. While the Islamic republic tries to keep the race under control, two people who have previously criticised Ghalibaf and his affiliates over corruption allegations were jailed on Sunday after being convicted on charges of “spreading misinformation and disturbing public opinion”.

Khamenei has meanwhile urged candidates not to undermine each other during the election campaign, which will begin on Wednesday.

Laylaz said reformists would throw their full weight behind Pezeshkian in the two weeks before the election. “The positive point about Pezeshkian is that he is not opposed to any of the main elements of power within the establishment. He also has a huge support base among the large Azeri-speaking community in north-western Iran. I can easily imagine him as Iran’s next president,” he said.   

As more American couples opt for lab-grown stones, whoever buys the diamond producer needs to be as sharp at marketing as mining

Is it more romantic to buy a diamond that formed in the bowels of the earth than one grown in a lab? Young American couples don’t think so.

That is awkward for diamond miner De Beers, especially now that it is looking for a new owner. Mining conglomerate Anglo American, which has been a top shareholder in the world’s best-known diamond producer for almost a century, wants to sell or separately list it as part of a radical breakup plan.

The diamond industry is going through a rough patch, so the timing isn’t great. Jewelry sales boomed in 2022 as consumers splurged on luxury goods, but last year they pulled back. Weak demand has sent diamond prices to 2003 levels, says Liberum analyst Ben Davis.

Moreover, traditional diamonds are increasingly being challenged by lab-grown ones, which cost a fifth of the price. In April, 45% of all engagement rings sold in the U.S. had a synthetic stone, according to Edahn Golan Diamond Research & Data. It is impossible to tell whether a diamond is natural or lab-grown with the naked eye, and they have the same chemical makeup.

Some thrifty grooms may be buying lab-grown stones and passing them off as the real deal. Yet the trend also reflects the different spending priorities of a new generation of couples.

The average federal student-loan debt is more than $37,000, according to the Education Data Initiative. After a run-up in house values, a 10% down payment on a median-priced home has risen 45% to $43,000 compared with the end of 2019. Some couples are choosing to scrimp on the ring to splurge on a memorable honeymoon instead.

Even without this upheaval, De Beers would be a difficult business to sell because of its mix of assets. It has huge mining operations, producing a quarter of global diamond supply by volume. But it also runs 40 high-end jewelry stores and is one of the most famous luxury brands in the world. De Beers has been associated with romance since its 1947 “a diamond is forever” marketing campaign.

No buyer is an obvious fit for all these different skills. Diamond industry analyst Edahn Golan says De Beers could attract a trophy-hunting private buyer from the Middle East or a sovereign-wealth fund, but they wouldn’t necessarily have mining expertise. The government of Botswana, which jointly owns some diamond mines with De Beers, is another possibility, as is a consortium of Indian diamond buyers.

Ideally for the diamond industry, a luxury goods company would buy it and use its marketing flair to make the mined stones shine to young consumers again. Cartier’s owner, Richemont, has already ruled out a bid. The world’s biggest luxury company, LVMH, wants to push into fine jewelry and splashed out $16 billion on Tiffany & Co. in 2021. But luxury companies will be reluctant to get their hands and reputations dirty in mining pits.

The worst outcome for the industry would be for De Beers to be sold to a buyer that wants to extract profit rather than invest in the long-term appeal of diamonds. “It would be a fundamental change for the industry if De Beers was no longer the steward of natural diamonds,” says market analyst Paul Zimnisky.

If De Beers opts for an initial public offering, coming up with a realistic valuation will be a challenge. The diamond miner is valued at $7.6 billion on Anglo American’s books, but outside estimates range anywhere from $600 million to $4 billion.

De Beers might try to pitch itself as a luxury brand rather than as an old-school miner. The company plans to more than double its number of stores worldwide to shine a brighter spotlight on its jewelry business. The two industries fetch dramatically different valuations: Miners BHP and Anglo American trade at enterprise values equivalent to roughly six times earnings before interest, taxes, depreciation and amortization, compared with 13 times for Richemont.

But De Beers doesn’t have the high margins or earnings consistency of the best European luxury companies. Its Ebitda rose 29% in 2022 before plunging 95% to $72 million last year. No one is quite sure where its finances will settle, with the diamond industry in a funk and U.S. consumers abandoning natural stones.

Assets like De Beers don’t come up for sale often. Minus the mines, cash-rich luxury tycoons might snap it up for the power of the brand alone. Perhaps the company should be broken apart, just like its owner Anglo American. Natural diamonds won’t necessarily be forever unless De Beers makes a good match.