TheChek News Flow

Nikkei +0,53% Hang Seng +1,04% CSI -0,06% Shanghai +0,05% Shenzen -0,17%

Eur$ 1,1335 CNH 6,3681 CNY 6,3661 JPY 113,54 GBP 1,3325 CHF 0,9203 RUB 73,7563 TRY 13,1876 WTI$ 68,24 Gold 1,786,80 BTC 57,000 -110 ETH 4,730 +100

S&P +0,91%% Nasdaq +1,44% EuroStoxx +0,87% FTSE +0,69% Dax +0,93% SMI +0,64%

Macro :

- Fed’s Clarida Says Comfortable With Inflation Expectations Now

Keep an eye on :

- ADL GY : LEG Buys 31% of Brack Capital, to Buy Adler’s Remaining Stake

- AIR FP : Qatar Airways CEO: Airbus Doesn’t Fully Grasp A350 Issues

- AF FP : Air France-KLM Working to Bolster Balance Sheet, Couderc Says

- ASAI SS : Artificial Solutions International Holder Offers Shares

- BT/A LN : BT Readies Itself for Bidders as Takeover Talk Intensifies

- CBK GY : Commerzbank's $87 Billion Mittelstand Exposure Still a Key Risk

- CRBN NA : Corbion Completes EU100M U.S. Private Placement

- RF FP : Eurazeo Extends CEO Virginie Morgon’s Contract by 4 Years

- GLKBN SW : Glarner Kantonalbank: 2M New Shares to be Created From Loans

- GSK LN : Vir CEO Sees Antibody Medicine Working on Omicron, Data in Weeks

- HUSQB SS : Husqvarna Raises Financial Targets, Unveils Operational Goals

- IDR SM : Indra to Acquire Chilean Credit Card Operator Nexus

- INTER NA : CVC No Longer in Talks With Intertrust About Potential Offer

- LEG GY : LEG Buys 31% of Brack Capital, to Buy Adler’s Remaining Stake

- LNZ AV : Lenzing Board Proposes Dividend of EU4.35 for Fiscal 2021

- DRLCO DC : Maersk Drilling Gets $5.4M Contract as Petrogas Exercises Option

- BMPS IM : Monte Paschi Eyes Restart of EU Talks as Year-End Deadline Looms

- POG LN : Petropavlovsk Holder Files Derivative Claim on IRC Stake Sale

- PROX BB : Proximus Exploring TeleSign Listing Through a SPAC Merger

- RECSI NO : REC Silicon Chief Executive Tore Torvund Steps Down

- RNO FP : French November New Car Registrations Slip 3.2%: PFA

- SAN FP : Sanofi to Buy Origimm Biotech, Adds Acne Vaccine Candidate

- SAN FP : Sanofi Aims to More Than Double Vaccine Sales by End of Decade

- SOI FP : SOITEC 1H Current Operating Income EU75.3M Vs. EU37.2M Y/y

- SEV FP : Cleanaway Says ACCC’s Decision Date on Suez Assets Deferred

- TW/ LN : Taylor Wimpey Rallies Into Close Following Betaville Report

- TIT IM : Telecom Italia’s Head of HR Luciano Sale Leaves Company

- UBSG SW : UBS Says Sarah Youngwood to Succeed Kirt Gardner as CFO

- VCAP LN : Vector Capital Sees Earnings Ahead of Market Expectations

High-yield market suffers worst month since September 2020 as traders re-evaluate companies’ ability to repay debt

US junk bonds fell in November by the most in more than a year on fears the spread of the Omicron coronavirus variant will hinder the ability of low-rated companies to repay their debts.

A high-yield bond index compiled by Ice Data Services dropped just over 1 per cent in November, marking only the second month this year in which the gauge has posted a negative total return and its worst showing since September last year.

The decline was driven by a slide in the price of the debt, which offset the interest payments the bonds provide.

It is one of the clearest indications yet of how the emergence of a new strain of coronavirus has prompted global investors to shift away from stocks and bonds of companies that are considered to be most vulnerable to the potential hit to the global economy caused by the new variant.

The selling last month was even more severe for the lowest-rated corner of the market. The bonds of triple-C and lower-rated companies returned minus 1.4 per cent, reflecting worries that a boom in financing for risky companies could be knocked by tightening monetary policy or stricter social curbs in response to the new coronavirus variant.

Much of the downturn came on Friday last week, as concerns about Omicron prompted governments to rush to reimpose restrictions in an attempt to stem the spread of infection. Leisure was the worst-hit sector in the debt market on Friday, with airline bonds also suffering.

Yet investors had already grown cautious earlier in November, as high inflation and decelerating economic growth heralded calls for the Federal Reserve to step back from its $120bn-a-month pandemic-era bond-buying programme faster than planned. Comments from Fed chair Jay Powell on Tuesday suggesting the US central bank may accelerate its exit from crisis-era bond purchases added to those jitters.

The additional yield above ultra low-risk government bonds, or “spread”, for the high-yield index rose from 3.03 percentage points earlier this month — just marginally above its historic low — to 3.67 percentage points on Tuesday, its highest level since March. Bond yields move inversely to their prices.

“We have not seen these levels in a while,” said Matt Eagan, a portfolio manager at Loomis Sayles. “At the end of the day the buyer base has not been showing up as heartily as it was before.”

In another sign of the souring sentiment towards the asset class, investors pulled $2.8bn from the high-yield market last week, according to data from EPFR Global, the biggest one-week withdrawal since mid-March this year, when inflation fears were first spooking investors.

Investors also pointed to the seasonal slowdown in the build-up to Thanksgiving, with traders looking to book profits and trim risk before trading activity dwindles, as bankers and portfolio managers break for the holidays.

Despite the selling, yields on junk bonds are still in line with levels from around the same time a year ago, signalling borrowing costs will remain near historically low levels for many borrowers.

“It’s quite a change from a stable environment to a big drop off but it’s not as if this is a market panic,” said Marty Fridson, chief investment officer at Lehmann Livian Fridson Advisors. “Without the final blow from Omicron it wouldn’t have been so bad.”

No one has been able to generate net energy by combining atoms, yet Commonwealth Fusion Systems has attracted Bill Gates and George Soros

Commonwealth Fusion Systems LLC said it has raised more than $1.8 billion in the largest private investment for nuclear fusion yet as startups race to be the first to generate carbon-free energy like the sun.

Big-name investors backing the latest funding round for the Massachusetts-based company include Microsoft Corp. co-founder Bill Gates and George Soros via his Soros Fund Management LLC. Some of Commonwealth Fusion’s competitors, including Helion Energy Inc., have also recently secured huge funding as investors pile into clean energy technologies amid growing concerns about climate change.

Nuclear fusion has long been the holy grail of the energy world. Fusion is the process of generating energy by melding atoms. Current nuclear power plants create energy through nuclear fission, or splitting atoms. Fusion has the potential to create nearly limitless energy using common elements such as hydrogen, and has the added benefit of generating little to no long-lived nuclear waste.

But despite decades of research, no one to date has been able to produce net energy through fusion—or more energy than it takes to create a fusion reaction. Private firms are vying to be the first not only to create net-energy machines, but to commercialize them by delivering electricity to the grid on the scale of a power plant.

“Everything is science fiction until someone does it and then all of a sudden it goes from impossible to inevitable,” said Bob Mumgaard, chief executive of Commonwealth Fusion, which was spun out of the Massachusetts Institute of Technology in 2018.

The recent infusion of cash into fusion startups eclipses the roughly $1.9 billion in total that was previously announced, according to data tracked by the Fusion Industry Association and the U.K. Atomic Energy Authority.

Helion Energy announced in early November that it had raised $500 million, with another $1.7 billion committed that is tied to meeting performance milestones. Canada’s General Fusion this week closed a $130 million fundraising round that was oversubscribed, said Chief Executive Christofer Mowry. New investors included a state pension fund and the hedge fund Segra Capital Management.

“It’s a sign of the industry growing up,” Mr. Mowry said. General Fusion plans to launch a larger fundraising effort next year.

Companies are pursuing different designs for fusion reactors, but most rely on fusion that takes place in plasma, a hot charged gas. In September, Commonwealth Fusion successfully tested the most powerful fusion magnet of its kind on Earth that would hold and compress the plasma.

Mr. Mumgaard said the magnet test and funding round allow it to move to the next big step in its evolution: building a net-energy fusion machine that it plans to demonstrate by 2025. It also plans to begin work on the first commercial fusion power plant that would produce electricity by the early 2030s.

New investors supporting Commonwealth Fusion’s most recent funding round include Alphabet Inc.’s Google, Salesforce.com Inc. Chief Executive Marc Benioff’s TIME Ventures and Silicon Valley venture-capital firm DFJ Growth.

Vinod Khosla, co-founder of Sun Microsystems, was an early backer through his Khosla Ventures. He said he had the same reaction to the fusion company as he did to Impossible Foods Inc., the plant-based alternative meat maker, considering both critical for addressing climate change.

“My general view is there’s quite a few things in society that don’t get funded when they should, and frankly, some things in life are just too important to not fund,” Mr. Khosla said. His interest isn’t philanthropic, though; he said he sees an opportunity for a big financial return on fusion.

“If you’re wrong, you lose one times your money. But if you’re right, you make 100 times your money,” Mr. Khosla said. “Financially, it made sense.”

Until someone proves it, though, fusion won’t shake its reputation as a technology that is always around the corner. The world’s largest fusion project is ITER, a $22 billion multinational government-funded project in France. Scientists say the project, which has experienced delays, is on track to create superheated plasma by the end of 2025. Full fusion would come a decade later.

There are many skeptics of fusion as a near-term source of electricity. Retired Princeton University research physicist Daniel Jassby, a frequent critic, calls the recent private investment trend a “fusion frenzy” and notes that no one has produced electricity from fusion yet.

“A lot of it is fake it ‘till you make it,” Mr. Jassby said.

Tony Donné, program manager for a 28-country research consortium known as EUROfusion, said he likes the industrial approach of private companies, but thinks getting fusion power to the grid is likely to take 20 to 30 years.

David Kirtley, Helion’s chief executive, said he once counted himself among the skeptics. After studying fusion in graduate school, “I actually said, I quit,” Mr. Kirtley said. “I didn’t see a path where in my lifetime we were going to build a real system and get it out there.”

He pivoted to building spacecraft propulsion systems, but improvements in fields like fiber optics and computing convinced him that there was a path forward for commercial fusion.

This summer, Helion published results confirming it had become the first private firm to heat a fusion plasma to 100 million degrees Celsius, which it called the ideal temperature for a fusion power plant. It also broke ground on a facility in Everett, Wash., where it says it will demonstrate net electricity generation by 2024.

The company’s recent funding round included commitments from Facebook Inc. co-founder Dustin Moskovitz and Sam Altman, the former head of tech incubator Y Combinator.

Adam Stein, a senior nuclear energy analyst at the Breakthrough Institute, a California-based research center, said he expects successful demonstrations of net energy this decade by some of the leading private fusion companies. But he also thinks some firms will fail.

“Net positive energy is a long distance away from net positive power, which is a system that can put out more power than it uses, ultimately as electricity on the grid,” Mr. Stein said. “These are still demonstration projects we’re looking at.”

KKR's Telecom Italia approach may call time on Italy discount - Reuters News

New generation of smaller alternative networks are forcing incumbents to increase investment in broadband

There was once a time when the words “fixed line” turned investors cold — as the extraordinary growth of wireless telecoms and mobile data made cabling seem antiquated.

Yet, in the age of full-fibre broadband, those tables have turned. Investors are backing a new generation of smaller, alternative cabled networks — dubbed “alt-nets” — forcing larger incumbents to increase their investment in broadband.

“There are two big things in telecoms right now: 5G and fibre,” says William Hare, an analyst with Omdia, a technology consultancy. “But, through the pandemic, fibre has become much more of a priority.”

Political pressure has played a part, with various governments actions leading to upgrades of fibre broadband networks. These have ranged from threats to break up telecoms companies to offers of subsidies and tax incentives to encourage investment, particularly in rural areas.

Telecoms groups could be forgiven some initial caution towards this fibre push. A “build it and they will come” attitude to network investment at the turn of the century backfired, as the value of telecoms companies collapsed due to sluggish demand for high-speed networks.

But, two decades later, the resilience and speeds offered by full-fibre networks is more than matched by consumer appetite.

“Fibre really outperforms copper,” says Hare. “The raw speed is one thing; but reliability and stability is the real advantage.”

As the pandemic-induced increase in video conferencing proved, a fast and reliable broadband connection is essential for working from home. Surging demand for home entertainment services, such as Netflix, and online gaming, also demonstrated the need for speed in domestic networks.

In the five years to 2024, the growth in fixed-line connectivity will be most pronounced in Spain, China, Egypt and the US, according to forecasts from Omdia.

Spain has become one of the most competitive markets in Europe in recent years. The fast rollout of full fibre broadband has been the bedrock of that competition, and consolidation is emerging in what is one of Europe’s most highly penetrated fibre markets.

Egypt has long been a high growth mobile market due to a young population and heavy investment. Basic internet subscriptions in the country rose almost a quarter in the year to March 2021, according to Omdia data, driven by a jump in investment.

And the US has long been one of the world’s most lucrative telecoms markets. Regional cable players had dominated domestically. Now, the global trend for telecoms companies to refocus on their networks has been seen. Verizon and AT&T have stepped up their network investment after reversing their unsuccessful forays into adjacent media markets. They had previously spent billions on media assets, with AT&T buying content company Time Warner, and Verizon buying digital advertising and media company Yahoo.

China, the world’s largest telecoms market, remains a growth spur as the government pushes ahead with its “dual gigabit network plan” to ensure ultrafast speeds are available on both fixed and mobile networks.

However, while fibre has enabled fixed line to regain its mojo, the huge cost of upgrading the networks — which can involve expensive street works and the installation of new underground ducts — remains a problem. Regulation and planning laws also act as a barrier to a more rapid and cost-effective upgrade path, notes Omdia’s Hare.

But mobile is due a renaissance. Many telecoms companies still see wireless, and specifically the new 5G standard, as a growth driver.

5G has launched in many markets but the move to standalone 5G networks, where the entire service from the radio antenna to the data centre runs on the new technology, will open up more opportunities for telecoms companies to differentiate the service from 4G.

Omdia expects that advanced 5G markets, including the US and South Korea and Finland — where 5G penetration already exceeds 10 per cent — will be the biggest growth markets between 2020 and 2024. Saudi Arabia is another tipped to boom as 5G networks have been rapidly rolled out to cover about 40 per cent of the country.

A barrier to growth in some places is the difficulty in obtaining the smartphones needed to deliver full 5G, particularly in certain African markets. That could slow the rise in app-based communications, such as video calling, which has boomed during the pandemic in many mature markets.

Omdia forecasts that both voice and video calling will grow at a compound annual rate of more than 15 per cent over the next four years — faster than the 10 per cent predicted for voice over internet protocol (VoIP) products. Video calling growth, particularly in the Middle East, is starting to outstrip voice-only calls.

But those services are largely app-based, so telecoms companies must innovate if they are to participate in that growth trend.

“How telecoms companies can grow is a perennial debate,” says Hare. “Companies need to broaden their portfolio without drifting from what they need to do on the network. That’s the real challenge.”