>>> What to look at today - 3rd of June 2021

Most Asian stocks climbed Thursday and U.S. equity contracts were steady, weathering the latest twist in the U.S.-China relationship as well as comments from the Federal Reserve on a potential reduction in stimulus.
Optimism over the vaccine rollout boosted Japanese equities, while Hong Kong retreated. China’s shares edged higher despite President Joe Biden’s plans to amend a U.S. ban on investments in companies linked to the Chinese military, which may expand scrutiny to a wider set of enterprises. S&P 500 and Nasdaq 100 futures were slightly in the green after modest gains for both benchmarks.
Ten-year U.S. Treasury yields held below 1.60% and a dollar gauge inched up. Traders took in their stride comments from Philadelphia Fed President Patrick Harker, who said the U.S. central bank should begin discussing the time frame for paring back its bond-buying program. Friday’s U.S. jobs report may offer clues on the economic rebound from the pandemic and inflation risks.
US After Hours ESTC +9.4%, SMAR +3.4% higher on earnings; AI -9.6%, SPLK -3.2%, NCNO -1.7% fall on earnings

Nikkei +0.41% Hang Seng -0.37% CSI +0.30% Shanghai +0.46% Shenzen +0.66%

Eur$ 1.2202 CNH 6.3854 CNY 6.3858 JPY 109.73 GBP 1.4158 CHF 0.8987 RUB 73.1420 TRY 8.5926 WTI$ 69.22 +0.57% Gold 1,903.67 -0.25% BTC 38,300 +410 ETH 2785 +25

S&P +0.07% NAsdaq +0.15% EuroStoxx +0.15% FTSE DAX +0.18% SMI

Macro :
- EU Mulls Carbon Levy on Cement, Steel, Electricity Imports (1)
- Fed’s Harker: May Be Time to Think About Thinking About Tapering
- Hedge Funds Boost Short Bets, Escalating Retail-Trader Showdown
- Germany Suspends Permits For Russian Flights: Transport Ministry
- EU Governments to Lift Restrictions for Travelers From Japan
- Luxury Home Sales Soar as U.S. Recovery Favors Wealthy Buyers

Keep an eye on :
- AIR FP : Airbus Set to Report Uptick in Deliveries for May
- ALO FP : Alstom Signs Toronto Streetcar Contract Valued Over EU275m
- AMS SW : AMS Says AGM Did Not Approve Remuneration Report
- BAS GY : BASF, CD&R Said to Mull Exit From Water Treatment Firm Solenis
- BMW GY : BMW to Build 360,000 EV Charging Sites in China in Green Push
- CEGID : KKR to Buy Minority Stake in Cegid Valuing Company at EU5.5B
- ACA FP : Credit Agricole Not Excluding More Creval Type Deals in Italy
- DBK GY : Deutsche Bank Is Bringing U.S. Investment Bankers Back to Office
- EDP PL : Portuguese Electricity Demand Rose 10.6% in May, REN Says
- ITV LN : ITV to Replace Renishaw in FTSE 100
- JET2 LN : Jet2 Signs New GBP150m Term Loan, Launches GBP375m Bond Offering
- LHA GY : Lufthansa Granted Russian Permission to Bypass Belarus: IFX
- KN FP : Natixis IM, H2O AM Are Working to Amend Stake Sale Terms
- PPRX NA : Prosus Agrees to Buy Tech Firm Stack Overflow for $1.8 Billion
- RCO FP : Remy Cointreau Launches Share Buyback, to Raise Dividend
- RR/ LN : Rolls-Royce Delays Deadline for Itp Aero Bids to June 7: Cinco
- LOCAL FP : Solocal’s Danon Leaves Board, Chairmanship
- VK FP : Vallourec Launches Rights Issue for About EU300M

WSJ : Fed to Sell Corporate Bonds and ETFs Acquired During Covid-19 Crisis

Fed to Sell Corporate Bonds and ETFs Acquired During Covid-19 Crisis
Central bank made purchases to shore up liquidity in debt markets after pandemic hit in early 2020

The Federal Reserve will soon begin selling off the corporate bonds and exchange-traded funds it amassed last year through an emergency-lending vehicle set up to contain the Covid-19 pandemic’s economic fallout.

The vehicle, known as the Secondary Market Corporate Credit Facility, or SMCCF, held $5.21 billion of bonds from companies including Whirlpool Corp. , Walmart Inc. and Visa Inc. as of April 30. In addition, it held $8.56 billion of exchange-traded funds that hold corporate debt, such as the Vanguard Short-Term Corporate Bond ETF.

The sales, which should be completed by the end of this year, are unrelated to monetary policy, a Fed official said. Net proceeds will be remitted to the Treasury Department, which funded the facility’s creation.

The SMCCF’s corporate-debt holdings are distinct from the more than $7.3 trillion of Treasury debt and agency mortgage-backed securities on the Fed’s balance sheet. The central bank under Chairman Jerome Powell is continuing to purchase those types of assets to the tune of at least $120 billion a month to hold down long-term borrowing costs until the economy recovers further from the pandemic.

The SMCCF was set up in March 2020 as part of a broader suite of programs established by the Fed and Treasury to shore up liquidity in financial markets. Stock and bond markets at the time were reeling from the fear and uncertainty regarding the coronavirus and economic lockdowns to contain it.

The Fed’s announcement of the facility and a related vehicle, the Primary Market Corporate Credit Facility, quickly restored investor confidence in major corporations’ ability to issue debt. As a result, the latter vehicle never made a purchase, and the SMCCF’s holdings peaked at around $14.2 billion last year, a far cry from the two programs’ combined $750 billion of firepower.

“The SMCCF proved vital in restoring market functioning last year, supporting the availability of credit for large employers, and bolstering employment through the Covid-19 pandemic,” the Fed said in a statement Wednesday.

The corporate-credit programs stopped buying assets on Dec. 31 after then-Treasury Secretary Steven Mnuchin declined to extend several of the Fed’s emergency lending programs.

In testimony before the House Financial Services Committee last June, Mr. Powell suggested the central bank would likely hold the individual corporate bonds until they matured, rather than selling them back into the market. “We are generally a hold-to-maturity entity,” Mr. Powell said in response to a lawmaker’s question about the Fed’s plans for the SMCCF. “It may be that we sell some back into the secondary market down the road, but ultimately, we’re a buy-and-hold buyer,” Mr. Powell added.

In Wednesday’s statement, the Fed said it plans to sell the bonds and ETF holdings in a gradual and orderly way that seeks to minimize “the potential for any adverse impact on market functioning.”

The New York Fed, which manages the SMCCF, will provide additional details soon and before sales begin, the statement added.

FT : Russia’s Nordgold prepares for London IPO

Russia’s Nordgold prepares for London IPO
Latest gold miner to choose UK capital for listing as metal’s price rallies

Russian gold miner Nordgold plans to list in London as it looks to take advantage of a rebound in the gold price.

The company intends to sell a 25 per cent stake to investors, including via a secondary listing in Moscow, said people familiar with the company. It is set to file a registration document this week.

The miner is the latest to come to the UK capital to capitalise on interest in gold, after prices surged last year following the onset of the pandemic. Canada’s Yamana Gold listed in London last year, while Endeavour Mining is set to join the market this month.

Gold prices have risen 10 per cent since the beginning of March to $1,906 a troy ounce, as investors buy the metal to hedge against the prospect of rising inflation driven by higher raw material prices and a recovery in global demand.

The NYSE Arca Gold Bugs index, which tracks shares of gold miners, has risen 29 per cent over the same period.

Nordgold hopes to attract investors by paying higher dividends than its peers in North America. It is developing two new gold mines in the far east of Russia, which will help it boost production by an expected 20 per cent over the next five years.

In contrast, production at the world’s largest gold miner, Newmont, is set to remain roughly flat until 2025.

Nordgold will sell existing shares and will not raise any capital in the listing. The company said it hoped for a premium listing allowing it to be eligible for the FTSE indices, entry to which would draw investment from tracker funds.

The company says it will pay a minimum dividend of $400m to investors this year, in two instalments. After that it intends to pay out 50 per cent of its free cash flow, subject to its net debt remaining less than 1.5 times its earnings before interest, tax, depreciation and amortisation.

Nordgold has nine mines — four in Russia, three in Burkina Faso and one each in Guinea and Kazakhstan. It produces more than 1m ounces of gold a year and reported ebitda in excess of $1bn last year.

Polymetal, the largest Russian miner in London with an £8bn market capitalisation, produced 1.4m ounces of gold in 2020. Endeavour is set to produce up to 1.5m ounces this year.

Nordgold is developing the Gross and Tokko mines in Russia’s far east, which it expects to produce more than 350,000 ounces of gold a year.

The company is led by Nikolai Zelenski, a Surrey-based former McKinsey consultant with a PhD in molecular genetics from the University of Texas.

Bacchus Capital Advisers are financial advisers to Nordgold while Citi is the lead sponsor of the offering.

FT : Spac promoter Palihapitiya seeks $800m to target biotech companies

Spac promoter Palihapitiya seeks $800m to target biotech companies
Launch comes as blank-cheque acquirers face fading investor interest

Chamath Palihapitiya, one of the figures most associated with the craze for blank-cheque companies, is planning to raise $800m for four cash shells that will target biotechnology businesses, injecting a jolt into a market that has faltered in recent months.

The plans for the new special purpose acquisition companies, disclosed in securities filings, showed the billionaire investor and former Facebook executive is teaming up with new partners for his next project. Spacs raise money in an IPO and then look for a private business to acquire.

The four new Spacs, all with ticker names beginning “DNA”, will work in partnership with Kishen Mehta, a healthcare-focused portfolio manager at Suvretta Capital Management.

Palihapitiya has a longstanding partnership with Ian Osborne, a British investor. The pair launched six Spac vehicles together under the Social Capital Hedosophia name and have taken four companies public through reverse mergers. Palihapitiya will continue to work with Osborne, a person familiar with Social Capital said.

Another difference is that Morgan Stanley will advise Palihapitiya on his latest venture. The serial Spac sponsor had previously relied on Swiss lender Credit Suisse.

Palihapitiya has also decided to forgo warrants for his latest Spac series in what will be a test case on investor appetite for vehicles without such a sweetener for early backers.

Sponsors have come under criticism for handing out free warrants to early investors who can keep a hold of them even if they sell out of the company. Warrants, which convert to stakes in the new company at a strike price of $11.50, tend to dilute shareholders who buy in later.

The timing of Palihapitiya’s new Spacs comes at a tricky juncture for a market struggling in the face of increased regulatory scrutiny and waning investor confidence.

Palihapitiya, referred to by some as the “Spac King”, has also become the target of criticism for promoting the blank-cheque companies to his followers while also cashing in on one of his deals. A representative for Palihapitiya declined to elaborate on the securities filings.

The new launches come after a fallow two months for new Spac listings, which have slowed dramatically after US securities regulators took aim at the vehicles and banks curtailed lending to hedge funds that provided much of the capital.

Some 32 Spacs listed publicly in April and May, down from 298 in the first quarter of 2021, according to data provider Dealogic. More than 400 of the vehicles that have launched since the beginning of 2019 are still looking for companies to acquire, according to Refinitiv data.

>>> US After Hours Summary: ESTC +9.4%, SMAR +3.4% higher on earnings; AI -9.6%,

After Hours Summary: ESTC +9.4%, SMAR +3.4% higher on earnings; AI -9.6%, SPLK -3.2%, NCNO -1.7% fall on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ESTC +9.4%, PAGS +5.9%, SMAR +3.4%, SMTC +1.8%, DSGX +1.7%, PVH +1.6% (also CFO/COO leaving as is the CEO of its Calvin Klein unit), GWRE +0.6%

Companies trading higher in after hours in reaction to news: WVE +7.7% (reports proof-of-concept preclinical data for ADAR editing program), REAL +4.5% (provides business update; GMV QTD up 106% yr/yr), SEIC +0.7% (increases stock repurchase program by an additional $250 mln), FRG +0.6% (The Vitamin Shoppe announces partnership with IRONMAN), AAP +0.4% (announces deal with Baxter Auto to convert 29 stores to Carquest locations), AMRN +0.2% (announces presentation of further insights into potential mechanisms of action of icosapent ethyl)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AI -9.6%, SPLK -3.2%, NCNO -1.7%, SPTN -1.7%, EDR -1.3%, NTAP -0.5% (also increases dividend by 4%, authorizes add'l $500 mln for share repurchases), SPWH -0.4%

Companies trading lower in after hours in reaction to news: PINE -7.3% (stock offering), FEYE -4.7% (to sell FireEye Products business to Symphony Tech for $1.2 bln; authorizes $500 mln share repurchase program), SUMO -4.1% (to acquire Sensu), SYNH -4% (stock offering), SJ -4% (stock offering), CWK -2.5% (stock offering), CHGG -1.8% (launches new educator platform Uversity), NDAQ -0.8% (reports May 2021 metrics), BILL -0.8% (stock offering), APPS -0.7% (delays 10-K filing), TSLA -0.2% (thousands of cars being recalled for loose brake bolt, according to Reuters), XOM -0.1% (updates preliminary results for election of directors), VAL -0.1% (awarded a two-well contract extension with Equinor Energy), LMT -0.1% (selected by NASA to build the VERITAS and DAVINCI+ spacecraft)

Barrons : Zoom’s Growth Is Slowing. Investors Are Getting Nervous.

Zoom’s Growth Is Slowing. Investors Are Getting Nervous.

Zoom Video Communications continued its run of fantastic Covid-19 driven growth, reporting better-than-expected results for its fiscal first quarter ended April 30. But the quarter provided clear evidence that even for Zoom—the most obvious beneficiary of the pandemic era shift to working, learning, and playing from home—hypergrowth can’t last forever.

For the quarter, reported late Tuesday, Zoom (ticker: ZM) posted revenue of $956.2 million, up 191% from a year ago, and ahead of both the company’s guidance range of $900 million to $905 million and the Street consensus estimate of $906 million. Growth in each of the past three quarters was above 355%—making this a rare case where nearly 200% growth represents a considerable slowdown.

But as we pointed out yesterday, the margin by which the company beat guidance has been shrinking—it was 6% above the guidance range in the April quarter, after a 9% beat last quarter, a 13% beat two quarters back, and mid-pandemic beats of 33% and 61%. In other words, the margin of outperformance narrowed for the fourth quarter in a row.

Zoom lifted its guidance for the January 2022 fiscal year. The new range of $3.975 billion to $3.99 billion points to growth of just over 50%. That is impressive growth by most measures, but the Zoom boom days are clearly over. Asked about what normalized growth might look like, Zoom CFO Kelly Steckelberg told Barron’s that she expects to see “growth more consistent with companies at this scale.” Street estimates call for growth in fiscal 2023 of just under 20%.

Steckelberg says the challenge for Zoom from here is to shift from simply being an app to being a platform. Zoom told investors on their postearnings conference call yesterday that it now has 1.5 million Zoom Phone users, up from 1 million in January, as it continues to roll out the service, which competes with RingCentral (RNG) and others in the market for cloud-based telephone systems.

The CEO notes that the company is on track for a summer launch for the previously announced Zoom Apps store, which will include software from third parties that can include or enhance Zoom’s core conferencing experience. Last month, the company announced Zoom Events, software to hold virtual events; the platform will fold in OnZoom, a website launched last year to promote online events.

J.P. Morgan analyst Sterling Auty this morning repeated his Neutral rating on Zoom shares, while slashing his price target to $385 from $456.

>>> US Close Dow +0.07% S1P +0.14% Nasdaq +0.14% Russell +0.13%

Closing Market Summary

The stock market finished a quiet midweek session on a slightly higher note with the S&P 500 (+0.1%) and Nasdaq (+0.1%) settling right above their flat lines.

The quiet finish was fitting for an equally quiet trading day that saw the major averages inch higher during the first two hours of action, followed by a slow slide into the early afternoon. The S&P 500 spent the day inside a 20-point range.

Six sectors ended the day in positive territory. The energy sector (+1.7%) continued its torrid start to the week and was followed by the lightly-weighted real estate sector (+1.4%) while top-weighted technology (+0.6%) held a modest gain throughout the day, keeping the S&P 500 in the green.

The relative strength in the technology sector was owed to big components like NVIDIA (NVDA 671.13, +20.55, +3.2%), Visa (V 229.66, +3.03, +1.3%), MasterCard (MA 366.85, +7.06, +2.0%), and PayPal (PYPL 262.17, +2.90, +1.1%) while Apple (AAPL 125.06, +0.78, +0.6%) caught up to the sector as the day went on. Chipmakers kept pace with the sector, sending the PHLX Semiconductor Index higher by 0.7%.

Energy received a boost from crude oil, which rose $1.00, or 1.5%, to $68.79/bbl after a brief rally past yesterday's high. Most components of the growth-sensitive sector climbed more than 1.0% with TechnipFMC (FTI 9.89, +0.92, +10.3%) spiking more than 10.0% with no news contributing to the jump.

Given its low share price and membership in a hot sector, TechnipFMC may have benefited from the same speculative fervor that sent AMC (AMC 62.55, +30.51, +95.2%) to a fresh record high. AMC was today's most traded stock by a long shot while Bed Bath & Beyond (BBBY 44.19, +16.93, +62.1%) also enjoyed a massive rally on heavy volume.

The materials sector (-0.9%) was today's weakest performer while the remaining laggards finished with much slimmer losses.

In earnings, Zoom Video (ZM 327.11, -0.61, -0.2%) finished little changed despite beating estimates and boosting its guidance while Advance Auto (AAP 191.33, -3.32, -1.7%) fell back below its 50-day moving average (193.52) after it too beat EPS estimates and boosted its guidance.

Treasuries climbed with the 10-yr yield slipping two basis points to 1.59%.

Economic data released today was limited to the weekly MBA Mortgage and the June Beige Book.

The weekly MBA Mortgage Index fell 4.0% as the Purchase Index decreased 3.1% while the Refinance Index fell 4.6%.

The Fed's June Beige Book noted that the economy expanded at a moderate pace between April and late May, though reports of shortages became more prevalent. Employment increased at a steady pace with most Fed Districts describing the growth as modest. Many firms continued struggling to fill low-wage positions and those for skilled tradespeople. However, the shortages resulted in only moderate wage growth. Price pressures continued building with selling prices rising moderately while the Atlanta District reported price pressures in the new home market resulting from heavy investor demand.

The May ADP Employment Change report (Briefing.com consensus 675,000; prior 742,000) will be released tomorrow at 8:15 ET, followed by revised Q1 Productivity (consensus 5.5%; prior 5.4%), revised Q1 Labor Costs (consensus -0.4%; prior -0.3%), weekly Initial Claims (consensus 395,000; prior 406,000), and Continuing Claims (prior 3.642 mln) at 8:30 ET; final May IHS Markit Services PMI (prior 70.1) at 9:45 ET; and May ISM Non-Manufacturing Index (consensus 63.0%; prior 62.7%) at 10:00 ET.

  • Russell 2000 +16.4% YTD
  • Dow Jones Industrial Average +13.1% YTD
  • S&P 500 +12.0% YTD
  • Nasdaq Composite +6.7% YTD

Barron's : Is AMC Stock Worth Its High Price? We Did the Math.

Is AMC Stock Worth Its High Price? We Did the Math.

AMC Entertainment ‘s skyrocketing stock, which hit an all-time high Wednesday, would be easy to dismiss as just meme-trade madness, that social media-fueled investor frenzy that has launched the likes of GameStop and BlackBerry into speculative territory.
But it’s possible that traditional investors have missed a fundamental change in the movie theater business—and it wouldn’t be the first time.
Shares of AMC (ticker: AMC) on Wednesday surged past their all-time high of $36.72 set in 2015. Early Wednesday prices put the movie-theater chain’s market capitalization at about $18 billion, more than 15 times what it was in 2018, a record-breaking year at the box office. Shares surged throughout the day, up almost 100% in late trading to $62.90, pushing the chain’s market cap to roughly $31 billion.
Even if investors missed an inflection point, though, the math doesn’t add up. The reason might be that market cap isn’t the right measure. Maybe it’s enterprise value, which is essentially market cap and debt. AMC’s enterprise value is about $40 billion, compared with $6.2 billion or so at the end of 2018.

Including debt doesn’t make AMC stock look cheaper. AMC added debt during the pandemic as theaters in the country’s biggest cities were dark for months. The numbers make it easy to understand why: The U.S. box office in 2020 generated about $2.1 billion in ticket sales, down 81% from the 2018 record of $11.9 billion.
So, it seems investors have been vexed by movie theater economics. But it wouldn’t be the first time. The industry essentially went belly up at the turn of the millennium. Regal Cinemas, for instance, declared bankruptcy in 2001.
Back then, the industry had plenty of capacity because of a new theater design—stadium seating that gave a better view of the screen. That shift meant movie theater chains had to renovate or risk losing all their patrons to movie theaters that offered the better view. In the end, too many seats and not enough patrons meant the return on the stadium-seating investments never materialized.

The upshot was consolidation. With fewer operators, the number of screens stabilized. Between 2002 and 2007, Regal Cinemas became a cash-generating machine. The stock returned 21% a year on average. The S&P 500 and Dow Jones Industrial Average both returned less than 9% a year on average over the same period.
In those days, Regal Cinema’s enterprise value about $5 billion, or about 50% of total U.S. box office sales. That’s far short of AMC today. Something new has to be different for AMC to be worth it.
Maybe the movie theater business is going to go through another period of consolidation, which can usher in another golden age of returns. AMC’s Tuesday gains, in fact, were catalyzed by new capital raised so the company could go on the offensive, acquiring defunct chains. Monopolies, after all, can be good for stock returns.
If AMC can increase market share and the U.S. box office sales can return to 2018 levels in a few years, total sales at might be $9 billion—$6 billion from tickets and $3 billion from concessions. Sales in 2018 amounted to $5.5 billion.

Then, with better gross profit margins derived from larger scale, AMC might be able to generate $600 million in free cash flow annually. As of Tuesday’s closing price, that would have put the stock at about a 4% free cash flow yield. The S&P 500 trades for about a 3.4% free cash flow yield. Those numbers can work—if they’re stretched.
With Wednesday’s gains, AMC stock would be trading at a free cash flow yield of roughly 2%. That’s more expensive than the market and consumer discretionary stocks in the S&P, which trade at a free cash flow yield of about 3.1%.
There are problems with the $600 million free cash flow scenario, though. There are lots of ifs and mights—and AMC has never generated cash flow like that in the past. Arriving at $600 million in free cash flow is more about justifying current valuations than predicting what is likely.
Also, with mergers and acquisitions, AMC market shares might rise, but there are still competitors. Regal Cinemas is still out there, owned by Cineworld Holdings (CINE. London). So is Cinemark (CNK). There’s not a true monopoly.

AMC and its peers have to deal with streaming, too. Windows for exclusive theater showings are shrinking. The pandemic has accelerated that. And if AMC gets too large and demanding for movie makers, the talent can always go to streaming faster, hurting box office sales.
There is also the problem of the peer stocks. They aren’t trading like this is a brave new world for theaters. Cineworld stock is up 495% from its 52-week low, but shares are still off 72% from all-time highs. Cinemark shares are up 227% from their 52-week low. They are down 46% from their all-time high.
AMC stock is up almost 3,100% from its 52-week low and will likely close at an all time high.
Wall Street just doesn’t see the potential either. Nine analysts cover the stock. The average analyst price target is about $5. Before the pandemic, the average analyst price target was $15. But there were fewer shares back then. The old target enterprise value was roughly $7 billion. It’s tough to get from $7 billion to $40 billion predicting better margins.

Analysts do have positive free cash flow modeled, though–$13 million in 2022 and $90 million in 2023. That’s a long way from $600 million.
And that’s just another way of saying that AMC bulls are a long way from making the math work.

FT : Wizz Air warns of full-year losses as pandemic bites

Wizz Air warns of full-year losses as pandemic bites
Low-cost European airline remains ‘cautiously optimistic’ despite recovery starting later than expected

Wizz Air has warned it expects to lose money over the next year unless travel restrictions disappear rapidly in a sign of the threat to the aviation industry from the lingering effects of the pandemic.

The low-cost carrier on Wednesday said restrictions had stayed in place “longer than anticipated”. It expects to fly 30 per cent of its normal schedule between April and June.

Unless there is “an accelerated and permanent lifting of restrictions”, Wizz forecasts a net loss for the 12 months to the end of March next year. After that, chief executive Jozsef Varadi expects to return to profit and operate a full schedule.

“We are cautiously optimistic about the recovery of the business, which has started later than what we would have liked,” he said.

“The outcome [of this financial year] could be in a wide range depending on restrictions,” and it could even end up “a great” year if flying restarts quickly, he added.

Separately, Willie Walsh, director-general of the global airline body the International Air Transport Association, stepped up pressure on governments to ease travel restrictions, saying the industry will experience a “much better second half” of the year than the first six months.

He said he was confident international travel would return in the second half. There was plenty of scientific evidence now that “borders can be opened in a sensible way”, he added.

Walsh pointed to data from Britain’s NHS regarding international travellers arriving in the UK, which showed that just 2.2 per cent tested positive for Covid-19 among 365,895 tests carried out in February to May.

“These universal restrictions on people are no longer needed,” he said.

Excluding passengers arriving from countries on Britain’s higher-risk red list, the positive rate fell to 1.46 per cent, according to the data.

Iata, which teamed up with Airbus and Boeing to demonstrate potential methodologies to manage the risks of Covid-19, hopes members of the G7 will discuss the issue when they meet later this month.

Wizz’s forecasts are marginally gloomier than those of Ryanair, its fierce competitor in European low-cost travel, which expects to break even over the next 12 months.

Still, Varadi said there was clear pent-up demand for travel when restrictions are lifted.

“Consumers are very willing to come back and are coming back; the moment they can fly they are going to,” Varadi said. But he added that Europe’s “uncoordinated” reopening of its borders had left it very hard to predict how much flying would be possible over the coming months.

The Hungarian carrier reported a net loss of €482m in the 12 months to the end of March, after passenger numbers fell 75 per cent to 10m.

European airlines are hoping for restrictions to be lifted in time for a strong European summer, when they traditionally do most of their flying and earn the bulk of their revenue.

Wizz is better placed than most, with €1.6bn in cash at the end of March and a cash burn averaging €61m a month over the past year. The airline has one of the strongest balance sheets in the European industry.

The airline is expected to emerge as a long-term winner from the crisis, thanks to its low cost base and expansion into new regions over the past year as rivals have retreated.

Like Ryanair, Wizz has taken delivery of new aircraft during the pandemic, and both carriers hope that the more fuel-efficient aircraft will cement their cost advantage over other airlines.

“We have prepared the company to be an even more formidable player and to take advantage of the next phase of market opportunities that await post-pandemic. The investments we have made in our fleet and in our network over the past 12 months will soon yield results,” Varadi said.

Investors agree, with Wizz’s shares hitting all-time highs earlier this year even as the pandemic caused sweeping disruption across the industry.

Shares closed marginally lower at £48.73 on Wednesday, but have risen almost 40 per cent over the past year.

FT : Trafigura warned Credit Suisse over Gupta invoice last year

Trafigura warned Credit Suisse over Gupta invoice last year
Commodities trading house raised concern in July 2020 over a bill it apparently owed one of industrialist’s companies

Commodities trader Trafigura warned Credit Suisse last year that the bank’s supply-chain finance funds appeared to contain a suspicious invoice from industrialist Sanjeev Gupta’s business empire, according to three people with knowledge of the discussions.

The collapse of the $10bn suite of Credit Suisse funds, which packaged up invoices linked to the failed supply-chain finance specialist Greensill Capital, has enraged clients of the Swiss bank who poured billions into them.

Credit Suisse has warned that $1.2bn of debt linked to metals magnate Gupta, one of Greensill’s largest former clients, may prove hard to recover. Greensill, which was once one of the UK’s most highly valued financial start-ups, counting former prime minister David Cameron as an adviser, filed for administration in March.

Trafigura raised the alarm with Credit Suisse in July 2020 over a so-called receivable listed in one of the supply-chain finance funds’ annual accounts, according to three people briefed on the matter. The receivable indicated that Trafigura owed money to Gupta’s Liberty Commodities, his main metals trading business founded nearly 30 years ago and part of his GFG Alliance.

Before its implosion in March, Greensill would lend money to clients, including Liberty, and take invoices from their suppliers or customers as collateral. The loans were then bundled into investments and sold on to funds, chiefly those run by Credit Suisse.

The fund accounts in question indicated that Liberty Commodities had raised financing from Greensill against a $30m invoice to Trafigura, one of the world’s largest commodities trading houses. This meant investors in the Credit Suisse funds should have earned a return when Trafigura paid the invoice.

However, Trafigura executives told bankers at Credit Suisse that they did not believe this invoice was genuine, according to the people familiar with the discussions. The warning came as Credit Suisse was in the middle of an internal review of the funds.

According to two people familiar with the matter, Credit Suisse executives then approached Lex Greensill, the founder of the eponymous finance firm, who explained that he believed there had been a misunderstanding around what the fund filings represented.

Credit Suisse, Trafigura, Greensill Capital and Gupta’s GFG Alliance all declined to comment.

The revelation of Trafigura’s intervention comes as the level of due diligence Credit Suisse performed on the funds draws increasing scrutiny. Multiple class-action lawsuits bringing together dozens of wealthy investors in the funds are gathering pace.

The bank’s own commodities-trade finance division shared their concerns over Gupta with compliance officers after discovering that the funds were investing in notes tied to his business, Bloomberg reported last week.

The FT reported in April that loans to Liberty Commodities from Greensill were made on the basis of suspect invoices. The UK’s Serious Fraud Office announced last month that it had launched an investigation into suspected fraud and money laundering at GFG, including its “financing arrangements” with Greensill.

GFG has denied wrongdoing and pledged to co-operate fully with the SFO probe.

In an April letter to the FT, Gupta explained that Greensill allowed his business to raise funding against a “potential customer of Liberty Commodities”, as facilities from Greensill allowed for “prospective” or “future” receivables.

However, a document Credit Suisse sent to fund investors in April shows that Liberty Commodities did not have a so-called “future receivables” facility, meaning that financing could only be raised against existing invoices.

A December 2019 document, seen by the Financial Times, from GFG also states that Liberty Commodities had a regular “accounts receivable” facility, in contrast to the “future receivables” facilities Greensill provided to some of his industrial businesses.

The FT has previously reported that several European metals businesses listed on invoices from Liberty Commodities deny ever doing business with Gupta’s group. GFG has previously denied wrongdoing in response to the FT’s reporting.

In contrast to these companies, Trafigura has in recent years had a multipronged relationship with Gupta, who began his a career as a commodities trader before buying metals plants.

Aside from purchasing metal from Gupta, the commodity trading house also provided part of a $350m loan backing his purchase of a French aluminium smelter in 2018.