(JPM) Glencore : Giving credit, where credit is due – Glencore is undervalued on

Giving credit, where credit is due – Glencore is undervalued on fundamentals

We regard Glencore’s 43% share price fall on distressed credit concerns to be excessive. At Glencore’s $16bn market cap, the shares imply a -$2bn equity value for its Industrial assets, yet the realisable value of these assets alone should exceed their $29bn debt. GLEN has $13bn of available liquidity to refinance $6.4bn of bonds maturing by YE’16, and its bank debt has no financial covenants. Despite its robust liquidity, we retain credit rating
concerns; at current prices, we estimate a $10bn shortfall at YE’16 to preserve its BBB. At today’s commodity prices, we believe GLEN is undervalued on fundamentals, but asset sales and/or an additional capital raise will be required to ease credit concerns. We thus remain Neutral with a £1.50/sh YE’16 PT.

Full note attached

WSJ : Volkswagen May Not Face Environmental Criminal Charges

Volkswagen May Not Face Environmental Criminal Charges

U.S. probe faces hurdle because auto makers won carve-out in Clean Air Act

WASHINGTON—A Justice Department investigation into whether Volkswagen AG should face criminal charges for cheating on emissions tests highlights what some lawmakers say is a long-standing gap in U.S. environmental law.

Despite the scale of Volkswagen’s behavior—it has admitted using test-evading software in as many as 11 million cars world-wide—the German auto maker may not face an environmental crime charge here, legal experts say. If the Justice Department does pursue a criminal case, it would be the first-ever against an auto maker for skirting emissions standards.

Car companies, with the aid of industry-friendly lawmakers, won a carve-out from criminal penalties in the 1970 Clean Air Act—a loophole that has largely escaped notice in recent years. Prosecutors now are considering alternative legal approaches, such as charging Volkswagen with lying to regulators.

Prosecutors in Germany are investigating former and current Volkswagen executives for fraud in connection with the emissions scandal. Unlike in the U.S., Germany’s criminal code doesn’t provide much corporate liability.

U.S. lawmakers and activists hope the Volkswagen probe will lead to changes to the law, including criminal penalties for emissions violations. “The loophole should be closed so there is a specific penalty for auto manufacturers,” said Sen. Richard Blumenthal (D., Conn.). “We will be introducing legislation to close the loophole.”
Mr. Blumenthal and Sen. Amy Klobuchar (D., Minn.) on Monday called on the Justice Department to criminally charge Volkswagen for making what the senators say are false statements to the government.

Rep. Fred Upton (R., Mich.), who chairs the House Energy and Commerce Committee, has proposed a congressional hearing on Volkswagen’s actions and, along with other committee leaders, on Tuesday asked Volkswagen and the Environmental Protection Agency for more information.

“It seems Volkswagen had a dirty little secret, and it’s not just consumers who are feeling betrayed,” said Mr. Upton and Rep. Tim Murphy (R., Pa.), who chairs the oversight subcommittee.

The Justice Department previously has considered charging auto makers that skirted pollution laws, according to people familiar with the matter. But the department, facing problems with jurisdiction and evidence, ultimately decided against criminal charges in those cases.

Instead, the government opted for civil penalties, which among other things don’t carry potential prison sentences for individuals determined to be responsible for any violations.

Former Rep. John Dingell (D., Mich.), a longtime congressman and auto industry ally who helped pass the Clean Air Act, said in an interview that the law focused on civil penalties because they’re easier to enforce. “It’s easier, speedier, quicker,” he said.

Mr. Dingell predicted Volkswagen will face billions of dollars in costs regardless. “The cost to Volkswagen is going to be unbelievable,” he said. Volkswagen has set aside $7.3 billion to cover the fallout from the emissions scandal. “The risk of them going out of business is very real.”

As they debate their best course, Justice Department lawyers may still decide against criminal charges for VW. “We take these allegations, and their potential implications for public health and air pollution in the United States, very seriously,” said spokesman Wyn Hornbuckle.

A Volkswagen spokeswoman said the company doesn’t comment on active or pending litigation.

Since at least 2008, Volkswagen has employed software, called a “defeat device” by the EPA, in 11 million diesel cars, including nearly a half-million in the U.S. The devices disable air-emissions controls under normal driving conditions.

Prosecutors could bring a traditional criminal fraud case against Volkswagen if they find evidence the company or its executives intentionally misled regulators or consumers, as they did in recent safety cases against General Motors Co. and Toyota Motor Corp.

The department considered criminal charges in several prior emissions cases, including one against a pair of South Korean auto makers that the EPA last year accused of exaggerating their cars’ fuel-economy, according to people familiar with the matter. In the end, the U.S. civilly charged the two companies, Hyundai Motor Co. and Kia Motors Corp. , levying a $100 million penalty, still the largest in Clean Air Act history.

Lawyers familiar with such cases point to the hurdles proving that companies intentionally misled regulators and in pursuing executives who live overseas. EPA previously has opted for record-setting civil fines rather than criminal charges in the handful of auto pollution cases it has handled.

The best-known defeat-device case unfolded in 1998, when the EPA reached a $1 billion settlement with seven diesel-engine manufacturers for using the technology to improve their fuel-economy ratings.

The EPA could hit Volkswagen with more than $18 billion in civil fines, based on a legally-prescribed penalty of $37,500 a vehicle, which would be billions more than any past Clean Air Act penalties. Experts say the agency is unlikely to levy that amount, but the penalty is expected to be many times the $100 million Hyundai and Kia faced last year.

Margo Oge, former director of EPA’s Office of Transportation and Quality, said the agency is likely to pursue a large penalty “I would be shocked if it wasn’t at least hundreds of millions of dollars,” she said.

>>> Telecity says revised ratio expected around 10 November 2015 once final numb

Telecity says revised ratio expected around 10 November 2015 once final number of new Equinix shares to be issued under 2015 Special Distribution is known
Telecity Group PLC ("TelecityGroup") notes that the Board of Equinix, Inc ("Equinix") has declared a special distribution of USD 627.0 million to its common stockholders in connection with Equinix's conversion to a real estate investment trust (the "2015 Special Distribution") which is payable on 10 November 2015. As Equinix stockholders will be entitled to elect to receive payment of the 2015 Special Distribution in the form of stock or cash (with the total cash payment to all stockholders limited to no more than USD 125.4 million), in accordance with the terms of the announcement made by TelecityGroup and Equinix on 29 May 2015 regarding Equinix's recommended cash and share offer for TelecityGroup (the "Offer") the number of new Equinix shares that each TelecityGroup shareholder will be entitled to receive under the terms of the Offer will be subject to a pro rata adjustment upwards to reflect the equity component of the 2015 Special Distribution. This will ensure that the percentage of the Equinix group following completion of the Offer owned by Telecity shareholders is not changed by the 2015 Special Distribution. The revised ratio is expected to be announced on or around 10 November 2015 once the final number of new Equinix shares to be issued pursuant to the 2015 Special Distribution is known.

>>> Europe : Brokers Upgrades & Downgrades - 30th of September 2015

sorry disregard KEring & HErmes change at Exane of sent earlier...I will double check

From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: Sep 30 2015 08:01:44
Subject: >>> Europe : Brokers Upgrades & Downgrades - 30th of September 2015
>>> Up
*HSBC RAISED TO BUY VS NEUTRAL AT UBS
*RANDALL & QUILTER RAISED TO ADD VS HOLD AT NUMIS
*SEMPERIT RAISED TO BUY VS HOLD AT HSBC
*SHIRE RAISED TO HOLD VS REDUCE AT HSBC

>>> Down


>>> PT Change


>>> Initiation
*HISPANIA RATED NEW NEUTRAL AT GOLDMAN SACHS, PT EU15
*HSS HIRE RATED NEW ADD AT PEEL HUNT, PT 70P
*MERLIN RATED NEW NEUTRAL AT GOLDMAN SACHS, PT EU11.9
*ROLLS-ROYCE REINSTATED AT BUY AT GOLDMAN SACHS
*VICTREX RATED NEW BUY AT LIBERUM, PT 2,200P

>>> Call

>>> Europe : Brokers Upgrades & Downgrades - 30th of September 2015

>>> Up
*HERMES UPGRADED TO NEUTRAL AT EXANE (Note atatched)
*HSBC RAISED TO BUY VS NEUTRAL AT UBS
*RANDALL & QUILTER RAISED TO ADD VS HOLD AT NUMIS
*SEMPERIT RAISED TO BUY VS HOLD AT HSBC
*SHIRE RAISED TO HOLD VS REDUCE AT HSBC

>>> Down
*KERING DOWNGRADED TO NEUTRA AT EXANE (Note attached)


>>> PT Change


>>> Initiation
*HISPANIA RATED NEW NEUTRAL AT GOLDMAN SACHS, PT EU15
*HSS HIRE RATED NEW ADD AT PEEL HUNT, PT 70P
*MERLIN RATED NEW NEUTRAL AT GOLDMAN SACHS, PT EU11.9
*ROLLS-ROYCE REINSTATED AT BUY AT GOLDMAN SACHS
*VICTREX RATED NEW BUY AT LIBERUM, PT 2,200P

>>> Call

>>> What to look at today - 30th of September 2015

Dow+0.30% S&P+0.12% Nasdaq-0.59% Russell-0.61% VIX 26.83 (-2.90%)
US market closed higher but tech was under pressure, fell to lows in the afternoon. Shares of Apple (AAPL 109.06, -3.38) were largely responsible for the retreat as the stock fell 3.0%. Volume were above average at 980mil shares. US After Hours CUDA -22.3%, EXXI -5.5%, DMND -4.3% following earnings/guidance, RL +3.9% GPS -3% (confirmed that Stefan Larsson has been named Chief Executive Officer, to become effective in November, 2015) ...last trading day of the quarter in Asia has finally given way to relief rally, though it remains unclear how much of the buying is due to short-covering and window dressing. US indices also thawed, with S&P500 showing its first marginal rise after 5 losing sessions. S&P500 eminis are up by a more resounding margin, rising about 15pts or 0.8%. Japan industrial output fell for the 3rd straight month against expected sequential improvement, prompting the cabinet office to cut its assessment of production once again. Retail sales were also disappointing, and output of cars is now down for the 12th straight month. Skeptics are increasingly worried over the sustainability and the efficacy of Abenomics, and Japan's Prime Minister continued to take every opportunity to defend his plans with more remarks in the US on Tuesday. Abe's advisors however are calling for more aggressive policy response..Japan Tobacco -7..5% on asset purchase news(2914)...Geely (175 HK) +15% on China to cut tax for small cars, Mazda +5.8% on Jap. AUg Production.

Nikkei +3.03% Hang Seng +1.68% Shanghai +1.04%

Eur$ 1.1242 CNY 6.3558 JPY 119.92 GBP 1.5160 EURCHF 1.0931 BRL 4.0620 RUB$ 65.5854 WTI $44.84 (-0.88%)

S&P+0.83% EuroStoxx +1.48% Dax +1.54% SMI +1.03%

Macro :
- Japan PM Abe's Advisor Takenaka: Would like to see an extra budget of ¥15T this fall, followed by additional BOJ easing

Keep an eye on :
- ABI BB : ABI Said to Line Up BofA, Santander for $70b SAB Funding
- ATC NA : T-Mobile US/Altice tie-up provides attractive exit option for Deutsche Telecom
- ABG/P SM : Abengoa Denies Report That It Owes EU20.27b to Banks
- EGPW IM : Enel Green Power Sells Portugal Assets to First State Wind
- ELUX SS : Electrolux, GE Considering Options for Merger Settlement in U.S.
- FCA IM : Fiat Unit Told NHTSA It Under-Reported Death Claims, Injuries
- GEA GY : GEA Group Says Sales Growth Guidance No Longer on Organic Basis
- HMB SS : H&M to Open More Than 70 Mainland China Stores Despite Slowdown
- EGL PL : Mota-Engil to Sell Port and Logistics Business to Yildirim
- NEO FP : Neopost 1H Net EU64.7m vs EU69m Y/y
- OHL SM : OHL Capital Increase to Price at 20-25% Discount: Confidencial
- PC IM : Paulson Sells 9.5% of Pirelli to ChemChina at EU15/Shr
- SABLN : traded up to 3818 in NY but in no volume on the ADR, no real
- TNTE NA : EU May State Objections to TNT Deal by Mid-Oct., Telegraaf Says
- VIV FP : Mars Films 30% stake acquired by Vivendi

(Nomura) SAB - M&A Update

* 45 - The magic number?
Per Bloomberg, SABMiller is signalling that it may consider an offer of about
GBP 43-45 per share, although the valuation is still being discussed and will
also depend on the structure of the offer. The top end of this range (GBP 45)
is in line with a price cited in The Sunday Times (27 September). A price of
GBP 45 a share would represent a premium of 45% vs the 30-day average
share price (GBP 30.82) prior to recent market speculation and a 17%
premium vs the SABMiller all-time high. We would highlight that the premium
that InBev ultimately paid for Anheuser-Busch in 2008 (USD 70 per share)
represented a 45% premium to AB’s unaffected share price.

* Part debt, part equity financing – see sensitivities below
Per Bloomberg, Anheuser-Busch InBev (ABI) is working to arrange total
financing of USD 50-70bn. This would imply a debt/equity split (at GBP 45
per share) of between 45% and 64%. See sensitivities below based on a
share price between GBP 43-47 and a 50/50 debt/equity financing
component. We assume disposals (US and China for 10x and 16x EBITDA
respectively), synergies (USD 2bn by year three), a tax rate of 25%, and an
interest coupon of 4%.

* Negotiations still “friendly”
It is interesting that negotiations would appear to be “friendly”, as opposed to
hostile, and that ABI’s intention is to work with SABMiller’s board towards a
recommended transaction. We believe that this reflects the tacit support of
SABMiller’s largest shareholder Altria (27% stake), with Altria having been
brought over the wall ahead of the approach to SABMiller (note The Sunday
Times on 20 September suggested that Altria is "angling for a sale").
Further, we believe that a friendly approach is more likely to lead to cooperation
with regards to SABMiller’s numerous associate and JV partners.

* SABMiller (Buy) – continue to own
While there are a number of potential loose ends and the recently appointed
heavyweight chairman, Jan du Plessis, is likely to put up a strong bid
defence, we see no obvious white knight or poison pill that might prevent the
deal from taking place.

* ABI (Neutral) – await further details on deal terms
ABI has an enviable record for value creation on transactions following the
BUD and Modelo deals. With the controlling Brazilian and Belgian families
ultimately behind the timing of the SABMiller approach, we believe that any
approach would be well thought out for longer-term value creation. However,
until further deal terms are clarified (ultimate price, form of consideration,
synergies, disposals, interest, tax), we remain on the sidelines.

* Ownership structure
52.6pc of ABI shareholders are represented on ABI's board. This drives an
ownership culture and long-term view. It is hard to over-estimate the
importance that ABI assigns to this ownership structure. We see a potential

>>> Asian Update Nikkei +2.98% Hang Seng +1.61% Shanghai +0.80%

Asian Mid-session Update: Japan cuts assessment of Industrial Output after surprise decline; Markets rebound on quarter-end short covering

***Economic Data***
- (JP) JAPAN AUG PRELIMINARY INDUSTRIAL PRODUCTION M/M: -0.5% (3rd straight decline) V 1.0%E; Y/Y: 0.2% v 0.8%E
- (JP) JAPAN AUG RETAIL SALES M/M: 0.0% V 0.5%; Y/Y: 0.8% (5-month low) V 1.2%E; LARGE RETAILERS' SALES: 1.8% V 1.3%E
- (JP) JAPAN AUG VEHICLE PRODUCTION Y/Y: -4.7% V -5.9% PRIOR (12th straight negative reading)
- (AU) AUSTRALIA AUG PRIVATE SECTOR CREDIT M/M: 0.6% V 0.5%E; Y/Y: 6.3% (6-year high) V 6.2%E
- (AU) AUSTRALIA AUG BUILDING APPROVALS M/M: -6.9% V -2.0%E; Y/Y: 5.1% (10-month low) V 7.4%E
- (NZ) NEW ZEALAND SEPT ANZ ACTIVITY OUTLOOK: 16.7 V 12.2 PRIOR; BUSINESS CONFIDENCE: -18.9 V -29.1 PRIOR
- (NZ) NEW ZEALAND AUG BUILDING PERMITS M/M: -4.9% V +20.3% PRIOR
- (NZ) New Zealand Aug M3 Money Supply Y/Y: 9.0% v 9.3% prior; 3-month low
- (SG) Singapore Aug M1 Money Supply Y/Y: 2.3% v 2.0% prior; M2 Money Supply Y/Y: 1.8% v 2.6% prior
- (UK) SEPT GFK CONSUMER CONFIDENCE: 3 V 5E (4-month low)

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +1.7%, S&P/ASX +1.0%, Kospi -0.5%, Shanghai Composite +0.6%, Hang Seng +0.8%, Dec S&P500 +0.4% at 1,882

***Commodities/Fixed Income***
- Dec gold -0.2% at $1,124/oz, Nov crude oil -1.0% at $44.77/brl, Dec copper +0.5% at $2.26/lb
- (US) API Petroleum Inventories: Crude: +4.6M v +0.5Me (first build in 3 weeks; largest build since Sept 1st)
- (CN) PBOC: China Aug gold reserves 54.5M oz v 53.9M oz prior
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3613 v 6.3660 prior setting (strongest Yuan setting since Sept 18th)
- (JP) BOJ offers to buy ¥400B in 1-3yr JGBs, ¥400B in 3-5yr JGBs, ¥240B in 10-25yr JGBs, and ¥140B in JGBs with maturity over 25-yr

***Market Focal Points/FX***
- The last trading day of the quarter in Asia has finally given way to relief rally, though it remains unclear how much of the buying is due to short-covering and window dressing. US indices also thawed, with S&P500 showing its first marginal rise after 5 losing sessions. S&P500 eminis are up by a more resounding margin, rising about 15pts or 0.8%. In FX, risk-on flows are also helping drive funds out of safe-haven Yen and into the beaten down commodity currencies. USD/JPY is up about 20pips from the lows above 119.90, AUD/USD up nearly 40pips around 0.7020, NZD/USD up about 35pips above 0.6370, and EUR/USD flat around 1.1250.

- Japan industrial output fell for the 3rd straight month against expected sequential improvement, prompting the cabinet office to cut its assessment of production once again. Retail sales were also disappointing, and output of cars is now down for the 12th straight month. Skeptics are increasingly worried over the sustainability and the efficacy of Abenomics, and Japan's Prime Minister continued to take every opportunity to defend his plans with more remarks in the US on Tuesday. Abe's advisors however are calling for more aggressive policy response - Honda said Japan needs more economic stimulus to defend against a shock from China slowdown as Japan is now in static situation, while Takenaka said he prefers to see an extra budget of ¥5T this fall, followed by additional BOJ easing.

- China FX regulator reiterated it would keep Yuan basically stable, anticipating current account surplus to be maintained in H2. SAFE did acknowledge that large volatility in cross-border capital flows should be anticipated for the balance of H2. China official Manufacturing and Non-Manufacturing PMI figures are on tap for release tomorrow.

- Down under, BHP and Rio Tinto borrowed a page from Glencore's playbook, talking up their financial position over the past 24 hours. Fortescue is also up nearly 5% after company CEO said commodity market volatility can be sustained, and that he is looking for an investor to help accelerate debt payment. Australia building approvals was the most notable datapoint for the session, falling by wider than expected margin m/m and also missing expectations for y/y growth. In New Zealand, Fin Min English said he was very concerned about the risks of a housing market crash, just as the latest Building Permits data also showed a contraction.

***Equities***
US equities / ADRs:
- UACL: Guides Q3 $0.27-0.31 v $0.44e, R$283-290M v $296Me ; SCOR +8.5%; RENT +12.9% afterhours
- CLVS: Reaches milestones in the US and Europe for Rociletinib; +4.1% afterhours
- DMND: Reports Q4 $0.23 v $0.22e, R$202M v $205Me; -4.3% afterhours
- CMLS: Confirms names new CEO; effective Oct 13th;-4.6% afterhours
- DCI: Files NT-10K to delay annual report filing; -10.6% afterhours
- CUDA: To acquires Intronis Inc (private); terms not disclosed; -22.3% afterhours

- COST: Reports Q4 $1.73 v $1.66e, R$35.8B v $36.3Be

Notable movers by sector:
- Consumer discretionary: Japan Tobacco 2914.JP -7.5% (confirms asset purchase); Heiwado 8276.JP +4.6% (6-mo result)
- Consumer staples: China Huishan Dairy Holdings 6863.HK -5.3% (acquisition)
- Financials: Goldin Financial Holdings 530.HK +0.7% (FY15 result)
- Industrials: CRRC Corp 1766.HK +2.8% (awarded contracts); Geely Automobile 175.HK +15.1%, BYD 1211.HK +4.7% (China to cut tax for small cars); Mazda Motor 7261.JP +5.8%, Honda Motor 7267.JP +1.6% (Aug Japan auto production)
- Technology: Mesoblast MSB.AU -4.0% (trial update)
- Materials: Fortescue Metals Group FMG.AU +4.8% (CEO comment)
- Energy: AGL Energy AGL.AU -2.3% (FY16 guidance)
- Healthcare: Hua Han Bio-Pharmaceutical Holdings 587.HK +1.1% (FY15 result); Eisai Co 4523.JP +1.4% (adjusts H1 guidance); Avita Medical AVH.AU +18.6% (awarded contract)
- Telecom: China Mobile 941.HK -2.1% (to launch unused data rollover plan); TPG Telecom TPM.AU +5.9% (deals with Vodafone)