TheChek News Flow

Greek officials have made an informal approach to the International Monetary Fund to delay repayments of loans to the international lender, highlighting the parlous state of Greek finances, but were told that no rescheduling was possible.

According to officials briefed on the talks by both sides, Athens was persuaded not to make a specific request for a delay to the Fund, which is owed almost €1bn in two separate payments due in May.

Although Athens was rebuffed, the discussions, which occurred in private earlier this month, are a sign that the Greek government is finding it increasingly difficult to scrape together enough money to continue to pay wages and pensions while meeting its debt payments to external lenders.

Yields on Greek bonds soared on Thursday following the news, with yields on three-year paper rising 134 basis points to 25.10 per cent, the highest since the country’s restructuring. Its 10-year yields climbed 45 basis points to 12.18 per cent.

Officials representing Greece’s creditors are unsure whether Athens will be able to make the payments in May. Even if they do, they are certain that the matter will come to a head by June, before much larger payments on bonds held by the ECB start coming due.

IMF officials have repeatedly said that a rescheduling of repayments can only come as part of a completely renegotiated new bailout programme. Were it to miss a payment, Greece would become the first developed economy to go into arrears at the Fund, something only counties like Zaire and Zimbabwe have done in the past.

Greece informally raised the precedent of delaying IMF payments by at least one other developing country a generation ago in the 1980s. But IMF officials stuck to their guns saying that none of the underlying problems had been solved by payment delays.

One source briefed on the approach said the proposal was to “reshuffle the repayment schedule for the IMF loan over the coming months,” allowing the new Greek government led by Alexis Tsipras to have the money to pay bills for pensions and public sector salaries while negotiating with European creditors over payment of the next tranche of bailout loans.

The government, which must repay more than €9bn to the IMF this year relating to its first bailout in 2010, is locked in a two-month-long stand-off with its bailout creditors to release some of the remaining €7.2bn in its current €172bn bailout in order to make those payments.

Eurozone creditors have refused to release the funds unless Athens comes up with a more complete list of economic reforms and a credible plan for implementation, but talks over what those reforms should include have stalled and EU officials have publicly said no deal is likely at the next meeting of eurozone finance ministers, which is scheduled for next week.

Even if negotiations go well and start again in earnest, EU officials are privately sceptical that the technical work allowing the release of the money will be complete by the eurogroup meeting of 11 May, the day before the IMF payment is due.

EU finance ministers now openly talk about the possibility that no deal is possible, which could lead to a Greek default and potentially an exit from the euro.

Olivier Blanchard, IMF chief economist, also highlighted the increasing possibility of a Greek exit from the eurozone, saying this week that for the rest of the eurozone a Greek exit “would not be smooth sailing, but it could probably be done”.

PARIS, 16 avril (Reuters) - Deutsche Bank a franchi en hausse les seuils de 5% du capital et des droits de vote du groupe Renault RENA.PA dans le cadre d'une opération d'options conclue avec l'Etat français, a fait savoir jeudi l'Autorité des marchés financiers (AMF).

Deutsche Bank détient 17.847.662 actions Renault, représentant autant de droits de vote, soit 6,04% du capital et des droits de vote du groupe, selon l'avis de l'AMF.

L'Etat avait fait savoir la semaine dernière qu'il avait décidé d'acquérir temporairement jusqu'à 4,73% supplémentaires du capital de Renault pour augmenter ainsi sa participation jusqu'à 19,74% et s'assurer de disposer de droits de vote double à l'issue de la prochaine assemblée générale du groupe, contre l'avis du conseil d'administration de Renault et de son PDG Carlos Ghosn. (Full Story)

Selon l'avis de l'AMF, Deutsche Bank a cédé à l'Etat des options de vente portant sur 14.000.000 actions Renault, soit 4,73% du capital et des droits de vote de la société, et l'Etat a cédé à Deutsche Bank des options d'achat portant sur autant d'actions du groupe automobile, soit 4,73% du capital et des droits de vote de Renault.

Les options de vente sont exerçables au prix par action de 90% du cours de référence de l'action Renault au 7 avril 2015 et les options d'achat au prix par action de 110% par action du cours de référence de l'action le même jour.

Le dénouement des options interviendra de manière échelonnée à l'issue d'une période de six mois, entre le 7 octobre et le 28 décembre 2015. L'Etat et Deutsche Bank ont déclaré agir séparément et sans concert entre eux vis-à-vis de Renault.

Le ministre des Finances Michel Sapin a défendu jeudi matin la position du gouvernement en expliquant que l'Etat voulait peser dans Renault mais ne souhaitait pas diriger le groupe à la place de ses dirigeants. (Full Story) Le groupe a convoqué jeudi en fin d'après-midi un conseil d'administration extraordinaire en réponse à la montée au capital de l'Etat. (Full Story)

Investors in Alcatel expected a premium and some cash as part of the Nokia offer. Although they did not get either of these, the prospect of owning part of the new Nokia is better than some might think, in our view

- The terms of Nokia's offer were not as good as expected by investors, with Alcatel shareholders owning 33.5% of the new entity vs expectations for about 40%. 

This would value Alcatel at €4.1 using the Nokia share price of €7.5 – in-line with our base case price target – thus with no premium, while Nokia takes control of Alcatel.

- While the terms have disappointed Alcatel shareholders, the prospect of owning part of the new Nokia could prove more compelling than at first sight. 

Our pro-forma models for Nokia published today suggest that the deal should be 25% accretive in 2017 – and the share price of Nokia has certainly not reacted to that kind of positive outcome. We also found that should Nokia's enlarged networks business rerate to the same EV/sales multiple as Ericsson, this would imply 15% upside to the current Nokia share price. In a separate note we upgrade Nokia from Equal-weight to Overweight. We acknowledge that owning a long-dated restructuring story with a patent story on the side is not as exciting as the idea of Michel Combes driving Alcatel ex Wireless into a phase of growth. However, a recommended deal such as this, including endorsement from the French President, is unlikely to meet with any obstacles to completion.

- Nokia shares are not pricing in the better earnings prospects or the strong product positioning of the new enlarged group. 

We previously thought that Nokia's product portfolio was too narrow with only wireless and no exposure to the US. With Alcatel, the new Nokia has the full gamut of world-class products in wireless, IP routing, optical and access, not the patchy product portfolio of the old Alcatel-Lucent or Nokia Siemens.

Our commodities team has lowered the near- and long-term iron ore price forecasts to $47/$37/$33 FoB Aus in 2015/16/17 and LT 2015 real to $39/t.

Steel production and apparent demand in China are negative yoy as a shift away from investment-led infrastructure spending has reduced demand, which combined with a focus on reducing air pollution has seen apparent domestic demand for steel down 6.2% yoy through to end March 2015.

Our supply analysis suggests that Rio, BHP, Vale, Anglo and FMG will deliver enough supply to meet all seaborne demand with the majority of this below $40/t FoB cash cost. The implication is that there is no need for prices to rise and higher cost producers will likely cease trading.

1) risky talk of trough multiples, and 2) dividends are not covered and offer limited share price support 1) With c.250mn t more supply on the way and China’s steel demand in negative territory for 2015, putting iron ore names on trough multiples (implying future price recovery) is risky in our view. With no upside to prices on our long-term iron ore price, we see little chance of material improvements in earnings from current levels. 2) Dividends don’t backstop shares when they are not covered by free cashflow our analysis shows. At iron ore under $40/t, we estimate that BHP, Rio Tinto and Anglo would be unable to cover their dividends and Kumba would have to suspend its.

We downgrade Anglo and Kumba to Sell, from Neutral, and reiterate our Sell on Rio Tinto. We also downgrade BHP to Neutral, from Buy, and remove it from our Conviction List. Our main thesis for all is the same – we see an inability to cover dividends from FCF on our commodity price deck, yet they trade at a significant premium which we believe is unwarranted.

On our price outlook Glencore is the only large-cap name that can cover its dividend with FCF, has no iron ore and more exposure to preferred base metals, its marketing division provides more stable cashflow and it has a stable credit outlook – it is our preferred name. On to CL Buy, from Neutral.

Une réunion du conseil d’administration aura lieu ce jeudi. L’attitude de Nissan sera déterminante.

Piqués au vif, Carlos Ghosn et Nissan vont-ils sortir l’arme nucléaire ? Une semaine après avoir été mis devant le fait accompli de la montée de l’Etat français au capital de Renault , le PDG du constructeur automobile a convoqué ce jeudi un conseil d’administration extraordinaire. L’intitulé de l’ordre du jour – « évolution de la composition de l’actionnariat et conséquences sur l’alliance » – ne souffre d’aucune ambiguïté.

Il s’agira, pour les 19 administrateurs du constructeur français, de discuter de la montée soudaine, annoncée la semaine dernière, de l’Etat français au capital du constructeur. Via l’acquisition de 14 millions de titres, soit environ 4,73 % du capital, pour un montant compris entre 814 millions et 1,23 milliard d’euros, l’Etat pourrait détenir jusqu’à 19,74 % du capital du constructeur, contre 15,01 % aujourd’hui.

Pour Bercy, l’objectif de cette manoeuvre surprise est d’arriver devant l’assemblée générale de Renault, le 30 avril prochain, avec suffisamment de poids afin d’ imposer la mise en place de droits de vote double, prévus par la loi du 29 mars 2014, dite loi Florange, qui vise à renforcer l’actionnariat de long terme. Pour cela, les actionnaires devront repousser, la résolution numéro douze proposée par le conseil d’administration de Renault, qui vise à déroger à la loi, en appliquant le principe « une action égale une voix ».

L’allié japonais, contrôlé à 44,3 % par Renault, détient 15 % du capital du constructeur français, mais ne dispose d’aucun droit de vote, afin d’éviter toute position d’autocontrôle. Alors même qu’il a, pendant des années, fourni l’essentiel des profits de Renault et qu’il pèse deux fois plus que son actionnaire français, le constructeur nippon pourrait juger que la future position de l’Etat français est la goutte d’eau qui fait déborder le vase. Il pourrait alors exiger un renforcement de son poids dans l’alliance, qui pourrait intervenir par plusieurs leviers, par exemple une baisse de la participation de Renault en dessous des 40 % via une cession de titres, la dilution de Renault via une augmentation de capital de Nissan ou d’autres actions capitalistiques. Et in fine, contrer en Assemblée générale l’Etat français et peser davantage dans l’alliance. Autant de scénarios aux conséquences très lourdes, auxquels ne veulent pas croire plusieurs acteurs. Dans tous les cas, les cartes sont entre les mains de Carlos Ghosn..