>>> US Close

Closing Market Summary: Stocks Register Broad Gains on Monday

The major averages rallied throughout the Monday session with the Dow Jones Industrial Average (+1.5%) ending in the lead while the S&P 500 (+1.2%) and Nasdaq (1.2%) followed not far behind.

The key indices began the week on an upbeat note, aided by overnight news indicating China has loosened its lending requirements for purchases of second homes. In addition, Friday's dovish remarks from Fed Chair Janet Yellen, who said the Fed will move cautiously when raising rates, provided another measure of support.

All ten sectors ended the day with solid gains while the S&P 500 narrowed its March loss to 0.9%. Despite the month-to-date loss, the benchmark index will enter tomorrow's session with a quarter-to-date gain of 1.3%.

Overall, cyclical sectors had the best showing, but countercyclical groups held their own. Health care and telecom services ended at the bottom of the leaderboard, but both groups still gained close to 1.0% apiece.

The health care sector settled behind most other groups despite showing early strength that was fueled by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 351.32, +3.86) ended higher by 1.1% after being up more than 1.5% at the start. On the M&A front, UnitedHealth (UNH 121.00, +2.99) gained 2.5% after agreeing to acquire Catamaran (CTRX 59.83, +11.51) for $61.50/share.

Over on the cyclical side, five of six groups ended ahead of the S&P 500 while the consumer discretionary sector (+1.0%) underperformed.

Interestingly, the energy sector (+2.1%) ended in the lead even as crude oil spent the bulk of the day in negative territory. The energy component tested the $47.75/bbl level before settling lower by 0.5% at $48.65/bbl. WTI crude will enter tomorrow's session down 11.5% for the first quarter versus a 2.7% decline for the energy sector.

Elsewhere, the technology sector (+1.2%) caught up to the broader market during the final hour, but Intel (INTC 31.46, -0.54) weighed. The heavyweight lost 1.7%, retracing a portion of its 6.4% spike from Friday afternoon that occurred amid reports the company has approached Altera (ALTR 42.82, -1.57) about a potential takeover. However, it was reported earlier today that the deal remains on track. For its part, the PHLX Semiconductor Index gained 1.4%.

Treasuries registered slim gains after spending the day in narrow ranges. The 10-yr yield slipped one basis point to 1.96%. On a related note, the Dollar Index (98.05, +0.76) spiked 0.8%, but the greenback strength had little impact on today's equity rally.

Today's participation was well below average with fewer than 660 million shares changing hands at the NYSE floor.

Economic data included Personal Income/Spending data and Pending Home Sales:
  • Personal income increased 0.4% in February after increasing an upwardly revised 0.4% (from 0.3%) in January while the consensus expected an increase of 0.3% 
    • The increase was in-line with the 0.4% increase in aggregate earnings that was reported in the February employment report 
    • Spending rose just 0.1% in February after declining 0.2% in January while the consensus expected an increase 0.2% 
    • Core PCE Prices rose 0.1%, as expected 
  • Pending home sales for February rose 3.1% while the consensus expected an increase of 0.4% 
Tomorrow, the Case-Shiller 20-City Index for January will be released at 9:00 ET (consensus 4.6%) while March Chicago PMI (consensus 52.0) and March Consumer Confidence (expected 96.4) will be reported at 9:45 ET and 10:00 ET, respectively.
  • Nasdaq Composite +4.5% YTD 
  • Russell 2000 +4.3% YTD 
  • S&P 500 +1.3% YTD 
  • Dow Jones Industrial Average +0.9% YTD

(BN) Teck Resources, Antofagasta Said to Explore Copper Mining Merger


Teck Resources, Antofagasta Said to Explore Copper Mining Merger
2015-03-30 18:38:51.762 GMT


By Matthew Campbell, Dinesh Nair and Jeffrey McCracken
(Bloomberg) -- Teck Resources Ltd. and Antofagasta Plc are
exploring a merger that would create one of the world’s largest
copper producers, people with knowledge of the matter said.
The companies have held early-stage talks, and any
agreement hinges on the approval of the families that control
both miners, the people said, asking not to be identified
discussing private information. There’s no guarantee they will
reach a deal, which would be primarily stock based, the people
said.
A combination of Teck, based in Vancouver, and London-based
Antofagasta would be the first major mining transaction since an
across-the-board slump in commodity prices hammered the
industry. Both companies have extensive copper operations in
Chile which could be combined by a merger, potentially reducing
costs.
Representatives for both companies declined to comment.
With a market value of about C$10 billion ($8 billion),
Teck is Canada’s third-largest mining group after Goldcorp Inc.
and Barrick Gold Corp. It’s backed by the Keevil family and
Japan’s Sumitomo Metal Mining Co. Antofagasta, which is
controlled by Chile’s Luksic family, is listed in London and has
a market value of about 7.3 billion pounds ($10.8 billion).
A purchase of either company would be one of the mining
industry’s largest deals over the past five years, data compiled
by Bloomberg show, topping acquisitions by Newcrest Mining Ltd.
in 2010 and Barrick Gold Corp. the next year.
Mining acquisitions were on the rise in 2011 and 2012, when
producers were benefiting from a seemingly insatiable appetite
for raw materials out of China and other emerging markets.
Commodities prices have since slumped due to an oversupply of
everything from oil and gas to copper -- a decline that’s left
many of the earlier deals looking too expensive.
Copper has fallen about 8 percent in the past 12 months,
and hit a five-year low in January. Despite the weak prices,
Teck Chief Executive Don Lindsay sees a significant production
deficit emerging by 2017, he said in a March 3 interview in
Toronto.

For Related News and Information:
Too Much of Everything Spurs Commodity Exodus as Price Wars Rage
Teck’s Lindsay Seeks Copper-Mining Deal Amid Price Slump
Top Stories:TOP<GO>

--With assistance from Scott Deveau and Liezel Hill in Toronto,
Matt Craze in Santiago and Ruth David in London.

To contact the reporters on this story:
Matthew Campbell in London at +44-20-3525-8684 or
mcampbell39@bloomberg.net;
Dinesh Nair in London at +44-20-3525-3212 or
dnair5@bloomberg.net;
Jeffrey McCracken in New York at +1-212-617-8517 or
jmccracken3@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net;
Aaron Kirchfeld at +44-20-3525-8830 or
akirchfeld@bloomberg.net
Elizabeth Fournier

>>> Campus Crest may attract Apollo, Canyon Partners, sources say

Deal Reporter

Campus Crest may attract Apollo, Canyon Partners, sources say
Campus Crest Communities (NYSE: CCG) is a likely target for private equity firms seeking to cash in on a turnaround story, according to two industry bankers and a person familiar with the matter.

Apollo Global Management (NYSE:APO), Canyon Partners, Harrison Street Real Estate Capital and Starwood Capital are among the potential suitors, these sources said.

But shareholders may decide against a sale, opting instead to endorse a proposal by activist investor Clinton Group to shakeup management and eventually acquire competitor Campus Evolution Villages, they added.

In February, Charlotte, North Carolina-based Campus Crest announced plans to review strategic alternatives, including a sale. The following month, Clinton Group outlined a plan to purchase the management company of Campus Evolution for less than USD 10m and replace Campus Crest’s interim management with executives from the competing campus housing operator.

As part of the deal, Campus Crest would receive a call option on the property currently managed by Campus Evolution, which is worth about USD 300m, according to a person familiar with the matter.

Clinton Group has repeatedly criticized Campus Crest’s poor financial performance and a steadily declining stock price. The company’s stock price has declined more than 40% since its IPO in 2010. Campus Crest CEO Ted Rollins and CFO Donnie Bobbitt stepped down in November and the company has not announced replacements.

Campus Crest declined to comment for this story.

The potential acquirers are probably hoping to purchase Campus Crest at a modest premium, restore performance and then resell it later on at a higher price, the industry bankers said, adding that shareholders may be better off if Campus Crest orchestrates a turnaround itself.

Clinton Group expects that by improving operating metrics such as occupancy rates and operating income, which lag industry peers, the new executives will lift Campus Crest’s stock price to around 13 USD per share in less than a year, according to the person familiar. The stock price is currently trading below USD 7.50.

Campus Crest could attain additional growth by using a restored stock price as a currency to purchase the remaining properties of Campus Evolution, which would initially be held in a joint venture and managed by Campus Crest, the person said.

Clinton Group nominated four independent board members in December. Shareholders will vote on the nominees during Campus Crest’s annual meeting on 15 May.

The activist is willing to see out the current sale process being run by Campus Crest management and would not interfere with a deal, the person familiar said, adding that a sale in the next couple of months would likely value Campus Crest at around USD 9 per share.

If the current process fails to produce an acceptable deal, the board members nominated by Clinton Group would not advocate for a second formal process in the future but would “always be receptive to inbound inquiries,” the person familiar said

If Clinton Group’s proposal succeeds in improving Campus Crest’s performance, an institutional investor may still seek to acquire Campus Crest in order to apply the REIT’s operating platform to its other real estate holdings, one of the industry bankers said, adding that a deal under these circumstances would probably be better for shareholders.

The other industry banker said that shareholders may opt for a sale at a reasonable premium in the near term because Clinton Group’s proposal requires delaying returns and internalizing the downside risk that the management brought on from Campus Evolution could fail.

(BFW) StanChart Most Vulnerable to U.K. Banks’ 2015 Stress Test: CS

StanChart Most Vulnerable to U.K. Banks’ 2015 Stress Test: CS
2015-03-30 13:48:27.181 GMT


By Chris Malpass
(Bloomberg) -- Standard Chartered and to a lesser extent
HSBC are most vulnerable to 2015 stress tests that will
emphasize global and emerging market shocks, Credit Suisse says
in note.
* Stress test could provide working backdrop for StanChart’s
next CEO
* Previous stress test pushed StanChart’s CET1 ratio down
to 8.1% from 10.5%
* CS says StanChart has significantly de-risked since
* CS says StanChart has significantly de-risked since</li></ul>
* EARLIER: U.K. stress tests include China slump, oil-price
drop, FX swings
* EARLIER: BI says HSBC, StanChart restructuring may be in
cards as BOE focus turns


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Chris Malpass in Berlin at +49-30-70010-6234 or
cmalpass@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

>>> Looming tax law change could spur M&A activity for development-stage solar p

Deal Reporter

Looming tax law change could spur M&A activity for development-stage solar projects in US, industry sources say -

The scheduled step-down of the federal Investment Tax Credit (ITC) that supports financing of US solar construction is pushing many development-stage solar projects to consider selling over the next year, according to several industry executives and bankers.

Utility-scale projects should already be on the market, while commercial and industrial projects could come available at the end of 2015 or early 2016, according to Stanley Chin, CEO of Clean Focus. “We’re already starting to see it,” Chin said. His company focuses on co-development, investing in late-stage or early construction-stage projects, typically between one megawatt and five megawatts (MW).

According to industry executives interviewed by Mergermarket, the cost to acquire development-stage projects in North America can range from as little as three cents per watt to north of USD 1 per watt, based on the prevailing conditions and incentives of a specific market. Massachusetts, for example, has rolled out significant incentives and commands higher premiums, while those with low rates in power purchase agreements (PPAs), such as California, fall to the lower end.

Under current law, the ITC provides for a dollar-for-dollar reduction on income taxes for eligible expenses on solar projects. If the projects are in operation by the end of 2016 the credit is 30%; if a project comes online after that the credit is 10%. It is a double-whammy for developers, a banker said, because projects will be more expensive and there will be less opportunity for tax equity investors, who are able to claim the tax credits, which aren’t useful to operators of a project that just went online and is likely not generating much revenue at that point.

Developers who do not think they can complete construction of a project in time to receive the full credit will be the most logical targets, particularly smaller developers without track records or ample capital. The banker said valuations will depend a lot on how clear a path there is to a power purchase agreement (PPA) for the assets. Some development-stage projects are shovel-ready, while others are “not much more than land and an idea.”

Innovative Solar in Asheville, North Carolina, is actively marketing some 500 MW worth of projects, according to CEO John Green. He said the projects are all shovel-ready and pointed to several recently sold projects that quickly secured power purchase agreements with utilities such as Duke Energy (NYSE: DUK).

"The people buying now, they have to know what they are doing," Green said. "A utility-scale project takes a year to build and when you throw in the time to close and giving yourself a cushion at the end of next year just in case you have delays, these really need to be sold in the next few months to be pretty sure get the full ITC."

Beaumonth Solar is conducting a sales process, according to previous reports from this news service. Beaumont has 35MW of operating projects and a backlog of another 60MW, according to a source familiar with its plans.

8minutenergy renewables President Tom Buttgenbach, whose company buys utility-scale, development-stage projects, said it is not uncommon for developers to back out of projects because they feel timelines are too tight, often for reasons beyond the ITC step-down. 8minuteenergy bought out a partner on a solar project last year because the partner was skittish about having the project completed in the timeframe called in for in the PPA.

“Some of these projects out there, people really need to get moving on,” added Charlie Kuffner, COO of developer Clean Power Group. “It’s a lot like the 2008 rush” when solar tax credits were also threatened and a similar buying binge began. The credit was later extended through the end of 2016.

The urgency to build also comes as yieldcos — publicly traded companies holding renewable and other assets aiming to produce long-term steady cash-flow — are lowering the cost of capital for solar projects and providing paths for developers to monetize their projects quickly after completion.

“The yieldcos need to be fed and they have cheap capital to make projects happen,” a second banker said.

While the yieldcos would not directly buy development-stage assets, companies such as SunEdison, NRG and others that need to drop down assets can acquire developers with both producing assets and projects to put into their pipelines. Coronal Group, which does not have a yieldco but will consider such an exit in the future, according to President Ed Feo, acquired developer and operator Heliosage earlier this year for both its pipeline of development-stage projects and its operating assets.

Adam Boucher, CEO of solar thermal developer Promise Energy, said he expects that many commercial and industrial-scale solar developers are already making plans to raise capital to finance a building binge next year. Their funding will likely be a mix of sponsor equity, tax equity and debt at the project level.

Industry executives and bankers are hopeful that either the 30% credit will be extended past 2016, a provision will be added only requiring that construction of projects begin by the end of 2016 to qualify, or that the step-down is reduced. But there is widespread agreement that solar developers cannot afford to wait and see if changes will happen.

“I can’t see anything happening until close to the election next year, and November 2016 is obviously too late,” said the first industry banker. “I am seeing some nervousness among developers. We, bankers seem to be certain it’s here to stay, but what [the tax credits] will look like in a couple years is a big question.”