Top Stories: Business and Finance
The following are the day's top business stories:
1. Stocks Slide as Dollar Gains on Korea, Debt Concerns; Commodities Retreat 2. GM Says Total Offering Size $23.1 Billion Including Overallotment Options 3. Ireland Seeks EU Agreement Before Market Open as Investors Flee Bank Bonds 4. Black Friday Shoppers Top Last Year's Levels as They Seek Holiday Bargains 5. Treasury's Architects for GM IPO Sought to Limit Windfall for Wall Street 6. Otsuka Said to Tell Investors It Plans to Make Acquisitions With IPO Funds 7. Repsol Seeks to Raise as Much as $2.36 Billion for Selling Shares of YPF 8. Petrobras Bonds Trounced by Pan American as Vote Looms: Argentina Credit 9. China's Huaneng Said to Buy GMR Stake in Utility InterGen for $1.2 Billion 10.Bond Investors Rank Iberdrola Safer Than Spanish Government: Chart of Day 11.Advertising's Modern-Day Mad Men Adapt to Fend Off Smaller Digital Rivals 12.Singh Blocked on Investment Plans as Telecom Probe Shows Cost of Coalition
1. Stocks Slide as Dollar Gains on Korea, Debt Concerns; Commodities Retreat
Stocks dropped, extending a third straight weekly decline for the MSCI World Index, as tensions in Korea mounted and concern deepened that Europe´s debt crisis will worsen. The cost of insuring against defaults by Portugal, Spain and Ireland surged and the dollar strengthened. The MSCI World slipped 1.1 percent at the 1 p.m. close of trading in New York and the Standard & Poor´s 500 Index lost 0.8 percent. South Korea´s Kospi Index fell 1.3 percent and Hungary´s BUX Index slid 2.8 percent. The dollar rose 1 percent to $1.3233 per euro, a two-month high, as it strengthened against all 16 major peers. The Thomson Reuters/Jefferies CRB commodities index slipped 0.4 percent. Almost $2 trillion has been erased from global stocks in the past three weeks amid concern Ireland´s debt crisis will spread to other European Union countries. S&P cut ratings on Irish banks today, reducing Anglo Irish Bank Corp.´s counterparty credit rating to junk. North Korea threatened a "shower of terrifying fire" as the USS Washington traveled to participate in drills with South Korea. "On top of the tension in Korea, the European situation is one that´s going to continue to affect the markets in a negative way," said Walter "Bucky" Hellwig, a Birmingham, Alabama- based senior vice president at BB&T Wealth Management, which oversees $17 billion. "Over here, retail traffic is very good and that´s fueling some optimism. However, with so many unknowns, I´d see a choppy market."
2. GM Says Total Offering Size $23.1 Billion Including Overallotment Options
General Motors Co. said the underwriters in its initial public offering exercised options to buy additional stock, bringing the total value of common and preferred shares sold to $23.1 billion. The banks bought an additional 71.7 million common shares at $33 each for $2.37 billion and 13 million more preferred shares for $650 million, Detroit-based GM said in a statement today. The amount of common and preferred shares sold is more than the $22.1 billion raised by Beijing-based Agricultural Bank of China Ltd. in the biggest IPO of common stock in history. The underwriter´s purchase increases the amount of stock sold by the U.S. Treasury in the IPO to $13.6 billion, bringing Chief Executive Officer Dan Akerson closer to his goal of returning the $49.5 billion the automaker received in a taxpayer bailout. GM´s shares have climbed 2.4 percent since the company originally raised $20.1 billion on Nov. 17. "There is a lot of demand right now for the automakers," said Wayne Wilbanks, chief investment officer at Wilbanks, Smith & Thomas in Norfolk, Virginia, which manages about $1.6 billion. "The stock has held up very well," since GM began trading, he said.
3. Ireland Seeks EU Agreement Before Market Open as Investors Flee Bank Bonds
Ireland is in the final stages of negotiating an international aid package to rescue its financial system before markets open on Monday after investors yesterday dumped the bonds of its largest banks. Euro-area finance ministers may seal an agreement with Ireland tomorrow, with a teleconference slated to begin at 4 p.m. Brussels time, a European Union official said on condition of anonymity. The loans may cost as much as 6.7 percent, compared with a rate of 5.2 percent paid by Greece, state broadcaster RTE said, without citing anyone. The need for a pact, which may be worth 85 billion euros ($112 billion), is intensifying as capital flows out of the nation´s banks. The Irish government two years ago assured senior bondholders they wouldn´t lose their money if banks failed. For negotiators, the risk is that breaking the pledge may spark concerns about the quality of other euro-region debt. "One possible scenario is that the financial package for Ireland could include an element of restructuring affecting senior debt," Fitch Ratings said in a statement yesterday. "Fitch has no visibility of this matter but notes that such a restructuring could have wider implications for the euro area."
4. Black Friday Shoppers Top Last Year's Levels as They Seek Holiday Bargains
Melanie Devontino wasn´t about to let a deal slip through her hands. The 26-year-old, shopping at a Wal-Mart Stores Inc. location in Greensboro, North Carolina, began opening a pallet full of Hewlett-Packard Co. printers shortly before 5 a.m. Employees patrolled the aisles around the pallets, so crowded shopping carts couldn´t get by, asking people to put the merchandise back. Devontino ignored them. "I´m running hard," said Devontigno, who plans to spend $1,500 on holiday gifts, more than triple the amount she spent last year. Other shoppers thronged around her, carrying off digital cameras, desktop computers and other electronics. Similar scenes played out across the U.S. as Black Friday, the biggest shopping day of the year, got off to its earliest start yet. Around the nation, stores were reporting more shoppers than last year. About 7,000 people waited at 4 a.m. when Macy´s Inc.´s flagship store at Herald Square in New York opened, Chief Executive Officer Terry Lundgren said.
5. Treasury's Architects for GM IPO Sought to Limit Windfall for Wall Street
Want to underwrite one of the largest initial public offerings in history? Chop your usual fee by three-fourths and commit to limiting Wall Street´s windfall. That was the deal David Miller and Tim Massad, the unheralded government architects behind the General Motors Co. stock offering, gave investment banks interested in handling the deal. When the two U.S. Treasury officials made their expectations clear, "we could kind of hear their jaws drop over the phone," said Massad, Bloomberg Businessweek reports in its Nov. 29 issue. Massad, acting assistant secretary for financial stability, and Miller, chief investment officer for the Troubled Asset Relief Program, were President Barack Obama´s dealmakers on the Nov. 17 sale of GM stock, along with two Obama aides -- manufacturing czar Ron Bloom and economic adviser Brian Deese. The IPO, led by JPMorgan Chase & Co. and Morgan Stanley, was a nail-biter for Massad and Miller, who also manage the government´s bank and insurance company investments.
6. Otsuka Said to Tell Investors It Plans to Make Acquisitions With IPO Funds
Otsuka Holdings Inc., Japan´s largest closely held drugmaker, told investors it will use proceeds from an initial public offering to buy drug and health- food businesses, according to two people who were briefed on the company´s plans. The company is also considering raising its dividend payout after it is listed, Chief Executive Officer Tatsuo Higuchi told at least 200 investors and analysts in Tokyo yesterday, said the people, who attended the meeting. They declined to be identified because the information isn´t public. Yasushi Nakajima, an Otsuka spokesman, declined to comment before the listing. Otsuka aims to raise as much as 226.8 billion yen ($2.7 billion) selling 94.5 million shares including overallotment in what would be the world´s biggest health-care IPO since at least 2006. The Tokyo-based company´s best-selling drug, Abilify, used to treat mental illness, is set to lose patent protection in the U.S. in 2015, making acquisitions attractive to bolster growth. The company is Japan´s fifth-largest drugmaker, after Takeda Pharmaceutical Co., Astellas Pharma Inc., Daiichi Sankyo Co. and Eisai Co. Otsuka, which derives two-thirds of sales from pharmaceuticals, also makes Pocari Sweat drinks and Soyjoy nutrition bars.
7. Repsol Seeks to Raise as Much as $2.36 Billion for Selling Shares of YPF
Repsol YPF SA, Spain´s largest oil company, aims to raise as much as $2.36 billion with the sale of as much as 15 percent of its Argentine unit YPF SA. The 59.9 million shares, which will be sold in New York as American depositary receipts, will be priced at a maximum of $39.93 each, YPF said in a U.S. Securities and Exchange Commission filing today. Repsol said yesterday it made a U.S. regulatory filing to be able to sell the shares. The Madrid-based company owns 84 percent of YPF and wants to sell part of it "sooner rather than later," Repsol Chief Executive Officer Antonio Brufau said on April 29. Another 15.4 percent is owned by Argentina´s Eskenazi family, the unit´s operator. Repsol delayed a public offering of YPF in 2008. The Eskenazis have an option to buy another 10 percent of YPF by 2012 and may exercise it as early as next month, a person familiar with the situation said Nov. 16. Earlier this month, YPF said it plans to return to global markets for the first time since 1998 by selling as much as $600 million worth in bonds.
8. Petrobras Bonds Trounced by Pan American as Vote Looms: Argentina Credit
Bonds of Pan American Energy LLC, Argentina´s biggest oil exporter, are outperforming larger competitors Petroleo Brasileiro SA and Petroleos Mexicanos SA on speculation a new government may ease price caps on crude oil. Pan American bonds due in 2021 returned 2 percent in the past month, compared with a 3 percent decline for the bonds of Mexico City-based Pemex with a similar maturity, according to data compiled by Bloomberg. Rio de Janeiro-based Petroleos Brasilero SA´s bonds due 2020 fell 2.6 percent. Investors are betting an opposition candidate will unseat President Cristina Fernandez de Kirchner next year and ease restrictions in the oil and power industries. Companies including Spain´s Repsol YPF are seeking to reduce their business in Argentina as the nation´s oil fields mature and price caps limit the price they receive per barrel to $50. "If there was a change in the regime in 2012, or an improvement in the rules to sustain the petroleum industry in Argentina, it would be good for Pan American," Francisco Velasco, an analyst with Exotix Ltd., a brokerage specializing in emerging markets, said in a Nov. 24 telephone interview from New York
9. China's Huaneng Said to Buy GMR Stake in Utility InterGen for $1.2 Billion
China Huaneng Group, the nation´s biggest electricity producer, agreed to buy a 50 percent stake in Massachusetts-based power utility InterGen for about $1.2 billion, said two people with knowledge of the matter. The state-owned Chinese company would also assume about $2 billion of debt to acquire the 50 percent interest owned by India´s GMR Infrastructure Ltd., said the people, who asked not to be identified because the transaction isn´t yet public. The deal may be announced as soon as Nov. 29, the people said. Huaneng would gain access to 12 power plants in the U.K., Netherlands, Mexico, Australia and the Philippines with what would be its biggest overseas acquisition in two years. The Beijing-based utility bought Singapore´s Tuas Power Ltd. for $3.1 billion in 2008 as China´s government encourages companies to invest abroad. GMR Infrastructure, based in Bangalore, bought its share of InterGen for $1.1 billion from a fund owned by American International Group Inc. in 2008. The rest of InterGen is owned by Ontario Teachers´ Pension Plan.
10.Bond Investors Rank Iberdrola Safer Than Spanish Government: Chart of Day
Spain, which this week froze an $18 billion power-bond program because yields surged, might be better off leaving the debt on Iberdrola SA´s books. The CHART OF THE DAY shows that the difference between the interest investors require for lending to the state and what they ask from the nation´s biggest utility widened to the most in at least a decade: Iberdrola´s five-year bonds yield 75 basis points less than the government´s. Spain planned the state-guaranteed bond sales to repay a 14.6 billion-euro ($19.5 billion) debt rung up by subsidizing power prices for homes and businesses. The surge in Spanish sovereign yields delayed the deal following Ireland´s rescue package of an estimated 85 billion euros, according to people familiar with the deals. Iberdrola and competing Spanish utilities have financed the gap so far, straining their credit ratings and driving up their financing costs. "The Spanish guarantee was meant to get better pricing" for financing the debt, said Christian Kleindienst, a credit analyst at Unicredit SpA in Munich. "A guarantee from the utilities would be more valuable now for investors."
11.Advertising's Modern-Day Mad Men Adapt to Fend Off Smaller Digital Rivals
John Seifert, the chairman of Ogilvy & Mather North America, shakes his head. It drives him crazy, he explains, when people portray contemporary New York admen as sushi-munching, Scotch-slurping dinosaurs, far removed from the concerns of digitally connected consumers and out of touch with a changing industry. It happens a lot. It´s the second day of Advertising Week, the industry´s bender of panels, parties and awards shows, held every fall in Manhattan. Seifert is sitting on a short stage, in a dim room with low ceilings at TimesCenter´s The Hall, not far from Times Square. Rows of conventioneers in foldout chairs are watching the event, entitled "Inside a Big Dumb Agency." Joining Seifert on stage are two colleagues from Ogilvy & Mather -- a global agency owned by Dublin-based WPP Plc, the holding company that has more than 100,000 employees in a constellation of agencies, Bloomberg Businessweek reports in its Nov. 29 issue. The Ogilvy executives are taking turns calmly responding to inquiries from critics -- "How many Twitter followers do each of you have?" one asks -- questioning the relevance of a large, traditional agency in an age when low-to-the-ground, hand-to- hand grappling with consumers, tweet by tweet, is all the rage.
12.Singh Blocked on Investment Plans as Telecom Probe Shows Cost of Coalition
Indian Prime Minister Manmohan Singh´s re-election 18 months ago sent stocks and the rupee to record gains as investors anticipated measures to promote investment. Now, the regional parties keeping Singh in power are blocking his agenda. One of Singh´s 10 parliamentary partners is at the center of a federal telecommunications probe that may turn out to be India´s biggest case of political corruption. Another regional ally is slowing Singh´s efforts to change rules on how steelmakers Posco and ArcelorMittal acquire land for their mills, delaying as much as $100 billion in investment. Even after winning the most parliamentary seats of any party in two decades, Singh´s Indian National Congress has failed to implement economic changes sought by business leaders. His coalition lacks a parliamentary majority and is distracted by political scandals, rising inflation and a worsening Maoist insurgency in eastern India "There are a lot of very important reforms that need to be passed that won´t go through," said Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai, which provides equity and brokerage services. "It´s frustrating. The government is struggling to assert its authority."
-0- Nov/27/2010 00:35 GMT