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Hytek Microsystems Inc said its board accepted the resignation of President James Phalan at a special meeting held today. Phalan who had been president since the company was founded in 1974 resigned for personal reasons Hytek said. It also said Thomas Bay Hyteks vice president for marketing was appointed to the additional role of president and chief executive. Reuter | HYTEK MICROSYSTEMS <HTEK> PRESIDENT RESIGNS |
<Southam Inc> said its Flyer Force unit acquired three community newspapers in Winnipeg with a combined circulation of 65000 for undisclosed terms. Southam said the newspapers The Herald The Lance and Metro One will be printed at its Canadian Publishers division in Winnipeg. Flyer Force intends to expand distribution of the newspapers to begin improved service to the Winnipeg market Southam said. Reuter | SOUTHAM UNIT ACQUIRES WINNIPEG COMMUNITY PAPERS |
The New York Stock Exchange sought to defuse a trans-Atlantic flap over whether member firms can trade stocks on Londons electronic dealing system during New York trading hours. I dont know what the hub-bub is about said Richard Torrenzano NYSE spokesman. Some member firms had said they were worried that a strict interpretation of NYSE rule 390 curtail trading when London closes its trading floor next year and all trading is done via electronic systems. If the British Parliament calls it a stock exchange thats good enough for us Torrenzano said. Torrenzano did not see any conflict with rule 390 if members wanted to trade in London. The rule in effect since the mid 1970s says in part During NYSE trading hours a member a member organization or affiliated person may trade as principal or agent in any listed stock on any organized exchange of which they are a member in any foreign country at any time. The rule has not been changed there is nothing new here he said. Reuter | NYSE SEES NO PROBLEM ON RULE 390 INTERPRETATION |
venezuelas biggest private company la electricidad de caracas will meet with bank creditors in new york on monday to discuss the danger of a default on its 622 mln dlr foreign debt a company spokesman said. we are in an impossible situation. Unless we get government relief the company will be bankrupt in three years he told reuters. La electricidads problems stem from the governments december decision to set private debt payments at 7.50 bolivars per dollar instead of 4.3. Company officials estimate that the currency change raised the debt to 4.67 billion bolivars from 2.67 billion. additional preferential dollar premiums put the total cost at 7.47 billion not including interest payments. Under the government plan for repaying the 7.8 billion dlr private debt the central bank will guarantee debtors their dollars at 7.5 with a premium of 4.50 per dollar. La electricidad president francisco aguerrevere will meet his bank advisory committee led by morgan guaranty to explain that unless government assistance is forthcoming the company cannot meet its obligations. La electricidad ceased principal payments under a five-year refinancing plan last year althouigh interest has been paid the officials said. They said exchange contracts which the government no longer recognizes were signed with the central bank for this refinancing at 4.3 per dollar. The company spokesman said the new york meeting will be held to inform the committee representing 72 banks of the latest developments on efforts to lobby the government. the banks are anxious to know the situation on debt payments but we can only tell them we are waiting for a government response to our proposals he said. La electricidad is seeking permission for a 50 pct rate increase which officials say would bring in an extra 1.3 billion bolivars this year. The 30 pct tariff increase introduced in january will only bring in an extra 600 mln bolivars per year against additional debt costs of 900 mln. Without relief the company will incur losses of 287 mln bolivars this year 556 mln in 1988 733 mln in 1989 and 1.47 billion in 1990. In 1990 the company would be decapitalized 874 mln bolivars. As alternatives to the rate increase the company has also proposed allowing la electricidad a grace period on payment of the exchange risk premium to the central bank a longer period to pay it or a soft loan from the government. The company spokesman said the government has not responded to the proposals and there have been no formal meetings since january. if these solutions are not agreed to we face the final resort of either the government buying the debt or the company being nationalised he said. Reuter | Venezuela's biggest private debtor faces default |
Shr loss 12 cts vs profit one ct Net loss 1815000 vs profit 65000 Revs 59.9 mln vs 2798000 Avg shrs 15.8 mln vs 9775000 Year Shr loss 11 cts vs loss three cts Net loss 1217000 vs loss 324000 Revs 83.3 mln vs 3195000 Avg shrs 11.2 mln vs 9775000 Reuter | MLX CORP <MLXX> 4TH QTR LOSS |
Enzo Biochem Inc said (Ortho Diagnostic Systems Inc) withheld a payment of 1.5 mln dlrs due Jan 15 1987 under a research and development contract. Ortho indicated it suspended payments due under the 1985 contract pending resolution of certain contractual matters but intends to maintain the agreement Enzo said. Ortho also plans to keep a 1982 research contract in effect it said. Enzo said it continues to work under the contract and recognize revenues on a cost recovery basis. It recognized revenues under the 1985 contract of 820000 dlrs and 1655000 dlrs for the quarter and six months respectively. The revenues recognized were only partially received an Enzo spokesman said. He declined to elaborate. Total revenues were 2944000 dlrs for the quarter and 6200000 dlrs in the six months ended Jan 31 1987. The next payment under the 1985 contract of 1.5 mln dlrs is due in June the spokesman said. Reuter | ENZO BIOCHEM <ENZO> CONTRACT PAYMENT WITHHELD |
John Labatt Ltd said its share of the Canadian beer market is holding at more than 41 pct but the total market has grown only three pct since last year when volumes were depressed by labor disruptions in the industry. Labatt earlier reported profits in the third quarter ended January 31 rose 20 pct to 26.2 mln dlrs from 21.8 mln a year earlier while nine month earnings were up almost as much to 92.8 mln dlrs from 78 mln dlrs. Through acquisitions as well as growth in the core businesses all segments achieved both sales and earnings improvement over a year ago it said. Labatt purchased Tuscan Dairies Green Spring Dairy EverFresh Juice Co and Pasquale Food Co in the third quarter. The company said cool wet weather last summer slowed total market demand in the past nine months. Lack of significant market growth emphasizes the importance of customer service and new product development it added. Reuter | LABATT CLAIMS 41 PCT SHARE OF CANADIAN MARKET |
Dome Mines Ltd said it was extending the closing date of its previously announced public offer of seven mln common shares to either March 19 pending registration of the shares under U.S. securities laws or to March 27. Reuter | DOME MINES <DM> EXTENDING PUBLIC OFFER DEADLINE |
U.S. Agriculture Department (USDA) figures for highly-erodible land enrolled into the Conservation Reserve Program were regarded by most grain analysts as neutral to bearish although some said a full state-by-state breakdown would be needed to assess the full price impact. Out of 10.5 mln acres only 1.9 mln acres were accepted in corn -- Thats neutral at best and perhaps bearish to what the trade was looking for Dale Gustafson of Drexel Burnham Lambert said. The USDA said it had accepted 10572402 more acres into the conservation program out of bids on a total of 11254837 acres. Gustafson said he would not be changing his estimate of planted acreage for corn as a result of the latest figures but some other analysts said they would adjust their estimates slightly. The USDA is due to release planting intentions figures March 31. Indications of a heavy sign-up in the conservation program recently lowered most trade estimates of corn planted acreage to 63.0 to 67.0 mln acres from 67.0 to 69.0 mln. Richard Loewy analyst with Prudential Bache Securities said there was not enough information to completely assess the conservation figures. The 1.9 mln acres on corn is certainly disappointing he added. The USDA later released the state-by-state breakdown of the enrollment figures. Loewy said the initial figures appeared to be negative for both new crop corn and soybeans and might possibly mean an upward adjustment in planting intention figures. Asked about the impact on the flow of generic certificates onto the market this spring he said: The trade was definitely looking higher so certificates are going to be less than expected. The USDA offered a special corn bonus rental payment to the farmers to be paid in generic certificates. The bonus amounts to two dlrs per bushel based on the farm program payment yield for corn for each acre of corn accepted into the reserve. Katharina Zimmer analyst for Merrill Lynch Futures said the conservation sign-up was slightly higher than she had expected although she noted that some trade expectations were considerably higher than the actual figures. I think it is friendly for the market at least in the long run she said. Susan Hackmann of AgriAnalysis said there was some confusion over whether trade ideas of an enrollment figure between 15 and 18 mln acres referred to the total sign-up or the latest addition. It seems the trade was looking for more acres to be bid into the program she said. Hackmann said she would not make much change to her ideas about corn planting figures as a result of the conservation sign-up. She added that while some trade guesses were as low as 61 mln acres she was looking for corn plantings to be in the high 60s. Zimmer of Merrill Lynch said she would be making a slight reduction of about one mln acres in her planting estimate to around 64 mln acres. New crop corn prices at the Chicago Board of Trade firmed earlier this week on ideas of a large sign-up in the program despite the fact that acres enrolled are generally poor yielding and not likely to make a substantial difference to final production figures. Reuter | U.S. CONSERVATION FIGURES SEEN NEUTRAL/BEARISH |
Canadas federal budget deficit fell to 2.01 billion dlrs in December from 2.27 billion dlrs a year earlier the finance department said. The government said revenues in December totaled 8.17 billion dlrs up from 7.26 billion dlrs in 1985. Expenditures were 10.18 billion dlrs up from 9.53 billion dlrs in the previous year the government said. Reuter | CANADA BUDGET DEFICIT FELL IN DECEMBER |
MCI Communications Corp said it opposed recent recommendations by the U.S. Justice Department that would loosen restrictions on the regional bell operating companies. MCI said the restrictions on the regional bell companies should only be loosened if their monopolies on local service are eliminated. It said the proposals to loosen those restrictions are at odds with the rulings that governed the break-up of American Telephone and Telegraph Co <T> in 1984. Reuter | MCI <MCIC> OPPOSES U.S. PHONE RECOMMENDATIONS |
Forest City Enterprises Inc said it completed the previously announced sale of assets of its retail store division excluding real estate to Handy Andy Home Improvement Centers Inc a private Gurnee Ill. firm. The sale is for cash and notes but exact terms were not disclosed. Reuter | FOREST CITY <FECA> COMPLETES SALE |
Beaver Creek State Bank in Beaver Creek Minn. failed and the banks insured assets were transferred to Citizens State Bank of Silver Lake Minn. the Federal Deposit Insurance Corp. said. Separately the Federal Home Loan Bank Board said Victor Federal Savings and Loan Association of Muskogee Okla. was placed into receivership. Beaver Creeks two offices will re-open as branches of Citizens on Monday. The transfer was arranged because there were no bids to buy Beaver Creek the FDIC said. Citizens will pay a premium of 30000 dlrs to the FDIC and purchase Beaver Creeks assets for 5.3 mln dlrs. It was the 43rd bank failure in the nation this year. The FHLBB said Victor Federal Savings was insolvent and its assets were transferred to a newly chartered federal mutual association with directors named by the FHLBB. Victor was a stock association with 564 mln dlrs in assets. The new association is to be known as Victor Savings and Loan Association and its assets continue to be insured by the Federal Savings and Loan Insurance Corp the FHLBB said. Reuter | MINN. BANK, OKLA. THRIFT ACTIONS TAKEN |
Lifestyle Restaurants Inc said revenues for the first quarter ended January 24 1985 were 17.5 mln dlrs and not the 17.8 mln dlrs it had reported earlier. The company also said a note attached to its earnings concerning a gain in 1986 on certain sales was incorrect and should be disregarded. Reuter | LIFESTYLE RESTAURANTS <LIF> ADJUSTS REVENUES |
The Commerce Department said that all Canadian firms had begun to pay an agreed to 15 pct surcharge on softwood shipped to U.S. markets. It made the statement after talks with Canadian officials about press reports and speculation in Canada that some exporters were not paying the charge. Canada and the United States agreed last December to the 15 pct charge ending a lengthy trade dispute over alleged Canadian subsidies to Canadas softwood exporters. Commerce officials would not say if they found any Canadian companies had been evading the charge but that following the talks they were convinced all exporters were complying with the agreement. Undersecretary of Commerce Bruce Smart said We are gratified to learn that companies in Canada have begun paying the export charge on lumber. He added the agreement was important to the health of the U.S. lumber industry and he intended to see that it was fully carried out. reuter | U.S. SAYS CANADA COMPLYING WITH LUMBER PACT |
Petroleos de Venezuela S.A. said it will sign a contract March 17 to buy a half interest in a Corpus Christi Texas refinery and related operations. The contract to be signed by PDVSA and Champlin Petroleums parent company the Union Pacific Corp will create a new joint venture called Champlin Refining. The state oil company said PDVSA will pay on the order of 30 mln dlrs for the half interest in Champlin. Energy minister Arturo Hernandez Grisanti said Wednesday the cost would be 33 mln dlrs in cash plus an additional 60 mln in crude and refined oil shipments. PDVSA and Union Pacific have sought a line of credit from a group of North American and Japanese banks to finance the new companys working capital the Venezuelan company said. Under the deal PDVSA will supply up to 140000 barrels a day to the refinery with the option to place 50000 bpd more - mostly gasoline and distillates - through Champlins distribution system in 10 U.S. states. The new company will be directed by a six-member board with three representatives each from PDVSA and Union Pacific. According to PDVSA Venezuelans will occupy such key positions such as treasurer and vice-president for manufacturing. The total capacity of the Champlin refinery is 160000 bpd of crudes and another 40000 bpd of intermediates. The plant will be able to handle 110000 bpd of Venezuelan heavy crudes which make up more than half of the countrys crude oil exports. Reuter | PDVSA TO SIGN CHAMPLIN REFINERY DEAL MARCH 17 |
Investor Martin Sosnoff said in a statement that he was disappointed in Caesars World Incs response to his 28 dlrs a share offer to buy the company. The company had said the offer was inadequate and that it was exploring restructuring or sale of the company to another party. Sosnoff said he believes the offer is fair to all shareholders. My primary desire is still to sit down with management to negotiate a friendly acquisition he said. Reuter | INVESTOR DISAPPOINTED AT CAESARS <CAW> RESPONSE |
Venezuela will lend Ecuador up to 12.5 mln barrels of crude oil to help it meet its export commitments and its domestic energy demand Ecuadorean Energy and Mines Minister Javier Espinosa said today in a statement. Ecuador was forced to suspend exports after the pipeline connecting its jungle oil fields with the Pacific Ocean port of Balao was damaged last week by an earthquake. Venezuela would lend 50000 barrels per day of crude for a total of up to to 7.5 mln barrels to help Ecuador meet export commitments Espinosa said. Also Venezuela will sell the crude and provide the foreign exchange earnings to Ecuador he said. Ecuador would repay Venezuela in crude once it resumed its exports after repairing its pipeline to Balao a task that would take an estimated five months. Venezuela is lending Ecuador five mln barrels of crude for refining in this country to meet domestic demand. Ecuador would repay that loan with crude once the oil pipeline is repaired. Both countries are the only Latin American members of the Organisation of Petroleum Exporting Countries (OPEC). Ecuador was exporting about 140000 bpd before the earthquake Energy Ministry officials said. Its total output was around 260000 bpd. Reuter | VENEZUELA TO LEND UP TO 12.5 MLN BARRELS OF OIL |
Petroleos de Venezuela S.A. said it will sign a contract March 17 to buy a half interest in a Corpus Christi Texas refinery and related operations. The contract to be signed by PDVSA and Champlin Petroleums parent company the Union Pacific Corp <UNP> will create a new joint venture called Champlin Refining. The state oil company said PDVSA will pay on the order of 30 mln dlrs for the half interest in Champlin. Energy minister Arturo Hernandez Grisanti said Wednesday the cost would be 33 mln dlrs in cash plus an additional 60 mln in crude and refined oil shipments. PDVSA and Union Pacific have sought a line of credit from a group of North American and Japanese banks to finance the new companys working capital the Venezuelan company said. Under the deal PDVSA will supply up to 140000 barrels a day to the refinery with the option to place 50000 bpd more - mostly gasoline and distillates - through Champlins distribution system in 10 U.S. states. The new company will be directed by a six-member board with three representatives each from PDVSA and Union Pacific. Reuter | PDVSA TO SIGN CHAMPLIN REFINERY DEAL MARCH 17 |
Venezuelas biggest private sector company La Electricidad de Caracas will meet urgently with bank creditors in New York on monday to discuss the danger of a total default on its 622 mln dlr foreign debt a company spokesman said. We are in an impossible situation unless we get government relief the company will be bankrupt in three years he told reuters. La Electricidads problems stem from the governments decision in december to set private debt payments at 7.50 bolivars per dlr instead of 4.3 adding 74 pct to the debt in bolivar terms. La Electricidad is seeking permission for a 50 pct increase in industrial and commercial tariffs which officials say would bring in an extra 1.3 billion bolivars this year. A 30 pct tariff increase introduced in january will only bring in an extra 600 mln bolivars per year as against additional debt costs of 900 mln. Reuter | VENEZUELA'S BIGGEST PRIVATE DEBTOR FACES DEFAULT |
PH Acquisition Co a unit of Pratt Hotel Corp said its 135 mln dlrs per share tender offer for all shares of Class B common stock of Resorts INternational Inc expired. As of today about 45690 shares were tendered an insufficient number of shares to satisfy the condition that 51 pct of the voting power be tendered. Earlier this week New yOrk developer Donald Trump made a competing bid for the class B shares. Reuter | PRATT <PRAT> OFFER FOR RESORTS <RT> EXPIRES |
Manville Corp said it named John Roach senior vice president and chief financial officer. The post of chief financial officer has been vacant since W.T. Stephens was appointed president of the company last April Manville said. Roach 43 was most recently a partner of Braxton Associates a unit of the accounting firm Touche Ross and Co. He was previously with Northrop Corp <NOC>. Reuter | MANVILLE <QMAN> NAMES FINANCIAL OFFICER |
Saudi Arabia has dropped its condition that Brazil secure international bank guarantees before Saudia Arabia would ship it oil the state-oil company Petrobras said in a statement. Petrobras said the Saudis will accept Banco do Brasil credit guarantees. Petrobras cancelled a 40-mln dlr crude oil purchase from the Saudis yesterday after they refused to accept a letter of credit from the official Bank of Brazil. The Saudis had demanded that Brazil get credit guarantees from leading international banks. Petrobras said the Saudis had been advised that if they did not change their mind by Monday Petrobras would negotiate the purchase of oil with other producers. The Petrobras statement said the shipment of 2.2 mln barrels will be made by the Saudis on March 24 as scheduled. The shipment is part contract signed in February for the Saudis to supply Brazil with 125000 barrels per day until June. Reuter | SAUDIS DROP CONDITION FOR OIL SALE TO BRAZIL |
United Telecommunications Inc said it called for rejection of the recommendation that the regional Bell telephone companies be allowed to enter the long-distance business at this time. In comments to U.S. District Court Judge Harold Greene the company said modification of other restrictions currently imposed on the regionals would be acceptable. United Telecommunications operates U.S. Sprint a long distance telephone service in a joint venture with GTE Corp <GTE>. Separately US Sprint in its comments told Judge Green that allowing the Bell operating companies into the long-distance business could undo all the strides toward full competition since the breakup of American Telephone and Telegraph Co <T> in 1984. The U.S. Justice Department has proposed lifting restrictions on the regional phone companies so they can enter the long-distance business in areas where they do not provide local service. Reuter | UNITED TELECOM <UT> ASKS TO RESTRICT BELL |
Saudi Arabia has lifted the condition it imposed on the sale of oil to Brazil and will accept Banco do Brasils credit guarantees state-oil company Petrobras said in a statement. Petrobras cancelled a 40 mln dlr crude oil purchase from the Saudis yesterday after they refused to accept a letter of credit from the Bank of Brazil demanding guarantees from leading international banks. It advised the Saudis the company would negotiate oil purchases elsewhere unless they changed their mind by Monday. The 2.2 mln barrels shipment will be made by the Saudis on March 24 as scheduled the statement said. Under a 125000 bpd contract signed in February the Saudis agreed to supply oil to Brazil until June. Reuter | SAUDI ARABIA DECIDES TO ACCEPT BRAZIL CREDIT |
Micron Technology Inc said it expects to record a net loss of about 11 mln dlrs in the second quarter compared to a loss of 9.7 mln dlrs in the first quarter and 9.8 mln dlrs in the year-ago second quarter. Revenues in the quarter ended March five increased to about 20.4 mln dlrs from 18.8 mln in the preceeding quarter and 9.4 mln dlrs in the year-ago quarter. The company makes semiconductors memory components and related products. Reuter | MICRON TECHNOLOGY <DRAM> SEES 2ND QTR LOSS |
U.S. economic data due out next week is unlikely to hold any surprises that will shake U.S. interest rate futures out of their relatively narrow trading range of the last 3-1/2 months financial analysts said. People dont seem to have any firm conviction about the current strength of the economy or about the Federal Reserve doing anything said Drexel Burnham Lambert analyst Norman Mains. The narrow range trading is also taking its toll on trading volume he noted. Weve had a decline in activity as recent economic statistics have not greatly changed peoples viewpoints on interest rates Mains said. The data which has provided not clear-cut view of the economy coupled with dampened activity in the foreign exchange markets after the Paris initiative has made for less than ebullient market action Mains said. He added however that Treasury bond futures could be in for a retracement after the recent rise as they are near the top of the trading range. My view is that the economy remains relatively strong and market participants will see that current prices are unjustified Mains said. Refco Inc senior vice president Michael Connery also noted that the market is showing very little momentum and lacks retail interest. All of the movement occurs at the opening afterwhich volume dwindles and momentum fades Connery said. Although data during the week was mildly positive for bond prices the small rise in February producer prices and downward revisions in January retail sales and industrial production were not real exciting said Prudential Bache analyst Fred Leiner. There is no one factor that will push us through the highs at this moment Leiner said. Next weeks revision to fourth quarter U.S. Gross national Product is also likely to be of little interest to the market said Kleinwort Benson chief financial economist Sam Kahan. Still forecasts for first quarter GNP could play a role in the direction of bond prices over the next month. Kahan said his early estimate for first quarter growth is around three pct due largely to a buildup in inventories reflected in the January inventory data Friday which showed the largest increase since 1979. The key question will be not whether there is a large increase in first quarter GNP but whether any increase is sustainable or a one shot deal Kahan said. He said that a sizable increase in first quarter GNP stemming from an increase in inventories will be a drag on second quarter growth. If that is the case GNP in the second quarter could ease back to a one to two pct growth rate Kahan said. Reuter | TRADING RANGE LIKELY TO CONTINUE IN DEBT FUTURES |
Oper shr 35 cts vs 34 cts Oper net 2313000 vs 1646000 Revs 100.1 mln vs 77.3 mln Note: 1986 net excludes extraordinary loss of 294000 dlrs or four cts vs shr vs yr-ago loss of 579000 dlrs or 12 cts shr. 1986 net includes non-cash loss of 1436000 dlrs or 22 cts shr vs yr-ago loss of 1922000 dlrs or 39 cts shr from depreciation and amortization allowances on U.S. cable TV operation. Fewer shrs outstanding. Reuter | <AGRA INDUSTRIES LTD> SIX MTHS JAN 31 NET |
Citibank the main susbidiary of Citicorp said the filing it made with the Securities and Exchange Commission about the possible impact on earnings should certain Brazilian loans be placed on a cash basis was not linked to debt talks that are about to begin with Brazil. Citibank said it had told the SEC that its earnings could be reduced by 50 mln dlrs after-tax in the first quarter and 190 mln dlrs in the year if it has to declare 3.9 billion dlrs of medium- and long-term Brazilian loans non-performing. Rather Citibank said it was simply complying with the disclosure requirements contained in the U.S. Securities Acts. Citibank said in its filing with the SEC that it was premature to decide now whether the loans should be placed on a non-perfoming basis a view that was echoed by spokesmen of several other major U.S. banks. Reuter... | CITICORP <CCI> SEC FILING NOT TIED TO DEBT TALKS |
FPL Group Inc shut down a nuclear reactor at its Turkey Point power plant after engineers discovered a tiny leak of radioactive water from the pressure vessel surrounding the reactor core a company spokeswoman said. FPL spokeswoman Stacey Shaw said FPL shut down Turkey Point Unit Four voluntarily to repair the leak which she described as a tablespoon full of water that never posed any danger to the plant or the public. The nuclear reactor -- one of two at the site south of Miami -- was already partially shut down for the repair of a leaky pressure valve discovered on Wednesday. Shaw said the reactor was expected to be back on line in about a week. Reuter | FPL GROUP <FPL> NUCLEAR REACTOR SHUT DOWN |
Mexico has temporarily suspended its debt-equity swap program in a move that some bankers see as an attempt to increase pressure on reluctant foreign banks to participate in a new 7.7 billion dlr loan for the country. The scheme which gives foreign firms access to cheap pesos to finance investment in Mexico is likely to resume soon after the loan package is signed on March 20. But the move is a further indication of the strains that have developed between Mexico and the banks because of the difficulty of syndicating the huge loan bankers said. Bankers said that Mexico suspended the swap program on February 25. Adolfo Hegewisch Mexicos Undersecretary for Commerce confirmed that the swap program had been halted but he told a Euromoney conference on debt-equity swaps that Mexico had been forced to act because it had been inundated with applications. Between January 1 and February 15 132 firms had applied to do a debt-equity conversion compared with 100 between May and December 1986. We were not accustomed to receive so much work said Hegewisch who is responsible for foreign investment in Mexico. Bankers said applications totalling two billion dlrs had piled up at the finance ministry which has said it wants to limit the amount of swaps to 100 mln dlrs a month. But some bankers who declined to be identified said the halt also suited Mexico as it would keep up pressure on the banks during the final campaign to persuade all 400 creditors worldwide to participate in the loan. Over 97 pct of the loan has been subscribed but dozens of smaller banks are still baulking. Assistant U.S. Treasury Secretary David Mulford said yesterday that the reluctance of these banks had nearly jeopardized the deal at one stage. The Mexicans basically said Were not going to subsidize foreigners until we have a deal one banker said. Other bankers however said Mexicos motives were not so sinister and that the suspension was mainly due to the absence of top ministry officials in New York for the debt talks. They want to focus on the deal and they wanted the banks to focus on the deal one source said. Apart from the present disruption bankers and company officials said the Mexican debt-equity scheme has been a huge success. Frank Fountain Assistant Treasurer at Chrysler Corp said a 100 mln dlr swap it made in December had gone so smoothly that Chrysler has plans for more. Chrysler working through Manufacturters Hanover Trust Co bought Mexican public-sector debt with a face value of 110 mln dlrs mainly from European banks. The cost was about 65 mln dlrs in cash and paper. It then presented the paper to Mexicos central bank and received the equivalent of 100 mln dlrs worth of pesos which it invested in its local subsidiary to produce cars for export to North America. Susan Segal senior vice president of Manufacturers Hanover said the swaps not only reduce Mexicos debt burden but help to recapitalize local industries that may have been squeezed out of the local capital markets. Fountain said that even a large well-established firm such as Chrysler had found it difficult to arrange long-term peso financing on reasonable terms in Mexico. Industrial companies have done most of the swaps to date and Hegewisch said that many of the applications now pending are for investments in the electronic and chemical industries with Japanese and Korean firms showing particular interest. But the interest is spreading. Segal said Manufacturers Hanover has been authorized to convert part of its own portfolio of loans into equity investment in Mexican hotels. She said the sums involved are considerable but gave no details. The bank is also looking into joint ventures with manufacturing and trading companies Segal added. And as part of the agreement with the banks that will be signed next week Mexican residents will be allowed to participate in the scheme hitherto reserved for foreign firms in the hope that some of the 30 billion dlrs estimated to be held abroad will be repatriated. Reuter | MEXICO TEMPORARILY HALTS DEBT-EQUITY SWAPS |
The Commerce Department said all Canadian firms have begun to pay an agreed 15 pct surcharge on softwood shipped to U.S. markets. It made the statement after talks with Canadian officials about rumors in Canada that some exporters were not paying the charge. Canada and the U.S. agreed last December to the 15 pct charge ending a lengthy trade dispute over alleged Canadian subsidies to Canadas softwood exporters. Commerce officials declined to say if any Canadian companies had been evading the charge but said following the talks they were convinced all exporters were complying with the agreement. Undersecretary of Commerce Bruce Smart said We are gratified to learn that companies in Canada have begun paying the export charge on lumber. He added the agreement was important to the health of the U.S. lumber industry and he intended to see that it was fully carried out. reuter | U.S. SAYS CANADA COMPLYING WITH LUMBER PACT |
Ecuador President ratifies unilateral suspension of debt payments to private foreign banks |
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A decision by Colombia to open coffee export registrations for an unlimited amount does not imply the country will heavily sell coffee until recently withheld Gilberto Arango president of the private exporters association told Reuters. Colombia today opened export registrations for april and may with the National Coffee Growers Federation setting no limit. Since the start of the coffee year last october private exporters were on average allowed 350000 bags of 60 kilos per month. Traders will initially interpret this measure as announcing heavy sales. Even today it pressured the market. But it will quickly become apparent that Colombia does not intend to go over the top Arango said in an interview. Colombias marketing policy is to sell without haste but consistently. No targets for volume will be set. We will react to market factors adequately. Colombia has no intention to give its coffee away he added. Arango described measures adopted here yesterday including a lower export registration price as a major change in Colombias coffee marketing policy. The export registration price or reintegro was lowered to 1.10 dlr per lb ex-dock new york or 155.83 dlrs per bag of 70 kilos from 1.35 dlrs (194.33 dlrs). The government announced a more flexible policy of reintegro in order to closely reflect market trends which arango warmly welcomed saying private exporters will undoubtedly be more actively present in the market. A frequent gap between international market prices and the reintegro was unlikely to recur he said. Reuter | NO HEAVY COFFEE EXPORT IMPLIED-COLOMBIA OFFICIAL |
Baird Corp said its independent directors adopted a plan under which one stock purchase right will be distributed as a dividend on each common share to stockholders of record March 23. The plan is designed to protect shareholders against unsolicited or coercive takeover attempts. The rights which would allow holders to buy one-half share of common for 20 dlrs will be exercisable if a suitor acquires 25 pct or more of the companys common as of today or 30 pct at a later date or if such a holder begins a tender offer to acquire the company or in other circumstances. Under certain conditions the rights will allow holders to buy stock in a surviving company at half price. Baird can redeem the rights at five cts apiece subject to certain conditions it said. Reuter | BAIRD CORP <BATM> SETS RIGHTS PLAN |
William Mulholland president of the Bank of Montreal said here it is important for Brazil to seek its economic growth. Speaking to reporters after a meeting with Brazilian Finance Minister Dilson Funaro the Canadian banker said he suggested to Funaro the conversion of Brazils 1.3 billion dollars debt with the Bank of Montreal by direct investments in this country. He said the Brazilian minister was impressed with his initiative and that he (Funaro) had submitted the proposal to the Central Bank for a broader analysis. Commenting on Brazils decision to suspend payment of interests to private creditor banks Mulholland said he would rather see that it did not happen but that he understood the decision made by the Brazilian government: A country like Brazil cannot stop growing. Of course it must also seek an internal adjustment capable of controlling the spiral of its inflation and public deficit he said. He suggested Brazil and the international financial community to work together and seek stable conditions to face the problems of this countrys foreign debt. Reuter | CANADIAN BANKER SAYS BRAZIL ECONOMIC GROWTH VITAL |
Ecuadorean President Leon Febres Cordero said his country was unilaterally suspending payments to private foreign banks due to last weeks earthquake which caused up to one billion dollars in damage. Febres Cordero quoted in an Information Ministry communique said: We have to ratify this suspension ... on debt service to the private international banks. I am not ashamed to say it there definitely isnt a way to pay he said. Ecuador had already suspended payments to private foreign banks holding two-thirds of Ecuadors 8.16 billion dollar foreign debt from last January due to a cash-flow squeeze stemming from a slide in world oil prices last year. But finance officials had earlier said the length of the suspension would depend on negotiations with private foreign banks. The information ministry communique said febres cordero made these statments to reporters at lago agrio at the heart of ecuadors region of jungle oilfields before returning to quito. Febres cordero said up to a total of 1000 people died or were missing in avalanches and mudslides during the march 5 earthquake. The tremor damaged an oil pipeline thus barring all crude exports for a projected five months. Oil accounts for up to two-thrids of ecuadors total exoprts and for as much as 60 per cent of the governments revenues. He did not specify for how long the suspension of payments would last. Ecuador owes private foreign banks 450 to 500 mln dlrs in interest payments for the rest of the year and 66 mln dlrs in principal payments maturing in 1987 finance officials said. Finance minister domingo cordovez said two days ago the government seeks to postpone all the payments due to private foreign banks in 1987 until next year through negotiations with these creditors. Reuter | ECUADOR SUSPENDS PAYMENTS TO PRIVATE BANKS |
GENEVA - negotiators at U.N. Conference agree basic elements in new rubber pact - chairman |
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Negotiators at a United Nations conference on a new International Natural Rubber Agreement (INRA) have agreed on basic elements in a new pact conference chairman Manaspas Xuto said. We have resolved major differences of opinion he told Reuters. Xuto said the way is now cleared for drafting a new accord to replace the current one which expires in October. Xuto said: I welcome the friendly and cooperative atmosphere that has prevailed without interruption since the talks began last Monday. It is my hope that delegations will go back home and try to ratify the new agreement he added. The renegotiation conference under the auspices of the U.N. Conference on Trade and Development (UNCTAD) is the fourth such meeting in two years. Xuto said producers and consumers had agreed on four points: 1) Regular price reviews will be held every 15 months. Previously consumers were proposing 12-month intervals between price reviews instead of 18 in the current pact. 2) If the average of the daily market indicator prices over six months prior to a review is below (or above) the lower intervention price (or the upper intervention price) the reference price will be automatically revised downwards (or upwards) by five pct unless the International Natural Rubber Organisation council decides on a higher percentage. If buffer stock purchases or sales reach 300000 tonnes the reference price will be lowered or raised by three pct unless the council decides on a higher percentage. 3) If the buffer stock reaches 400000 tonnes the price at which the additional contingency stock of 150000 tonnes is brought into operation will be two Malaysian/Singapore cents above the floor price -- or 152 cents. 4) The floor price will not be breached. Throughout the talks producers had adamantly resisted a consumer proposal to lower the floor price of 150 cents if the buffer stock currently 360000 tonnes rose to 450000 tonnes. The proposal initiated by the U.S. Was withdrawn last night setting the stage for compromise. Legal drafting of provisions will start next week and formal adoption of the new accord by the 40 countries taking part in the conference is expected to take place on March 20. The current conference was widely seen as the last chance to clinch a deal. Three previous attempts to negotiate a new five- year pact had failed the last round breaking down in October over consumer demands for tighter controls of the buffer stock. The United States Japan West Germany France Italy and Britain are the major consumers. UNCTADs latest estimates project an increase of 8.5 pct in rubber prices this year and 4.1 pct in 1988. REUTER | MAJOR DIFFERENCES RESOLVED AT RUBBER PACT TALKS |
World Bank Vice-President David Knox said creditor banks must become more flexible in providing funds for Latin American debtor nations. The international creditor banks must make their position more flexible ensuring a flow of funds for Latin American countries especially the most indebted Knox told the semi- official newsagency Telam. Knox said Brazils decision last month to suspend payments on a large portion of its foreign debt had shocked the creditor banks. The banks were in no hurry to provide funds for the debtor nations he said. But he said the situation of debtor nations transferring funds to the developed should be reversed. It must be the other way round to make development in indebted states possible. He said the World Bank was supplying special lines of credit to make up for this inflexibility on the part of the banks. It had increased its involvement in development projects by 60 pct in the last two years he said. Knox said banks would grant Argentina loans of up to two billion dlrs over the next two years to help the country meet growth targets. Argentina is currently negotiating a 2.15 billion dlr loan with creditor banks for 1987. REUTER | WORLD BANK OFFICIAL CALLS FOR BANKER FLEXIBILITY |
The Federal Home Loan Bank Board (FHLBB) announced the acquisition of Home Savings and Loan Association in Seattle Washington by InterWest Savings Bank of Oak Harbour Washington. The FHLBB said Home Savings was the 12th troubled savings institution requiring federal action this year. It said Home Savings had assets of 150.6 mln dlrs in assets and InterWest had assets of 342.9 mln dlrs. REUTER | S&L ACQUISITION RAISES U.S. 1987 TOLL TO 12 |
Bangladesh floated an international tender for the purchase of 10000 tonnes of refined soyabean oil for delivery at Chittagong/Chalna port by April 24 Food Ministry officials said. The tender closes March 28 at 0500 GMT. REUTER | BANGLADESH TO BUY 10,000 TONNES SOYABEAN OIL |
President Leon Febres Cordero said Ecuador would honour its debt when it had the capacity to make payments but said foreign banks had calculated oil would have to be 25 dlrs a barrel for Ecuador to meet its commitments. Ecuador yesterday said last weeks earthquake was forcing it to reaffirm an earlier decision -- based on the slide in world oil prices -- to suspend debt payments to private foreign banks which hold two-thirds of its 8.16 billion dlr foreign debt. All legitimate debt is a commitment of honour the president said during a visit to the quake zone. A government as a sovereign entity has dignity and prestige to maintain. He said he had previously held that Ecuador was obliged to make debt payments when crude oil was at 26 dlrs a barrel because the government had projected plans with crude prices at that level. Private foreign banks and the World Bank had calculated oil would have to be at least 25 dlrs a barrel for Quito to be able to meet its commitments Febres Cordero said. He added that Ecuadorean crude was now selling for 15 to 17 dlrs a barrel after having been sold for many months at 12 dlrs a barrel and as low as seven dlrs before that. REUTER | ECUADOR SAYS IT WILL PAY DEBT WHEN IT CAN |
The Bank of Spain said banks must make provisions amounting to at least 25 pct of outstanding loans to countries deemed to be high-risk borrowers. The measure was included in a package of circulars approved by governors of the central bank yesterday. The bank said it was retaining a complex system for calculating the proportion of loans which must be covered by special provisions but added that sudden shifts in the situation of borrowers had made it advisable to set a minimum level of 25 pct for such provisions. The bank said another measure instructs banks and financial institutions to begin setting aside provisions for future pension obligations. Banks were obliged last year to ensure that they had made sufficient provisions for current pension obligations and a new circular sets a maximum time limit of five years to cover future obligations. REUTER | SPAIN SETS BANK PROVISIONS FOR HIGH-RISK BORROWERS |
Ecuador announced an austerity program and a price freeze on key consumer goods as a result of last weeks earthquake which killed at least 300 people. Presidency Minister Patricio Quevedo said in a televised address that the budget would be cut by five to 10 pct government hiring would be frozen and salaries of top officials including the president and cabinet would be reduced. He also said a price freeze would be imposed on 20 basic consumer items mainly food staples while the price of petrol would rise by between 69 and 80 pct and bus fares would rise by 20 pct. Petrol supplies would also be limited. Information Ministry officials said the price freeze was aimed at protecting poor Ecuadoreans from a wave of specualtion. Violators would be severely punished according to the price freeze order signed by five cabinet ministers. The items for which prices were frozen included rice sugar cooking oil potatoes salt wheat flour cigarettes soft drinks school supplies and several kinds of vegetables. Ecuadors consumer price inflation was 23 pct in 1986. The price of 92-octane petrol rises to 110 sucres a U.S. Gallon from 65 sucres. Eighty-octane petrol increases to 90 sucres from 50. REUTER | ECUADOR ADOPTS AUSTERITY PROGRAM |
Swedens trade surplus rose to 3.6 billion crowns in February from 1.5 billion in January and 3.48 billion in February 1986 the Central Bureau of Statistics said. The trade surplus for the first two months of the year rose to 5.1 billion crowns from 4.9 billion in the corresponding period of 1986. The report said February imports stood at 20.1 billion crowns while exports were 23.7 billion. REUTER | SWEDISH TRADE SURPLUS RISES IN FEBRUARY |
The Bank of China the state foreign exchange and foreign trade bank has increased its capital to five billion yuan from three billion yuan the New China News Agency said. The banks board of directors meeting here announced that the increased funds had been allocated to the bank last December. The meeting approved the banks 1986 balance sheet showing total assets of 345 billion yuan by end-1986. No comparative figure was given for 1985. A bank spokesman said the increased capital would enhance its position at a time of rapidly expanding business. By end-1986 the bank had 369 domestic institutions and 347 elsewhere including Hong Kong and Macao. REUTER | BANK OF CHINA INCREASES CAPITAL |
Yugoslavian steel output will rise by one mln tonnes to 6.3 mln tonnes a year between 1986 and 1990 under a development program adopted by the Yugoslav Iron and Steel Metallurgy Association the official Tanjug news agency said. The association groups together the main Yugoslav iron and steel enterprises. Extraction of iron ore should show an annual growth rate of nine pct and reach seven mln tonnes by 1990 under the program. Iron output is planned to grow at eight pct a year reaching 4.5 mln tonnes at the end of the decade. Tanjug said the programme would create conditions for raising exports of finished steel products. The main Yugoslav steel producers plan to market 5.35 mln tonnes of steel goods this year or 150000 tonnes more than last year with 1.5 mln tonnes going to export. REUTER | YUGOSLAV 1990 STEEL OUTPUT TO HIT 6.3 MLN TONNES |
French state-owned aluminium and special metals group Pechiney said it has signed two protocols of intent to set up joint ventures with the Soviet Union. Pechiney said in a statement one accord was to set up joint ventures manufacturing aluminium packaging for food and cosmetics while another was to produce machinery to manufacture packaging. Under the latter Pechiney which does not manufacture packaging equipment will form and lead a consortium of yet unspecified European partners a spokesman said. He said it was early to put figures on possible deals or outline what form joint ventures would take. The statement said joint working groups for each accord had a three-month deadline to come up with contract proposals. No firm contracts have yet been finalised under new laws enabling joint ventures First Deputy Prime Minister and Chairman of the State Agro-Industrial Committee (GOSAGROPROM) Vsevolod Murakhovsky told journalists here on Wednesday. REUTER | PECHINEY <PUKG.PA> SIGNS SOVIET PACKAGING ACCORDS |
Yugoslavias top oil and natural gas producer <Ina-Naftaplin> has started to implement a cooperation contract signed last year with the French petrochemical concern <Petro Chemie> the official Tanjug news agency said. Under the deal Petro Chemie supplies oil to Ina refineries in Sisak and Rijeka and ships parts to 12 Yugoslav firms in the petrochemical chemical textile and plastics industries. The Yugoslav firms in turn will export oil products to France. Tanjug said this years exchange will value 530 mln dlrs. Ina signed a similar deal with West Germanys Hoechst AG <HFAG.F> two years ago. Ina also has joint ventures and co-production projects involving Yugoslavias other main producer <Naftagas> of Novi Sad with partners in Angola Algeria and Tunisia exploring for and exploiting oil and natural gas. An estimated 300000 tonnes of oil will thus be obtained from fields in Angola over the next 15 years Tanjug said. Ina accounts for some 75 pct of Yugoslavias total oil production which amounts to 4.2 mln tonnes a year. Ina earned more than 154 mln dlrs from exports of goods and services to 39 countries last year and ranks among Yugoslavias leading export enterprises. In a separate statement issued through Tanjug Ina said it has successfully completed the first drill at the depth of over 3000 meters in the Bay of Baes in Tunisia. Ina is jointly prospecting with the U.S. Firm Conoco for oil and gas there. Work on a second drill below 4000 meters would start soon in the Bay of Gabes the statement said. Ina would invest about 8.5 mln dlrs in prospecting in the Gabes area. Conoco which has completed geological prospecting for the Tunisian government has transferred one third of its option rights in the region to Ina it said. REUTER | YUGOSLAVIAN OIL FIRM STARTS WORKING WITH FRENCH |
Britain and Japan agreed to operate 12 flights a week over Siberia each other including eight non-stop services from May 31 officials of the Transport Ministry said. The officials said both countries reached agreement at their civil aviation talks here enabling British airline companies to begin regular air service on the trans-Siberian route between London and Tokyo. Japan Air Lines Co <JAPN.T> (JAL) already operates one flight on that route. Ministry sources said <British Airways> and <British Caledonian Air Lines> were expected to share the six British flights each week over Siberia. They said Britain currently operating seven weekly Japan-Britain flights all via Anchorage Alaska will be allowed to operate a total of 10 flights a week from May 31. Under the agreement the British side can also operate flights from Tokyo to Seoul instead of Singapore. Japanese airway companies will be able to increase the number of weekly flights to nine from May 31 from eight currently comprising six trans-Siberian flights including four non-stop flights and three flights via Anchorage. REUTER | BRITAIN, JAPAN AGREE ON FLIGHTS OVER SIBERIA |
Indonesia the worlds second largest producer of palm oil has not issued licences to import the commodity a spokesman for the Ministry of Trade said. Traders in London said Indonesia has issued licences to local operators to import around 135000 tonnes of palm oil starting in April but the spokesman said this was incorrect. A spokesman for the Indonesian Importers Association also denied knowledge of the import plan. He said importers would quickly know if licences were issued. The Trade Ministry official said there was no sign of a palm oil shortage in Indonesia. REUTER | INDONESIA DENIES GIVING PALM OIL IMPORT LICENCES |
India will get 104.65 mln stg as grants from Britain to develop its coal zinc and lead industries the British Information Services said in a statement. It said a 31 mln stg grant would be disbursed over three to four years under an agreement signed here yesterday between the Indian Finance Ministry and the British Overseas Development Administration. The British grants for developing the Indian coal industry using British mechanised longwall technology totalled 52 mln stg in the past 10 years it said. Under a separate agreement the British government agreed to provide 73.65 mln stg as a grant to develop a zinc and lead mine at Rampura-Agucha and an associated smelting complex at Chaneriya both in Indias northern state of Rajasthan the statement said. The grant will finance the basic engineering for the smelter complex to be undertaken by Britains <Davy McKee> of Stockton. It will also help develop the mine complex it added. REUTER | INDIA TO GET U.K. COAL, STEEL INDUSTRY GRANTS |
Iran has deployed about six large missiles near the Strait of Hormuz which increase the threat to shipping in the Gulf the New York Times said. The paper quoted U.S. Intelligence sources as saying the missiles appeared to be of a Chinese design known as HY-2 which is based on the Soviet SSN2 or Styx missile. Styx missiles have a range of up to 50 miles. It said the missiles had been deployed at two sites and quoted a naval analyst as saying they could be used to sink a supertanker and block the Strait of Hormuz. Missiles now used by Iran had only a fraction of the explosive power of the Styx and could sink a supertanker only with a lucky hit the paper said. None of the new missiles had been fired yet it added. The CBS television network reported on Friday that Iran had installed new missiles along the Gulf and said Washington had warned Tehran not to use them against civilian shipping. REUTER | IRAN HAS ANTI-SHIP MISSILES NEAR GULF - PAPER |
Yugoslav trade union leaders are touring the country in an attempt to quell a wave of strikes following a partial wages freeze official sources said. Eyewitnesses in the northern city of Zagreb reported far more police on the streets than normal after the city and areas nearby experienced the biggest wave of strikes in the country in recent memory. National newspapers in Belgrade have given few details of the strikes. But Zagreb papers said thousands of workers went on strike and thousands more were threatening action over pay cuts. Official sources said there were also strikes at a Belgrade medical centre a food factory in Sambor and enterprises in Nis Leskovac and Kraljevo as well as other towns. They said national union officials were travelling throughout the country to speak to meetings in an attempt to restore calm. But trade union leaders were avoiding making statements to the press and had not made their stand on the strikes clear. Western diplomats said the strikes appeared to be spontaneous and without any unified orchestration. REUTER | UNION LEADERS TOUR YUGOSLAVIA TO QUELL STRIKE |
Brazilian bank workers voted to launch a nationwide strike this month compounding labour unrest arising from the failure of the governments anti-inflation plan. At a rally in this city about 100 km northwest of Sao Paulo about 5000 bank workers voted to strike on March 24 unless their demand for 100 pct pay rises is met. Wilson Gomes de Moura president of the national confederation which groups the bank employees 152 unions representing 700000 workers told Reuters the indefinite stoppage would affect all banks. The vote came as a stoppage by seamen entered its third week and as 55000 oil workers threatened action against the state-owned petroleum company Petrobras. The government ordered thousands of troops into the refineries on Tuesday to forestall any occupation but the troops were removed yesterday. Petrobras said it had requested their withdrawal because the refineries were calm and oil workers had indicated their willingess to negotiate next Wednesday. The government has also sent marines into the main ports. A spokesman at strike headquarters for the seamen in Rio de Janeiro said unions were studying an offer by private shipowners for a 120 pct pay rise. Seamen employed by two small companies have already accepted a 120 pct pay rise and returned to work as have about 5000 seamen employed by Petrobras. Last week also saw widespread protests by hundreds of thousands of farmers over what they see as unfairly high interest rates charged by banks. According to official estimates prices rose by more than 33 pct in the first two months of this year. REUTER | BRAZILIAN BANK WORKERS DECIDE ON NATIONAL STRIKE |
President Reagan for the first time admitted he was wrong to sell arms to Iran in an initiative which four months ago plunged him into the worst crisis of his six-year-old presidency. He made the admission in a weekly radio address while defending the role played by Secretary of State George Shultz and Defence Secretary Caspar Weinberger in the affair. He said: In the case of the Iranian arms sale matter both Secretary Shultz and Secretary Weinberger advised me strongly not to pursue the initiative. I weighed their advice but decided in the end the initiative was worth the risk and went forward. As we now know it turned out they were right and I was wrong. But they discharged their responsibilities as my advisers and as my subordinates he said. Since the scandal broke last November Shultz and Weinberger have said they told Reagan of their opposition to the deal and were not fully informed of the effort carried out by National Security Council members. They also said they were unaware of the diversion of millions of dollars in profits from the arms sales to the Nicaraguan contra rebels who have been fighting the leftist Managua government for six years. REUTER | REAGAN SAYS HE WRONG IN SELLING ARMS TO IRAN |
Bank of China has increased authorised capital to five billion yuan from three billion to help meet expanding business needs the official Peoples Daily reported. The state-owned banks total assets reached 345 billion yuan at end-1986 up from 260.5 billion at end-1985 it said. The bank handles almost all of Chinas foreign exchange business and the settlement of international trade transactions. REUTER | BANK OF CHINA INCREASES AUTHORISED CAPITAL |
West German Finance Minister Gerhard Stoltenberg was quoted as saying a possible currency fraud at Volkswagen AG <VOWG.F> may affect government plans to sell its 20 pct stake in the carmaker this year. It is all very unpleasant for us because we have decided to privatise the VW shares this year. We will now have to ask ourselves the question whether we can keep to this date he told Bild am Sonntag newspaper in an interview. Bild am Sonntag released the text ahead of publication Stoltenberg did not elaborate on the share sale. The West German government owns 20 pct of VW ordinary share capital and has said previously it plans to sell it either in 1987 or 1988. Stoltenberg told Bild am Sonntag the possible fraud showed there had clearly been reprehensible criminal conduct below the level of the responsible management board. I do not want to prejudge results but the immediate and serious question which poses itself is whether certain management board members have kept their areas of business under appropriate control he was quoted as saying. VW said last week it had discovered possibly fraudulent currency transactions which could cost the company 480 mln marks and had asked state prosecutors to investigate. It said on Friday it had dismissed the head of its foreign exchange department Burkhard Junger. VW also said it suspended six staff including financial transfer department chief Guenther Borchert and the head of the central cash and currency clearing department Siegfried Mueller. REUTER | VW AFFAIR COULD DELAY SHARE SALE - STOLTENBERG |
U.S. Commerce Secretary Malcolm Baldrige predicted Congress will pass a reasonable trade bill this year and said tough protectionist legislation could prompt a trade war. The mood of the Congress right now is as tough on trade as Ive ever seen it in six years in Washington Baldrige said in a television interview. I think well still be able to get a reasonable trade bill out in spite of that because the whole Congress is trying to work together with the administration but there is a hardening trade attitude he said. President Reagan opposes protectionist legislation but agreed to support a trade bill when it became apparent that opposition Democrats would pass such legislation. However Baldrige warned measures that would penalise trading partners such as Japan South Korea and Taiwan for failing to cut their trade surpluses with the U.S. Could lead to retaliation and he said he would urge Reagan to veto any such bill. When asked if there is a rising danger of a worldwide trade war Baldrige said: Yes I dont think theres any question about that. REUTER | BALDRIGE WARNS OF WORLD TRADE WAR DANGER |
Britains ruling Conservatives have a nine point lead over the main opposition Labour Party their biggest in two years according to an opinion poll published in the Sunday Times. The MORI polls findings come as the latest in a series of setbacks for Labour and are bound to encourage talk that Prime Minister Margaret Thatcher may call a general election in June. The poll gives the Conservatives a rating of 41 pct against 32 pct for Labour and 25 pct for the centrist Liberal-Social Democratic Alliance -- enough to give Thatcher an overall majority of 46 seats in the 650-seat House of Commons. The poll which follows a survey by Marplan last week giving the Conservatives a six-point lead over Labour shows how dramatically the fortunes of Britains two largest parties have changed over the past six months. As recently as September Labour was still ahead in opinion polls and was looking forward to forming Britains next government. Since then it has been beset by inner wrangling and its popularity among Britains voters has tumbled. Morale among Labour politicians slumped further last month when the party lost a key by-election in Greenwich south London -- a seat which Labour had held for 50 years. REUTER | THATCHER PARTY HAS NINE POINT POLL LEAD |
European Commission President Jacques Delors quoted by Le Monde newspaper said he favoured a Franco-German candidate to take over <Cie Generale de Constructions Telephoniques> which has a 16 pct stake in the French public telephone switching market. I wish for a European solution ... That will enable Germany and France to move closer together which is currently necessary he was quoted as saying. Given the situtation of the EC (European Community) and of the importance for our future connunications audiences and of cooperation already undertaken on the Community level that seems the best choice Delors added. Five groups including an alliance between West Germanys Siemens AG <SIEG.F> and Frances Schneider S.A. <SCHN.PA> subsidiary Jeumont-Schneider have applied to buy what is Frances second largest telephone switching firm. Under French privatisation law foreign companies are restricted to a 20 pct stake in privatised companies. REUTER | DELORS QUOTED FAVOURING FRANCO-GERMAN BID FOR CGCT |
The head of a Philippine panel charged with recovering illegal wealth accumulated by former President Ferdinand Marcos and his associates said they still controlled large funds circulating in the countrys economy. Ramon Diaz Chairman of the Presidential Commission on Good Government (PCGG) told Reuters in an interview: There is every reason to believe that the cronies and President Marcos and his family were able to hide millions and millions of pesos before they fled. As a matter of fact we have been able to get hold of crates of newly printed currency. Diaz did not give figures but said: We believe they still have a lot of funds. These are the funds that they will use in the coming elections. These are the funds that they used to stage those coups. He was referring to congressional elections scheduled for May 11 and to the three coup attempts faced by President Corazon Aquino since she toppled Marcos a year ago. Diaz said the PCGG so far has recovered cash and property valued at about eight billion pesos and had sequestered shares of stock of at least 286 firms. We have achieved more than what we thought we could achieve in one year he added. The PCGG set up by Aquino in February 1986 has sweeping powers of sequestration seizure and inspection of bank accounts. Diaz said the panels main task is to gather evidence for legal prosecution. But we have to sequester before we file a case and that is the legal objection because they say that we shoot first before we ask questions he said. He said dividends from seized shares were held in trust funds pending court verdicts adding several Marcos associates had made confessions about their wealth. He did not name them. They are very concerned and afraid that if their names appear something may happen to them he said. The government last week announced that businessman Antonio Floirendo an associate of Marcos known as the banana king had turned over 70 mln pesos in cash to the PCGG and promised to surrender titles to property in New York and Hawaii worth another 180 mln pesos. In return the PCGG said it had lifted freeze and sequestration orders on Floirendos properties. Diaz said there were already similar preliminary agreements with another Marcos associate Roberto Benedicto. He said Benedicto had surrendered control of several newspapers and radio and television stations and agreed to PCGG control of the boards of a bank and a hotel he owned in the Philippines. Diaz said the PCGG based its estimates of illegal wealth on income-tax returns and land titles of Marcos associates. Anything over and above reported income -- thats what we have to recover he said. He said a decision by the PCGG last week to probe street certificates held by brokers at Manilas two stock exchanges was prompted by suspicion that illegal funds were in circulation. Street certificates describe securities held in the name of a broker or another nominee instead of a customer so as to permit easy trading or transfer. Share prices at the two exchanges reacted nervously last Tuesday when news of the probe leaked. The composite index at the Manila Stock Exchange fell 18.61 points to 451.51 while that at the Makati Stock Exchange slipped 1.7326 points to close at 63.0618. There was a slight recovery the following day. The presidents of the two exchanges appealed to Diaz to carry out the probe discreetly so investors were not scared away saying street certificates did not necessarily indicate anomalous transactions. Its unfortunate that (news of the probe) leaked out to the papers Diaz said. Diaz said PCGG suspicions were aroused by the stock market boom over the past year. The Manila Stock Exchange composite index jumped 224 pct from 131.32 to 424.81 in 1986. One of our functions is to see to it that these assets that we have sequestered do not go right back into the hands of the (Marcos) cronies he said. We want to make sure that these stock exchanges are not being manipulated by the cronies because maybe they want to launder their pesos and that is why the prices are just skyrocketing. Diaz said the PCGG would limit its probe to sequestered stock in brewery giant San Miguel Corp the Philippine Long Distance Telephone Co mining conglomerate Benguet Corp and Oriental Petroleum and Minerals Corp. Shares of the four companies are among the most frequently traded on the two stock exchanges. Diaz said at a meeting with the heads of the two exchanges last Thursday that the PCGG would act prudently in its investigation of street certificates adding the panel supported government efforts to create a favourable investment climate. REUTER | PANEL HEAD SAYS MARCOS STILL CONTROLS LARGE FUNDS |
Irans revolutionary leader Ayatollah Ruhollah Khomeini warned the nations civilian and military hierarchy against discord and dissent Tehran radio said. A report monitored by the British Broadcasting Corporation said he gave the warning in a speech to senior government and military figures. He said Iranians should guard against internal dissent and try to prevent it in a situation where foreign powers aimed to smash Islam...And destroy every one of us. His audience at a Tehran mosque included President Ali Khamenei Prime Minister Mir-Hossein Mousavi and Hojatoleslam Ali Akbar Hashemi Rafsanjani influential Speaker of the Majlis (Parliament) as well as military leaders the radio said. It quoted Khomeini as saying: Everybody around us is pursuing the aim of destroying us from within. They say things like such-and-such happened at such-and-such a place who is fighting whom...These things have an impact and if one does not beg God for preservation from such evils one may fall into a trap. Urging support for Parliament and the armed forces Khomeini said it was a religious duty to control negative feelings about others and to behave in a friendly way. We must support the Majlis. The Majlis must take sides with the nation. We must support the government and it must serve the nation he said. We must support the armed forces...They too should support you. Khomeini said there should not be one faction on one side and another on the other...The armed forces must be on the side of the Revolutionary Guards Corps and the Corps must support the armed forces. REUTER | KHOMEINI WARNS AGAINST INTERNAL DISSENT |
The International Monetary Fund (IMF) has assured Kenyan President Daniel Arap Moi it will continue to give his country maximum support the official Kenya News Agency KNA said. It said IMF Managing director Michel Camdessus made the pledge during talks with Moi in Washington yesterday. Earlier this month Moi told parliament Kenya would face a difficult balance of payments situation this year as a result of falling income from coffee exports and a higher oil import bill. Foreign bankers in Nairobi have said a new loan agreement with the IMF would be Kenyas first option for dealing with the expected deficit. According to KNA Moi thanked Camdessus for the IMFs help to Kenya during difficult times in the past. Mr Camdessus assured president Moi that the IMF would continue to give Kenya maximum help it added. Moi pressed the U.S. To increase its level of aid to Kenya which fell to 53 mln dlrs this year from 111 mln in 1984 and called for more U.S. Investment in the country. REUTER | IMF ASSURES KENYA OF MAXIMUM HELP |
SAUDI OIL MINISTER FORESEES NO NEED FOR NEW OPEC MEASURES BEFORE JUNE 25 |
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Saudi Arabian Oil Minister Hisham Nazer said OPECs December agreement to stabilise oil prices at 18 dlrs a barrel was being implemented satisfactorily and there was no immediate need to change it. Nazer in an interview with Reuters and the television news agency Visnews said Saudi Arabia was producing around three mln barrels per day (bpd) of crude oil well below its OPEC quota. Saudi Arabia the worlds largest oil exporter will continue to restrain production as long as other OPEC members adhere to the pact Nazer said. The 13-nation OPEC agreed in December to cut its production ceiling by 7.25 pct to 15.8 mln bpd and abide by fixed prices averaging 18 dlrs a barrel from February 1. Nazer in his first interview since succeeding Ahmed Zaki Yamani last October said: I do not foresee any need for new measures before the 25th of June when our (next OPEC) meeting will take place as scheduled. Nazer said OPEC was producing below 15.8 mln bpd and all members were abiding by its agreements. Weve heard news every now and then of violations but they were not at all verified he said. OPEC production curbs have boosted world oil prices from a 13-year low of around eight dlrs a barrel last August to near 18 dlrs after announcement of the December pact. Spot market prices slipped some two dlrs in February but have firmed in the past two weeks to near OPEC levels as traders gained confidence in OPEC price and output discipline. Nazer said Saudi Arabia would continue to produce below its 4.133 mln bpd quota if necessary to defend the 18 dlr price. As long as all the OPEC members adhere to the program as devised in December Saudi Arabia will continue to adhere to the agreement he said. Current production of three mln bpd includes oil from the Neutral Zone shared with Kuwait but not sales from floating storage Nazer said. King Fahd of Saudi Arabia in an interview with Reuters and Visnews on March 11 said the kingdom wanted oil price stability and called on non-OPEC producers to avoid harmful competition with OPEC. Saudi Arabia doesnt decide prices by itself but certainly desires price stability he said. Nazer said the output level did not mean the kingdom had returned to a role of swing producer within OPEC. Saudi Arabia allowed its output to sink as low as two mln bpd in August 1985 to compensate for slack demand and over-production by some OPEC states. Saudi Arabia is not playing that role. It is being played by OPEC membership as a whole because the reduction in the 15.8 mln bpd share of OPEC in the market is being shared by other members of OPEC Nazer said. Nazer said OPEC estimated demand for its oil during third quarter this year would be around 16.6 mln bpd. But he said if circumstances changed I am sure then the OPEC members will consult with each other and take the necessary measures. Oil analysts say the OPEC pact could come under strain when demand for petroleum products generally falls in the northern hemisphere spring and summer. Nazer said he was satisfied with the extent of cooperation from non-OPEC producers. Norway Egypt and the Soviet Union agreed to help OPEC by restraining production or exports after he visited them on OPECs behalf earlier this year. We did not ask any country to do anything. These were programmes they thought were necessary to stabilise market conditions and to help themselves attain better pricing conditions Nazer said. He said it was up to countries that declined to cooperate -- such as Britain -- to come up with their own proposals if they saw fit. REUTER | SAUDI OIL MINISTER SEES NO NEED TO ALTER OPEC PACT |
A senior Ivory Coast Agriculture Ministry official confirmed his countrys backing for a new international cocoa pact and said Ivorian delegates would be present at talks on its buffer stock starting this week. The official told Reuters that Ivorian Agriculture Minister Denis Bra Kanon would attend the opening of the talks convened by the International Cocoa Organization (ICCO) in London on Monday. While Bra Kanon is due to return home this week for funeral ceremonies for a sister of Ivorian President Felix Houphouet-Boigny scheduled to be held in the countrys capital Yamoussoukro between March 19-22 senior Ivorian delegates will be present throughout the London talks the official said. Bra Kanon is chairman of the ICCO Council and rumours that he or Ivorian delegates might be delayed because of public mourning in the West African nation helped depress already low world cocoa prices Friday. The official said Ivory Coast continued to support the new pact which was agreed in principle last year by most of the worlds cocoa exporters and consumers. He also said Bra Kanon would fulfil his duties as ICCO Council chairman during the talks scheduled to end on March 27. The meeting aims to set rules for the operation of the pacts buffer stock which producers hope will boost a market hit by successive world cocoa surpluses. Ivory Coast did not participate in the last international cocoa pact and its decision to join the new accord has sparked hopes that it will be more successful in supporting prices. REUTER | IVORY COAST CONFIRMS PRESENCE AT COCOA TALKS |
Tense trade relations with the U.S. And Japan and concern about the foreign impact of a proposed European Community (EC) tax on edible oils and fats are expected to dominate talks by EC foreign ministers here tomorrow. EC diplomats said Britain demanded the early debate on the EC Executive Commissions proposal to impose a hefty tax on domestic and imported oils and fats in an attempt to head off a proposal it sees as extremely damaging to EC foreign relations. The proposal was the most controversial part of a reform package due to be discussed by EC farm ministers later this month of the ECs Common Agricultural Policy -- widely seen as the root cause of the ECs persistent financial problems and of tensions with major trading partners. The proposal is described by its promoters as a stabilisation program which would penalise a new sector going into massive overproduction and complement proposals to cut cereals and dairy production rather than a straight forward tax. They say it would not only curb the growth of oils and fats production and prevent imports from filling any vaccum left by a fall in EC output but would also save the EC some two billion European Currency Units over two billion dlrs in farm costs. It has provoked strong protests from domestic producers as well as foreign exporters led by the United States. The diplomats said the protests had been received from most corners of the developing and developed world ranging from Senegal Malaysia and Indonesia to Brazil Argentina Canada Iceland and Norway. The proposal had little chance of approval by EC governments with West Germany as strongly opposed to it as Britain and Denmark the Netherlands and Portugal also unconvinced of its political or economic wisdom. Even Mediterranean countries such as Italy France and Greece which backed similar proposals in the past did not seem as enthusiastic now because olive oil had been added to the list of products affected. But the diplomats said a protectionist lobby in the U.S. And elsewhere was using the proposal as an excuse to promote anti-EC action and the foreign ministers debate should demonstrate the strength of feeling against the proposal within the EC and deprive its oponents of this argument. The ministers were also due to discuss proposals in the U.S. Congress for a range of protecionist legislation such as a bill that would curb EC textile exports. The diplomats said the ministers were expected to strongly back a Commission warning to Washington that such a bill if enacted would provoke swift EC retaliation. REUTER | TENSE TRADE TIES TO DOMINATE EC TALKS |
Saudi Arabias Ministry of Finance and National Economy has started to issue an index to measure share activity in the kingdom. An official of the Ministrys National Centre for Financial and Economic Information said the weekly index based on the U.S. Standard and Poors Index had been kept for over two years but was only now being published. Measuring the prices of 48 companies currently traded in Saudi Arabia the index reached 68.72 points in the week ended last March 5 down from the previous weeks 69.50. It is divided into four subcategories -- agriculture which stood at 99.03 points on March 5 industry at 54.44 services at 76.93 and finance at 61.46. The ministry begun issuing the index at a time when the situation is improving in the Saudi stock market after a two-year decline. REUTER | NEW SAUDI SHARE INDEX INTRODUCED |
Saudi Arabian business leaders assembled for a conference aimed at thrashing out problems facing the private sector of the kingdoms oil-dependent economy. The meeting of some 500 top businessmen from across Saudi Arabia comes at a time of guarded optimism in industry and commerce following the OPEC pact to boost world oil prices. The four-day conference in this resort town high in the mountains above the Tihamah plain stretching to the Red Sea has been organised by Saudi Arabias chambers of commerce. Finance Minister Mohammed Ali Abal-Khail and Commerce Minister Suleiman Abdulaziz al-Salim will attend the first day. Bankers and businessmen said the conference will air problems facing commerce and industry after last years slide in oil prices and examine ways to promote higher investment in a private sector sorely short of finance. Government planners have long recognised that Saudi Arabia the worlds largest crude exporter needs to foster private enterprise to diversify its oil-based economy. The fledgling private sector was hard hit by the Middle East recession as early as 1983 and several big manufacturing and trading companies ran into problems repaying loans. Renewed optimism this year stems largely from the accord reached by OPEC last December to curb oil output and boost prices to a benchmark level of 18 dlrs per barrel. With oil prices recovering Saudi Arabia went ahead at the turn of the year with long-delayed budget plans incorporating a 52.7 billion riyal deficit to be bridged by drawing down foreign reserves. The simple act of publishing a budget restored a measure of confidence to the business community. Some share prices have risen by more than 35 pct since last November while banks are generally reporting a slowdown in the number of new non-performing loans. But not all bankers are convinced. One senior corporate finance manager in Riyadh said: Banks are still reluctant to lend ... There is certainly more optimism in the air but I am not sure if it is firmly based. Some businessmen and bankers point out that government spending is still under tight control and the non-oil economy may still be contracting. Capital expenditure on large projects has been cut sharply. A U.S. Embassy report on Saudi Arabia published just before the budget said: While industrialisation has continued to be one of the governments highest priorities the recession the payments problem and the lack of financing have reduced Saudi and foreign investor interest in industry. It is the lack of fresh investment that is expected to be a major issue among the businessmen gathered here. Official figures show the number of new licences for industrial ventures fell 24 pct in the six months to March 1986 compared with the same period in 1985. Lending by the Saudi Industrial Development Fund a major source of industry backing has fallen steadily since 1983. Trading companies have also been hit some caught with huge inventories of construction equipment as recession bit. Some firms laid off workers and cut bloated inventories. Others have effectively been liquidated. A few have reached agreement with bankers to extend debt repayments. The latest rescheduling is for the shipping-to-hotels conglomerate REDEC. Its negotiators have just initialled a draft accord to restructure payments on 1.3 billion riyals of bank debt. Bankers and businessmen said the conference was also likely to discuss the apparent reluctance of U.S. And British firms to step up investment in the kingdom. A British government delegation has just left Riyadh after holding preliminary talks on ways of offsetting the huge Saudi outlay on a defence contract to supply 132 fighter aircraft worth five billion stg. REUTER | SAUDI BUSINESSMEN TO DISCUSS PRIVATE SECTOR |
Automobiles Citroen expects rising sales of its new AX compact car to help boost profits significantly this year continuing a financial recovery after six straight years of losses president Jacques Calvet said. Speaking to reporters during weekend trials for the new AX sports model he said: All the budgetary forecasts that we have been able to make ... Show a relatively significant improvement in 1987 compared with 1986 he added. Citroen part of the private Peugeot SA <PEUP.PA> group increased its share of the French new car market to 13.7 pct in first two months 1987 from 12.1 pct a year earlier. It is aiming for an average 12.8 pct share throughout the year after 11.7 pct in 1986. The firm believes it is on target to raise its share of the European market excluding France to 3.2 pct this year from 2.9 pct in 1986. Our first problem is to produce enough vehicles to meet the demand Calvet said. This is a relatively new problem for us. Citroen lost close to two billion francs in 1984 but cut the deficit to 400 mln in 1985 helped by moves to modernise its range and improve productivity. Calvet indicated last December he expected Citroens 1986 profit to be between 250 and 500 million francs. This weekend he said that those profit estimates remain about the same -- perhaps even a little more optimistic. Some of this optimism is due to the early success of the AX launched on the French market last October. It will be available throughout most of western Europe within four months. The car has registered just over 20000 sales. It is being built at Citroens large plant at Aulnay-sous- Bois in northern Paris as well as at Rennes in Brittany and Vigo in Spain with production just reaching target level of 1000 cars a day. The car which Citroen markets as an intermediate model between its long-running 2CV and the Visa is designed to compete with the Renault 5 Volkswagen Polo and Opel Corsa. The AX had built up its market share in France to around four pct last month. Calvet said: Our hope is that once the AX is fully developed we will have between 6.5 and seven per cent of the national market. REUTER | CITROEN EXPECTS HIGHER PROFITS, HELPED BY AX |
Trading bank staff in Wellington and Auckland voted to accept a 7.9 pct pay rise ending any threat of strike action the Bank Officers Union said. Union president Angela Foulkes told Reuters that Wellington and Auckland staff are still unhappy with the offer but accepted it because they could not have forced a higher offer when provincial union members had already accepted the 7.9 pct. Provincial bank staff approved the offer at meetings last week but Wellington and Auckland workers had initially threatened to strike in support of a higher claim. REUTER | WELLINGTON, AUCKLAND BANK STAFF ACCEPT PAY DEAL |
The Reserve Bank said it has cancelled the regular weekly treasury bill tender scheduled for March 17. It said in a statement that forecasts show a net cash withdrawal from the system. Cash flows which include half-yearly provisional and terminal tax payments are expected to more than offset cash injections. Cash balances should fluctuate around 30 mln N.Z. Dlrs over the week after open market operations it added. REUTER | NEW ZEALAND CANCELS WEEKLY T-BILL TENDER |
Taiwan is not expected to export sugar this year because of falling production and growing domestic consumption state-owned Taiwan Sugar Corp said. A company spokesman told Reuters this will be the first time in more than 40 years Taiwan has not exported sugar. Last year sugar exports totalled 149755 tonnes. He said the actual production during the 1986/87 season (November/May) is about 480000 tonnes barely enough to meet local consumption. This compares with actual 1985/86 output of 570000. He said the production fall was due to typhoon damage to more than 6000 hectares of canefields last year. REUTER | NO TAIWAN SUGAR EXPORTS EXPECTED THIS YEAR |
Leading industrial nations will meet again next month to review their accord on currency stability but U.S. Officials said financial markets are convinced for now the countries will live up to commitments to speed up economic growth. The narrow currency movements of recent weeks strongly suggests the six leading industrial countries have tamed the normally unruly financial markets and next months talks seem likely to build on that stability. A Reagan administration official said the Paris agreement last month was the main reason markets were calm. But he said in an interview that financial markets also understood That all six countries concluded that the measures to be taken over a period of time in the future should foster stability of exchange rates around current levels. That is in fact what has happened since Paris. Monetary analysts said stability has been helped in part by the decision of industrial nations to bury the hatchet and cease to quarrel over short-term policy objectives. Instead they have focused on medium-term policy goals but left room to adjust their agreements with periodic meetings. The official refused to comment however on whether the agreement included a secret pact to consider further coordinated interest rate cuts -- a measure industrial nations have taken jointly several times in the past year. On February 22 the United States Japan West Germany France Britain and Canada agreed that major currencies were within ranges broadly reflecting underlying economic conditions given commitments by Washington to cut its budget deficit and by Toyko and Bonn to boost economic growth. The shake-up would strengthen the U.S. Position in future international talks. I think these changes will strengthen the Presidents hand politically and the stronger he is politically the better off we are with the Congress and the better off we are in international fora said the official an Administration economic policymaker. So it would be beneficial to the continued conduct of our initiatives. But the official also said the Administration would resist calls for a tax increase to cut the budget deficit -- a target Europeans say is crucial to help curb economic instability. Last week dealers said the Federal Reserve intervened to stop the dollar rising against the mark which had breached 1.86 to the dollar. British authorities are also understood to have intervened to curb sterlings strength. International monetary sources say finance ministers and central bankers who will review market performance and their own economic prospects will reassemble again in Washington just before the April 9 policymaking meeting of the International Monetary Fund. The sources said Italy which refused to join the Paris pact was invited back by Treasury Secretary James Baker. Since Paris there are signs West German growth is slowing while U.S. Officials said they were giving Japan until April to show that an economic stimulus package was in the offing. Signs of concern about German prospects emerged recently when Bundesbank (central bank) president Karl Otto Poehl told bankers he would consider cutting West German interest rates if the Fed was ready to follow suit. A Reagan Administration official said this would show there had been some change in approach on the part of the central bank in Germany. But he declined to comment on the prospects for action by the Fed and the Bundesbank. If there is such a provision it is private and if I talked about it it would no longer be private said the official who asked not to be identified. Public comments by Fed officials suggest the central bank is keeping credit conditions broadly unchanged but if the major economies continue to show sluggish growth and the U.S. Trade deficit remains stubbornly high further coordinated action could be on the April agenda. REUTER... | LEADING INDUSTRIAL NATIONS TO MEET IN APRIL |
Harper and Row Publishers Inc said its board of directors decided to take no action on two takeover bids that the company has received. Instead it appointed a committee of independent directors to study strategic alternatives for the 170-year-old firm. The alternatives include continuation of the companys existing business plans possible business combinations sales of stock restructuring and the sale of all or part of the company. Kidder Peabody and Co Inc has been retained to advise on the alternatives Harper and Row added. Private investor Theodore Cross last week offered 34 dlrs a share for Harper and Row prompting a rival bid of 50 dlrs a share from another publishing firm Harcourt Brace Jovanovich Inc <HBJ>. After considering the two offers at a meeting on Friday the Harper and Row board decided not to act on them. The directors unanimously expressed their strong desire to preserve the companys independence and take advantage of its considerable future prospects according to director Winthrop Knowlton former chief executive and now chairman of the newly established independent committee. However given the significant current interest in the company we also feel that we should carefully review all the options available. The committee will consider all the pertinent facts and alternatives.... We intend to make a careful and informed decision but will proceed expeditiously to a conclusion Knowlton said. Pending its deliberations Harper and Rows board has postponed indefinitely a special meeting of stockholders that had been scheduled for April 2 to discuss a proposal to recapitalize the companys stock to create two classes of shares with different voting rights. REUTER | HARPER AND ROW <HPR> TO MULL OPTIONS AFTER BIDS |
The Soviet economy recovered slightly last month after a poor performance in January but major industries including oil and machinery are still short of production targets official figures show. Central Statistical Board data published in the weekly Ekonomicheskaya Gazeta yesterday showed that industrial output was only up 0.8 pct in the first two months of 1987 over the same period of last year. However the figure for January alone showed a fall in output of 0.1 pct from a year earlier. Production is targetted to increase 4.4 pct for all of 1987. The figures showed that only 77 pct of enterprises met their supply obligations in January and February. Production of oil the countrys main export to Western nations hit 100 mln tonnes in January and February up from 97.3 mln a year earlier and exceeded its target by 0.5 pct. Economists said this reflected the huge investments poured into the oil sector in recent months in an effort to reverse the stagnation in production which began in November 1983. Falling world oil prices last year helped cause a decline in Soviet trade with the West to 130 billion roubles from 141.6 billion in 1985. Ekonomicheskaya Gazeta said labour productivity targets were also not fulfilled but did not give figures. Economists said the overall data reflected exceptionally bad weather at the start of the year and stricter quality controls imposed on enterprises. Production in the machine-building sector a priority in Moscows plans for economic renewal recovered slightly in February but was still 3.6 pct lower in the first two months of the year compared with the same period of 1986. The figures showed that five republics produced less than in the first two months of 1986. REUTER | SOVIET FIGURES SHOW ECONOMY STILL SHORT OF TARGETS |
Banque Paribas which arranged a 220 mln dlr loan for Ecuador last year to pre-finance oil exports wants to adjust the terms of the facility to help the country recover from a devastating earthquake bankers said. But the French banks plan which would effectively postpone repayment of about 30 mln dlrs of the loan for several months is running into stiff resistance from many of the 52 members of the loan syndicate. The pipeline that carries all Ecuadors oil exports was ruptured in the March 5 tremor and will take about five months to repair at a cost of some 150 mln dlrs. President Leon Febres Cordero on Friday estimated total damage caused by the quake at one billion dlrs and said that as a result Ecuador would maintain Januarys suspension of interest payments on its foreign commercial bank debt. Payments were halted in January because of the drop in the price of oil which accounts for nearly two-thirds of Ecuadors export earnings and 60 pct of government revenue. Many banks in the Paribas facility although sympathetic to Ecuadors plight feel that emergency financial relief is a job for international financial organisations and not for commercial banks bankers said. The 18-month oil-financing facility which was signed last October 28 is one of the few purely voluntary credits for a Latin American nation since the regions debt crisis erupted in August 1982. Because it was a voluntary deal many bankers feel strongly that the orginal terms must be adhered to. Otherwise they fear the gradual re-establishment of normal market conditions for Latin borrowers will be set back. Theres a lot of reluctance by the other banks. They feel its a different facility and so any kind of suggestion of a restructuring would look bad one banker said. REUTER | PARIBAS PLAN TO ADJUST ECUADOR LOAN TERMS OPPOSED |
Egypt and the Soviet Union are expected to sign an agreement in Moscow next week settling Cairos three billion dlr military debt Egyptian officials said. One official who asked to remain anonymous told Reuters a draft agreement would reduce to zero from two pct future interest payable on the 10 year-old debt and set a 25 year repayment term. Talks are due to begin in Moscow on Wednesday. Economy Minister Youssri Mustapha who leaves for Moscow on Tuesday met President Hosni Mubarak and Egyptian ambassador to Moscow Salah Bassiouni to discuss the issue. One official said Egypt would propose a new exchange rate for trade with the Soviet Union. Current commerce is based on a rate set in the 1960s of 0.38 Egyptian pounds to the dollar which Moscow sees as unreasonable. The fluctuating official rate is about 1.36 pounds to the dollar. The officials said part of the debt would be paid in exports of goods such as textiles leather and furniture. Egypt wants to settle the debt problem partly to open the door for new cooperation mainly in modernising Soviet-built steel aluminium and fertiliser plants under a five-year development plan ending June 30 1992. Egypt which already imports Soviet coal wood newsprint and glass also wanted a debt deal to allow purchases of currently blocked spare parts for its ageing Soviet military hardware the officials said. An estimated 65 pct of Egypts arsenal is still made up of Soviet-supplied equipment one official said. Cairo stopped repaying Moscow for arms purchases in 1977 when then-president Anwar Sadat broke with its long-standing ally and turned to the U.S.. REUTER | EGYPT, SOVIET UNION TO RENEGOTIATE ARMS DEBT TERMS |
Peru will put into effect Monday a foreign exchange rationing system for imports designed to stop a slide in the countrys international reserves a government decree in the Official Gazette said. Under the system importers will be required to present a bill from the foreign seller of goods and apply for a license for foreign exchange. The central bank will have 10 days to decide whether to issue the required foreign exchange. Net international reserves now total about 800 mln dlrs compared to 1.54 billion dlrs a year ago. The system will be effective until the end of 1988. A ceiling for foreign exchange availability will be set by a council with members from the central bank the economy ministry and the planning and foreign trade institutes. The central bank will issue licenses to procure foreign exchange in accordance with guidelines set by the council. Perus reserves fell sharply due to a drop in the trade surplus to about five mln dlrs in 1986 from 1.1 billion in 1985 according to preliminary central bank estimates. Total exports dropped to 2.50 billion dlrs last year against 2.97 billion in 1985. Imports last year rose sharply as gross domestic product grew by about 8.5 pct the highest economic growth level registered in 12 years. Imports were about 2.49 billion dlrs in 1986 against 1.87 billion in 1985 according to preliminary estimates. The cushion of reserves allowed Peru to take a hard-line debt stance last year and suspend most payments due on its 14.3 billion dlr foreign debt. REUTER | PERU BEGINS FOREIGN EXCHANGE RATIONING |
Finance Minister Mohammed Ali Abal-Khail said a committee will be set up to examine the problem of late government payments to contractors and companies operating in the kingdom. He told a working session on the first day of a businessmens conference yesterday that the committee made up of Finance Ministry and Chamber of Commerce officials will be formed shortly. He said the committee will also investigate disputes between contractors and the government but said the foreign press had to some extent exaggerated payments problems. Abal-Khail said It is only natural that among those thousands of contracts some problems perpetrated by disputes over specifications contractual obligations project-handovers and duration of contracts arose. Late payments or in some cases total absence of payments have been a major source of concern for both the Saudi private sector and foreign contractors operating in the kingdom. Businessmen said the ministers remarks were a rare admission of problems in the contract sector and the first concrete sign of government action to tackle payments delays. REUTER | SAUDI ARABIA TO EXAMINE LATE CONTRACTOR PAYMENTS |
The United States wants Taiwans currency to appreciate faster to reduce Taiwans trade surplus with the U.S. A senior trade official said. Board of Foreign Trade director Vincent Siew told reporters on Saturday U.S. Officials told him in Washington last week that unless Taiwan allowed its dollar to rise faster it would face retaliation. Siew returned from Washington on Friday after the U.S responded to Taiwans request to increase its textile export quotas by promising further talks in May. Taiwans surplus with the U.S. Hit a record 13.6 billion U.S. Dlrs in 1986. Washington signed a three-year accord with Taipei last year limiting textile export growth to 0.5 pct a year. Siew said the Taiwan dollar had risen by about 15 pct against the U.S. Dollar since September 1985. It surged last week amid indications Washington was seeking a major rise in its value. It rose four cents against the U.S. Dollar on Saturday to close at 34.59. Western trade sources told Reuters Taiwan and the U.S. Have been holding talks on the currency issue but added it is not clear how far Washington wants to see the Taiwan dollar rise. REUTER | TAIWAN SAYS U.S. WANTS TAIWAN DOLLAR TO APPRECIATE |
Saudi Arabias economy is showing signs of picking up after problems last year caused by the steep fall in oil prices Commerce Minister Suleiman Abdulaziz al-Salim said. Salim told a conference of Saudi businessmen the government had taken a bold step to stimulate the economy by drawing down more than 50 billion riyals of reserves in its 1987 budget. Salim said one tangible sign of that optimism had been a strong rise in the price of Saudi shares. Some have gained by more than 35 pct since last November. But the keynote speaker Prince Khaled al-Faisal accused Saudi businessmen of ingratitude because they preferred to invest abroad rather than in Saudi Arabia. The need to increase private investment in Saudi Arabia is expected to be a major theme of the conference. Saudi Arabias economic planners have long recognised the need to stimulate the private sector and diversify the oil-dependent economy. But despite the encouraging signals cited by Salim some businessmen and bankers said they are still sceptical about prospects for the economy. REUTER | SAUDI ECONOMIC OUTLOOK IMPROVED, MINISTER SAYS |
Tanzania seeks to export a surplus of 200000 tonnes of maize from last years bumper harvest agriculture minister Paul Bomani said yesterday. The 1986 maize crop was officially estimated at 2.1 mln tonnes but only a fraction of this was marketed with most grain consumed by the farmers who grew it. The state-owned National Milling Corp (NMC) meanwhile said it is trying to sell 190742 tonnes of maize stored in different parts of the country. NMC acting general manager John Rubibira said Tanzania has only 56000 tonnes of silo storage capacity concentrated in Dar es Salaam Arusha in the north and Iringa in central Tanzania. In addition the country has 450000 tonnes of flat storage capacity he added. Rubibira said the government is planning to build new silos in the main maize producing areas of Iringa Mbeya Ruvuma and Rukwa. REUTER | TANZANIA WANTS TO EXPORT 200,000 TONNES OF MAIZE |
Philippines finance minister Jaime Ongpin said he was cautiously optimistic an accord on debt rescheduling would be reached with commercial bank creditors as he prepared for the third week of talks starting Monday. One can never be too optimistic but Im cautiously optimistic that we can get an agreement....We think were close to a deal Ongpin told Reuters by telephone. He said he had received a new proposal from the banks late Friday and had spent the weekend evaluating it with other members of the Philippine delegation. Ongpin declined to disclose details of the banks new offer and bankers also declined to be specific ahead of their next meeting with Ongpin on Monday. But one senior banker said he too was guardedly optimistic a deal could be struck possibly by the end of the week. Still at the heart of the talks is Ongpins offer to pay part of the countrys interest bill in Philippine Investment Notes PINs instead of cash. The bank creditors advisory committee led by Manufacturers Hanover Trust Co rejected the concept as it was originally drafted but the counter-proposal made on Friday contains a revised version bankers said. Manila seeking to reschedule 9.4 billion dlrs of its total debt of 27.2 billion wants to pay the London Interbank Offered Rate (LIBOR) in cash and a margin above LIBOR in PINs. These dollar-denominated notes would be sold by banks at a discount to multi-national firms which would then convert them at face value with the central bank thus receiving subsidized pesos for use in funding government-approved investments. Effectively foreign companies would be paying the interest margin above LIBOR. The Philippines would conserve foreign exchange and enjoy investment inflows reducing marginally the need to seek new bank loans. But the banks rejected the PINs proposal in its original form fearing regulatory and accounting problems. They were also reluctant to veer from the principle that interest should be paid in cash not paper fearing that other debtor nations would emulate the idea bankers said. Ongpin sweetened his original offer by guaranteeing that his government would redeem the notes at 7/8 pct over LIBOR if there was no buyer in the secondary market. Last week the banks came under pressure to accept this when senior U.S. Officials endorsed it as fully consistent with Treasury Secretary James Bakers debt strategy. But banking sources said that the margin over LIBOR was still a sticking point. After Venezuela clinched a revised rescheduling agreement last month at 7/8 pct over LIBOR some New York bankers imediately claimed that 7/8 pct should be seen as a new benchmark for a debtor that needs no new loans is current on interest and is repaying some principal. The Philippines meets the first two criteria but not the third. REUTER | PHILIPPINES' ONGPIN OPTIMISTIC ON DEBT TALKS |
The cabinet has approved a finance ministry plan to raise the amount of outstanding government bonds as a percentage of the total budget in financial year 1987/88 starting July 1 to meet growing demand for funds for major construction projects a cabinet official said. The increase would allow outstanding bonds to total 40 pct of the 1987/88 budget up from 25 pct in the current year. He said the increase would allow the government to issue bonds worth up to about 105 billion Taiwan dlrs in the next financial year up from 49.6 billion in the current year. The proposal will go to parliament for final approval. A finance ministry official told Reuters the increase in bond issues was necessary to finance 14 major projects including highways power plants an underground railway and a receiving terminal for liquefied natural gas. Spending on major projects is expected to total more than 120 billion Taiwan dlrs in 1987/88 compared to 89 billion in the current year he said. REUTER | TAIWAN CABINET APPROVES INCREASE IN BOND ISSUES |
Year to December 31 1986 Net profit 78 mln N.Z. Dlrs vs 45 mln Pre-tax profit 147 mln vs 88 mln Total assets 7.7 billion vs 6.4 billion Notes - The company is 100 pct owned by Lloyds Bank Plc <LLOY.L>. Results include for the time first a pre-tax profit of 11 mln N.Z. Dlrs from Australian unit <Lloyds Bank NZA Ltd>. REUTER | <THE NATIONAL BANK OF NEW ZEALAND LTD> |
Australias current account deficit for February is expected to narrow to a range of between 700 mln and one billion dlrs from the unrevised January level of 1.29 billion market economists polled by Reuters said. Statistics Bureau February figures are out tomorrow. The economists said a key element in the narrowing would be a reversal of the drop in exports which took place in January after a sharp rise in December when the deficit was only 598 mln dlrs. As an example they quoted wheat export volume which rose about 30 pct in February after dropping as much in January. A lack of aircraft imports in February should also contribute on the trade account although it is still likely to remain in deficit the economists said. Other positive influences on the current account balance should be a decline in the invisibles deficit following a seasonal fall in interest payments and the dropping out of certain official aid payments they said. They said the Australian dollar which last week touched an eight-month high of 0.6900 U.S. Dlrs but is now around the 0.6800 level should not react adversely to the figures unless the current account shortfall tops one billion dlrs. REUTER | AUSTRALIAN CURRENT ACCOUNT DEFICIT SEEN NARROWING |
Zambias talks with the World Bank and International Monetary Fund (IMF) on a financial rescue package have run into difficulties on the issue of food subsidies an official newspaper said. The Times of Zambia which is run by the ruling United National Independence Party (UNIP) quoted official sources as saying the IMF and World Bank had refused to continue financing food subsidies and were pressing the government to explain how it proposes to pay for them. President Kenneth Kaunda tried to abolish maize subsidies last December in line with IMF recommendations but the move caused maize meal prices to double overnight and led to riots in which 15 people were killed. The subsidies were immediately restored as part of moves to quell the disturbances but they are estimated to cost the government about 500 mln kwacha per year. The Times of Zambia said another major issue in the governments current talks with the IMF and World Bank was the remodelling of Zambias foreign exchange auction. The central banks weekly auction of foreign exchange to the private sector has been suspended since the end of January pending modifications to slow down the rate of devaluation and dampen fluctuations in the exchange rate. The kwacha slid to around 15 per dollar under the auction system losing 85 pct of its value in 16 months. However since the end of January it has been revalued to a fixed rate of nine per dollar. Banking sources said Zambia was persuaded by the World Bank and IMF to lift its proposed ceiling of 12.50 kwacha per dollar on the currencys devaluation once the auctions restart. According to the Times of Zambia the IMF team led by assistant director for Africa Paul Acquah is due to conclude its talks with the government on schedule on March 23. The IMF mission arrived in Lusaka on February 26 and its talks with the government have taken longer than expected. REUTER | ZAMBIA, IMF TALKS HIT PROBLEMS OVER FOOD SUBSIDIES |
Major tanker operator Japan Line Ltd <JLIT.T> is selling 20 VLCCs and several bulk carriers for scrap or further trading industry sources said. The tanker disposals include Japan Orchid (231722 dwt) Japan Lupinus (233641 dwt) Sovereign (233313 dwt) Rosebay (274531 dwt) Saffron (268038 dwt) and Cattleya (267807 dwt) all of which have been reported on the London sale and purchase market they said but refused to give further details. Japan Line officials declined to comment. REUTER | JAPAN LINE SELLING TANKERS AND BULKERS |
A senior Ivory Coast Agriculture Ministry official confirmed his countrys backing for a new international cocoa pact and said Ivorian delegates would be present at talks on its buffer stock starting this week. The official told Reuters that Ivorian Agriculture Minister Denis Bra Kanon would attend the opening of the talks convened by the International Cocoa Organization (ICCO) in London on Monday. While Bra Kanon is due to return home this week for funeral ceremonies for a sister of Ivorian President Felix Houphouet-Boigny scheduled to be held in the countrys capital Yamoussoukro between March 19-22 senior Ivorian delegates will be present throughout the London talks the official said. Bra Kanon is chairman of the ICCO Council and rumours that he or Ivorian delegates might be delayed because of public mourning in the West African nation helped depress already low world cocoa prices Friday. The official said Ivory Coast continued to support the new pact which was agreed in principle last year by most of the worlds cocoa exporters and consumers. He also said Bra Kanon would fulfil his duties as ICCO Council chairman during the talks scheduled to end on March 27. The meeting aims to set rules for the operation of the pacts buffer stock which producers hope will boost a market hit by successive world cocoa surpluses. Ivory Coast did not participate in the last international cocoa pact and its decision to join the new accord has sparked hopes that it will be more successful in supporting prices. REUTER | (CORRECTED)-IVORY COAST CONFIRMS PRESENCE AT TALKS |
Jordans key economic priorities are having a sound national treasury and adequate foreign exchange reserves Prime Minister Zeid al-Rifai said. First the national treasury should be in sound shape when dealing with the public and other countries so that its credibility is preserved he said in a television interview Saturday. The second priority is to maintain an acceptable level of foreign exchange reserves to provide (the) stability and confidence needed by the government to meet foreign commitments. Rifai said Jordans outstanding government-guaranteed and commercial loans total 902 mln dinars with a debt service ratio of 14.9 pct. The figure was sharply lower than the 1.02 billion dinars in outstanding loans at the end of September according to latest Central Bank figures. Rifai dismissed the view of some bankers and economists here that the dinar which is pegged to a basket of currencies is overvalued. The dinar is strong and stable and we intend to preserve its stability he said. The prime minister said he hoped the next Arab summit would tackle the question of continuing financial aid to Jordan. Under a 10-year agreement reached in 1978 Jordan was to receive a total of 1.25 billion dlrs annually from Algeria Iraq Kuwait Libya Qatar Saudi Arabia and the United Arab Emirates to help it resist Israel. But only Saudi Arabia met its obligations while the others failed because of falling income due to lower oil prices. REUTER | TREASURY, FOREIGN RESERVES ARE JORDAN'S PRIORITIES |
New Zealands inflation rate could fall to eight pct in the coming year Prime Minister David Lange said. He said forecasts to be released soon by research groups would predict a rate of around eight or nine pct in the 12 months to the end of March 1988 against 18.2 pct in calendar 1986. I predict it will be something between eight and 10 per cent he told a news conference. Lange would not name the forecasting groups. REUTER | LANGE PREDICTS N.Z. INFLATION TO FALL TO 8-10 PCT |
Malaysian Primary Industries Minister Lim Keng Yaik welcomed the basic accord reached over the weekend in Geneva between producers and consumers on a new International Natural Rubber Agreement (INRA). This is a good development and if a new pact is adopted this week it will augur well for the rubber industry and prices in the long term he told Reuters here. Negotiators at a United Nations conference on a new INRA resolved differences and agreed last Saturday on basic elements for a new pact to replace the current one which expires in October. Conference Chairman Manaspas Xuto said legal drafting of the new pact will begin this week and it is expected to be formally adopted by some 40 countries on March 20. Malaysia the worlds top producer acted as spokesman for producers at the talks which began on March 9. Malaysian traders said they expected prices to firm by a few cents on the news that a pact is expected to be adopted. Prices will also firm in the short term because some 370000 tonnes of rubber held in INRA buffer stock will not be liquidated with a new pact in sight they said. REUTER | MALAYSIA WELCOMES ACCORD ON NEW RUBBER PACT |
Japans January seasonally adjusted industrial production index (base 1980) was revised upwards to 122.3 from a preliminary 122.0 the Ministry of International Trade and Industry said. The revised adjusted January index was down 0.5 pct from December when it rose 3.6 pct from a month earlier. The revised unadjusted January index rose 0.5 pct from a year earlier after a one pct year-on-year December rise. The adjusted producers shipment index (base 1980) for January was revised upward to 117.7 from a preliminary 117.4. The index was down 0.7 pct from December when it rose three pct from a month earlier. The revised unadjusted index was up 1.0 pct from a year earlier after a 1.4 pct year-on-year December rise. The adjusted index of producers inventories of finished goods (base 1980) for January was unchanged from a preliminary 105.9. The index was down 0.3 pct from December when it rose 1.1 pct. Unadjusted the revised index was down 2.3 pct from a year earlier after a 2.1 pct year-on-year drop in December. REUTER | JAPAN JANUARY INDUSTRIAL PRODUCTION REVISED UP |
A Japanese consortium will supply 10 generators worth some 10 billion yen to a joint Argentine/Paraguay hydroelectric project a Mitsubishi Electric Corp <MIET.T> official said. The presidents of Mitsubishi Electric Hitachi Ltd <HIT.T> and Toshiba Corp <TSBA.T> the three firms in the consortium will sign the contract with Entidad Binacional Yacyreta an Argentine public company later this month. The Export-Import Bank of Japan Ltd will provide yen financing for the project the official said. REUTER | JAPAN FIRMS SELL GENERATORS FOR SOUTH AMERICAN DAM |
State-affiliated financial institutions and commercial banks from eight countries are expected to lend a U.S. Leasing company 400 mln dlrs to finance the purchase from Boeing Co <BA> of six Boeing 767 planes that will be leased to Brazils Varig airline banking sources said. The deal is expected to be signed in May covering a 12 year period with deliveries starting the same month. Japans share in the deal is expected to be about 14 mln dlrs part of which will come from the Export-Import Bank of Japan Ltd the sources said. Canada France Italy Sweden the U.K. U.S. And West Germany are also involved they said. REUTER | BRAZIL AIRLINE SEEN IN BOEING PLANE LEASE DEAL |
Australia faces the risk of recession if capital expenditure does not grow from the subdued levels of recent years the Commonwealth Bank of Australia said. Without stronger levels of capital expenditure the structural adjustment that is so critical to overcoming the economys fundamental problems cannot occur the bank said its latest Economic Newsletter. In that event Australia would be destined to experience a prolonged period of sub-par growth at best with the very real risk that the onset of serious recession would become unavoidable it said. Australias medium-term economic performance will be fundamentally determined by business investment in the period immediately ahead the bank said. It said spending has been disappointing in recent years due to low capacity utilisation low expected profitability and very high real interest rates. There also appears to be little likelihood of any significant improvement for the present it said. Investment is strongly influenced by medium-term uncertainties and risks and these are likely to continue for the present it said. REUTER | AUSTRALIAN ECONOMY NEEDS MORE INVESTMENT, BANK |
The extraordinary foreign exchange loss of 480 mln marks reported last week by Volkswagen AG <VOWG.F> (VW) is so large that outside currency traders were probably involved in the case currency sources said. They were commenting after weekend newspaper reports that prosecutors were transferring the focus of their enquiries to Frankfurt West Germanys main foreign exchange centre. Volkswagen announced last Tuesday that it had called in prosecutors to investigate a possible fraud involving currency hedging. The newspaper Welt am Sonntag said the investigation by state prosecutors was now considering whether the alleged VW currency manipulators had outside banking accomplices. The transactions were only possible because the culprits possessed genuine bank forms with the help of which they were able to deceive controllers for years the newspaper said. But currency sources said there were so many loopholes in every banks currency dealing system that controls could easily be avoided. Rolf Selowsky financial member of the management board has resigned in the wake of the affair a VW spokesman said. Selowksys resignation followed a VW announcement on Friday that foreign exchange chief Burkhard Junger had been dismissed and Guenther Borchert head of the financial transfer department had been suspended along with Siegfried Mueller head of the central cash and currency clearing. Four other members of the foreign exchange staff were also suspended but no charges have been laid. VW Supervisory board chairman Karl Gustaf Ratjen said entire data tapes had been erased and programs altered in forged transactions. Der Spiegel magazine said VW financial controllers discovered the uncovered positions on February 18 when VW expected a currency forward contract with the Hungarian National Bank to mature but Hungarian bank officials said they knew nothing of the transaction and the supposed contracts were forgeries. The Budapest-based bank refused to buy the dollars and has not commented on the affair. The Hungarian National Bank is along with the Soviet Bank of Foreign Trade one of two major East Bloc currency traders and most major banks based in Germany deal with it regularly. It would not be possible the sources said for any bank to renege on a genuine forward contract since this would immediately become known and effectively prevent the bank from operating further in the spot or forward currency markets. Longer-maturity forward contracts even contracts of up to 10 years were now becoming more common they said but the longer and larger the contract the more likely it was that it would be transacted with a domestic institution. Being one of Germanys most diversified multi-nationals VW has exposure in a large number of currencies and dealt in these with most banks in Frankfurt and also abroad sometimes through currency brokers although it has the reputation of doing relatively little hedging currency sources said. They (VW) are always in the market more or less trading as a bank one senior dealer said. Some newspaper reports said the losses were incurred because of VWs failure to take out currency hedging contracts beginning at the end of 1984 when the dollar was rising. But the currency sources said market speculation was that dollar income of around one billion dlrs was involved and that the bulk of the transactions occurred last year since which time around 50 pfennigs per dollar was lost when the dollar fall continued. Longer-maturity currency contracts for more than 100 or 200 mln dlrs each were rare. Taking several in this size out with a single bank would be easily spotted by financial controllers. One senior dealer for a German bank said Theres no way they can have hoped to get away with it. Its too big. The sources added that the involvement of the Federal Criminal Office (BKA) in Wiesbaden could indicate that the investigation would lead outside Germany. BKA has the mandate to handle criminal cases that may involve foreign police forces or supranational services such as Interpol. However the branch also handles cases that transcend federal state borders within Germany. REUTER | VW CURRENCY LOSSES SEEN INVOLVING SEVERAL TRADERS |
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