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Fri., January 27, 2012

Leaders in Euro Zone Shift Focus Beyond Gloom
Fri., January 27, 2012

Is the “end of the euro” over? Among political and business leaders gathering in Davos for the World Economic Forum’s annual meeting, the talk seems to be have shifted away from doomsday forecasts of an imminent euro collapse, the International Herald Tribune reported. Instead, the debate is now focusing on the best way for the euro zone to weather an economic downturn and whether it can emerge stronger from the ordeal. Leaders like Chancellor Angela Merkel of Germany are displaying a renewed will to preserve the common currency and are appearing more united. Business leaders have made clear their desperate desire to save the euro zone. And the European Central Bank’s willingness to flood the banking system with cash has won crucial time. “Europe is a great and magnificent project,” Mrs. Merkel, who is not normally known for florid pro-European oratory, said Wednesday in Davos. “We wish to further develop this great achievement.” But in light of the many policy mistakes made by Mrs. Merkel and other European leaders in the past, there are still plenty of doubters. Economists like Kenneth S. Rogoff at Harvard University remain skeptical that the euro can survive the tension between indebted, slow-growing countries in the south and economically healthier ones in the north. Read more.

French Prosecutor Probes Insolvency Of Petroplus French Unit
Fri., January 27, 2012

A French prosecutor has launched an investigation into the insolvency filing by the local unit of Swiss-based refiner Petroplus Holdings AG, Dow Jones reported. The prosecutor started an investigation into whether there was irregular money flow, of about EUR100 million, out of the company's bank accounts prior to the filing for insolvency, a spokeswoman said Thursday in a telephone interview. She said the French police's financial brigade is investigating and officers have already carried out searches at some Petroplus sites. In an e-mailed statement, Petroplus Holdings refuted all allegations of fraudulent bankruptcy in France. The company said its French unit's bank accounts held EUR124 million and $59 million on Jan. 23, a day before the company filed for bankruptcy. On Jan. 23, Deutsche Bank AG (DB), one of Petroplus's lenders under a revolving credit facility, transferred EUR122 million and $59 million of this cash out of these accounts as specified by the lending facility. Read more. (Subscription required.)

Spanish Business Grows Impatient For Reforms
Fri., January 27, 2012

After years of decrying as incompetent the former Socialist government of José Luis Rodríguez Zapatero, Spain’s business leaders and fund managers are having their first twinges of doubt about the Popular party administration they elected in November to replace it, the Financial Times reported. Mariano Rajoy, PP prime minister, had raised expectations he would enact radical economic reforms to save Spain from the eurozone sovereign debt crisis and the ignominy of a bail-out such as those of Greece, Ireland and Portugal. “Spain’s new leaders have managed to generate a sensation of timidity, procrastination and confusion,” is the verdict of Edward Hugh, an economist in Barcelona. One prominent Spanish economist privately called the transition to the new government a shambles. Some business leaders are more sanguine, however. “The next three weeks will be very relevant,” says the chief executive of a big Spanish exporter. “The current government believes in what they are doing. The previous one didn’t.” So far the PP government’s most significant move has been to raise income taxes – the one thing Mr Rajoy and his team specifically promised not to do while campaigning for the November election – after announcing that the 2011 budget deficit bequeathed to them by Mr Zapatero was much higher than foreseen. Read more. (Subscription required.)

ANALYSIS: Swedish Bank Crackdown Sends Corporates To Bond Market
Fri., January 27, 2012

Sweden’s tough regulations on its own lenders, regarded as even more stringent than the Basel III bank capital rules, could fire up the Nordic country’s corporate debt market in 2012, as small and mid-cap borrowers in particular rush from hard-to-get loans to readily available bonds, International Financing Review reported. While heads of the world’s leading economies have agreed to introduce stricter bank capital and global liquidity rules by 2013, Sweden has urged its four biggest lenders to ensure that they have bigger buffers sooner. “Stricter rules means corporates will find it tougher to borrow money and will be forced to the debt capital markets instead,” one syndicate banker said. Read more.

BTA Still Seeks Debt Talks After Restructuring Fails to Pass
Fri., January 27, 2012

Kazakh lender BTA Bank said it will push ahead with talks to restructure its debt for the second time in as many years even after a shareholder meeting today failed to gain enough votes to begin the process. The results of the meeting in Almaty are “certainly not an impediment to achieving restructuring and the bank will continue to take all the necessary steps,” BTA said in a statement. Majority owner Samruk-Kazyna, the Kazakh sovereign-wealth fund, couldn’t back any resolutions on the agenda as an insufficient number of depositary-receipt holders voted, it said. Samruk-Kazyna “is committed to an orderly and consensual restructuring of the bank,” according to a separate statement e-mailed by the fund. It “supports the establishment of a steering committee to negotiate the terms of the restructuring of a certain part of the bank’s financial debt.” Samruk-Kazyna took over BTA in February 2009, two months before the central Asian nation’s largest lender at the time defaulted on $12 billion of debt. BTA missed a coupon payment at the start of the month on its July 2018 dollar bonds, according to data compiled by Bloomberg. Read more.

Cameron Unworried By Britain's Europe Isolation
Fri., January 27, 2012

Britain should be relaxed about being "out of the room" when Europe discusses euro zone issues, Prime Minister David Cameron said on Thursday, dismissing any prospect of signing up to a new treaty with other EU states to enforce stricter budget controls, Reuters reported. Cameron infuriated other European Union members last month and sparked speculation about Britain's place in the bloc it joined in 1973 by blocking an EU treaty change and forcing euro zone countries to negotiate a fiscal accord outside the Union. All EU countries other than Britain now plan to sign a treaty outside the full EU framework at a summit on January 30. Cameron had not seen a shift in position by other EU countries that would allow Britain to sign a treaty with them. Read more.

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