TEXT-Fitch:2011 U.S. high yield default rate remains low
September produced a single default, the bankruptcy filing by paper company
NewPage Corporation (NewPage), affecting $3.2 billion in bonds. With
NewPage, the year-to-date default tally moved up to $7.9 billion and the
trailing 12-month default rate to 1.4%. Similar to 2010, 2011 U.S. defaults have
come overwhelmingly from the bottom of the rating scale, with nearly all
defaulted issues rated ‘CCC’ or lower at the start of the year.In the face of fears that the U.S. economy may slip into another recession,
Fitch’s new report examines key market metrics and important contrasts that
separate current default conditions from the September 2008 period.’Variables ranging from fundamental trends to funding to the market’s rating
mix all point to greater resiliency in the event of another downturn’, said
Mariarosa Verde, Managing Director of Fitch Credit Market Research. ‘However,
the depth of any potential recession would ultimately determine the severity of
a new surge in defaults.’The weighted average recovery rate on defaults through September was a
robust 56% of par (since 2000, the average annual recovery rate according to
Fitch’s U.S. High Yield Default Index is 35% of par).’When combining default and recovery rates, the loss rate on 2011 defaults
remains very low — less than half a percent on a year-to-date basis,’ said Eric
Rosenthal, Senior Director of Fitch Credit Market Research. ‘In addition, 2011’s
defaulted issues were already trading at a discounted weighted average price of
72.2% of par at the beginning of the year.’Fitch’s report also discusses default and recovery patterns associated with
grace period defaults.The monthly series offers a detailed view of default and recovery rates by
industry and seniority, a look at the market’s evolving profile, issuance and
credit availability indicators.
TEXT-S&P afrms all rtngs in CLO transaction RMF Euro CDO IV
OVERVIEW— We have assessed the current performance of RMF Euro CDO IV by
applying our 2010 counterparty criteria and conducting credit and cash flow
analyses.— Following our review, we believe that the level of credit enhancement
available is commensurate with our current ratings on the notes.— We have thus affirmed our ratings on all rated classes of notes in the
transaction.— RMF Euro CDO IV is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans to primarily speculative-grade corporate
firms.Standard & Poor’s Ratings Services today affirmed its credit ratings on all rated classes of
notes in RMF Euro CDO IV PLC.Today’s rating actions follow a review of RMF Euro CDO IV, which included the
application of our 2010 counterparty criteria, in addition to credit and cash
flow analyses.In our opinion, the current levels of credit support available to all classes
of notes are commensurate with our current ratings on the notes. We have
therefore affirmed our ratings on all classes of notes in this transaction.From our analysis, we have observed that overcollateralization test results,
the credit quality of the pool, and the weighted-average spread earned on the
collateral pool have all improved since our last rating action in December
2009, (see Transaction Update: RMF Euro CDO IV PLC, published on Dec. 17,
2009).We have also observed that the balance of the collateral pool and outstanding
balance of the class I notes have reduced. Overall, we have observed a small
improvement in the level of credit enhancement available to each rated class
of notes in the transaction as well as a small reduction in the stressed
default rate generated by our CDO Evaluator credit model. We have also noted
that the weighted-average recovery rates, which we consider to be appropriate,
have reduced since our last review in 2009.We subjected the capital structure to a cash flow analysis to determine the
break-even default rate for each rated class. We incorporated various cash
flow stress scenarios using various default patterns, levels, and timings for
each liability rating category, in conjunction with different interest stress
scenarios.In our opinion, the credit enhancement available to each tranche remains
consistent with the current ratings assigned to each class of notes, taking
into account our credit and cash flow analyses and our 2010 counterparty
criteria. We have therefore affirmed our ratings on all of the rated notes.None of the notes were constrained by the application of the largest obligor
default test, a supplemental stress test we introduced in our 2009 criteria
update for corporate collateralized debt obligations (CDOs) (see “Update to
Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic
CDOs,” published on Sept. 17, 2009).We have applied our 2010 counterparty criteria and, in our view, the
participants in the transaction are appropriately rated to support the ratings
on the notes (see “Counterparty And Supporting Obligations Methodology And
Assumptions,” published on Dec. 6, 2010).We will publish a transaction update on this transaction in due course.RELATED CRITERIA AND RESEARCH— Counterparty And Supporting Obligations Update, Jan. 13, 2011— Counterparty And Supporting Obligations Methodology And Assumptions,
Dec. 6, 2010— Update to Global Methodologies And Assumptions For Corporate Cash Flow
And Synthetic CDOs, Sept. 17, 2009— CDO Spotlight: Update to General Cash Flow Analytics Criteria For CDO
Securitizations, Oct. 17, 2006RATINGS LISTRMF Euro CDO IV PLCEUR444 Million Fixed- And Floating-Rate NotesRatings AffirmedClass RatingI AA+ (sf)II A+ (sf)III BBB+ (sf)IV-A BB+ (sf)IV-B BB+ (sf)V BB (sf)
Telenor’s Indian unit to launch rights issue in ‘12-exec
“I don’t have any exact timeframe, but of-course there are
certain steps and processes that we need to follow so it will
take some months. It will not happen this year,” Brekke, who is
also the chief executive of Unitech Wireless told Reuters.He said “yes” when Reuters asked if the rights issue will
definitely happen next year.Telenor owns 67.25 percent of the joint venture while Indian
real estate firm Unitech owns the remainder.The rights issue has been delayed after Unitech obtained a
court’s “stay order”, which Telenor said has been cleared by
another Indian court, allowing the to proceed with the planned
issue. .
($1 = 48.955 Indian Rupees)
Unilever nears deal for Russian cosmetics co-WSJ
Personal care products accounted for 31 percent of
Unilever’s 2010 revenue of 44.3 billion euros, the Journal
said.Earlier this year, Unilever paid $3.7 billion for U.S. hair
care products maker Alberto Culver.A Unilever spokesman was not immediately available to
comment on the Journal report.
Ellsbury and Berkman win MLB Comeback Player awards
The 35-year-old outfielder/first baseman, who earned his sixth All-Star selection this season, added 23 doubles and scored 90 runs while posting a .547 slugging percentage and a .412 on-base percentage.Ellsbury, in his fifth major league season, posted career-highs in nearly every offensive category this season after being limited to just 18 games in 2010 due to injuries.The speedy outfielder hit .321 with 32 home runs, 105 RBI, 46 doubles, five triples and 119 runs scored. He also added 39 stolen bases to go with his .552 slugging percentage and .376 on-base percentage.The 28-year-old Ellsbury led MLB with 364 total bases and 83 extra-base hits and became the first Red Sox player ever to achieve a 30-homer, 30-stolen base season.Winners were determined by a vote of the 30 club beat reporters from MLB.com, the official web site of Major League Baseball.
Alberta’s new premier names her first cabinet
* Cabinet to be in place until electionCALGARY, Alberta, Oct 12 (Reuters) - Alberta’s new premier,
Alison Redford, has named her first cabinet, appointing a
handful of former leadership rivals to key posts in Canada’s
largest energy-producing province.Redford won a surprise victory early this month to become
leader of the Progressive Conservatives, which have held power
in Alberta since 1971.The 46-year-old former justice minister, who is a centrist
in the party, put together a cabinet that will likely remain in
place until a provincial election, expected next year.Among the key posts, former energy minister Ron Liepert
becomes finance minister. The scrappy Liepert is responsible
for meeting a goal of eliminating Alberta’s C$3.4 billion ($3.3
billion) deficit by 2013.Ted Morton, a favorite of the party’s right who ran against
Redford to lead the Conservatives, has taken the important
energy post.Alberta, whose economy is dependent on the energy sector,
is fighting an onslaught from international environmental
groups opposed to accelerating development of the oil sands,
the world’s third-largest crude deposit.A major push to open new markets for oil sands crude is
TransCanada Corp’s $7 billion Keystone XL pipeline to
Texas, which has become a flashpoint in the environmental
debate over oil sands development. The proposed line faces a
go-ahead decision in the United States by the end of this
year.Redford appointed another former leadership opponent, Doug
Horner, as deputy premier and president of the Treasury Board.First-term legislator Diana McQueen, meanwhile, is the new
environment minister, replacing Rob Renner.
Greek tax inspectors announce strike as austerity protests
With much of Greece expected to be shut down by a general strike on October 19, finance ministry officials have called a two-week stoppage from October 17 while tax offices will remain closed on October 17-20 and customs officials will stay away from their desks on October 18-23.The walkouts are not only expected to disrupt tax payments. They might also block statistics releases and even fuel supplies, since petrol deliveries from refiners to tank stations usually require customs clearance.”This law will drastically cut our wages and hurt our pensions,” the POE-DOY union, which represents tax officials, said in a statement.Athens has promised tough new civil service wage cuts to convince the European Union and International Monetary Fund that it will meet its budget deficit targets of 8.5 percent of gross domestic product this year and 6.8 percent in the next.But the strike underlines the risks to a tax collection drive demanded by the EU and IMF inspectors as workers who will themselves suffer from the austerity measures resist implementing the new laws.Disgruntled electricity workers have already threatened to boycott a planned property tax, designed to be collected through electricity bills as a means of bypassing the notoriously inefficient tax authority.On Wednesday, workers in the Greek archaeological service, responsible for running sites such as the Acropolis in Athens which help attract much-needed tourist revenues to Greece, also went on strike. Doctors and nurses and teachers were planning separate demonstrations.”We’ll continue with labor action and occupations next week when the general strike takes place,” said Despina Spanou, a senior leader of the ADEDY union, which represents half a million public sector workers.”We expect it to be the biggest walkout so far, an answer to this austerity bill that rips us off. We cannot live like this,” she told Reuters.Public sector workers have already lost a fifth of their salaries since the start of the crisis. Spanou said the new bill will further reduce wages by 20 percent on average.”It’s not just salary cuts. It’s a combination of measures that hurt civil servants such as the unified wage scale or the labor reserve. I am an example of the pain they feel. I’ve already lost 70 percent of my 2009 salary,” she said.DEFICIT WIDENSWith Greece trapped in deep recession and fighting to control a public debt mountain expected to reach 162 percent of GDP this year, there has been growing doubt over its ability to stave off a debt default.Parliament is debating a sweeping package of measures, ranging from wage and pension cuts, tax hikes and large scale public sector layoffs. Finance Minister Evangelos Venizelos said the measures had to be approved in time for an EU leaders’ summit on October 23.”This law needs to be approved before the EU summit so that the PM can stand up and argue that Greece is fulfilling its obligations,” Venizelos told lawmakers at a reading of the legislation in parliament on Wednesday.The government has already admitted it will miss its 2011 deficit target and Venizelos has warned that if citizens fail to back new tax measures, the 2011 budget deficit could reach 9 percent of GDP, even higher than the new 8.5 percent goal.On Tuesday, officials from the so-called EU-IMF “troika” noted that Greece would miss its 2011 fiscal targets and needed to take additional steps to get back on track to meet targets beyond 2012.But the austerity measures imposed so far by Prime Minister George Papandreou’s center-left government have failed to make visible headway in solving the crisis.On Wednesday, data showed Greece’s central government budget deficit during the first nine months widened 15 percent year-on-year to 19.2 billion euros as measures including a hike on sales tax in restaurants and a one-off income tax surcharge failed to boost overall tax revenues.The finance ministry said the shortfall was mainly due to a deeper-than-expected recession, which has been exacerbated by the austerity measures.The slump not only hurt revenues but also lifted spending, as the government increased payments to social security organizations, whose receipts are drying up as businesses and workers reduce contributions.
