2024-09-26 05:02

LONDON/NEW YORK, Sept 26 (Reuters) - Investors in emerging market sovereign bonds, alarmed by efforts to limit their debt restructuring options, are adding clauses to bond deals that would allow them to switch jurisdictions to avoid such curbs. Two recent debt agreements, one pending in Sri Lanka and another agreed last year in Suriname, included clauses that would allow investors to change the location where potential disputes settle. Such steps show that investors are mounting their defence against law changes that proponents say would help poor countries secure debt relief, but which financial firms argue could make emerging nations' bonds too risky for investors or too expensive for borrowers. "The ideas ...are not going to go away," Andrew Wilkinson, senior restructuring partner at law firm Weil Gotshal said regarding proposed bills. "They will keep coming up, because there is a problem." Under the proposed changes to laws in New York state, which is the location for roughly half of international bond deals, commercial creditors could see their recoveries capped at the level of bilateral official lenders. They could also be forced into a preset formula to decide who gets what in a restructuring. The rationale is that it would streamline the default process and spare the indebted nations lengthy and costly negotiations. But investors argue that they could be forced to take losses which might be manageable for government creditors but too steep for the private ones. "You will be imposing (the same) haircut when you have two different lenders with two complete different reasons for lending," said Rodrigo Olivares-Caminal, chair in banking and finance law at Queen Mary University of London. "You are lending millions, and you have a fiduciary duty towards your investors." Creditors also warn that changes like those mooted in New York could backfire - making them avoid lending to poor countries or demand higher returns to justify the risk. The New York bills did not pass this year or last, but amid what the World Bank describes as a silent debt crisis, with emerging nations' external debt-servicing costs estimated to hit $400 billion this year, support for law changes is growing on both sides of the Atlantic. SLOW AND PAINFUL A raft of recent defaults from Zambia to Ethiopia fuelled a debate about debt fairness - particularly as Zambia's restructuring took three painful years. Debt justice advocates including Ben Grossman-Cohen, director of campaigns for Oxfam America, have supported the New York bills and he said the Sri Lanka contract clause was "just an attempt to grab headlines." For others, like Olivares-Caminal, Sri Lanka's bond provisions mark a watershed moment. "In Suriname it was a technicality, and it went unnoticed. But Sri Lanka, I think will send a strong message," Olivares-Caminal said. He said the clauses were a direct reaction to "fires" in the two main jurisdictions - New York state and England, where similar proposals have gained renewed traction since the Labour party took power. In Suriname's case, negotiators inserted a clause allowing 50% of bondholders to seek a vote to change the jurisdiction underpinning the bonds, while giving the country the power to veto the request. In Sri Lanka, just 20% of holders of any particular bond could force a vote to change the jurisdiction from New York to England or Delaware. The government has no veto right. NOWHERE TO RUN? Even those who support changes to make debt reworks fairer to the developing world say lawmakers must tread carefully. Rebeca Grynspan, Secretary-General of the UN Trade and Development agency (UNCTAD), told Reuters several provisions introduced over the past decade already offer safeguards against rogue creditors holding up debt deals in pursuit of more generous returns. Newer language, such as natural disaster clauses, is also protecting debtor countries, she said. "Legal instruments are important but if we overdo it, the private sector will go somewhere else to issue debt," she said. Shifting from New York to English law would be relatively straightforward, restructuring experts say, given both locations have legal systems honed over decades to handle sovereign debt defaults and their legal complexities. Moving elsewhere would be problematic, Weil Gotshal's Wilkinson said. "You don't just create a restructuring regime out of whole cloth and expect it to work," he said. "You need established law and you need judges who are experienced in applying them." Sign up here. https://www.reuters.com/markets/wall-street-strikes-back-against-new-yorks-sovereign-debt-bill-2024-09-26/

2024-09-26 04:34

A look at the day ahead in European and global markets from Rae Wee Asian markets rallied on Thursday, defying weakness overnight on Wall Street as optimism over China's latest stimulus measures got a fresh boost from news of a possible capital injection into its top banks. Authorities are considering a $142 billion infusion to help big lenders, Bloomberg News reported, just two days after policymakers announced a series of measures intended to pull the country out of its deflationary funk. While the latest moves point to a sense of urgency among the authorities as Beijing's 5% economic growth target for the year starts to slip out of sight, investors saw reason to cheer. After months of seemingly futile waiting by the markets, Chinese authorities finally appear to be waking up to the idea that a lot more needs to be done to get the world's second-largest economy back on track. China's blue-chip index (.CSI300) , opens new tab reversed early losses to trade higher after the latest news report, while Hong Kong's Hang Seng Index (.HSI) , opens new tab rose about 2%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab scaled a more than two-year peak. That set the tone for a strong opening in Europe, with futures posting solid gains during the Asian session. China aside, the day was already shaping up to be a busy one for global markets with a rate decision by the Swiss National Bank (SNB) due alongside a series of speeches by Federal Reserve and European Central Bank officials. The SNB is expected to ease rates by 25 basis points, marking its third straight meeting of cuts. Needless to say, the focus will be on policymakers' guidance on their respective rate outlooks, with those at the ECB likely to maintain a less hawkish posture on rate cuts compared with their U.S. counterparts. Key developments that could influence markets on Thursday: - Swiss National Bank rate decision - Speeches by Fed, ECB policymakers - U.S. weekly jobless claims Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-09-26/

2024-09-26 03:00

MUMBAI, Sept 26 (Reuters) - The Indian rupee is expected to struggle on Thursday after it was unable to move past the key resistance level of 83.50 and as traders eye comments from Federal Reserve Chair Jerome Powell for cues on the pace of U.S. interest rate cuts. The 1-month non-deliverable forward indicated that the rupee will open at 83.63-83.65 to the U.S. dollar compared with 83.5925 in the previous session. In each the last three sessions, the rupee has been unsuccessful in climbing past 83.50, a level which market participants say is important for the currency to take out to sustain its upward momentum. "Most think that 83.40-83.50 will be very difficult (for the dollar/rupee) pair to break and the recent price action has validated that," a currency trader at a bank said. The rupee's cause will not be helped considering that the "enthusiasm" in the Asia FX space on account of the China stimulus had "dimmed somewhat", he said. The trader expects the rupee to drift lower to 83.75, the middle of its recent trading range, over the next few sessions, , 25 BPS OR 50 BPS Comments from Fed Chair Powell and other key Fed officials later in the day will be scrutinized for cues on what the central bank's next move is likely to be after it delivered a 50-basis-point cut last week. The swap market is pricing in slightly higher odds of a follow up 50-bps rate cut at the Fed's next meeting in November than that of a smaller 25-bps reduction. The Fed's focus is right now more on the U.S. labour market and less on inflation, which is what is prompting traders to bet on a larger cut. U.S. jobless claims data due on Thursday will be eyed for cues on how the labour market is faring. The U.S. core PCE index, the Fed's preferred inflation, out on Friday, will indicate whether price pressures remain comfortable. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.71; onshore one-month forward premium at 11 paise ** Dollar index down at 100.87 ** Brent crude futures up 0.1% at $73.5 per barrel ** Ten-year U.S. note yield at 3.79% ** As per NSDL data, foreign investors sold a net $173.9 mln worth of Indian shares on Sep. 24 ** NSDL data shows foreign investors bought a net $30.3 mln worth of Indian bonds on Sep. 24 Sign up here. https://www.reuters.com/markets/currencies/rupee-awaits-powells-comments-us-inflation-after-failure-breach-8350usd-2024-09-26/

2024-09-26 00:59

Sept 25 (Reuters) - Boeing (BA.N) , opens new tab and its largest union will resume contract talks on Friday in a bid to end a strike that has throttled plane production and hammered the finances of the aerospace giant, the union and company said on Wednesday. More than 32,000 Boeing workers in the Seattle area and Portland, Oregon, walked off the job on Sept. 13 in the union's first strike since 2008, halting production of airplane models including Boeing's best-selling 737 MAX. Negotiators from Boeing and the International Association of Machinists and Aerospace Workers (IAM) will meet with federal mediators in a bid to break the deadlock, after two days of previous talks collapsed a week ago. "The Union is ready for this opportunity to bring forward the issues that members have identified as critical to reaching an agreement," IAM said in a statement. "We know that the only way to resolve this strike is through negotiations." Boeing confirmed the talks would continue on Friday but had no further comment. Hours before the strike started, nearly 95% of workers at the IAM rejected Boeing's initial offer of a 25% pay rise over four years, arguing it did not make up for more than a decade of stagnant wage increases that had lagged inflation. Boeing made an improved offer , opens new tab on Monday it described as its "best and final", which would give workers a 30% raise over four years and restored a performance bonus. The union said a survey of its members found that was not enough and has declined to put it to a formal vote. "The company's latest offer didn't meet the needs of our members. That message came through loud and clear in our latest survey," IAM's statement said. The union has been seeking a 40% pay rise and the restoration of a defined-benefit pension that was taken away in the contract a decade ago. Sign up here. https://www.reuters.com/business/aerospace-defense/talks-resume-between-striking-machinists-boeing-friday-says-union-2024-09-26/

2024-09-26 00:33

Sept 26 (Reuters) - BHP Group (BHP.AX) , opens new tab said on Thursday it plans to test U.S.-based equipment manufacturer Caterpillar's (CAT.N) , opens new tab new technology, which transfers energy to diesel-electric and battery-electric large mining trucks while they are working on a mine site. Caterpillar launched its Cat Dynamic Energy Transfer (DET) system earlier this month, saying that the use of this technology would lead to lower operating costs for miners and a reduction in greenhouse gas emissions. The DET system can also charge the batteries of electric trucks while they are under operation, providing extra speed and upgraded efficiency. Mining giant BHP would become the first to try this new system, starting planned trials at its iron ore and copper businesses, including at its Escondida operations in Chile. BHP, in 2021, had announced a collaboration with Caterpillar to work towards zero-emission mining truck deployment at its sites to cut back on its emissions of operational greenhouse gas. Sign up here. https://www.reuters.com/business/energy/bhp-test-caterpillars-new-energy-transfer-system-its-mining-trucks-2024-09-26/

2024-09-26 00:30

LONDON, Sept 25 (Reuters) - U.S. broker Clear Street is seeking regulatory approvals in Britain to pursue membership of the London Metal Exchange's open-outcry trading floor, a source with direct knowledge of the matter told Reuters on Wednesday. Clear Street's plan, first reported by Bloomberg news agency, would take the number of dealing members on Europe's last open-outcry venue back to eight after Societe Generale (SOGN.PA) , opens new tab said last month it would leave the LME's trading floor. Both New York-based Clear Street and the LME, the world's oldest and largest market for industrial metals, declined to comment. A British unit of the U.S. firm, Clear Street UK Ltd, was incorporated in July 2023, according to government data. An arm of the broker, Clear Street Futures is headed by Chris Smith, who was previously the London-based head of ED&F Man Capital Markets until it was acquired by Marex in 2022. Smith founded ED&F Man Capital Markets, which was a ring-dealing member of the LME. He did not reply to a Reuters' request for comment on Wednesday. The LME, the 147-year-old exchange owned by Hong Kong Exchanges and Clearing (0388.HK) , opens new tab, proposed closing its trading floor three years ago, joining other financial exchanges that have moved to pure electronic trading, but an outcry from physical LME users saved the ring. LME now operates on a hybrid basis, with open-outcry trading for official prices used by physical users as benchmarks for their contracts and an electronic system for closing prices. After Societe Generale's decision to leave the ring, nearly all of the seven remaining firms participating on the floor told Reuters they remained committed to the age-old practice. Sign up here. https://www.reuters.com/markets/europe/clear-street-seeks-join-london-metal-exchanges-open-outcry-trading-floor-source-2024-09-25/