BNP.PA - BNP Paribas SA
| Previous Close | 43.88 |
| Open | 43.87 |
| Bid | 0.00 x 0 |
| Ask | 0.00 x 0 |
| Day's Range | 43.60 - 44.15 |
| 52 Week Range | 38.13 - 55.34 |
| Volume | 2,945,941 |
| Avg. Volume | 4,467,913 |
| Market Cap | 54.616B |
| Beta (3Y Monthly) | 1.43 |
| PE Ratio (TTM) | 7.23 |
| EPS (TTM) | 6.06 |
| Earnings Date | Oct 31, 2019 |
| Forward Dividend & Yield | 3.02 (6.88%) |
| Ex-Dividend Date | 2019-05-29 |
| 1y Target Est | 61.49 |
- Bloomberg
Every U.S. Grid Is Getting Greener, Except the One That Matters
(Bloomberg) -- Every major U.S. electricity grid is getting greener.Except for the massive one serving 65 million Americans.That’s just as problematic as it sounds for the policymakers, power providers and climate activists looking to wean Americans off fossil fuels. While members of other systems move quickly to add solar and wind to their mixes and slash carbon emissions, the network that keeps the lights on from Chicago to Washington has effectively doubled down on natural gas. In the past two years, it has boosted the amount of power generated with gas by 11,131 megawatts. And developers are planning 34,507 megawatts more.“How do you manage the gas build-out with more states boosting renewables targets?” asked Toby Shea, a New York-based analyst at Moody’s Investors Service. “There’s already an overbuild of gas.”It’s not that there’s no interest in the renewable trend in the 13 states connected to what’s called the PJM Interconnection. In fact, it has been inundated with applications from renewable developers — 67,000 megawatts of wind and solar in total, from 684 projects.But there’s also this economic reality: PJM crisscrosses a section of the U.S. that’s home to some of the world’s most abundant natural gas reserves. As fast as the cost of wind and solar energy has been dropping, gas in some of these parts is cheaper.The hundreds of cities, counties, states and utilities linked to PJM have different and often competing goals and interests. Some are keen on getting greener, and the continued gas build-out threatens those ambitions.But the rush to make electricity without carbon emissions could put the gas plants in a bind. The potent brew of falling costs for emissions-free renewables could jeopardize facilities that are built to last for decades. They could end up as expensive bit players, filling in only during extreme weather or when the wind or sun aren’t cooperating.By 2035, it will be more expensive to run 90% of the gas plants being proposed in the U.S. than it will be to build new wind and solar farms equipped with storage systems, according to the Rocky Mountain Institute, a nonprofit supporter of cleaner energy. It will happen so quickly, the institute says, that plants will become uneconomical before their owners finish paying for them.More than half of U.S. states — including New Jersey, which is in PJM — have required renewables in their electrical blends. This group includes California, which aims to get all of its electricity from emission-free sources by 2045. Even oil-mad Texas is favoring clean power, because wind and solar are so cheap in the Lone Star State. There’s little debate, though, that natural gas is still needed. A Texas heat wave that drove its grid to the brink of blackouts last month was a reminder of how essential the fuel remains. Even in California, gas continues to provide round-the-clock power.As a grid, PJM is most focused on providing reliability at the lowest cost, said Stu Bresler, its senior vice president of markets and planning. In other words, just because projects are in the queue — gas-fired, wind or solar — doesn’t mean they’ll come to fruition.“We just can’t turn that gas off today,” said Joseph Fiordaliso, president of the New Jersey Board of Public Utilities. “The infrastructure was built years ago. We have to build the infrastructure for wind.”There’s a $70 billion offshore wind market forming off the Atlantic coast.The gas-fired bet once seemed pragmatic. Appalachia needed new electricity to replace gigawatts of retiring coal-fired power and nuclear reactors. The cheap shale reserves were right there. Private equity responded, pouring in tens of billions of dollars to build a new gas-fired fleet.Several of the nuclear plants are now being subsidized to stay online. As for gas, the threats posed by renewables prompted Devin McDermott, a commodities strategist at Morgan Stanley, to write a recent research note that he titled, “Could natural gas be a bridge to nowhere?”His question takes the premise that has underpinned the boom and flips it on its head: What if grids need new gas plants for only half of their lives? The economics do seem to be changing. In Texas, a gas plant built in this decade went bankrupt in 2017, in part because it struggled to compete with the state’s cheapest power sources: renewables.Among the half-dozen competitive power markets in the U.S., PJM is a big draw for investors, thanks to its size, capacity payments granted through an annual auction and the proximity to shale formations, said Mark Florian, head of the global energy and power infrastructure team at BlackRock Inc.Ravina Advani, head of energy, natural resources and renewables at BNP Paribas SA, estimated that there will be $6 billion of debt financings supporting new gas-fired plants in PJM by mid-2020.Last year’s auction was a boon for developers. More than $8 billion in supplier payments were granted for the year starting in June 2021. But the next auction, originally scheduled for May and then for August, won’t be held until a federal agency decides how to balance the competing interests of states and power generators in PJM’s territory.Backers of gas-fired units are “taking a lot of risk going into this type of market, when it’s already oversupplied and with renewables coming,” said Moody’s Shea. “It’s just a matter of time.” (Adds the number of people served in PJM in second paragraph)\--With assistance from Dave Merrill, Christopher Cannon, Hannah Recht and David R Baker.To contact the authors of this story: Brian Eckhouse in New York at beckhouse@bloomberg.netNaureen Malik in New York at nmalik28@bloomberg.netTo contact the editor responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Simon CaseyReg GaleAnne ReifenbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Financial Times
Humility and ambition are needed to shake markets out of their funk
Whether over global economic health or the power of central banks to improve it, the gloom is understandable. Some central bankers in the US and eurozone question the consensus view that they need to do more, urging caution instead. Regional presidents in the US Federal Reserve system have voiced their reluctance to cut rates further.
- Bloomberg
Moody’s Changes Outlook on Hong Kong to Negative Over Protests
(Bloomberg) -- Moody’s Investors Service Inc. changed its outlook on Hong Kong’s Aa2 issuer rating to negative from stable on Monday, citing growing risk that protests will undermine the city’s attractiveness as a trade and financial hub.The agency said the ongoing demonstrations could hurt government and policy effectiveness more than it had previously assessed, as well as damage Hong Kong’s credit fundamentals. Still, it affirmed the Aa2 long-term issuer and senior unsecured ratings, saying they reflect the city’s strong buffers as it has minimal government debt and large fiscal and foreign-exchange reserves.Hong Kong has been rocked by unrest this summer, with weekends marked by clashes between police, protesters and pro-China groups. There’s little sign of any end in sight as demonstrators continue to call on the government to act on their demands, which include an independent investigation into the police’s use of force. The turmoil has affected transport networks and businesses, weighing on the economy and causing a slump in visitor numbers.“While the outcome of the standoff remains highly uncertain, the longer it persists, the greater the risk that it precipitates a response from the authorities, which would demonstrate a tightening in the institutional linkage to China and signifies a diminution of the predictability of Hong Kong’s own governing and judicial institutions,” Moody’s said in a statement.Hong Kong Financial Secretary Paul Chan responded by saying the city’s financial markets and banking system have been operating as usual in the past few months.“The linked exchange rate system is functioning well, banks are well-capitalized, liquidity management is sound, and there is no significant outflow of Hong Kong-dollar funds or from the banking system. Hong Kong and U.S. dollar deposits have remained stable,” he said in a statement. “We do not agree with Moody’s decision to downgrade Hong Kong’s rating outlook.”Earlier this month, Fitch Ratings Inc. downgraded Hong Kong as an issuer of long-term, foreign currency debt for the first time since 1995. Fitch said political turmoil in the territory raised doubts about its governance.To contact the reporter on this story: Carol Zhong in Hong Kong at yzhong71@bloomberg.netTo contact the editor responsible for this story: Will Davies at wdavies13@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
London broker wins sexual discrimination lawsuit against BNP Paribas
A female BNP Paribas broker, whose boss repeatedly brushed aside her questions by saying "not now, Stacey," has won a sexual discrimination and victimisation lawsuit in a London employment tribunal. Stacey Macken, who is suing the London branch of the bank for 4.0 million pounds ($4.9 million) from the London branch of the bank, alleged she was paid less than male peers and subjected to sexist behaviour that included colleagues leaving a witch's hat on her desk.
- Reuters
UPDATE 1-Effort to disqualify lawyer part of U.S. campaign against Huawei: counsel
The effort to stop a former U.S. Justice Department official from representing Huawei is another step in a broader U.S. government campaign against the Chinese company, a lawyer for Huawei argued on Wednesday. Lawyer Michael Levy said the company has not been given any material information as to why its counsel, James Cole, should be removed. Cole is Huawei’s lead lawyer in the U.S. case against the world's largest telecommunications equipment maker for allegedly misleading global banks about its business in Iran.
- Bloomberg
BNP Paribas London Credit-Trading Desk Is Hit By Departures
(Bloomberg) -- BNP Paribas SA has been struck by a wave of departures and absences from work at its European credit-trading business, gutting the senior-most ranks of the desk that deals in corporate debt at France’s largest lender.Iftikhar Ali, head of credit trading for central and eastern Europe, the Middle East and Africa, has left BNP along with distressed-debt and loan-trading head Jonathan Oakley, according to people familiar with the matter, who declined to be identified as the details are private. European high-yield trading head Stephen Snizek may also depart, they said.Some executives at the credit-trading unit have taken leave. Senior trader Omar Ghalloudi is on sick leave and may not return, while head of investment-grade trading Uzoma Igboaka is absent for health reasons, the people said.BNP Paribas’ markets chief Olivier Osty is trying to make more money from trading credit as part of a broader efforts to enter the top tier of European investment banks, even as the French bank pushes through a series of cost cuts. Yet the project has faced challenges, including losses on Turkish debt last year and industry-wide declines in revenue.Alexandra Umpleby, a spokeswoman for the bank, declined to comment on the departures.Ali joined BNP Paribas in 2017 as did Snizek, who arrived from Barclays Plc as head of high-yield bond flow trading for Europe, the Middle East and Africa. Ghalloudi, a credit veteran who trades CEEMEA debt, was hired just last year.Karan Samtani, a credit analyst, and debt salesman Gabriel Willis have also exited recently, according to the people. Loan trader James Connolly has also left for rival Deutsche Bank AG, Bloomberg reported last month.Credit traders buy and sell debts issued by corporations and also credit derivatives, contracts which let buyers speculate on a borrower’s ability to repay. The world’s biggest banks generated about $6.8 billion from the business in the first half of the year, a 3 percent decline on a year earlier and the lowest figure for that period since at least 2014, according to data from Coalition Development Ltd.BNP Paribas is among the smallest of the global banks in credit trading, Coalition data show, and Osty has targeted the business for change. Revenue from the division increased 38 percent for the first half of 2019, according to spokeswoman Umpleby, who cited internal Coalition data.The bank has made some new hires, she said, including CEEMEA debt trader Akash Garg and Sarosh Siddiqui, who joined from Credit Suisse Group AG earlier this year as head of high-yield trading for Europe, the Middle East and Africa.To contact the reporters on this story: Alastair Marsh in London at amarsh25@bloomberg.net;Donal Griffin in London at dgriffin10@bloomberg.netTo contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Simply Wall St.
Those Who Purchased BNP Paribas (EPA:BNP) Shares Five Years Ago Have A 23% Loss To Show For It
Ideally, your overall portfolio should beat the market average. But in any portfolio, there will be mixed results...
- Bloomberg
Oil Falls as Hurricane Dorian, Trade Wars Stoke Demand Fears
(Bloomberg) -- Oil fell as demand concerns weighed on the market with Hurricane Dorian taunting the U.S. East Coast this week, and the U.S.-China trade war unresolved.Futures were 0.6% lower at the halt of trading in New York Monday after sinking as much as 1.4% in New York. While Dorian, which reached category 5 strength over the weekend, probably won’t affect U.S. crude production and refining, it will dampen demand for gasoline and diesel.“Products are leading the market down” and crude is following, said Andy Lipow, president of Lipow Oil Associates LLC. Despite the U.S. Labor Day holiday which ended trading early, “there was decent volume,“ he said.The storm’s forecast path remains uncertain although it’s expected to move “dangerously close” to the Florida shoreline later Monday or earlier Tuesday.New U.S. tariffs on Chinese goods, which took effect on Sunday, are fueling demand fears even more. The outlook for Chinese manufacturing deteriorated further in August, the latest evidence that the U.S.-China trade conflict is taking a toll on the global economy. Meanwhile, Chinese and U.S. officials are struggling to agree on the schedule for a planned meeting this month, according to people familiar with the discussions.“Economic uncertainty will continue to dominate the oil market’s agenda as new U.S. and China trade measures come into effect,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA. “The market is more and more resigned to a protracted stand-off and will be looking toward central-bank easing to shore up risk appetite to help overcome the prevailing hesitancy in going long oil.”Poor economic data from Germany and U.K. also weighed on the market at a time when the latter is trying to resolve its own trade dispute, Lipow said. Prime Minister Boris Johnson put the U.K. on notice that it faces the threat of an election within weeks, as the political crisis engulfing the country’s divorce from the European Union deepened.West Texas Intermediate for October delivery fell 33 cents to $54.77 a barrel on the New York Mercantile Exchange at 12.59 p.m., after reaching an intraday low of $54.34. Transactions will be booked Tuesday for settlement because of the U.S. Labor Day holiday. The contract lost $3.48 in August.Brent for November settlement slid $1.77 to $58.66 a barrel on the ICE Futures Europe Exchange, and traded at a $4.07 premium to WTI for the same month. The October contract expired on Friday, having lost 7.3% last month.To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net;Sheela Tobben in New York at vtobben@bloomberg.netTo contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick, Steven FrankFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
BNP Paribas plans bid for Deutsche Bank's equity derivatives
French lender BNP Paribas plans to bid for Deutsche Bank's equity derivatives book and is hopeful it can beat off rival bidders to secure a deal in the next few weeks, according to sources familiar with the matter. Deutsche Bank is selling the portfolio as part of a restructuring that will see it exit equities trading and other unwanted businesses and shed 18,000 staff globally. Chief Executive Officer Christian Sewing is hoping the plan will turn around the bank, whose shares hit a record low this month.
- Reuters
UPDATE 1-Deutsche Bank to transfer up to 800 to BNP in prime brokerage deal - source
FRANKFURT/PARIS, Aug 23 (Reuters) - A deal in the works for BNP Paribas to assume the prime brokerage operations of Deutsche Bank will involve the transfer of up to 800 people, a person with knowledge of the matter said on Friday. Deutsche Bank said in July it had struck a preliminary agreement with BNP covering the business that serves hedge funds as part of its 7.4 billion euro ($8.2 billion) overhaul, but details on personnel and the timing of any final deal were being hammered out. BNP and Deutsche Bank declined to comment.
- Bloomberg
Huawei Used Code Names for Syria, Sudan Activities, U.S. Alleges
(Bloomberg) -- Huawei Technologies Co. used code names and secret subsidiaries to conduct business in Syria, Sudan and Iran, the U.S. alleged in the extradition case related to sanctions violations against the company’s chief financial officer.The Chinese networking giant allegedly operated a de facto unit called DirectPoint in Sudan and Canicula in Syria, according to documents released this week by a Canadian court. In internal spreadsheets, Huawei also used the code “A5” to refer to Sudan and “A7” to Syria, the U.S. said in the documents submitted to the Canadian government in support of its request for the extradition of company CFO Meng Wanzhou.Huawei operated those units just as it controlled a subsidiary in Iran that obtained American goods, technologies and services in violation of U.S. sanctions, according to the allegations.The U.S. is seeking to extradite Meng -- daughter of Huawei’s billionaire founder Ren Zhengfei -- after accusing her and others at the company of conspiring to trick banks into conducting more than $100 million worth of transactions that may have violated U.S. sanctions. The company has denied it committed any violations. It didn’t respond Wednesday to requests for comment on the allegations in the court documents.“The motivation for these misrepresentations stemmed from Huawei’s need to move money out of countries that are subject to U.S. or EU sanctions -- such as Iran, Syria, or Sudan -- through the international banking system,” the Justice Department said in its request for Canada to arrest Meng as she arrived at Vancouver’s airport last December.The court on Tuesday released hundreds of pages of documents and video footage submitted by Meng’s defense to back its arguments that Canadian authorities deceived her about the true nature of her detention in order to collect evidence for the U.S. FBI.In those documents, the U.S. outlined its case against Meng and its plans for witnesses in the case against her if she is successfully extradited. Among those witness are unnamed executives from HSBC Holdings Plc, Standard Chartered Plc, BNP Paribas SA and Citigroup Inc. that allegedly were misled by Meng and her colleagues into continuing business with Huawei at the time despite the risk of sanctions violations.To contact the reporter on this story: Natalie Obiko Pearson in Vancouver at npearson7@bloomberg.netTo contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Andrew Pollack, Peter BlumbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
UPDATE 1-Citigroup, BNP caught up in U.S. case against Huawei CFO - documents
U.S.-based Citigroup Inc and French bank BNP Paribas are caught up in the U.S. criminal case against the chief financial officer of China's Huawei Technologies, according to newly available documents. The banks were named in documents released on Tuesday after a hearing in British Columbia Supreme Court, where Huawei CFO Meng Wanzhou is fighting extradition to the United States on bank fraud charges. The two are among at least four financial institutions that had banking relationships with Huawei when Meng and others allegedly misled them about its business dealings in Iran despite U.S. sanctions.
- Bloomberg
Germany Regrets Size of Bond That Pays Nothing as Auction Flops
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The world’s first 30-year bond featuring zero income struggled to find buyers, prompting Germany’s debt agency to admit the sale may have been “too large.”The nation failed to meet a 2-billion-euro target ($2.2 billion) for the auction of notes maturing in 2050, signaling that negative yields across Europe may finally be taking their toll on demand. It’s another sign that the global bond rally may be coming to a halt now that more than $16 trillion of securities have negative yields.“The broader conclusion is that this is an ominous sign for cash bonds,” said Antoine Bouvet, a rates strategist at ING Groep NV, looking ahead to the end of a summer lull in European issuance next month. The jury is still out on whether this is “a turning point in the long-end rates rally, as the fundamental driver of lack of faith in central banks’ ability to reflate the economy is still there.”Dwindling expectations for inflation and growth in coming years has led the European Central Bank to hint at a new wave of monetary stimulus next month, driving a rally across the region’s bond markets. The whole of Germany’s yield curve is now below zero -- among the first major markets exhibiting such a trait -- meaning the government is effectively being paid to borrow out to 30 years.That drew the attention of U.S. President Donald Trump, who used it to launch another push on Twitter for the Federal Reserve to lower U.S. borrowing costs. Markets are waiting for comments by Fed Chair Jerome Powell and other central bankers meeting from Friday to discuss stimulus for the global economy at a gathering in Jackson Hole, Wyoming.The German sale comes as Europe’s largest economy is priming the pumps for extra spending in the event of a crisis. While the nation is confined to strict laws on running a fiscal deficit, Finance Minister Olaf Scholz suggested Germany could muster 50 billion euros ($55 billion) should a recession hit. The economy contracted in the second quarter.The country only sold 824 million euros of the zero coupon bond at a record-low average yield of -0.11%, while the Bundesbank retained nearly two-thirds of the debt on offer. The real subscription rate -- a gauge of demand that accounts for retentions by the Bundesbank -- fell to 0.43 times against 0.86 times at the previous sale of similar maturity bonds on July 17.“This shows that there is less demand for 30-year bonds at negative yields,” said Marco Meijer, a senior fixed-income strategist at BNP Paribas SA. Still, Meijer doesn’t “see yields rising a lot in Europe.”Germany’s debt agency said it was aware that the auction with a zero coupon might fail to drum up large investor interest.“In the current environment it is difficult to issue in large volume a bond of this maturity,” said spokeswoman Alexandra Beust in Frankfurt. The agency “doesn’t view the sale as a failure -- it doesn’t cause us a problem as we can take the remainder on our own books.”Tantrum RiskGerman 30-year bonds erased declines after the comments, with yields steady at -0.15% after having risen three basis points earlier in the day. Those on 10-year securities also steadied at -0.69%, near a record low touched earlier this month.One of the triggers for a German bond selloff in 2015, after benchmark yields first neared 0%, was a poor 10-year auction that highlighted a loss of demand at low yield levels.This time around, Commerzbank AG had expected demand to come from life insurers and macro investors, despite the yield curve flattening in recent weeks to drive down long-dated yields. German 30-year bonds are still attractive for U.S. investors, when hedged for currency swings, offering around a 2.6% yield, relative to around 2% on a 30-year Treasury.“It is technically a failed auction,” said Jens Peter Sorensen, chief analyst at Danske Bank AS. “I am not all worried about this -- as investors can always just buy in the future and do not need to participate in auctions.”(Updates with German debt agency comments.)\--With assistance from James Hirai, Charlotte Ryan and Brian Parkin.To contact the reporter on this story: John Ainger in London at jainger@bloomberg.netTo contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
33-Year-Old Founder Raises $51 Million to Add AI to Call Centers
(Bloomberg) -- An Indian startup that aims to use artificial intelligence to deliver faster and more personalized customer support for corporate clients is raising $51 million in funding from investors including March Capital Partners and Chiratae Ventures.Uniphore Software Systems Pvt, based in Chennai and Palo Alto, Calif., plans to use the emerging technology to change the labor-intensive business of call centers, displacing workers with machines. Former Cisco Systems Inc. Chief Executive Officer John Chambers’ JC2 Ventures owns about 10% of the startup. Existing backers also include Analog Devices Inc. founder Ray Stata and Infosys Ltd. billionaire co-founder Kris Gopalakrishnan.Umesh Sachdev, 33, founded the company in 2008 with his engineering classmate Ravi Saraogi. They are competing with technology giants like Google, Microsoft Corp. and International Business Machines Corp. as well as at least a dozen AI startups to automate the $350 billion call center industry, helping agents deliver more useful support while decreasing the number of infuriating and ineffectual experiences.“This is one of the largest rounds in an area of deep tech already seeing a lot of investor activity,” CEO Sachdev said in a telephone interview. “It represents the coming of age of conversational AI.”He declined to reveal the startup’s valuation, but said it is “one step away from turning into a unicorn,” the tech industry’s term for a value of $1 billion or more.Voice bots and automated messaging systems are already changing the world of call centers, and experts reckon the majority of human workers will be driven to obsolescence by artificial intelligence. By 2021, about 70% of organizations will integrate AI to assist employee productivity, researcher Gartner Inc forecast earlier this year.Using messaging apps, chatbots and speech-based assistants, so-called conversational artificial intelligence automates communication and delivers personalized experiences. “Virtual agents are gaining ubiquity via smartphones and messaging platforms to support customer care, marketing and employee efficiency,” said Dan Miller, the lead analyst with Saint Paul, Minnesota-based Opus Research.Sachdev estimates that the U.S. alone has 3.9 million call center workers and those numbers will steadily diminish as companies adopt new technologies. “Humans will shift from taking mundane calls to enhancing knowledge and teaching AI what is the good answer and how to resolve issues,” he said.Uniphore will use the funds to hire talent, invest in research and development and accelerate expansion, particularly in its primary market in North America. The startup plans to increase its engineering and development operations to 200 employees in India by the year end, while another 60 will be based in the U.S. and 40 in Europe and Asia Pacific. Its customers include BNP Paribas SA, Genpact Ltd., NTT Data Corp., and PNB MetLife.“Indian entrepreneurs are going from slow-followers to fast-innovators,” said Chambers in an interview earlier this year, explaining why he’s backing Uniphore. “I see a young breed of founders who are hungry for a piece of the future.”To contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Power-Hungry Phone Companies Dial Into Surging Green Bond Market
(Bloomberg) -- Phone carriers are huge energy users, and need to cut emissions. They also face massive bills to build out the next generation of wireless networks. Green bonds promise to help them with both.A steady flow of issuance could be building: Orange SA and BT Group Plc are poised to follow Telefonica SA and Verizon Communications Inc. in selling securities designed to fund environmentally friendly projects. The industry has already completed at least $3 billion of sales since January, its first steps into a sustainable debt market that Bloomberg New Energy Finance estimates could exceed $370 billion this year.The proceeds can help telecom companies replace power-hungry copper wires with fiber-optic cables, or build the 5G networks that promise to make cities, homes and factories more efficient. There’s plenty of investor appetite for this new take on sustainable investing, but there’s a catch: any hint that a bond doesn’t genuinely help the planet can cause some buyers to flee.“Telecoms have to invest a lot. In the long run, having green bonds in place is going to be very important,’’ said Juuso Rantala, who holds Telefonica’s green bond in the 400 million-euro ($449 million) fund he manages at Aktia Asset Management Ltd. in Finland. “If I find out that I cannot trust the company in the case of green bonds, I cannot trust them in many other ways too. If I cannot trust them, I don’t invest.’’The securities show how green debt is expanding beyond its original universe of the clean energy industry. Beef supplier Marfrig Global Foods SA and Australian retailer Woolworths Group Ltd. have tapped this market to help their operations become more environmentally friendly.For carriers, the task is urgent. The communications industry accounts for about 10% of global electricity demand, and that could exceed 20% by 2030 as demand for data balloons, according to Huawei Technologies Co.Telecom companies have ways to clean up their act. For example, replacing copper with glass wires would use 85% less energy, according to Telefonica. And 5G can enable a range of environmental benefits by allowing smart buildings to monitor heating, connected warehouses to optimize their logistics and power grids to better allocate electricity.But these companies are already staggering under a mountain of debt from, among other things, buying 5G licenses. They’ll need to make sure they can keep their borrowing costs low and tap investors when needed.That’s where green bonds can help: the interest costs are about the same as on these companies’ conventional securities, but they offer the opportunity to access a wider pool of investors.The share of funds focused on socially responsible investing, which includes environmental projects, has risen 34% over the last two years, and now accounts for $30.7 trillion of assets globally, according to the investor group Global Sustainable Investment Alliance.“Many more green telco bonds are likely,” Morgan Stanley analysts led by Emmet Kelly wrote in June. “Demand from funds that have incorporated sustainability into their investment framework has been key.’’Telefonica, based in Madrid, is a good example. Demand for the issue, which priced in January, was significant: the company received five times the orders than what was available for sale, and obtained a spread more than the mid-swap rate that was about 25 basis points lower than initial indications.The yield on the 1 billion-euro 5-year security is in line with the rest of its curve, Bloomberg data show, indicating it didn’t have to pay a premium to tap demand for sustainable credit. It’s a similar story for Verizon and Vodafone Group Plc.Orange and BT Group are paying attention -- they have inserted clauses into their Eurobond prospectuses which would let them issue green bonds in the near future. And Deutsche Telekom AG is monitoring the surging market closely, said a spokesman.For investors, the risks go beyond what’s expected for any fixed-income asset. Buyers also have consider just how green these bonds are.“The question is whether or not a bond offers a real energy efficiency gain or overall gain for the environment,’’ said Arnaud-Guilhem Lamy, who holds telecom securities in his 340 million-euro ($381 million) green bond fund at BNP Paribas Asset Management in Paris. “If we think it’s insufficient, we would sell.’’For a start, there’s always the possibility that this new breed of green-bond borrowers divert proceeds to inappropriate purposes, including pooling them into general funds. Though monitoring groups such as credit rating firms can discourage such behavior, it’s something investors need to watch.But 5G presents a particular environmental paradox.Internet-of-things technologies will connect billions more devices and require many more antennas, so 5G will initially use more power than 4G, according to Sustainalytics, an independent corporate sustainability research firm. This complicates the idea that 5G can be a green investment.However, Sustainalytics estimates the energy savings from 5G outweigh the extra emissions to deploy the new tech by a ratio of 5 to 1. The firm’s analysis of the Verizon bond issue, which included 5G deployment among the potential use of proceeds, found that it was a credible candidate for green financing.It’s a good thing, because Verizon plans on returning to this corner of the bond market. It looks like it will be welcome, too – its $1 billion issue of 10-year green debt was eight times oversubscribed within six hours of being offered for sale, said Jim Gowen, head of supply chain and sustainability for the U.S. carrier.“It was far beyond our wildest expectations,” Gowen said. “We are very interested in doing another one.’’\--With assistance from Paul Cohen and Lyubov Pronina.To contact the reporter on this story: Thomas Seal in London at tseal@bloomberg.netTo contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Jennifer RyanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- GuruFocus.com
Bestinfond's Top 5 Buys in the 2nd Quarter
Top buys include new holding in US-based travel reservation giant Continue reading...
- Bloomberg
Pound Slide More About Brexit Than the Economy
(Bloomberg Opinion) -- The pound has set a new post-Brexit referendum low against the euro and is tantalizingly close to doing the same against the dollar. This slide says more about the increasing likelihood of a no-deal departure than the state of the U.K. economy.Figures released on Friday showed gross domestic product shrank by 0.2% in the second quarter, the first negative reading since 2012. Much of this is attributable to companies unwinding their stockpiles of inventory ahead of the initial March deadline for leaving the European Union. That date has now slipped to Oct. 31.In fact, the U.K. economy is holding up pretty well, with both government and household spending remaining robust. The third quarter should see a bounce back of 0.3%, according to Bloomberg Economics's Dan Hanson. His forecasts for growth in 2019 are unchanged.Sterling’s weakness has been far more closely linked to the prospects of a no-deal Brexit. Boris Johnson's administration has ramped up both its rhetoric and preparations for that outcome – but its majority in parliament is looking increasing doubtful and an early election thus more likely. That has prompted currency traders to raise their expectations that the U.K. and EU will fail to reach a deal in time. Analysts at BNP Paribas SA now put the probability at 50%, up from 40%.Another factor in all this is that Sajid Javid, the new Chancellor of the Exchequer, announced a shorter, sharper review of government spending on Friday, rather than the typical three-year review. This suggests election planning is in full swing. Add in Johnson’s big spending promises on health, and it is highly likely that more gilts will have to be issued. Such fiscal relaxation is a negative for sterling, even if the gilt market remains impervious for now.There is simply very little to support the pound regardless of how undervalued it may be. With previous lows breached, it is hard not to expect further weakness until the political landscape becomes clearer.To contact the author of this story: Marcus Ashworth at mashworth4@bloomberg.netTo contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Reuters
Brexit: BNP Paribas raises 'no-deal' probability to 50%
BNP Paribas on Friday raised the probability of the United Kingdom's exit from the European Union without a deal to 50% from 40%, pointing to a volatile political environment and tight timetable. The United Kingdom is due to leave the European Union on Oct. 31, but the burgeoning effects of Brexit have had a strong impact on the economy, which shrank unexpectedly in the second-quarter for the first time since 2012. "With Parliament in recess, the rhetoric is very much in one direction, with no effective counter-balance in the form of MPs actively trying to prevent a disorderly outcome," the bank's research team led by Paul Hollingsworth said in a note.
