The digital payment space has become a fragmented mess for many. Banks - largely left behind in the peer to peer payment race -- are trying to change that. Frank Sorrentino - the CEO of community bank ConnectOne - is here to tell us how.
The digital payment space has become a fragmented mess for many. Banks - largely left behind in the peer to peer payment race -- are trying to change that. Frank Sorrentino - the CEO of community bank ConnectOne - is here to tell us how.
"Market makers were heavily short puts in the range of $52,000 to $50,000, and I estimate were forced to sell nearly 2,900 bitcoin," one trader said.
The British pound initially shot higher during the trading session on Friday but has been a bit noisy in the process of breaking above the hammer from the previous session.
(Bloomberg) -- At their highs, five electric-vehicle startups that went public through mergers with special purpose acquisition companies were worth $60 billion. The corrections that followed have been brutal.Three of the companies plumbed new lows this week as short-seller attacks, management turmoil and execution issues lead investors to reconsider their prospects. They’ve lost more than $40 billion of market capitalization combined from their respective peaks.The sliding valuations of Nikola Corp., Fisker Inc., Lordstown Motors Corp., Canoo Inc. and Arrival Ltd. underscore the risks surrounding the blank-check boom. Unlike in a traditional initial public offering, going public via SPAC allows companies to make forward projections to investors during their listings. This was key to ginning up interest in EV companies -- all five are still working on delivering their first vehicles to customers.Here’s a breakdown of what’s happened at each company:NikolaFounder Trevor Milton burst onto the scene last year boasting that he could “out-Elon” Tesla Inc.’s Elon Musk. Days after his battery-electric and hydrogen-powered truck maker debuted on the Nasdaq in June, it was worth almost $29 billion, rivaling Ford Motor Co. at the time.When Bloomberg News reported that Milton had exaggerated the capability of his first truck years before the company went public, it got the attention of Hindenburg Research. The small short-selling firm produced a lengthy report accusing the company of deceiving investors. The U.S. Securities and Exchange Commission opened an investigation, and Milton resigned soon after.Early this year, the company cut its projection for semi-truck production this year to 100 units, one-sixth of its earlier plan. The shares have recovered somewhat since dipping below $10 in April.FiskerThe second EV venture founded by longtime auto designer Henrik Fisker announced its reverse merger a month after Nikola’s listing. While the company was more than two years from starting production, its plan to market an under-$40,000 sport utility vehicle and outsource the manufacturing work to others turned heads. Its market value peaked at almost $8 billion in February.The catalysts for Fisker’s decline to below $3 billion this week have been less clear than some of its peers. The company appeared to lose out as investors grew more bullish about incumbent automakers’ EV prospects. Its shares are surging in early trading after an announcement late Thursday of plans to develop an EV with Foxconn Technology Group and build it in the U.S.Lordstown MotorsThen-Vice President Mike Pence attended Lordstown’s unveiling of its Endurance work truck in June at the factory the company took over from General Motors Co. While it was a risky move championing a company with just 70 full-time employees, the Trump administration was eager to embrace a startup trying to revive an Ohio plant that once employed 10,000 people.Less than six weeks later, Lordstown found a SPAC suitor. Boasts about non-binding orders gave way to another attack by Hindenburg Research, which leveled accusations similar to the ones aimed at Nikola -- that Lordstown had misled investors. The SEC has been looking into the claims. Lordstown is now valued at $1.2 billion, less than a quarter what it was worth in mid February.CanooThe startup founded by a pair of former BMW AG executives unveiled a seven-seat prototype in late 2019, struck a deal early last year to help Hyundai Motor Group develop EVs, then another agreement in August to go public. In January, the Verge reported it had met with Apple Inc. about its car ambitions.That momentum is now long gone. The company announced a hard pivot in its business plans in March, deciding to de-emphasize engineering services for other companies and the subscription business model that was part of its original pitch to investors. It has replaced top executives, including its chief financial officer, and said it hasn’t addressed material weaknesses in its financial controls identified more than a year ago. Last month, one of its co-founders resigned the CEO position.ArrivalThe company pledging to build electric vans and buses as well as so-called microfactories to manufacture them had assembled big-name backers before its SPAC deal, including BlackRock Inc., Hyundai and United Parcel Service Inc.Last week, the London-based company founded by Denis Sverdlov, a former Russian deputy minister, said it will partner with Uber Technologies Inc. to develop an EV that’s purpose-built for ride-hailing. While Arrival shares haven’t sustained the immediate gain following that announcement, the company’s valuation is the highest among the five at $10.5 billion.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
BTC remains under pressure and could find lower support near $42K as long-term momentum wanes.
“They just want to gauge how you react and how you think through a response.”
(Bloomberg) -- Industrial materials from copper to iron ore are feeling the pain as China steps up efforts to cool a blistering rally in commodities that’s fanning fears over a global surge in inflation.Iron ore futures plunged as much as 11% in Singapore and steel rebar slid as Chinese officials rolled out fresh measures for steelmakers to take the steam out of markets. Base metals have also come under pressure in recent days, with copper down 4.7% from a record high set on Monday.The measures targeting China’s steel sector come after surging raw-material costs sparked the biggest jump in Chinese factory-gate prices in more than three years in April. A sharp jump in U.S. consumer prices has also sparked worries across financial markets that rising inflation will hamper a global recovery and force the Federal Reserve to tighten policy sooner than thought.“Many fear that high inflation will force the Fed to take away the punch bowl,” which acted as one of the forces in propelling a rally in commodities from their nadir in March last year, TD Securities analysts led by Bart Melek said in a note. “Ongoing deleveraging in China should take some wind out of the sails for commodity demand.”Copper and iron ore have been among the biggest gainers in a yearlong rally in commodities as Covid-19 upended supply while stimulus measures supported economies and sparked a surge in demand, particularly in China. An accelerating global decarbonization drive has also transformed the long-term outlook for metals like copper.But signs of easing short-term supplies and softening demand may be emerging in physical markets. LME metal has flipped into contango, a market structure in which spot prices trade below those three months out. That indicates loose supply or falling demand in the near term. Right now, it’s gapped out to the weakest since early January.“Copper will still trade at a very good price, but I do think it will come under pressure,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said by phone from London. “There are some headwinds coming.”Still, U.S. retail sales stalled in April following a sharp advance in the prior month when pandemic-relief checks provided millions of Americans with increased spending power. This could help the narrative by Fed officials this week that inflation numbers this week were an aberration and were transitory.Copper fell 1% to settle at $10,240.50 a ton at 5:53 p.m. on the London Metal Exchange, after peaking Monday at $10,747.50. Other base metals fared better on Friday, though aluminum still had a 3% weekly drop.In ferrous markets, iron ore fell 4.3% in Singapore on Friday, while futures in Dalian dropped the daily limit. Iron ore had surged to record highs recently amid the broad commodities boom.Prices slumped as Tangshan’s local government vowed to punish violations including price manipulation, and steelmakers were told that they may be suspended from doing business or have their licenses revoked if they break the law. The city, which accounts for 14% of China’s steel output, has been at the center of an industry overhaul as authorities unveiled a slew of output restrictions to control emissions.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- A crack in a bridge over the Mississippi River has stranded more than 700 barges, cutting off the biggest route for U.S. agricultural exports when the critical waterway is at its busiest.The route is shut near Memphis while the Tennessee Department of Transportation inspects a large crack in a highway bridge spanning the river, according to the U.S. Coast Guard. A queue has expanded to 47 vessels and 771 barges, with 430 of those heading north and the rest going south, Petty Officer Carlos Galarza of the Coast Guard’s 8th District said Thursday afternoon by email.The Mississippi River is the main artery for U.S. crop exports, with covered barges full of grain and soy floating to terminals along the Gulf of Mexico, while crude oil as well as imported steel also travel through sections of the waterway. Any sustained outage would disrupt shipments out of the Gulf. Corn futures tumbled by the most allowed under CME Group rules partly on speculation that exports would back up.“The river is the jugular for the export market in the Midwest for both corn and beans,” said Colin Hulse, a senior risk management consultant at StoneX in Kansas City. “The length of the blockage is important. If they cannot quickly get movement, then it is a big deal. If it slows or restricts movement for a longer period it can be a big deal as well.”The stoppage along the Mississippi River is the latest calamity to upend the commodities world in recent weeks. Back in March, the Suez Canal was blocked by a giant container ship that got stuck sideways in the vital waterway for almost a week, paralyzing global shipping. And late last week, a cyberattack brought down the largest fuel pipeline in the U.S. for five days, leading to widespread gasoline shortages from Florida to Virginia.A lengthy halt on the Mississippi River could further roil crop markets, where soybeans and corn futures have hit multiyear highs amid adverse weather in Latin America and a buying spree from China. Corn futures fell Thursday by the exchange limit of 40 cents, or 5.6%, to $6.7475 a bushel in Chicago.As a workaround, traders could in theory also send some supplies on trains and divert to ports along the U.S. Pacific Northwest. Few grain and soy buyers were bidding for barges north of the river closure amid uncertainty on when vessel traffic would resume.The crack halting vehicle and waterway traffic is in the truss of the Interstate 40 Hernando DeSoto Bridge, which was found during a routine inspection, according to a Tuesday statement from the Tennessee Department of Transportation.“The timeline is still undetermined” for the waterway reopening, department spokeswoman Nichole Lawrence said Thursday morning by email.The Army Corp of Engineers could figure out a way to keep automotive traffic closed in order for water traffic to resume under the bridge, according to CRU Group analyst Josh Spoores. It may cause bottlenecks, but most consumers already used to waiting months for supplies to ship are probably fine with some added delays, he said.The New Orleans Port Region moved 47% of waterborne agricultural exports in 2017, according to the U.S. Department of Agriculture. The majority of these exports were bulk grains and bulk grain products, such as corn, soybeans, animal feed and rice. The region also supports a significant amount of edible oil exports, such as soybean and corn oils and even attracted 13% of U.S. waterborne frozen poultry exports in 2017.Some traders speculated that, based on past experience, the river might be partially opened for restricted movements while repairs are being done.“My sense is that it is not a big deal for river traffic as it will be a short-term disruption,” said Stephen Nicholson, a senior analyst for grains and oilseeds at Rabobank. “The good news is most of fertilizer has already come up river and soybean exports are at their low point. However, corn exports continue at a strong pace, so we may see a slight delay in corn barges reaching” New Orleans.It may be difficult for exporters to shift much volume to rail, as the capacity to unload trains outside of the New Orleans area is limited, according to Curt Strubhar, vice chairman and risk management consultant at Advance Trading Inc.“There aren’t many rail unloaders South of the issue,” he said, adding that New Orleans “port elevators aren’t equipped to handle a sharply higher share of rail unloads either.”Of agricultural supplies that floated on barges north of Memphis, about 84% was corn and about 13% was soybeans, according to Mike Steenhoek, executive director of the Soy Transportation Coalition, citing USDA data. Overall shipments of corn and soy during the week ended May 8 were 18% higher than a year ago.Agricultural co-operative Growmark’s St. Louis port, which sends corn and soybeans south to New Orleans for export mostly to China and receives fertilizers, will likely close Friday, according to Matt Lurkins, executive director of the firm’s grain division.“Freight was already tight,” Lurkins said in a phone interview. “Then this kind of sent us over the edge.”If the pause drags on, he said, Growmark could send more grain to processors rather than loading it on barges for export.Small volumes of crude and partly refined oil are shipped by barge on the river as well. In February, 2.85 million barrels moved from the Midwest to the Gulf Coast via barge and tanker, according to government data.Imported steel on barges will be delayed as long as traffic is halted. About 25% of imported steel travels through at least a section of the Mississippi River, according to Wood Mackenzie analyst Cicero Machado, though he said newly arriving foreign steel to ports in New Orleans or Mobile, Alabama can be diverted onto rail cars or trucks.The river also is a major artery for steel shipments within the U.S. and delays could become an issue for automakers in the South that depend on high-strength steels produced in the Midwest, he said.“At this stage the big question is: is this going to last?” Machado said. “The issue is not actually in the river, it’s in a bridge over the river -- so perhaps they’re going to find a way to manage the traffic there.”(Adds Coast Guard update in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Stock sales are reaping a windfall for the world’s richest shareholders.Corporate insiders including Amazon.com’s Jeff Bezos and Google co-founder Sergey Brin have ramped up stock sales recently, cashing in on a 14-month long bull market that’s helped boost fortunes to the tune of trillions.U.S. public company insiders offloaded shares worth $24.4 billion this year through the first week of May, with about half sold through trading plans, according to data compiled by Bloomberg. That’s almost as much as the $30 billion total they disposed of in the second half of 2020.Large shareholders frequently sell stock in planned intervals, often through pre-arranged trading programs. Yet the prolonged rally in equities markets has made the value of these disposals, whether planned or opportunistic, strikingly high.There are multiple reasons an investor of any size might be motivated to sell. After the pandemic-defying rally, valuations are increasingly under pressure from rising inflation. Investors are wary the post-Covid recovery could prompt tightening measures from the Federal Reserve. And President Joe Biden’s proposed tax hikes -- including a near doubling of the capital gains rate -- have created uncertainty.Bezos, EllisonWhatever the reason, the sales are flooding the market with yet more liquidity, the consequences of which will ripple through philanthropy, the art market, real estate and other niches.Bezos has sold $6.7 billion worth of Amazon shares this year. While a relative pittance for the world’s richest person, it’s more than two-thirds the value of shares he sold in 2020. Larry Ellison unloaded 7 million Oracle shares in the past week for total proceeds of $552.3 million. Charles Schwab has sold $192 million worth of shares of his eponymous brokerage this year.Brin, who has signaled that he intends to sell as many as 250,000 Alphabet Inc. shares, has disposed of $163 million worth of stock in recent days, his first sales in more than four years, filings show.Mark Zuckerberg and his charitable foundation, the Chan Zuckerberg Initiative, meanwhile, accelerated their sales of Facebook stock in the fall. Zuckerberg or his charity has divested shares at a near-daily clip since November, for a cumulative total exceeding $1.87 billion.The surging markets have exacerbated the concentration risk of the single-stock-dominated fortunes typical of many tech billionaires, said Thorne Perkin, president of Papamarkou Wellner Asset Management.“From a portfolio-management perspective, it makes sense to spread it around,” he said.Covid EconomyAlso among the biggest sellers are some noteworthy beneficiaries of the Covid economy. Zoom Video Communications founder Eric Yuan and used-car retailer Carvana Co.’s Ernest Garcia II have together received more than $1.75 billion from stock sales since March 2020, according to the Bloomberg Billionaires Index. George Kurtz, chief executive officer of cybersecurity firm CrowdStrike, has sold shares worth at least $250 million over that period.Zoom founder Yuan -- the poster child, in many ways, for the coronavirus economy -- has stepped up his sales this year as the firm’s share price slumped. In 2020, he typically offloaded about 140,000 shares a month through a trading plan, which generated more than $350 million over the course of the year.Since March, he’s sold almost 200,000 shares a month on average, yielding him about $185 million. He also donated more than a third of his stake in the San Jose-based company as part of “typical estate planning practices,” according to a spokesman. Some of the cash from his share sales fund donations to unspecified “humanitarian causes.”(Updates with Charles Schwab’s sales in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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A metal coatings plant in China's manufacturing hub has been hit by price increases of up to 30% for raw materials including steel, aluminium, thinner and paint since the Chinese New Year in February. The firm has had no choice but to pass most of these higher costs on to its clients, including those in the United States, said King Lau, who helps run Dongguan-based Kam Pin Industrial Ltd, in Guangdong province. "Our customers understand, because it is happening to many different kinds of industries including home appliances, mobile phones, vehicles," Lau said, referring to price hikes by Chinese exporters.
Earlier, the three major indexes rebounded after declining sharply earlier this week.
Inflation fears are dogging Wall Street at a time when the U.S. rebound is picking up speed.
(Bloomberg) -- Fisker Inc.’s existing agreement to develop an electric vehicle with Foxconn Technology Group will now include a factory in the U.S.The joint project -- codenamed Project PEAR -- is targeting a start of production in the U.S. by the fourth quarter of 2023, the companies said in a statement Thursday. The companies are considering multiple sites around the world to support eventual global manufacturing capacity of 250,000 units a year. The partners plan to unveil a prototype of their jointly developed car later this year.Fisker climbed 11% to $11.01 at 9:40 a.m. Friday in New York after advancing as much as 18%, the most intraday in two months. The stock was down 32% this year through Thursday. Hon Hai Precision Industry Co., the main listed arm of Foxconn, is up 14% this year in Taipei.Electric vehicles have risen in prominence in recent months, with everyone from established automakers like Geely to smartphone purveyor Xiaomi Corp. making big investments in the category. Foxconn has an EV platform that will be used to launch two light vehicles in the fourth quarter of this year, Chairman Young Liu said in February. The company has also inked a manufacturing deal with Chinese startup Byton Ltd. and been among a coterie of suppliers and assemblers linked with a potential Apple Inc. car.Read more: IPhone Maker Foxconn to Help Launch Electric Cars This YearFisker is one of a wave of startups to go public via a special purpose acquisition company, or SPAC, and seek a fast-track challenge to Tesla Inc. in the EV market. It’s also the second battery-powered-car venture founded by its namesake founder and chief executive officer, Henrik Fisker, a longtime auto designer. Fisker’s first venture, Fisker Automotive, filed for bankruptcy in 2013.China Tech Giants Bet $19 Billion on Global Electric Car FrenzyUnder the agreement, Fisker and Foxconn will jointly invest in Project PEAR -- short for Personal Electric Automotive Revolution -- with each company taking proceeds if the launch is successful. Spending on the partnership will be hefty. Liu told analysts on Friday that building 10,000 cars per month in the U.S. will require $1 billion of capital expenditure, though he declined to elaborate on how the two companies will split the costs.Foxconn has said it will decide between Mexico and Wisconsin for the site of its first electric-car plant this year. The companies didn’t disclose any specifications of the vehicle they’re developing.The companies said the jointly developed vehicle will be priced below $30,000. Taiwan-based Foxconn, best known for assembling iPhones, is the second major manufacturer with which Fisker has announced a partnership since reaching a deal to go public last year. In October, the EV startup said Magna International Inc. would help it build its debut model. The Ocean electric SUV is scheduled to start production in late 2022 at a Magna facility in Graz, Austria.(Updates shares in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Sanjeev Gupta’s plans to save his embattled industrial empire suffered a major setback as the U.K. opened a fraud investigation, prompting a potential financial partner to walk away.For two months, Gupta has been scrambling to refinance after the collapse of his group’s main lender, Greensill Capital, and recently looked close to winning a reprieve -- helped along by a surging commodity prices.But on Friday, the Serious Fraud Office announced a probe into Gupta’s GFG Alliance, including into the financing arrangements with Greensill. That prompted White Oak Global Advisors LLC -- which had recently offered a lifeline with terms for a 200 million-pound ($282 million) loan for Gupta’s U.K. steel business -- to walk away. White Oak was also behind funding for part of Gupta’s Australian assets, the Australian Financial Review has said.“As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” White Oak said in a statement.GFG said Friday it will co-operate fully with the SFO investigation. It declined to comment on White Oak’s decision.The fraud probe also puts other efforts to replace about $5 billion Gupta had borrowed from Greensill in question.On Thursday, Gupta had conveyed a much brighter outlook, expressing confidence of a “new future” for his sprawling group of companies. On a podcast for employees, he said it had been “relatively easy to get refinancing” for the Whyalla mill in Australia. He also said that GFG had been “inundated by offers to help and to finance,” partly due to strong commodity markets.The picture is now bleaker in the wake of the SFO investigation, which follows months of scrutiny from lawmakers and the media over Gupta and Greensill’s financing practices. GFG has come under the microscope after the collapse of Greensill in March revealed it had been a recipient of financing based on expected future invoices, for sales that were merely predicted.Trading ActivitiesThe exact scope of the SFO investigation isn’t yet clear. Bloomberg has reported four banks stopped working with Gupta’s Liberty House Group trading business, starting in 2016, amid concerns about what they perceived to be problems in paperwork provided by Liberty, Bloomberg News has reported. In one example, the company had presented a bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.The two-month period it took from starting to covertly look into GFG and its financing by Greensill to announcing a formal probe is a quick turn-around for the SFO, which often takes years to publicly confirm it’s taking action against a company.It will now start to gather evidence, including securing devices and documents. However, it’ll likely take years for the office to make any tangible updates to the investigation, including whether it decides to charge individuals as part of the probe.The funding from Lex Greensill’s eponymous firm helped GFG expand at an astonishing rate in the past five years by targeting old, unwanted assets. His loose collection of companies now employs some 35,000 people worldwide, with steel and aluminum plants in the U.S., U.K., France, Romania and Australia.Staying afloat would enable Gupta to enjoy some of the best times his industrial businesses have seen. Steel prices are near an all-time high as demand recovers from the coronavirus pandemic and China cuts capacity to curb pollution. Aluminum, Gupta’s other major business, hit a three-year high this week amid a broad commodities boom.Still, Greensill’s collapse has already taken a major toll on Gupta’s businesses. On Thursday, his Wyelands Bank said it would be wound up if it can’t find a buyer. His steel units in France and Belgium have started creditor protection procedures, he’s approached buyers for some of his engineering assets, people familiar with the matter have said, and also sought buyers for two steel plants in France.For governments too, there is much at stake. Countries that once feted him as a savior for buying decrepit assets may have to pick up the pieces, due to the jobs at risk and some assets’ strategic importance to industry.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The U.K.’s fraud prosecutor opened a probe into Sanjeev Gupta’s GFG Alliance over suspicions of fraud and money laundering, causing a potential lender to the group to withdraw from agreements to provide new financing.The Serious Fraud Office is investigating “suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business,” according to a statement. The probe includes the financing arrangements with Greensill Capital UK Ltd. The SFO has been looking at GFG since Greensill’s collapse in March and decided to open a formal probe, according to a person familiar with the investigation.As a result, White Oak Global Advisors LLC is pulling out of discussions to provide loans to Gupta’s businesses. “As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” a spokesperson for the group in London said.The Financial Times first reported that White Oak was pulling out of financing talks. A representative for GFG declined to comment on White Oak’s decision. Last week, Bloomberg reported Gupta had agreed a 200 million pound ($282 million) facility with the San Francisco-based lender to provide working capital to his U.K. steel businesses. He had also secured the refinancing of one of his Australian units.It’s a massive setback for the tycoon, who appeared to be just on the cusp of securing a lifeline for his beleaguered metals empire. He now faces the extremely difficult task of negotiating new loans while being subject to a fraud probe.Prosecutors are starting to round in on both Gupta and Greensill, after months of scrutiny from lawmakers and the media over its financing practices. Earlier this week, the U.K. Financial Conduct Authority said it was also investigating Greensill and cooperating with counterparts in other U.K. enforcement and regulatory agencies.It’s also working with German, Australian and Swiss authorities. The FCA and SFO probes are completely separate although inevitably will involve cross-over and information sharing, according to the person familiar with the investigation.Read More: Lex Greensill Says His Investors Knew What They Were Buying“GFG Alliance will co-operate fully with the investigation,” a GFG spokesperson said. Grant Thornton, Greensill’s administrators, declined to comment.While the SFO has collected billions in fines in recent years from companies with deferred prosecution settlements, its track record in the criminal courts is patchy. Last month a trial into two Serco Group Plc directors collapsed and the agency lost a mammoth case against Barclays Plc bankers in 2020.GFG has come under the microscope after the collapse of Greensill Capital in March revealed it had been a recipient of financing based on expected future invoices, for sales that were merely predicted.What has also come to light is the activities of the tycoon’s trading business Liberty House Group. Four banks stopped working with the company, starting in 2016, after they became concerned about what they perceived to be problems in paperwork provided by Liberty, Bloomberg News reported.Read More: As Gupta Rose From Trader to Tycoon, Several Banks Backed AwayGreensill was Gupta’s largest source of financing before its collapse. The London-based lender supplied billions of dollars in loans to GFG, many of which were packaged and sold onto investors in funds run by Credit Suisse Group AG. Greensill fell into administration after a key insurance partner didn’t renew coverage on loans made to some of its customers, including GFG.Much of the financing extended to GFG by Greensill was from the finance firm’s German banking unit. Germany’s financial watchdog shuttered Bremen-based Greensill Bank AG and asked law enforcement officials to investigate accounting irregularities at the lender in March. The bank was closed after the lender identified problems in how Greensill Bank booked assets tied to Gupta’s companies.The announcement of the probe came a day after former Prime Minister David Cameron was grilled by lawmakers over his employment by Greensill. He defended his intensive lobbying on behalf of the firm as part of a parliamentary inquiry that’s raised questions over private dealings at the top of the British government.(Updates with detail of White Oak talks collapsing.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Will the man who forecast bitcoin's price rise to $50K last year be heeded or ignored?
(Bloomberg) -- Buyers of newly-minted corporate bonds are already nursing losses as inflation fears send government bond yields climbing.About four fifths of high-grade non-financial corporate bonds priced in Europe this year are quoted below their issue price, based on data compiled by Bloomberg. Last Friday, the share of post-issue losers stood at under 50%.This bleak statistic underscores the damaging effect on credit investors of the so-called reflation trade -- bets on rapid economic recovery and an associated pickup in inflation -- prompting many to seek shelter from further sovereign debt sell-offs.Investment grade bonds are more sensitive than high-yield debt to any threat of higher interest rates in response to inflation, a vulnerability known as ‘duration risk.’ That’s because they have longer life spans than lower-quality peers and carry lower risk premiums. This attribute is hitting investors hard this year.“Duration is already a problem when you see that rate-sensitive sectors underperform and this is going to increase,” said Vincent Benguigui, a portfolio manager at Federated Hermes, which oversees $625 billion. “Clearly everything is stretched.”The year-to-date total return of euro-denominated investment-grade bonds has slumped this week, to minus 0.96% from minus 0.56% on Monday. A month ago the return since the start of 2021 stood at minus 0.3%, according to Bloomberg Barclays indexes. By contrast, the less rate-sensitive junk bond market has gained 2.2%.While the threat of higher yields to compensate for a potential rise in inflation has been a thorn for high-grade investors throughout the year, a European Central Bank pledge to pick up the pace of its emergency pandemic QE program had helped funds recover some losses before this week’s sell-off pushed them further into the red.Rate risk is the main driver of corporate bond losses, as spreads on most of this year’s new issues are trading tighter than at launch, according to data compiled by Bloomberg. The average risk premium of high-grade euro bonds over safer government debt is indicated at 83 basis points, the lowest in more than three years, thanks to continued ECB purchases and bets on the economic reopening.Click here for the spread performance of all bonds issued in Europe this yearBut spreads, with little room to tighten further, seem incapable of stemming duration-driven losses.“While the extended recovery in fundamentals should provide another layer of support, higher yields in the euro government bonds space should limit euro investment grade’s ability to attract inflows and limit tightening potential once rates stabilize,” wrote Cem Keltek, a credit strategist at Commerzbank AG, in a note to clients on Thursday. “Pressure on rates and tapering prospects later in the year render long-end risk-reward unattractive.”Some hedge funds have started betting on price drops in corporate bonds amid the threat of rising interest rates and stretched valuations. Short positions in junk bonds have jumped to their highest level since 2008 and bearish bets on high-grade bonds are at their highest since early 2014.Bonds that lose value shortly after issuance could potentially discourage investors from bidding aggressively for new deals.This leaves high-grade investors with only one realistic source of return: the income made by just holding the interest-bearing bond, unless they are willing to switch to riskier parts of the credit market.“It’s more or less carry at this point,” said Martin Hasse, a portfolio manager at MM Warburg & Co., which oversees 76.2 billion euros ($92 billion). “Maybe a little tightening but not so much. High yield and subordinated notes can see more of that.”EuropeHigh yield issuers are in command of the region’s syndicated bond market on Friday, accounting for three of the day’s four deals as global credit risk sentiment improves.The financing arm of U.S. autoparts maker Dana Inc., Italian technology companies Lutech SpA and Cedacri SpA are pitching new deals that are likely to wrap up by market closeWeekly issuance is likely to reach 33.5 billion euros, according to data compiled by BloombergEuropean credit default risk fell for both investment-grade and high-yield bonds as more-tempered commodity prices helped allay investor concerns about inflation risksAsiaA rush of borrowers early in the week boosted dollar bond sales in Asia ex-Japan, with issuance doubling compared with the previous week.Bond sales rose to $8.4b from $4.2b a week earlier, the highest in three weeks, according to Bloomberg-compiled dataAt least 22 borrowers came to the market, the busiest week in 2021 since January in terms of number of issuersGLP Pte’s $850m perpetual note offering was the biggest bond sale this week, followed by a $707m offering by JSW Hydro Energy and a $650m note from Cathay Pacific AirwaysDeals slowed from mid-week, coinciding with release of data on Wednesday that showed U.S. consumer prices climbed in April by the most since 2009Yield premiums on Asia’s high-grade bonds, excluding Japan, and the cost of protection against such debt both dropped 1-2bps on Friday, credit traders saidU.S.Alibaba Group Holding Ltd.’s revenue beat estimates after China’s e-commerce leader rode a post-pandemic recovery and begins to move past a bruising antitrust investigationAs cash balances have risen toward $70 billion, financial flexibility may enable Alibaba to endure a prolonged period of macroeconomic uncertainty related to the coronavirus, as well as regulatory risk, better than hardware-centric technology peers, write Bloomberg Intelligence credit analysts Robert Schiffman and Suborna PanjaIt seemed almost certain that supply would at least match syndicate desks’ projections of $45 billion this week after Monday’s almost $28 billion bonanza, however, macro uncertainty fueled by inflation fears seems to have curbed issuanceLess than $3 billion priced on Thursday, bringing the week’s volume to $42 billionFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Oil prices rebounded on Friday morning as inflation fears fade and the global supply glut slowly drains, although the IEA did revise its demand projection downward