Archive for May, 2011

Greek finmin suggests EU/IMF repayment extension

Monday, May 2nd, 2011 | Finance News

PARIS/ATHENS (Reuters) – Greek Finance Minister George Papaconstantinou suggested on Monday that the EU and the IMF give Greece more time to repay its bailout funds, and at a cheaper rate, to allow it to exit its severe debt crisis.

In an interview with French daily Liberation published a day ahead of an inspection visit by the lenders, Papaconstantinou became the first Greek official to float the idea of a further easing of conditions on the 110 billion rescue.

The EU cut the interest rate and rescheduled repayments on the bailout in March to give Athens some breathing space.

Reiterating that Greece ruled out a restructuring of its debt, despite markets increasingly betting it will eventually have to do so, Papaconstantinou said:

"It would be better that we further lengthen the repayment schedule of the 110 billion euros that our partners have lent us and that we further lower interest rates. That way, we could meet our other repayments."

A year after Greece's euro zone partners and the IMF saved it from bankruptcy with a pain-for-gain bailout plan that required Athens to slash public spending and boost tax collection, Greece is struggling with a deep recession, weak revenues and skyrocketing yields on its bonds.

"There are people who think (a restructuring) is inevitable," Papaconstantinou said. "But there are also those who have bet a lot of money on a Greek default. That's what explains the ridiculous rumors of the last few weeks. There is no question of restructuring."


One analyst said a further rescheduling of EU/IMF bailout repayments would not be enough to avoid a restructuring.

"I would argue that lengthening the EU loan and cutting the loan rate might be a necessary condition for Greece to comply with its budget targets, but not a sufficient one," said Unicredit analyst Kornelius Purps.

Indicative short-dated Greek bond yields rose on Monday, although bid/offer spreads were in the region of 500 cents for two- and five-year Greek paper, reflecting a lack of liquidity.

Papaconstantinou said Greece was headed for a return to economic growth in the second half of 2011, and should see a full year of positive growth in 2012, but noted it was too early to see an end to the country's debt crisis.

"We are in the middle of the tunnel. Too far to see where we left from, which means that sometimes we forget that we had a narrow escape from default, and too far from the exit to be able to see the light," he said.

EU and IMF officials start an inspection visit to Athens on Tuesday, to evaluate whether Greece has made enough progress on the bailout fiscal and reform targets to receive a fifth, 12 billion euro tranche of aid.

Euro zone leaders agreed at a summit in March to extend the maturity of bailout loans to Greece to 7.5 years, doubling the repayment deadline. They also agreed to lower the interest on their bilateral loans to Greece by 100 basis points.

(Reporting by Catherine Bremer in Paris and Renee Maltezou in Athens; Writing by Ingrid Melander; Editing by John Stonestreet)


Stock index futures point to gains after bin Laden killed

Monday, May 2nd, 2011 | Finance News

(Reuters) – Stock index futures pointed to a higher open for Wall Street on Monday following confirmation that Al Qaeda leader Osama bin Laden was killed by a U.S. .-led operation in Pakistan.

By 0749 GMT, futures for the S&P 500, Dow Jones futures and Nasdaq futures were up 0.7 to 0.8 percent.

U.S. Treasury yields and the dollar rose, while safe-haven gold slipped from record highs, reflecting a perception of easing geopolitical risks after U.S. President Barack Obama said late on Sunday that bin Laden had been killed in a shootout in a compound in Abbotabad north of Islamabad.

Economic data scheduled for release is seen providing further direction for equities, with the Institute of Management Supply (ISM)'s manufacturing PMI numbers for April, due out at 1400 GMT, expected to drop to 59.9 from 61.2 a month earlier.

Stocks on Wall Street rose on Friday, with the Dow (.DJI) and the Nasdaq (.IXIC) recording their best monthly performance since December on the back of upbeat corporate results.

In company news, final buyout bids for Warner Music Group (WMG.N) are due on Monday and the company could be sold by the end of the week in a deal valued at over $3 billion, according to a person familiar with the matter.

Warren Buffett still believes his reputation is intact after his former top lieutenant David Sokol pitched for a takeover of Lubrizol Corp (LZ.N) after Sokol had purchased shares in the chemicals company.

Danish food ingredients and enzymes maker Danisco's (DCO.CO) board of directors unanimously recommended that Danisco shareholders accept U.S. chemicals group DuPont's (DD.N) improved offer for Danisco.

French retail and luxury giant PPR (PRTP.PA) said it would buy California-based Volcom Inc (VLCM.O), which specializes in youth-oriented sports clothes, for $607.5 million in cash.

U.S. agribusiness and trading conglomerate Cargill (CARG.UL) won EU regulatory approval on Monday to purchase a German chocolate maker to expand its cocoa and chocolate business in Europe.

In Europe, the pan-European FTSEurofirst 300 (.FTEU3) index rose in early trade, though volumes were expected to be thin throughout the session as Britain's markets were closed for a holiday.

(Reporting by Harpreet Bhal; Editing by Lincoln Feast)


Sony seen facing long battle to regain trust after data breach

Monday, May 2nd, 2011 | Finance News

TOKYO (Reuters) – Sony Corp will need time to restore trust in its online security systems as it prepares to restart its PlayStation video games network following the leak of personal details on 78 million user accounts.

Many PlayStation users around the world were angry and frustrated that the first warning of one of the largest Internet security break-ins ever came a week after Sony detected a problem with the network on April 19.

Some were dissatisfied with the limited free services offered as incentives after Sony on Sunday apologized and said it would gradually restart the PlayStation Network with increased security.

Analysts warned restoring customers' faith would take time -- a blow to the consumer electronics giant that has touted online services as a way of leveraging its strengths in both hardware and content, including films and music as well as games.

"Damage has been done to Sony whatever the scale of the content giveaway at this point, and Sony is facing a prolonged effort to regain customer trust," said Jay Defibaugh, director of equities research at MF Global in Tokyo.

"Anything that undermines consumer willingness to divulge credit card details to Sony is a problem for the network strategy," he added.

Sony said on Sunday it would offer some free content, including 30 days of free membership to a premium service to existing users and in some regions pay credit card-renewal fees, but added compensation would only be paid if users suffered damage.

The news sparked thousands of comments on the PlayStation blog and Facebook page, many of them supportive, but some expressing dissatisfaction.

"The point is you took our money and didn't secure our credit card and personal data. I'm not even sure how you can possibly make up for that," said a post by a user under the name rawstory. Others said they planned to pay for services using prepaid cards in future.

Shares in Sony were up 2.5 percent to 2,316 yen, outperforming the broader Nikkei index, but falling short of rival Nintendo Co Ltd, which was up 4 percent. Sony shares fell as much as 5 percent on Thursday as concerns mounted about the impact of the breach.

Analysts said the leak would weigh on investor sentiment.

"At minimum, having to suspend the service, fix its problems and deal with the aftermath, looks set to cost (Sony) tens of billions of yen," said analyst Nobuo Kurahashi of Mizuho Investors Securities.

"I don't think anyone knows where they will be able to absorb this loss, nor how much it will be, and that'll weigh on share prices going ahead," he added.

Goldman Sachs estimated the total earnings impact would be less than 50 billion yen. Many users open multiple accounts and the total number of valid credit cards registered on the network is 10 million, with other gamers using prepaid cards.

The incident has sparked legal action and investigations by authorities in North America and Europe, home to almost 90 percent of the users of the network, which enables gamers to download software and compete with other members.

Sony is the latest Japanese company to come under fire for how it has disclosed bad news.

Tokyo Electric Power Co was criticized for how it handled the nuclear crisis after the March 11 earthquake. Last year, Toyota Motor Corp was slammed for being less than forthright about problems over a massive vehicle recall.

(Editing by Joseph Radford and Lincoln Feast)