- Greece finally has her bailout. The late-night agreement saw Greece find a further 325 million euro worth of budget cuts. The bondholders accepted a higher than expected “haircut” (of 53.5%). The ECB will funnel profits from its Greek bonds into the other Central Banks. The EU ministers then awarded 130 billion euros in bailout aid. I will admit to some confusion – a debt “haircut” is often understood as the creditor having a portion of his outstanding loan due converted into equity. I assume that’s not the case here. And the ECB “profits” will be generated because they bought the bonds cheaply (at much less than face value) – and the bonds will appreciate once Greece stabilises and the risk of default diminishes. It’s all been so very dra(ch)matic. Let’s hope that it really is resolved. Link: Greece wins bailout.
- In the LIBOR collusion saga (I first mentioned it on 15 February), UBS is scrambling to turn its coat in order to gain immunity. I should probably have a post on LIBOR, but essentially, this is the rate at which banks will lend to each other. It’s set every day by the British Bankers’ Association via a survey of all the bankers before 10.00am (basically, “What rate would you accept to borrow from another bank this morning?”); there are some criteria around what counts as an actual quote (ie. some quotes are excluded); the quotes left are averaged and then the LIBOR for the day is published. The crux is that the bankers aren’t meant to discuss the rates beforehand. Apparently, they have been discussing it, as UBS is frantically trying to tell everyone. Awkward. Because if they HAVE done so, they’re going to have to start paying things like fines. And damages. Damages on a rate that is used to determine almost anything debt-related going back for a prolonged period of time? That’s going to be hectic. No wonder UBS wants some immunity. Link: UBS turning whistleblower.
- This article on the overhaul of Italy’s labour laws was fun to read: Three Women labouring over laws. In many ways – Italy’s deficit seems to be driven in a similar way to that of Greece. Poor tax collection and a bloated public sector. The issue at play is a Labour Code which makes it very difficult to retrench employees when you no longer need them. It’s not the same as making state employment a constitutional right (oh Greece… <shakes head>) – but still problematic. Apparently – it’s as difficult to change the Code as it is to fire those unwanted employees though. Literally, people have been assassinated over it. Hectic.
- South Africa is preparing for its budget speech in Parliament tomorrow. And we’re all on edge – because there’s a slowing of economic growth at the same time that the government is committing to increased capital expenditure on many state-owned operations (like Transnet and SAA). The spending on infrastructure will be great for growth in the long-term – but from a short-term perspective, it’s putting pressure on the government’s deficit. The extra financing needs to come from somewhere – most analysts suggest that tomorrow’s budget speech is going to include an increase in taxes. Maybe that mining tax that the nationalisation commission of enquiry suggested? We shall see. Link: Gordhan under pressure.
- Apple’s legal hassles in China continue, with many stores removing iPads from their shelves. The legal argument is around the use of the trademark name. Apple says it bought the worldwide rights to the trademark from a Taiwanese subsidiary of Proview International (Shenzhen) – but Shenzen says that the sale did not cover China. Time for Samsung and Co to step in and fill the demand. Link: Apple’s Legal Woes in China.
- And the Africa Business News. Link: ABN Briefs. The key points:
- Cameroon’s 10 billion CFA franc infrastructure bond issue yielded over 33 billion CFA francs in bids. Well-oversubscribed. Nice.
- The Zimbabwean government has increased royalty fees, licence fees and mining rentals on miners. It is suggested that the increases could cost the sector close to US $ 1 billion – a move that could bring many miners close to bankruptcy.
- Transnet, the state-controlled South African logistics company (ie. it’s responsible for transport – notably railways), has planned to triple its capital investment budget to more than R300 billion. See the problems being caused in point 4 above.
- Impala Platinum has agreed to reinstate all 17,200 workers fired from its Rustenberg plant over an illegal strike.
- South Sudan will cut 50% of non-salary spending as part of austerity measures. Now that it has closed its oil lines as part of its dispute with Sudan, it needs to compensate for the loss of oil revenues.
And that’s all for today, folks.
Russell Lamberti February 21, 2012 at 09:21
The budget speech is tomorrow if I'm not mistaken.
Greece bailout 130 BILLION not MILLION
Russell Lamberti February 21, 2012 at 09:55
p.s Very impressed with your blogReply
Jayson Coomer February 21, 2012 at 12:56
Ha ha – noted! Thanks for the heads up – I shall amend. I write the news before the first cup of coffee has properly kicked in. It's a problem!Reply