Tag Archives: Japan

Beam bonds soar on M&A news

NEW YORK, Jan 13,2014 (IFR) – Beam’s bonds ratcheted in by as much as 15 basis points on Monday after Japan’s Suntory Holdings made a USD16bn bid for the US spirits maker.

Beam’s 3.25% June 2023s were trading around 60p bid/55bp offered this morning, from around 70/65bp on Friday. Its 1.75% 2018s tightened to Treasuries plus 30bp mid-morning from around Treasuries plus 45bp at open.

 

The tightening is based on hopes that a successful bid from Suntory will trigger a change of control (CoC) covenant aimed at protecting investors against credit event risk.

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World Led by U.S. Poised for Fastest Growth Since 2010

According to Bloomberg,

The world economy is primed for its fastest expansion in four years, with the U.S. propelling the improvement in output.

Global growth will accelerate at least 3.4 percent in 2014 from less than 3 percent this year as the euro area recovers from recession and China and other emerging markets stabilize, according to economists at Goldman Sachs Group Inc., Deutsche Bank AG and Morgan Stanley. The U.K. will be a standout, while Japan risks damping the mood by suffering a mid-year slowdown after an April increase in sales taxes.

“So far it’s been a very bumpy, below-par and brittle expansion,” said Joachim Fels, co-chief global economist at Morgan Stanley in London. “Next year could bring a very important transition: a transition to a sounder, safer and more sustainable recovery.”

The upturn should prove bullish for equities and bearish for bonds. If it boosts corporate confidence in the durability of growth, it could further fuel demand, raising the odds that 2014 will break the pattern of recent years and come in better, rather than worse, than projected.

“An improving global-growth picture is widely forecast but, in our view, also still doubted in the investor community,” said Dominic Wilson, chief markets economist at Goldman Sachs in New York. “We therefore see room for markets to price in a better cyclical story.”

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Hedge Funds See Repeat of Yen Slide That Paid Soros, Currencies

According to Bloomberg,

Hedge funds are betting on another run of yen weakness, a trade that made money earlier this year for billionaire George Soros, putting them in opposition to economists who see Japan’s currency little changed into 2014.

Futures traders pushed net shorts, or wagers the yen will fall versus the dollar, to the highest since July 2007, according to the Commodity Futures Trading Commission. That contrasts with the median estimate of more than 50 analysts surveyed by Bloomberg, which puts the currency at 102 per dollar at the end of the first quarter of 2014, from 101.47 today.

Japan has resorted to an unprecedented $70 billion of monthly bond purchases since April to depreciate its currency, boost growth and combat deflation. The yen has plunged 15 percent this year, on pace for the biggest drop since 1979.

“Everybody likes dollar-yen higher,” Brad Bechtel, the managing director at Faros Trading LLC in Stamford, Connecticut, said in a Nov. 22 interview. “And everyone has it on.”

The yen fell to as low as 101.92 per dollar yesterday, the weakest level since May, when it slid to a 4 1/2-year low of 103.74. While it gained for the first time in four days today, its decline this year makes it the worst performer after South Africa’s rand among 16 major currencies tracked by Bloomberg.

Soros Profits

Japanese Yen and U.S. Dollar (Bloomberg)

Japanese Yen and U.S. Dollar (Bloomberg)

Soros, 83, made almost $1 billion from November 2012 to February 2013 on bets the yen would tumble, according to a person close to the billionaire’s family office. Michael Vachon, a spokesman for Soros Fund Management LLC, declined to comment.

Soros’s former chief strategist, Stan Druckenmiller, who made $10 billion with Soros in 1992 from a wager that the Bank of England would be forced to devalue the pound, has also been selling the yen. Druckenmiller, the founder of Duquesne Capital Management LLC, said in a Bloomberg interview in September that his firm is “short some yen,” while being “long some Japanese” stocks.

Fortress Macro Fund, which is run by Michael Novogratz and Adam Levinson, made money trading the yen last year when the currency fell 13 percent. Fortress Macro Funds oversee $3.8 billion. Spokesman Gordon Runte couldn’t be reached for comment.

Signs that the Federal Reserve may reduce its $85 billion a month of bond purchases, which pump money into the economy and debase the dollar, are also driving the yen’s plunge versus the U.S. currency. Minutes of the U.S. central bank’s Oct. 29-30 policy meeting showed that Fed officials expected to reduce their stimulus program “in coming months” as the economy improves.

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Mizuho Global Sees $2 Billion as Japan Pensions Seek Hedge Funds

 

Mizuho Global Sees $2 Billion as Japan Pensions Seek Hedge Funds

Mizuho Global Alternative Investments Ltd., which introduces hedge funds to Japanese investors, expects assets to reach $2 billion by the end of the business year, reflecting demand from local pensions.

The unit of Japan’s third-largest bank by market value raised $1.7 billion by the end June that it placed with global alternative asset managers that offer funds that invest in bank loans and multistrategy hedge funds, Chief Executive Office Manabu Ando said in an interview in Tokyo. It plans to offer other alternative investments such as private-equity and infrastructure funds by the end of this fiscal year in March 2014, he said.

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Hedge Funds End Seven-Month Winning Streak

Hedge Funds End Seven-Month Winning Streak

Hedge funds around the world saw negative returns in June to end seven months of straight gains amid a broad pull-back in equity markets, with those in Asia ex-Japan the worst hit, data from research firm Eurekahedge show.

The Eurekahedge Hedge Fund Index fell 1.47 percent in June, marking its first decline this year, the company said in a note published late on Wednesday. That compared with a fall of just over 3 percent in the MSCI World Index.

“June witnessed a continuation of downside momentum from the end of May as markets reacted adversely to speculation about a slowdown in the Fed’s bond buying operations,” Eurekahedge said.

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Emerging-Market Stocks Rise Most In 2012 On EU Meeting

Emerging-market stocks rose the most in eight months after European leaders agreed to ease repayment conditions for loans to Spanish banks, boosting demand for riskier assets.

The MSCI Emerging Markets Index (MXEF) jumped 3.4 percent to 937.35 by the close in New York, the steepest gain since Oct. 27. Energy companies rallied the most since October asOGX Petroleo e Gas Participacoes SA surged in Sao Paulo after naming a new chief executive officer. Brazil’s Bovespa rose 3.2 percent while Russia’s Micex Index (INDEXCF) added the most in four months. The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded Chinese shares rose by 2.6 percent.

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S&P 500 Caps Best June Since 1999 On European Agreement

The Standard & Poor’s 500 Index (SPX) capped the biggest June rally since 1999 after European leaders reached an agreement that alleviated concern banks will fail.

All 10 groups in the S&P 500 rose as industrial, technology and commodity shares had the biggest gains. Caterpillar Inc. (CAT), Apple Inc. and Bank of America Corp. (BAC) climbed at least 2.6 percent to pace rallies among the biggest companies.Exxon Mobil (XOM) Corp. jumped 3 percent as oil surged 9.4 percent, the most in more than three years as commodities surged. KB Home climbed 13 percent after the homebuilder reported a narrower loss.

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