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UNUSUALLY DRY WEATHER AFFECTS CHINA'S AGRICULTURE | Abnormally warm and dry weather over most
parts of China is seriously affecting crops, the New China News
Agency said.
It said the drought has made rice planting difficult in
eight provinces, including Guangxi, Sichuan and Hunan. Plant
diseases and insect pests have increased in wheat-producing
areas, it said.
The agency said some areas of Guangxi, Hubei, Shanxi and
other provinces have been suffering a drought for more than
seven months.
The agency said the dry weather had reduced the amount of
water stored by more than 20 pct compared with last March,
lowered the water level of many rivers, reduced hydroelectric
power supplies and caused water shortages for industry and
consumers.
The upper reaches of the Yangtze are at their lowest levels
in a century, causing many ships to run aground and making
harbour manoeuvres difficult, it said.
The drought has also increased the number of forest fires.
More than 1,000 fires in southern China had destroyed 13,340
hectares of forest by mid-February, it said.
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TAIWAN SHIPBUILDER LOOKS FOR JAPANESE VENTURES | Taiwan's state-owned China Shipbuilding
Corp (CSBC) plans to seek joint production agreements with
Japan and further diversify into ship repairing to try to trim
its debts, chairman Louis Lo said.
He told Reuters in an interview that CSBC's first joint
production venture, to build two hulls for <Onomichi Dockyard
Co Ltd>, was a success. Talks on similar projects have been
held with other Japanese firms, including Mitsubishi Heavy
Industries Co Ltd <MITH.T> and Ishikawajima-Harima Heavy
Industries Co Ltd <JIMA.T>, he said.
Lo said CSBC delivered the hulls of two 2,200-TEU (twenty
foot equivalent unit) container ships this year to Onomichi,
which would complete production.
"We expect the successful cooperation between us and
Onomichi will pave the way for further cooperation with other
Japanese shipbuilders in the future," Lo said.
He said Japanese firms would gain from the lower cost of
shipbuilding in Taiwan while CSBC would benefit from Japanese
technology and marketing. This would pose a challenge to
competitors in Europe and South Korea.
Lo said CSBC has made losses of about 100 mln U.S. Dlrs
since beginning operations in 1975. Its total debt now stands
at about 500 mln dlrs, with annual interest payments of nearly
three mln dlrs.
But he said the company, which is Taiwan's largest
shipbuilder, still has full government support and had begun
diversifying into ship repairing and manufacture of pipes and
other machinery.
"We hope we can survive and prosper through diversification,"
he said.
Lo said income from ship repairing almost doubled to 20 mln
U.S. Dlrs in the year ended June 1986 compared with the
previous financial year. He estimated income would rise to more
than 25 mln dlrs in 1986/87.
CSBC has orders to build 10 ships totalling 460,000 dead
weight tons (dwt) this financial year, compared with 11 ships
of 462,000 dwt in 1985/86, he said.
Lo said the prospects for shipbuilding were gloomy at least
until 1991 due to overtonnage, but the outlook for ship
repairing was bright.
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HYUNDAI MOTOR'S CAR EXPORTS RISE SHARPLY | <Hyundai Motor Co> exported 49,822 cars in
the first two months of 1987, up from 37,272 in the same period
of last year, mainly due to booming sales in the U.S. And
Canada, company officials said.
They told reporters Hyundai Motor expects to export 450,000
cars in 1987, including 250,000 to the U.S., After a record
total last year of 300,200, in large part due to 168,900
initial U.S. Sales of the Pony Excel sub-compact.
They said the company plans to lift annual output capacity
to 750,000 cars by end-year from 600,000 now. Net profit hit a
record 38.3 billion won in 1986 from 28.8 billion in 1985.
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CREDITORS SEEK SWIFT RESCUE PACKAGE FOR JAPAN LINE | A group of creditor banks hopes to work
out a rescue package for Japan Line Ltd <JLIT.T>, one of the
world's largest tanker operators, by the end of Japan's
business year on March 31, a spokesman for the Industrial Bank
of Japan Ltd <IBJT.T> (IBJ) said.
Japan Line's cumulative debt was 68.98 billion yen at the
end of September, which exceeded shareholders' equities and
reserves totalling 63.40 billion.
In December, Japan Line asked banks to shelve repayment of
about 124 billion yen in outstanding loans and about 153
billion in loans to its subsidiaries.
Japan Line said then that the yen's steep rise and the
world shipping recession had hit the company hard.
The Japanese daily Asahi Shimbun said today that IBJ and
three other banks plan to abandon a total of 16 billion yen in
loans to Japan Line and a group of creditor banks plans to buy
seven billion yen of new Japan Line shares.
The spokesman for IBJ, Japan Line's largest creditor, said
the package may write off part of the outstanding loans and
will be worked out before long.
Commenting on the article, he said the details of the
package have not yet been settled.
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ARGENTINA SEEKS NEW DEBT DEADLINES, OFFICIAL SAYS | Argentina will tell its creditors
it needs an extension of deadlines for payment of capital and
interest on its 50 billion dlr foreign debt, Industry and
Foreign Trade Secretary Roberto Lavagna told reporters.
"We, the developing countries, are going to insist on the
application of contingency clauses, to extend deadlines for the
payment of capital as well as interest," he said.
He said this could bring about what he called a possible
automatic capitalisation of those parts of debt interest that
could not be paid and even the elimination of a portion of the
debt.
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ECONOMIC SPOTLIGHT - INDONESIA'S ECONOMY | Indonesia heads for general elections in
six weeks' time with its economy in the worst shape in 20
years, economists and officials said.
The government expects no spillover of "people power" from
the neighbouring Philippines to unsettle the 20-year rule of
President Suharto, victory for whose ruling Golkar party in the
coming parliamentary elections is assured.
However, Western diplomats said it is the country's
deteriorating economic position that is the main threat to its
stability.
Last year's collapse in oil prices dealt a heavy blow to
Indonesia, halving its revenue from oil and gas exports to 6.5
billion dlrs last year from 12.4 billion in 1985. Oil and gas
account for 70 pct of export income.
The result is that in the run-up to April 23 elections,
Suharto, far from wooing his 168 mln countrymen with pay
increases or tax cuts, is busy slashing budget spending.
The government has also recently increased transport fares
and frozen the pay of the civil service and the army for the
second year running, despite inflation now estimated at 8.8
pct.
The current account deficit rose to 4.09 billion dlrs in
1986 from 1.8 billion in 1985, while the debt service ratio
widened to 33.2 pct for 1987 from 25 pct in 1986.
Foreign debt repayments of 4.6 billion dlrs account for
almost a third of the 1987/88 budget.
A recent U.S. Embassy report on the economy said 1986 gross
domestic product growth was the lowest since the mid-1960s when
Suharto came to power. Western economists said GDP registered
nil growth or contracted last year after 1.9 pct growth in
1985, and predicted only a one pct rise this year.
In its efforts to return to growth seen in the oil-boom
years of the 1970s when the economy grew an average seven pct,
the government is now relying more on foreign borrowings.
Indonesia has asked foreign governments to finance its
share of new projects being built with overseas money, because
it cannot afford even to meet local costs.
In the last three months Indonesia has taken out new loans
totalling 1.55 billion dlrs, on top of its external debt of 37
billion dlrs. Western bankers said more will be needed, and the
country now ranks sixth among Third World debtors.
A 350 mln dlr commercial loan signed in Tokyo in December
was followed in the first week of February with a 300 mln dlr
loan from the World Bank to support the balance of payments.
Last month, Japan's Export-Import Bank agreed a 900 mln dlr
loan to meet Indonesia's share of 21 World Bank projects which
would otherwise have been scrapped or postponed. More loans are
on the way, including two more from the World Bank worth a
total 300 mln dlrs for roads and irrigation.
U.S. Ambassador Paul Wolfowitz said in a recent speech that
economic growth remains the key to preserving Indonesia's
fundamental stability.
The largest Moslem nation in the world, Indonesia has so
far avoided some of the more extreme paths of other Moslem
countries. But the World Bank has warned that mounting
unemployment could start causing severe social strains unless
it is tackled.
It said in its annual report on Indonesia last June that
unless economic growth is revived, unemployment could reach
what it termed "unacceptable levels."
Unemployment was officially put at 4.8 pct at the end of
last year, but those considered underemployed number around 35
pct.
What path to take appears to be a matter of some dispute
within Suharto's government, with his Western-trained
technocrats advocating more of the classic remedies supported
by the international financial community.
But another group supports a protected economy, with more
import substitution, the U.S. Embassy report said.
The government devalued the rupiah by 31 pct against the
dollar last September to help exports and curb imports, and is
currently working on a series of measures to further encourage
foreign investment and boost exports outside the oil sector.
The direction Suharto takes could affect Indonesia's
ability to raise new loans in the future, Western bankers say.
So far, despite three packages of economic measures over
the past nine months, he has not touched key monopolies that
are linked to businesses controlled either by his family or by
business associates, diplomats and bankers say.
Diplomats and investors are now looking for action on
monopolies and the loss-making state sector as signs that
Suharto is serious about tackling the country's problems.
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AUSTRALIAN WHEAT EXPORTS RISE IN FEBRUARY | Australian wheat shipments rose to
1.33 mln tonnes in February from 1.01 mln in January, an
Australian Wheat Board official said.
February's shipments were down on the 1.54 mln tonnes
shipped in February 1986.
Cumulative shipments for the first five months of the
October/September wheat year were 6.12 mln tonnes, as against
6.54 mln a year earlier, the official said.
The major destinations in February were: China (419,196
tonnes), Egypt (301,909), Iraq (142,055), Japan (110,261),
South Korea (100,847) and the Soviet Union (100,056 tonnes).
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REAGAN SPEECH WINS MIXED REACTION FROM CONGRESS | Republicans in Congress hailed
President Reagan's speech on the Iran arms scandal as candid
and constructive while Democrats, who control both houses, said
Reagan would now have to match his words with action.
Senate Majority Leader Robert Byrd (Democrat) of West
Virginia said in a television interview he was heartened that
Reagan had acknowledged some of his mistakes. "But one speech is
not enough to rebuild trust."
"President Reagan told the American people what they needed
to hear, that mistakes were made and he made them," Senate
Republican Leader Robert Dole of Kansas said.
Reagan, responding to the Tower Commission report
criticising his role in the Iran arms scandal, said for the
first time the Iran arms policy, and not just its
implementation, was a mistake and accepted responsibility for
the diversion of profits to the Nicaraguan contra rebels.
Senator Bill Bradley (Democrat) of New Jersey said the
administration would "remain under a cloud" until several key
figures in the scandal, including fired National Security
Council (NSC) aide Oliver North and his boss Adm. John
Poindexter, have told "the whole truth."
Republicans and Democrats praised the appointment on Friday
of former Senate Republican leader Howard Baker to replace
Donald Regan as chief of staff, and the replacement of
Poindexter with Frank Carlucci to head the NSC.
Assistant House Republican Leader Trent Lott of
Mississippi, said he believed Reagan took the right measure in
admitting mistakes without apologising for them.
Some House Democrats, including Speaker James Wright of
Texas, said earlier they would delay their reaction until
tomorrow in order to study the speech overnight and assess its
impact.
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OPEC STICKING FIRM ON OFFICIAL PRICES - SUBROTO | OPEC countries are all sticking firmly to
official crude oil prices but the volatility of spot prices is
likely to continue into the third quarter, Indonesian Minister
of Mines and Energy Subroto told Reuters.
Subroto, attending a Pacific Energy Cooperation conference,
blamed recent rapid spot price changes on unbalanced supply and
demand. "If we stick to the production limitation, the third
quarter will be in better balance."
He said the market is in a period of transition while the
impact of OPEC's December agreement to cut output and fix
prices at an average 18 dlrs a barrel is worked through.
Asked whether OPEC members of the Gulf Cooperation Council
(GCC) had any concrete proposals to help Qatar sell its crude
oil in the face of strong resistance to its official prices,
Subroto said: "Apparently they have taken care of that."
"They (the GCC) meet very often among themselves. I think
they'll help each other," he said.
Subroto said that as he was not a member of OPEC's Price
Differentials Committee he did not know why the meeting had
been postponed from its scheduled April 2 date.
"Maybe they find it is better not to have the meeting
because ... Everyone is sticking to official prices," he said.
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THAI COFFEE EXPORTS RISE IN 1986 | Thai coffee exports rose to 22,068
tonnes in 1986 from 20,430 a year earlier, the Customs
Department said.
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ECONOMIC SPOTLIGHT - EUROYEN BOND ISSUES INCREASE | The easing of rules governing overseas use
of the yen has caused an explosion of Euroyen bond activity but
has failed to turn the yen into a truly international currency,
bond managers and traders said.
Although yen bonds now rank second only to dollar issues in
the Eurobond market, few foreigners are interested in keeping
the yen they borrow and no one wants the yen bonds but the
Japanese, they said. This lack of real yen demand through the
freer Euroyen market is undermining the 1984 U.S. And Japanese
accord to internationalise the yen, they said.
The borrowers want to take advantage of low Japanese
interest rates but have no need for yen. They arrange primarily
with Japanese banks to exchange yen funds into other
currencies, mainly dollars, bond managers said. More than 85
pct of Euroyen bond issues are swap driven, they added.
"The borrowers don't care which currency they use. They are
only after attractive money," one bond trader said.
Issues doubled to more than 150 in 1986 from the previous
year, boosting Euroyen offerings to more than nine pct of the
total Eurobond market, Koichi Kimura, managing director of
Daiwa Securities Co Ltd, said recently.
Traders said some of the activity stems from battles among
Japanese and foreign securities companies and banks for the
prestige of placing a larger share of issues. Many even resort
to "harakiri" swaps, those with unprofitable pricing.
But the fever continues and the number of offerings could
double again in 1987, said Naoki Yokoyama, manager of Nikko
Securities Co Ltd's international capital markets operation.
The Euroyen bonds, once issued, are mostly picked up by
Japanese trust banks, one trader said. After a 90 day waiting
period the bonds flow back to Japan where investor appetite is
strong, he added.
Foreign investors are reluctant to invest in yen when more
attractive yields are offered on dollar and other currency
investments, traders said.
"Even aggressive foreign investors have stopped investing
(in yen)," said Masaki Shimazu, manager of Daiwa's bond
department.
While few foreigners are interested in the secondary
market, Japanese commercial banks, regional banks, life
insurers and other financial institutions are eager to buy the
bonds and await their flow back to Japan since they offer
little currency risk, traders said.
The Finance Ministry last April shortened the waiting
period before issues could flow back to Japan to 90 days from
180. A ministry official said it verified through sampling that
reflow was fairly small.
"We believe the Euroyen bond should remain mainly in the
Euroyen market," he said.
One trader said that although demand from Japanese
investors is heavy, it may prove to be only short-term. He said
many investors plan to sell their bonds if Japanese or U.S.
Interest rates decline further.
To encourage further international use of the yen, the
ministry is considering allowing the issue of Euroyen
commercial paper, the official said, adding that it is studying
demand from potential borrowers.
Securities company sources believe the ministry will permit
non-residents to issue Euroyen commercial paper within the next
few months. But they expect it to continue to ban domestic
participation in the market for some time to come. Japanese
banks object to the short-term paper market which they see
encroaching on their business territory.
Traders said Euroyen commercial paper could spur more
demand overseas for the yen by allowing opportunities to shift
into shorter-term securities if need be.
"Commercial paper might encourage fewer swaps," one bond
manager said. If more financial instruments were available,
there might be more trades in yen, he added.
Euroyen bonds must now carry a five-year maturity, though
some recent issues which are callable in three years work as if
they had shorter maturities, traders said.
The ministry is expected to allow four-year Euroyen bond
maturities within a few months.
One yen bond manager said Japanese financial authorities
are giving up a lot of their control in liberalising the rules
governing international transactions of the yen. But freer use
of the yen could encourage more trade settlements in the
Japanese currency, he said. "If exporters or importers can raise
funds in yen, they will be more willing to agree to using the
Japanese yen as a settlement currency," he added.
The Finance Ministry official said the government must
constantly consider ways to improve markets for the benefit of
borrowers and investors. "No major market can keep its status
without change," he said.
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SOUTH KOREAN MONEY SUPPLY RISES IN FEBRUARY | South Korea's M-2 money supply rose 0.39
pct to 33,992.0 billion won in February from 33,858.4 billion
in January, when it fell a revised 0.04 pct from December,
provisional Bank of Korea figures show.
The February figure was up 18.89 pct from a year earlier.
M-1 money supply rose 4.13 pct to 8,492.1 billion won in
February from January, when it fell 7.82 pct from December. The
February figure marked a year-on-year rise of 18.45 pct.
The bank previously said M-2 fell 0.06 pct in January.
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PAKISTAN'S FOREIGN EXCHANGE RESERVES FALL | Pakistan's foreign exchange reserves
fell to 8.43 billion rupees in February from 8.96 billion in
January, compared with 12.97 billion in February 1986, the
State Bank of Pakistan said.
The bank gave no reason for the fall but local bankers said
big import bills had affected the reserves.
The Federal Bureau of Statistics has not yet released last
month's import and export figures.
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AUSTRIA DECIDES EARLY REDEMPTION OF SAMURAI BOND | Austria has decided to redeem six years
early a 20 billion yen, 12-year, 8.5 pct samurai bond due on
August 18, 1993, Daiwa Securities Co Ltd said as lead manager.
It will redeem 18.4 billion yen at 103.00 and the rest at
par this August 18 under an annual redemption obligation,
probably because of declining yen interest rates, Daiwa said.
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THAILAND REDUCES MAIN RICE CROP PROJECTION | Thailand's main paddy crop is expected
to fall to 15.4 mln tonnes in the 1986/87 (Nov/Oct) season from
a previous 15.68 mln estimate in November and an actual 17.35
mln a year ago, the Thai Rice Mills Association said.
It said a joint field survey late last month by the
association, the Commerce Ministry and the Bank of Thailand
indicated that paddy output in Thailand's northeast region is
lower than expected because of a drought in several provinces.
The association said rice growing areas in Nakhon
Ratchasima, Chaiyaphum, Khon Kaen and Mahasarakam were
especially affected by low rainfalls in the second half of
1986.
It said last November that the drought reduced total
national areas sown with paddy to some 8.25 mln hectares this
year, down from 8.84 mln a year ago.
The main crop represents about 85 pct of Thailand's paddy
output.
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N. ZEALAND MARKETS PREPARE FOR TRADING BANK STRIKE | New Zealand clearing house <DataBank
Systems Ltd> said it will know tomorrow what services it will
be able to provide during a strike by bank officers against
trading banks and DataBank set for March 9 and 10.
Trading banks polled by Reuters said their ability to offer
money market services during the strike depends on whether
Databank remains open, and whether the banks have enough staff
to process transactions.
A spokesman for the New Zealand Foreign Exchange
Association said dealers would be able to trade during the
strike.
But the spokesman added that from March 6 to 10 the value
date of currency transactions will be March 16.
Trading bank spokesmen told Reuters they will try to honour
transactions in which an offshore party sought payment on March
9 or 10, but they could not guarantee settlement.
The Futures Exchange said trading members and their clients
will be able to continue trading provided they have made
suitable financial arrangements.
The trading banks affected are the <Bank of New Zealand>,
Australia and New Zealand Banking Group Ltd <ANZA.S>, Westpac
Banking Corp <WSTP.S> and <National Bank of New Zealand Ltd>.
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HOECHST GROUP PRE-TAX PROFIT FALLS IN 1986 | Hoechst AG <HFAG.F> said its group
pre-tax profit in 1986 would be slightly lower than the 3.16
billion marks posted in 1985, while parent company pre-tax
profits rose slightly from the 1.62 billion in 1985.
Group turnover fell slightly to 38 billion marks from 42.72
billion in 1985, and parent company turnover fell to around 14
billion marks from 15.35 billion, the company said in a
statement.
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BHP TO FLOAT GOLD UNIT WITH ONE-FOR-THREE ISSUE | The Broken Hill Pty Co Ltd <BRKN.S>
(BHP) said it plans a renounceable one-for-three issue of
rights to float a new company, <BHP Gold Mines Ltd> (BHPGM),
which will hold most of BHP's gold interests.
In a statement BHP said the 25-cent par rights would be
priced at 50 cents for 430 mln of the BHPGM shares on offer.
BHP will subscribe for the remaining 540 mln shares, or 56 pct
of issued capital, on the same terms.
BHPGM will pay 440 mln dlrs for BHP's gold interests,
excluding its stake in Papua New Guinea's <Ok Tedi Mining Ltd>
and those interests held by BHP's <Utah International Inc>.
The BHP statement said the issue will be made to
shareholders registered on March 27. It opens April 4 and
closes April 29, and is underwritten by <J.B. Were and Son>.
Rights will be traded on Australian stock exchanges from March
23 to April 22, and the new shares will be quoted from June 4.
BHP said the new company will be one of Australia's larger
gold producers, with annual output exceeding 170,000 ounces. It
said there are plans to boost production to 300,000 ounces by
the early 1990s. BHPGM's portfolio will include several
Australian mines -- 30 pct of Telfer, 100 pct of Ora Banda and
Browns Creek and 20 pct of the new Boddington development.
The statement said BHPGM would also hold BHP's 45 pct stake
in the Coronation Hill Property in the Northern Territory, and
its 55 pct stake in a new venture near Gympie, Queensland.
BHPGM chairman-designate John Gough said it was a quality
gold stock.
"The diversity and depth of BHP Gold's portfolio ... Give
the company a sound foundation in current gold production and
an exciting potential for growth," he said.
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HK BANK EXPECTED TO POST 10 TO 13 PCT PROFIT RISE | The Hongkong and Shanghai Banking Corp
<HKBH.HK> is likely to show a rise in profit of between 10 and
13 pct for 1986, reflecting stronger than expected loan growth,
share analysts polled by Reuters said.
Their estimates of the bank's net earnings for last year
ranged from 2.99 to 3.1 billion H.K. Dlrs. Results will be
announced on Tuesday. The 1985 net profit was 2.72 billion.
They forecast a final dividend of 29 cents for a total of
42 cents for the year against 38 cents in 1985, adjusted for a
one-for-five bonus issue.
Analysts said they expected the bank to recommend a bonus
issue this year, probably one for three or one for five.
The bank's 61.5 pct subsidiary Hang Seng Bank Ltd <HSGH.HK>
is to report its 1986 results on Friday.
Analysts expect Hang Seng to announce net profit of more
than one billion dlrs for the first time, an increase of 10 to
12 pct.
They expect Hang Seng to pay a final dividend of 1.37 dlrs
for a total of 1.75 dlrs for the year against 1.60 in 1985.
Analysts said that while the use of undisclosed inner
reserves by banks here makes forecasting very imprecise,
Hongkong Bank benefited from the unexpected strength of the
Hong Kong economy in 1986, when gross domestic product grew by
nearly nine pct against an initial forecast of 4.5 pct.
"They benefited considerably from the pickup in loan demand,
as their loan portfolio is well balanced," an analyst at Mansion
House Securities (F.E.) Ltd said.
Government figures show that total loans and advances rose
by 13.8 pct in 1986, compared with a 4.5 pct increase in 1985.
Loans to finance Hong Kong's visible trade, the mainstay of
the local economy, rose by 15.1 pct against a decline of five
pct in 1985.
Low interest rates also helped the bank. Interest received
on loans was low, with the prime rate at 6.5 pct at end-1986,
but interest paid on savings was two pct. Hongkong Bank and
Hang Seng Bank control half of all deposits in the banking
system, giving them access to a large base of low-cost funds.
The strength of the real-estate market was another major
income source for the bank group. Loans to finance property
development and instalment mortgages rose sharply.
"The Hongkong Bank group is still the leader in mortgage
business despite tough competition from the Bank of China group
and other foreign banks," one analyst said.
The high level of activity on the capital and equities
markets in 1986 contributed to a sharp improvement in Hongkong
Bank subsidiaries Wardley Ltd <WAIA.HK> and <James Capel and
Co>, analysts said. "Wardley had a tremendous year acting as
financial adviser and underwriter," an analyst said.
Wardley was underwriter for last year's billion-dlr
flotation of <Cathay Pacific Airways Ltd>, of which Hongkong
Bank owned 30 pct at the time.
The bank's stake has since been cut to 16.4 pct in return
for 1.57 billion dlrs. It also sold its entire 48.8 pct stake
in <South China Morning Post Ltd>, the larger of two
English-language daily newspapers here, for 1.18 billion dlrs.
The proceeds will go to reserves for acquisitions and will
not show up in the profit and loss accounts, analysts said.
Analysts said the bank had also been helped by a reduced
need to write off bad debts. "The need for provisions was much
lower than the year before," said Tony Measor of Hong Leong
Securities Co Ltd. "Last year's profits should have been 2.8 to
2.9 billion dlrs if not for the huge provisions."
Former Hongkong Bank chairman Michael Sandberg said the
bank wrote off hundreds of millions of dollars against its
shipping exposure in 1985. Lesley Nickolds of County Securities
Asia Ltd said she saw no major shipping writeoffs in 1986. She
forecast profit of 2.99 billion dlrs.
The bank's Latin American exposure, mainly through its
51-pct owned Marine Midland Banks Inc <MM>, appears to have
improved substantially, analysts said. Marine Midland's 1986
fourth-quarter loan-loss provisions fell to 44.1 mln U.S. Dlrs
from 89.2 mln a year before. Its 1986 net profit rose to 145
mln U.S. Dlrs from 125 mln in 1985.
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HUGHES TOOL DIRECTORS REJECT MERGER WITH BAKER | The directors of Hughes Tool Co
<HT> said they would recommend to shareholders that they reject
a merger with Baker International Corp <BKO> today.
Hughes vice-president Ike Kerridge said the recommendation
would be put to shareholders at a meeting scheduled for 10 A.M.
Local time (1600 GMT) to discuss the proposed merger.
Kerridge said the board met yesterday to discuss the merger
but decided against it.
The Hughes board objected to a U.S. Department of Justice
requirement that Baker sell off several specialised
subsidiaries in businesses related to oil-drilling.
The Hughes board last week indicated that it might cancel
the merger because of the Department of Justice requirement.
The board of directors of the California-based Baker had
approved the merger. On February 17 Baker said it had signed an
agreement to sell one of the subsidiaries.
The companies had been given until April 22 to comply with
the Justice Department requirement, Kerridge said.
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BANK OF JAPAN TO SELL 500 BILLION IN BILLS | The Bank of Japan will sell tomorrow 500
billion yen of financing bills it holds to help absorb a
projected money market surplus, money market traders said.
Of the total, 300 billion yen will yield 3.9989 pct on the
sales from money houses to banks and securities houses in
27-day repurchase agreement, due April 2.
The remaining 200 billion yen will yield 3.9994 pct in a
39-day repurchase pact maturing on April 14, they said.
The repurchase agreement yields compare with the 4.0625 pct
one-month commercial bill discount rate today and the 4.50/43
pct rate on one-month certificates of deposit.
Tomorrow's surplus in the money market is estimated at 420
billion yen, mainly due to payment of national annuities, money
traders said. The operation will put the outstanding bill
supply at about 1,300 yen.
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MCDONALDS LAUNCHES 75 MLN AUS DLR EUROBOND | McDonalds Corp is raising 75 mln
Australian dollars through a 14-5/8 pct bullet eurobond priced
at 101-1/4 and maturing November 5, 1991, lead manager
Bayerische Vereinsbank AG said.
Investors will pay for the bond on May 5, 1987 and the bond
pays annual interest on November 5, beginning in 1988. There
will be a 1-3/8 point fee for selling and 5/8 for management
and underwriting combined. Listing is in Luxembourg.
Denominations are 1,000 and 5,000 dlrs.
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GUNZE SANGYO SETS 25 MLN SWISS FRANC NOTES ISSUE | Gunze Sangyo Inc of Tokyo is launching a
25 mln Swiss franc convertible notes issue due May 31, 1992
with a coupon indication of 1-5/8 pct, lead manager Swiss
Volksbank said.
Conditions will be set on March 11 and payment date is
March 30.
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CANON INC (CANN.T) YEAR ENDED DECMEBER 31 | Group shr 18.34 yen vs 58.72
Net 10.73 billion yen vs 37.06 billion
Pretax 27.76 billion yen vs 84.78 billion
Operating 30.06 billion yen vs 88.81 billion
Sales 889.22 billion vs 955.78 billion
Note - The company attributed the profit fall largely to
the yen's appreciation during the period. Domestic sales rose
0.4 pct to 274.17 billion yen from a year earlier while exports
declined 9.9 pct to 615.04 billion.
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OESTERREICHISCHE DRAUKRAFTWERKE SETS SFR BOND | Oesterreichische Draukraftwerke AG of
Klagenfurt is launching a 100 mln Swiss franc 4-3/4 pct 10-year
bond priced at 100-1/4 pct, lead manager Swiss Bank Corp said.
The issue is guaranteed by the Austrian state.
Subscriptions close March 20.
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NEW CURRENCY PROBLEM SEEN AMONG U.S, EUROPE, JAPAN | The highly visible drama involving the
yen's sharp rise against the U.S. Dollar is obscuring the fact
that the Japanese currency has hardly budged against major
European currencies, thus creating a new set of exchange rate
distortions, Japanese and European research officials said.
The officials, looking beneath the rhetoric of statements
by the Group of Five (G-5) industrial nations, told Reuters the
currency movements of the past two years are also creating a
fundamentally new world trade picture, which is throwing up new
trade tensions and imbalances.
Trade figures show that the new currency alignments are
already changing the Japan-U.S. Trade axis into a Japan-
European Community (EC) axis, to the discomfort of Europe.
In many ways, not least in terms of rare international
cooperation, the September, 1985 New York Plaza pact between
the U.S., Japan, West Germany, Britain and France to cut down
the value of the dollar was a historic one.
But it is the underlying peaks and troughs of the major
currency movements which lay bare the real picture, in which
the Plaza pact appears as an event of prime importance, but not
necessarily central significance, the officials said.
The officials said that when the Plaza agreement took
place, the dollar was already on its way down. The agreement
simply helped it on its way. Senior EC financial expert in
Tokyo Tomas de Hora has watched the movements closely.
"You have to look at the dollar's peak compared with now,
and that was well before Plaza," he said.
On February 25, 1985, the dollar peaked against the yen at
263.15 yen. On September 20, the Friday before Plaza, it was
242. Since then, despite massive Bank of Japan intervention and
periodic market frights about further G-5 concerted action, the
dollar trend has been down, down, down.
Yet the ECU is now around 173.4 yen. The historical cross
rates for sterling and the mark tell much the same story. The
European currencies are moving back up against the yen.
The close relationship between exchange rates and trade
flows makes it difficult to see which is driving which, but
undoubtedly the trade equation between the big three is
changing. In 1986, Japanese imports and exports with the EC
both grew by around 50 pct in dollar terms, five pct in yen.
This gave Japan a 16 billion dlr trade surplus.
Last January, Japanese exports to the EC totalled half of
of sales to the U.S, against about a third in recent years.
Trade with the U.S in 1986 rose 23 pct for exports and 12
pct for imports in dollar terms, but fell 13 pct for exports
and 21 pct for imports in yen terms.
"The basic meaning for Europe is that Japanese firms have a
tremendous interest in exporting to Europe, where every unit
sold maximises profits in yen terms, which is what is important
to them. Suddenly, instead of the U.S., It is Europe that is
laying the golden egg," said de Hora.
The EC is worried. EC business also had a remarkable year
in Japanese sales, but this can be explained partly due to its
start from a small base, compared with total Japan-U.S. Trade.
The Japanese think EC firms are now more competitive than
U.S. Firms, a factor which is aggravating the exchange rate
imbalance, and which will cause problems.
"This currency alignment between Japan and the EC is
reflecting the excellent performance of the EC countries. But
therefore, Japanese goods may keep their price competitive
edge," said Azusa Hayashi, Director of the First International
Economic Affairs Division of the Foreign Ministry. "If you want
my objective view, I don't expect a drastic improvement in our
trade imbalance. Last year, we asked for moderation in exports,
and this year we may have to do so again," he said.
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HAWKE SEES FOUR BILLION DLR BUDGET DEFICIT | Australian Prime Minister Bob Hawke and
Treasurer Paul Keating said the government's 1986/87 Budget
deficit could hit four billion dlrs against the official
forecast of 3.5 billion.
Hawke told a Sydney radio station the deficit "may turn out
at four billion." He and Keating last week warned that the
budget deficit was running above target and vowed sharp
decisions on spending in a May 14 economic statement.
A four billion dollar Budget deficit would be in line with
private economists' forecasts and compares with a 1985/86
shortfall of 5.73 billion dlrs.
Hawke said the 1986/87 deficit would be equal to 1.5 pct of
forecast Gross Domestic Product against five pct when he took
office during the 1982/83 year.
"In money terms (the deficit has been reduced) from the 9.6
billion dlrs that we inherited ... Down to about 3.6 billion,
it may turn out at four billion dlrs," Hawke said.
In a separate interview Keating said: "The deficit for this
year, projected, was 3.5 billion .... It is in fact running ...
Over four billion and we will be trying to bring that in close
to target."
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COMMONWEALTH BANK OF AUSTRALIA ISSUES NOVEL BOND | The Commonwealth Bank of Australia is
issuing a novel 100 mln Australian dlr eurobond due April 6,
1992 paying an initial coupon of 16 pct and priced at 101 pct,
lead manager Swiss Bank Corporation International said.
The coupon will then be re-fixed annually at the one-year
Australian Treasury rate. There will also be an investor put
option annually at par. The selling concession is 3/4 pct while
management and underwriting combined pays 3/8 pct.
The non-callable bond is guaranteed by Australia and will
be listed in Luxembourg. It is available in denominations of
1,000 and 10,000 Australian dlrs and the payment date is April
6.
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THAI TIN EXPORTS RISE IN JANUARY | Thailand exported 1,816 tonnes of tin
metal in January, up from 1,731 in December and 1,330 a year
ago, the Mineral Resources Department said.
It said major buyers last month were Singapore, Japan,
Britain, the Netherlands, Malaysia and the U.S.
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CENTRALE DE CREDIT COOPERATIF ISSUE DETAILED | Caisse Centrale de Credit Cooperatif is
launching a privately-placed 1.2 billion franc bond issue in
three tranches of 400 mln francs and with maturities of seven,
eight, and ten years respectively, lead-managers Credit
Lyonnais and Banque Francaise de Credit Cooperatif said.
Interest on the three variable-rate tranches issued at par
will be based on annualised money market rates (TAM) for the
February preceeding each payment. The settlement date is March
23 1987.
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U.K. MONEY MARKET OFFERED EARLY ASSISTANCE | The Bank of England said it had invited
an early round of bill offers from the discount houses. The
Bank forecast the shortage in the system today at around 1.15
billion stg.
Among the main factors affecting liquidity, bills maturing
in official hands and the take-up of treasury bills will drain
some 732 mln stg and exchequer transactions some 245 mln. In
addition, bankers' balances below target and a rise in note
circulation will drain a further 135 mln stg and 30 mln stg
respectively.
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BELGOLUX TRADE MOVES INTO SURPLUS IN 1986 | The Belgo-Luxembourg Economic Union
(BLEU) moved into a narrow trade surplus of 4.7 billion francs
in 1986 after a 140.4 billion franc deficit in 1985, figures
given by a spokesman for the National Statistics Institute
show.
He said imports fell last year to 3,061.8 billion francs
from 3,304.1 in 1985 while exports were also lower at 3,066.6
billion francs against 3,163.7 billion.
In December, the BLEU had an 11.9 billion franc trade
surplus after a 10.9 billion franc surplus in November and a
2.3 billion franc surplus in December 1985.
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SPAIN RAISES BANKS' RESERVE REQUIREMENT | The Bank of Spain said it raised the
reserve requirement for banks and savings banks to 19 pct of
deposits from 18 pct to drain excess liquidity which threatened
money supply and inflation targets.
In a statement issued late last night, the central bank
said the measure would take effect from March 13.
"In recent weeks, there has been excess liquidity in the
Spanish economy which, if not controlled, would threaten the
monetary and inflation targets set by the government," the
statement said.
Banking sources said the measure would drain about 200
billion pesetas from the system. The maximum reserve
requirement allowed by law is 20 pct.
The move follows a half-point increase yesterday in the
Bank of Spain's key overnight call money rate, which now stands
at 13.5 pct. At today's auction, however, the bank left the
rate unchanged.
Spain's principal measure of money supply, the broad-based
liquid assets in public hands (ALP), grew at annualised rate of
8.3 pct in January compared with 11.4 pct during the whole of
1986 and a target of eight pct for 1987.
Banking sources said that although the January money supply
figures were good, compared with annualised rates of 13.9 pct
in December and 10.2 pct in January 1986, ALP growth appeared
to have accelerated in February, raising government concern.
Regarding inflation, recent figures have suggested that
prices were under control.
Secretary of State for Trade, Miguel Angel Fernandez
Ordonez, said this week that the annualised inflation rate for
February, not yet officially announced, fell to 5.5 pct from
six pct in January, compared with inflation of 8.3 pct during
1986 and a government target of five pct for this year.
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INDIA AND JAPAN TO DISCUSS IRON ORE PRICES | The state-owned Minerals and Metals
Trading Corp will send a team to Japan next week to negotiate
an iron ore export contract for 1987/88 beginning April 1,
trade sources said.
Japan, the biggest buyer of Indian iron ore with imports of
around 23 mln tonnes a year, has asked India to reduce prices
from the current average of 18 dlrs a tonne, the sources said.
"Japan has said it may be forced to reduce ore imports from
India next year if New Delhi fails to reduce the price," one
source said, but declined to give further details.
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JAPANESE BANKS SEEN AGREEING DEBT RISK SCHEME | Japanese creditor banks are close to a
decision to jointly establish an offshore firm to which they
will transfer part of their title to possibly unrecoverable
debts owed by developing nations, international financial
sources told Reuters.
Details of the deal are likely be decided next week and the
firm set up before the end of the month, they said.
The scheme is intended to improve financial management at
the banks and reduce the risk of problems in the event of debts
turning bad, the sources said.
Last week's announcement by Brazil that it would
indefinitely suspend interest payments on an estimated 68
billion dlrs owed to commercial banks prompted Japanese
creditors to finalise the project, the sources said.
Major Japanese banks have been considering a plan to avoid
a debt crisis since the start of the year, they said.
There are likely to be at least 10 participating banks, and
perhaps as many as 28, they said.
About 30 Japanese commercial banks have outstanding loans
totalling over 10 billion dlrs to Brazil, accounting for about
15 pct of all commercial loans to that country.
The most likely venue for the envisaged firm is the
Caribbean tax haven of the Cayman Islands, the sources said.
The idea is to create a pool of funds in the firm with
participating creditor banks holding the firm's stock.
The firm will then use the funds to buy from its
stock-holding banks title to repayments of specified foreign
loans which are potentially bad, the sources said.
The stock-holding banks will draw up a list of such loans.
Subject to the scheme would be loans extended to
debt-ridden countries such as Mexico and Argentina, they said.
The financial sources said interest payments to the firm
would not be taxed because of its location. Japanese banks have
asked the finance ministry to increase tax breaks on loan loss
reserves, but the ministry has not yet complied.
A senior ministry official welcomed the scheme and said it
may encourage new lending to developing countries.
The ministry instructs banks to establish reserves for up
to five pct of their loans to 35 financially troubled
countries, but it only grants tax breaks on reserves accounting
for one pct of the loans.
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JAPANESE MINISTRY DENIES EXPORT QUOTA FOR DAIHATSU | The Ministry of International Trade and
Industry has not yet set a car export quota for <Daihatsu Motor
Co Ltd> which is scheduled to start exports to the U.S. Later
this year, a ministry official said.
Several local newspapers said the ministry had set a quota
of about 10,000 cars.
Daihatsu is owned 15.1 pct by Toyota Motor Corp <TOYO.T>.
Quotas for nine car makers, including Daihatsu, are likely
to be set before the end of March, the official said.
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CSR LTD SAYS IT WILL SELL HEAD OFFICE BUILDINGS | CSR Ltd <CSRA.S> said it will sell its
head office group of five buildings in central Sydney as part
of plans to decentralise.
The 2,750 square metre site will be repurchased under
existing lease-back agreements and then sold by public tender,
it said in a statement.
CSR's sugar and oil divisions have already moved to
Brisbane and the company said it plans further moves from
central Sydney to reduce its head office staff to about 100
from 550.
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IRAN REPORTS HEAVY FIGHTING IN IRAQI KURDISTAN | Iran said its troops repulsed heavy Iraqi
counter-attacks and continued their advance through the rugged
mountains of Iraqi Kurdistan in overnight fighting on the
northern war front.
Iran launched the new offensive, codenamed Karbala-7, on
Tuesday night among the snow-capped peaks of the Haj Omran
border area of northeast Iraq.
The Iranian news agency IRNA, received in London, said the
troops "continued their successful advance ... With more thrusts
into enemy positions."
It said "remnants of Iraqi Brigade 604 was shattered and 200
of its personnel killed or wounded." One battalion of the 25th
Division's Third Brigade thrown into counter-attacks today
suffered 70 pct losses, the agency added. Some 208 prisoners of
war had been taken from the front.
IRNA said the Iranian forces backed by heavy artillery fire
were continuing to advance. No Iranian casualties were given.
The area between Haj Omran and the Kurdish town of Rawandiz
some 65 km inside Iraq was the scene of heavy fighting in 1983.
Iran has backed dissident Kurds in the area in attacks on
government positions and installations in northern Iraq.
IRNA said the Iranian forces captured large amounts of
munitions in the latest fighting.
The Iraqis have made no comment so far on the Kurdistan
fighting, or on advances Tehran reported yesterday on the
southern war front east of the strategic Iraqi port of Basra.
IRNA said today a group of its reporters visited
newly-captured areas on the southern front and found the
battlefield littered with the bodies of Iraqi soldiers and
burnt military equipment.
They quoted an Iranian soldier, Hamid Dehqani, as saying
heavy rainfall during the past few days "had paralysed the Iraqi
enemy from embarking on any action" against the attacking
Iranians.
IRNA referred to the "Fish Canal" -- the man-made Fish Lake
-- made by the Iraqis as a defensive barrier on the eastern
side of the Shatt al-Arab waterway.
The agency yesterday said infantry and armour of the
Revolutionary Guards had captured strong defences west of the
canal in bitter fighting with Iraqi troops.
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Rank Organisation says it launching 100 mln stg commercial paper program
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TAIWAN FOREIGN EXCHANGE RESERVES HIT NEW HIGH | Taiwan's foreign exchange reserves hit a
new high of more than 51 billion U.S. Dlrs on March 4, compared
with 50 billion in mid-February and 25.1 billion a year
earlier, the central bank said.
Bank governor Chang Chi-Cheng told reporters the increase
came mainly from the bank's purchases of more than one billion
U.S. Dlrs on the local interbank market between February 18 and
March 4.
He said the rise showed signs of slowing, however, because
Taiwan has liberalised import policy and expects its trade
surplus to decline over the next few months as a result.
Chang declined to predict how high the reserves might rise,
but local economists have forecast they will hit 60 billion
U.S. Dlrs by the end of 1987.
In January, Taiwan reduced import tariffs of up to 50 pct
on some 1,700 foreign products. It had been under growing U.S.
Pressure to cut its 1986 record 13.6 billion dlr trade surplus
with the U.S. Taiwan's 1985 surplus with the U.S. Was 10.2
billion, according to official statistics.
Wang Chang-Ming, Vice Chairman of the Council for Economic
Planning and Development, told Reuters the government is
planning another round of deep tariff cuts in the second half
of this year.
The reserves could support imports of more than two years
for Taiwan, compared with about three months for Japan and the
U.S.
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MITSUI AND CO TO ISSUE EURODOLLAR WARRANT BONDS | Mitsui and Co Ltd said it plans to issue
300 mln Eurodollar warrant bonds in two tranches with payment
on March 30 through a syndicate led by Nomura International
Ltd.
One tranche is of five-year, 150 mln dlr bonds while the
rest is of seven-year, 150 mln dlr bonds, but other issue terms
have not yet been decided.
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BELGIAN ECU COIN ISSUE PRICED, SALE DATE SET | A limited Belgian issue of silver Ecu
coins with a face value of five Ecus will go on sale from March
23 at a price of 500 Belgian francs each, a Finance Ministry
spokesman said.
Gold Ecu coins with a face value of 50 Ecus will be sold
from the same day. The spokesman told Reuters the price for
these would be fixed just before they go on sale but was likely
to be between 8,500 and 9,000 francs.
At least two mln silver coins and several hundreds of
thousands of the gold coins will be minted, he said. They will
be sold both in Belgium and abroad.
The coins will be the first ever denominated in the Ecu,
the "basket" comprised of the 12-nation European Community's
currencies except the Spanish peseta and the Portuguese escudo.
The issue is being made to mark the 30th anniversary of the
EC's founding Treaty of Rome this month. Finance Minister Mark
Eyskens, who currently presides over the EC's council of
economic and finance ministers, has called the issue a
political act of symbolic value which aimed to make the
Community's goal of monetary integration more concrete.
The coins will be legal tender in Belgium but most demand
is expected to come from coin collectors.
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U.K. MONEY MARKET GIVEN 17 MLN STG EARLY HELP | The Bank of England said it provided just
17 mln stg assistance to the money market in response to an
early round of bill offers.
Earlier, the Bank had estimated the shortage in the system
today at around 1.15 billion stg.
The central bank purchased bills for resale to the market
on April 2 at an interest rate of 10-15/16 pct.
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BANK OF COMMUNICATIONS PLANS 200 MLN H.K. DLR CD | The Chinese state-owned Bank of
Communications Ltd Hong Kong branch is planning a 200 mln H.K.
Dlr certificate of deposit issue, banking sources said.
They said the five year issue, which matures March 23,
1992, carries a 7.05 pct coupon payable quarterly. Management
fee is 10 basis points. Payment date is March 23.
China Development Finance Co (H.K.) Ltd, a Bank of China
unit, is lead manager of the issue. A group is now being
formed.
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RANK ORGANISATION HAS 100 MLN STG CP PROGRAM | The Rank Organisation Plc said it has
appointed County Natwest Capital Markets Ltd, Samuel Montagu
and Co Ltd and Swiss Bank Corporation International as dealers
in a 100 mln stg commercial paper program.
The notes will be issued in any maturity of between seven
and 364 days and the funds will be used for the company's
general financing requirements.
Arranger for the facility is County Natwest Capital Markets
Ltd while National Westminster Bank Plc will act as issuing and
paying agent, Rank added.
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FIRS SLIGHTLY RAISES EC BEET SUGAR OUTPUT ESTIMATE | The French sugar market intervention
board, FIRS, raised its estimate of 1986/87 beet sugar
production in the 12-member European Community to 13.76 mln
tonnes white equivalent in its end-February report from 13.74
mln a month earlier.
Its forecast for total EC sugar production, including cane
and molasses, rose to 14.10 mln tonnes from 14.09 mln.
Portugal, which joined the Community in January 1986, was
estimated at 12.75 mln tonnes white equivalent, unchanged from
the previous forecast and compared with 12.41 mln tonnes for
1985/86.
Production for the current campaign in Spain was higher
than reported last month at 1.03 mln tonnes compared with
997,000 tonnes.
Beet sugar production, expressed as white equivalent, was
estimated at 3.44 mln tonnes in France, 3.17 mln tonnes in West
Germany, 1.72 mln in Italy, 1.30 mln in Britain, 1.22 mln in
the Netherlands, 936,000 tonnes in Belgium/Luxembourg, 499,000
in Denmark, 287,000 in Greece, 183,000 in Ireland and 4,000 in
Portugal.
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BANK OF CEYLON TO ADOPT NEW POLICIES | Sri Lanka's largest bank, the
government-owned Bank of Ceylon, plans to adopt a more
aggressive and selective interest rate policy to reduce excess
liquidity, estimated at some 500 mln rupees, and enlarge the
country's export manufacturing base, the bank's new chairman
Nimal Sandaratne told Reuters in an interview.
The bank aims to reduce terms for prime customers and is
holding talks with the Export Development Board on details to
be announced later, he said.
Sandaratne was head of research at the Central Bank of
Ceylon, the nation's central bank, until January.
A Swiss-based non-governmental group, which Sandaratne
declined to identify, has agreed in principal to guarantee
export credits, he said, but refused to elaborate further.
The bank may also consider more actively participating in
the foreign exchange markets in light of its substantial
non-resident foreign currency holdings of about 473 mln rupees,
or about 70 pct of the total market, he said.
Sandaratne said the bank may sell 60 pct of its shares in
its wholly-owned subsidiary, Merchant Bank of Sri Lanka Ltd.
The Asian Development Bank and a foreign bank operating
here have already expressed interests in acquiring a stake in
MBSL, Sandaratne said.
He tentatively estimated the Bank of Ceylon's net profits
for calendar 1986 at 163 mln rupees up from 133 mln the
previous year. The increase was eroded by increased provisions
for bad debts, he said. About 50 mln was written off and 17 mln
allotted for general provisions, he added.
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PAPUA NEW GUINEA PLANS RESOURCES INVESTMENT AGENCY | The Papua New Guinea Government
will establish a public corporation to invest in resources
projects, Minerals and Energy Minister John Kaputin said.
"We intend to provide a means through which less privileged
individuals can become part owners and beneficiaries from the
development of mining and petroleum projects," he told
Parliament.
Existing policy allowing the state up to 30 pct equity in
major mining projects and 22.5 pct in oil and gas projects
would be maintained, he said. The planned agency could take
over the state's equity in current developments.
Kaputin said Papua New Guinea was experiencing a boom with
exploration companies spending about 60 mln kina annually on
about 150 mining and 23 petroleum projects.
"The Government is determined to ensure that Papua New
Guinean ownership in minerals and petroleum projects increases
in an orderly way," he said.
Kaputin did not say when the corporation would be
established or exactly what form it would take, but said the
government would study whether it should be directly involved
in exploration or development.
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NIGERIAN CURRENCY FIRMS AT LATEST AUCTION | The Nigerian naira firmed 2.6 pct against
the dollar after 17 banks were disqualified from bidding at
today's weekly foreign exchange auction, the central bank said.
The naira finished at 3.8050 to the dollar, against 3.9050 last
week.
Only 38.39 mln dlrs of the 50 mln dlrs on offer was sold,
with all 27 bidding banks successfully obtaining hard currency.
The effective rate, including a central bank levy, for
transactions in the coming week, was 3.8241 against 3.9246 last
week.
The failure to sell the whole allocation was due to the
central bank's unprecedented disqualification of 17 banks as
punishment for inadequate documentation in previous
transactions.
Banks are required to submit proof that their bids are
based on valid commercial transactions and the central bank has
complained in the past that many are failing to produce the
right paperwork within the specified time.
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CANADA ZERO ISSUES CANADIAN DLR ZERO COUPON BOND | Canada Zero, a sole purpose company
incorporated in the Cayman Islands, is issuing a zero coupon
eurobond with a total redemption amount of 150 mln Canadian
dlrs, lead manager CIBC Ltd said.
The issue matures on May 1, 2001 and is priced at 30 pct.
It is secured with Canadian government bonds. The selling
concession is 3/4 while management and underwriting each pay
1/4 pct. The payment date is April 30. Listing is in
Luxembourg.
A CIBC spokesmn said the issue yields 49 basis points over
equivalent Canadian Treasury bonds. It is available in
denominations of 5,000 and 100,000 Canadian dlrs.
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U.S. TELLS JAPAN TO DO MORE TO CUT TRADE SURPLUS | U.S. Undersecretary of State for Economic
Affairs Allen Wallis said he had urged Japan to do much more to
reduce its large trade surplus with the United States.
"Our central message to Japan this week was that while we
have made progress in some areas, much needs to be done," he
told a press conference after three days of talks.
"What we need is a resolution of trade issues, we need
visible efforts to restructure the economy to encourage more
imports and we need greater domestic-led growth."
Forecasting sluggish economic growth in Japan this year,
Wallis urged Tokyo to stimulate domestic demand to help reduce
its trade surplus, which hit a record 83 billion dlrs in 1986.
He named several areas of particular concern to Washington
-- computer microchips, supercomputers, Kansai airport,
agricultural products and car telephones.
He warned that the U.S./Japan agreement governing trade in
semiconductors was in jeopardy. Despite the pact, Japanese
producers are still dumping microchips in foreign markets other
than the United States while U.S. Penetration of the Japanese
market has not increased, he said.
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TAIWAN BUYS 60,000 TONNES OF U.S. MAIZE | The joint committee of Taiwan's maize
importers has awarded contracts to two U.S. Companies to supply
two shipments of maize, totalling 60,000 tonnes, a committee
spokesman told Reuters.
Continental Grain Co of New York received the first 30,000
tonne cargo contract, priced at 93.86 U.S. Dlrs per tonne,
while Peavey Co of Minneapolis won the second shipment, also
30,000 tonnes, at 93.36 dlrs per tonne.
Both shipments are c and f Taiwan and are set before March
16, the spokesman said.
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BANK OF FRANCE SELLS 11.05 BILLION FRANCS OF TREASURY TAP STOCK - OFFICIAL
| |
JAPAN'S CHAMBER OF COMMERCE URGES FISCAL SPENDING | President of the Japan Chamber of Commerce
and Industry (JCCI) Noboru Gotoh called on the Government to
issue additional construction bonds as an emergency measure to
stimulate domestic demand.
Gotoh told a press conference that increased fiscal
spending is the only alternative to prop up the economy as
credit conditions are easy enough, a JCCI spokesman said.
Japan faces serious unemployment unless more construction
bonds, to raise cash for public works, are issued but Japan
should continue to carry out fiscal reform programmes, Gotoh
said.
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JAPANESE CAPITAL INVESTMENT SEEN SLUGGISH IN 1987 | Japanese private plant and equipment
investment will grow 0.1 pct in fiscal 1987, starting April 1,
from 1986 due mainly to a continued slump in manufacturing
sector spending, the Japan Development Bank said.
Capital spending by manufacturing industries, hit hard by
the rise of the yen, will fall 5.6 pct, a survey said.
Planned investment by non-manufacturing firms will grow
four pct as industries like leasing and transport that have
benefitted from the yen's rise will remain robust, it said.
The 0.1 pct overall increase compares to the 3.1 pct rise
the bank projected for the current fiscal year.
In the manufacturing sector, iron and steel companies are
the most pessimistic, with an estimated 18.0 pct spending cut.
Investment by precision machinery and textile firms will
decline by 18 pct and 11.2 pct respectively, the survey said.
In the non-manufacturing sector, transport and leasing
service industries are expected to increase their spending by
15.7 pct and 10.6 pct, respectively.
The bank's survey, conducted in early February, was based
on questionnaires from 1,738 corporations in all sectors having
a business relationship with the bank.
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GULF ARAB FINANCE MINISTERS TO MEET IN ABU DHABI | Economy and finance ministers of the
Gulf Cooperation Council (GCC) states will meet in Abu Dhabi on
March 17 and 18 to discuss their unified economic agreement,
officials said.
The semi-official United Arab Emirates' (UAE) daily
al-Ittihad said they would discuss two clauses, effective from
March 1, opening up wholesale trade and industrial loans in GCC
states to all GCC citizens.
The six states - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia
and the UAE - agreed in 1981 to integrate their economies and
eliminate barriers to the movement of people and goods.
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JAPAN RULING PARTY FIXES DATE OF BUDGET HEARING | Japan's ruling Liberal Democratic Party
started moves to push through the delayed draft budget for
1987/88 through Parliament, deepening a clash with the
opposition which called the move rash and unforgivable.
In the absence of the opposition, LDP members of parliament
decided at a meeting of the Lower House Steering Committee to
hold a public hearing on the draft budget on March 13 and 14,
parliamentary officials said.
The step came after Parliament resumed deliberations last
Tuesday following a month-long opposition boycott over a
controversial government-proposed sales tax plan.
Four opposition parties led by the Socialists have been
delaying budget deliberations in a bid to shelve the sales tax
on which the budget plan is based.
A Socialist spokesman said the opposition would again
boycott parliament unless the LDP changed its mind.
Prime Minister Yasuhiro Nakasone, who has vowed to push
through the tax reforms, told reporters: "Watching closely
negotiations between the ruling and opposition parties, I would
like to avoid ... Passing (the budget) singlehandedly."
The five pct tax, part of Nakasone's tax reform plan, is
planned to start next January to help offset cuts in individual
income and corporate tax.
The opposition objected to fixing a date for the hearing
because the LDP could technically stop deliberations on the
budget and ram it through the budget committee and then a Lower
House plenary session, political analysts said.
The four opposition parties called the LDP move "an
unforgivable, rash act" and said they would fight to scrap the
sales tax.
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BANK OF FRANCE SELLS TAP STOCK | The Bank of France said it sold a total of
11.05 billion francs of Treasury tap stock in an issue of two
fixed-rate tranches and one variable rate tranche.
It sold 8.25 billion francs of 8.50 pct June 1997 tap stock
at a top accepted price of 96.30 pct, giving an average yield
of 8.72 pct. Demand totalled 18.45 billion francs at prices
between 94.70 and 97.10 pct.
The Bank also sold 1.8 billion francs worth of 8.50 pct
December 2012 tap stock at a top accepted price of 93.60 pct.
Demand totalled 5.25 billion francs and the average yield
was 9.13 pct.
In addition, it sold one billion francs worth of floating
rate 1999 tap stock at a top accepted price of 96.90 pct, on
total demand of five billion francs.
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GERMAN ECONOMIC OUTLOOK SEEN FAIRLY BRIGHT | The outlook for the West
German economy is relatively bright, with gross national
product expected to expand by three pct this year, Kiel
University's Institute for World Economy said.
The GNP forecast by the institute, one of five leading
economic research bodies in West Germany, is more optimistic
than that of the other institutes, some of which have recently
reduced their GNP forecasts to between two and 2.5 pct.
In a report the Kiel institute said West Germany's export
outlook has not deteriorated fundamentally despite the mark's
strength against the dollar and other major currencies.
"The danger that exports will slump in 1987 appears, all in
all, limited," the report said. "On the contrary, a slight rise
in exports can be expected."
The institute said past experience has shown West German
exporters will move to counterbalance currency factors by
cutting costs, trying to penetrate new markets and adjusting
their product ranges.
They will be aided in 1987 by an expected slight rise in
economic growth in industrial countries. At the same time, the
decline in exports to oil producing countries looks set to slow
this year.
West German GNP growth in 1987 will be led by renewed
advances in domestic consumption and investment spending, both
of which will in turn be buoyed by an expansionary monetary
policy, the institute said.
However, it said the labour market would see only a slight
improvement because companies will be reluctant to hire
additional workers due to higher labour costs caused partly by
agreed reductions in working hours.
The institute cautioned that the expansionary stance of
monetary policy in West Germany was likely to bring a marked
acceleration of inflation.
It also warned that what it called the worldwide
synchronization of monetary policy heightened the risk of a new
global recession. It said central banks in industrialized
countries, including the Bundesbank, had followed the Federal
Reserve Board's expansionary course.
The institute said this in turn was bound to lead
eventually to a rise in worldwide inflation and a shift in U.S.
Policy towards a more restrictive policy. Other central banks
were likely to follow suit, causing a recession that could
aggravate the debt crisis of developing countries as well as
increase protectionism around the world.
Although Germany cannot entirely shield itself from the
negative effects of the global synchronization of monetary
policy, it should do all it can to strengthen the forces of
growth at home.
The institute said this could be done by ensuring that
fiscal policy fosters a willingness to work and invest. Taxes
should be cut by a greater amount than currently planned, and
wage increases in 1987 and 1988 should be markedly lower than
in 1986. It also said the Bundesbank should reduce inflationary
pressures by cutting the current rate of growth in money supply
to about four pct.
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CREDITOR BANKS MAY BUY INTO SINGAPORE COFFEE FIRM | The nine creditor banks of the
Singapore coffee trader <Teck Hock and Co (Pte) Ltd> are
thinking of buying a controlling stake in the company
themselves, a creditor bank official said.
Since last December the banks have been allowing the
company to postpone loan repayments while they try to find an
overseas commodity company to make an offer for the firm.
At least one company has expressed interest and
negotiations are not yet over, banking sources said.
However, the banks are now prepared to consider taking the
stake if they find an investor willing to inject six to seven
mln dlrs in the company but not take control, the banking
sources said.
Teck Hock's financial adviser, Singapore International
Merchant Bankers Ltd (SIMBL), will work on the new proposal
with the creditor banks, they said.
Major holdings are likely to be held by the two largest
creditor banks, Standard Chartered Bank <STCH.L> and
Oversea-Chinese Banking Corp Ltd <OCBM.SI>, they added.
Teck Hock owes over 100 mln Singapore dlrs and the creditor
banks earlier this week agreed to let Teck Hock fufill
profitable contracts to help balance earlier losses.
The nine banks are Oversea-Chinese Banking Corp Ltd, United
Overseas Bank Ltd <UOBM.SI>, <Banque Paribas>, <Bangkok Bank
Ltd,> <Citibank NA>, Standard Chartered Bank Ltd, Algemene Bank
Nederland NV <ABNN.AS>, Banque Nationale De Paris <BNPP.PA> and
<Chase Manhattan Bank NA.>
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|
U.K. 4TH QTR TRADE DEFICIT 2.6 BILLION STG, CURRENT ACCOUNT DEFICIT 760 MLN - OFFICIAL
| |
STRONG EARTHQUAKE REPORTED IN NORTHERN CHILE | A strong earthquake measuring an estimated
8.0 on the open-ended Richter scale hit northern Chile around
0936, the Meteorological Agency here reported.
The agency said the information had been received from
Honolulu.
It gave no further details.
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|
ECONOMIC SPOTLIGHT - POLISH SANCTIONS | Poland says U.S. Sanctions have cost its
economy 15 billion dlrs and has made clear it wants Washington
to take a lead in repairing the damage after lifting remaining
restrictions two weeks ago.
Polish officials are unable to provide a precise breakdown
of the figure, saying it takes into account a number of
hypothetical losses. Some of them are "too sophisticated to
convert into financial terms," one banking source said.
But Western economic experts say the effect of sanctions is
impossible to calculate.
They say it is blurred by the poor performance of Poland's
economy, and dismiss the 15 billion dlr figure as illusory.
"Sanctions have provided a very useful excuse for under-
achieving. They did have a bad effect, yes, but they only
contributed to largely internal, economic problems," one said.
The U.S. Imposed the measures and withdrew Most Favoured
Nation (MFN) trading status from Poland in 1982 in retaliation
for suppression of the Solidarity free trade union under
martial law. The estimated cost to the Polish economy was
originally devised several years ago by the Institute of
National Economy, an offshoot of the central planning
commission.
According to one Western envoy, an expert on Polish
economic affairs, it extrapolated 1979 information on growth
trends in trade with the United States, as well as increases in
credits from Western commercial and government lenders.
But the calculations were based on a time when trade was
booming and credits still flowed freely, he said, dismissing
the estimate as "a theoretical projection based on a high point,
which has no real scientific evaluation."
A foreign trade ministry official said Polish exports to
the U.S. In the late 1970s averaged around 400 mln dlrs
annually and had fallen by half since the sanctions were
imposed.
Imports have suffered, slumping from around 800 mln dlrs to
200 mln, as credits ran out. Poland has a dwindling trade
surplus with the West. Last year it was one billion dlrs
against a targeted 1.6 billion, official figures show.
Acknowledging that sanctions have lost Poland important
U.S. Markets -- including agricultural equipment, textiles,
chemicals and some foodstuffs -- Western economists say credits
dried up for economic not political reasons. "Poland is
accusing the West of letting economic relations deteriorate for
political reasons," said one expert. "It's an illusion based on a
misunderstanding of Western economy."
"There's a limit to how much you can go on giving someone
who has no hope of repaying it," another said, adding that
Poland had benefited from a global phenomenon of easy credits
in the 1970s which were no longer today's reality.
Describing the 15 billion dlr assessment as "nebulous," one
diplomat said it also included losses of hypothetical orders
and setbacks to Polish research through the curbing of
scientific links and exchanges. Western officials say the
lifting of sanctions and new MFN status will have little impact
on Poland, which has a hard currency debt of 33.5 billion dlrs
and lacks the means to modernise its industry.
"MFN doesn't really mean anything, only that Poland will not
be treated worse than other countries. It will be difficult to
regain access to the U.S. Market because different forces are
in play now," said one Western envoy.
He said Polish products were not competitive, and their
quality was too low. Trade wars and possible protectionist
measures amongst the U.S., Japan and Europe would also hamper
Poland's efforts to regain entry.
Deputy foreign trade minister Janusz Kaczurba recognised
this fact recently.
Kaczurba told the official PAP news agency recently, "Making
up our lost position will take a long time and be uncommonly
difficult, and in certain cases impossible... In a period of
two to three years it will be possible to increase the level of
exports by only about 100 mln dlrs."
While Poland is unlikely to seek compensation, it says it
has a "moral right" to assistance from the U.S. Which it says
imposed the sanctions illegally. But a Western economist said
"The argument that U.S. Sanctions were a unilateral torpedoing
of the Polish economy won't cut any ice. The Americans will
just reply that the Poles acted immorally in crushing
Solidarity."
Nevertheless, Polish National Bank head Wladyslaw Baka, in
talks in Washington last week with the International Monetary
Fund (IMF) and World Bank, made it clear that Poland was
looking for a lead from the United States.
He was quoted by PAP as saying that Poland would meet its
financial obligations to the United States, "but not in a short
time and not without a cooperative stand on the part of its
foreign economic partners."
He stressed that the U.S. "had a particular opportunity to
play a part in the cooperative policy of Poland's partners
interested in the settlement of Polish debt."
Putting it more sharply, one senior banking official blamed
Washington for obstructing talks with the World Bank, IMF and
Paris Club of Western creditor governments in recent years and
said it should now play a more positive role.
"As a major superpower the United States can influence
international organisations," he said, citing recent meetings
aimed at stabilising currencies as an example of the extent to
which Western nations were prepared to cooperate.
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|
U.K. FOURTH QUARTER TRADE DEFICIT 2.6 BILLION STG | Britain had a visible trade deficit of
2.6 billion stg in the fourth quarter of 1986 against a revised
deficit of 2.9 billion in the third quarter, official
statistics show.
Seasonally-adjusted figures issued by the Central
Statistical Office (CSO) show the current account was in
deficit by 760 mln stg against an upwardly revised third
quarter shortfall of 930 mln.
For 1986 as a whole, visible trade was in deficit by 8.3
billion stg, sharply up from 1985's 2.2. Billion shortfall and
a 4.4 billion deficit in 1984.
Preliminary figures for invisible transactions in the
fourth quarter show a surplus 1.8 billion stg to give an
estimated surplus for 1986 of 7.2 billion. The fourth quarter
figure was in line with CSO projections released on Friday.
The third quarter invisibles surplus was revised down to
1.9 billion stg from 2.25 billion.
In 1985 the invisibles surplus was 5.1 billion stg.
The reduced deficit on visible trade in the fourth quarter
was due to an increase in the surplus on oil of 200 mln stg and
a reduction in the non-oil trade deficit of 100 mln, the CSO
said.
However, 1986's surplus on oil trade was 4.0 billion stg
lower than in 1985, while the deficit on non-oil trade
increased by 2.1 billion.
The figures were broadly in line with market expectations.
The CSO stressed that figures for invisible transactions,
particularly for the most recent quarters are liable to
substantial revisions as later information becomes available.
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|
BELGIAN WHOLESALE PRICES FALL IN JANUARY | Belgian wholesale prices fell by 5.9
pct in January from a year earlier after a 5.7 pct year on year
fall in December, figures from the economics ministry show.
A ministry spokesman said the wholesale price index, base
1953 and excluding value added tax, stood at 250.9 in January.
This compared with 251.9 in December, 265.5 in Janua~y, 1986
and 267.2 in December, 1985.
In January 1986, wholesale prices were 3.9 pct lower than a
year earlier.
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|
CARGILL U.K. STRIKE TALKS POSTPONED TILL MONDAY | Talks set for today between management
and unions to try to solve the labour dispute at Cargill U.K.
Ltd's Seaforth oilseed crushing plant have been rescheduled for
Monday, a company spokesman said.
Oilseed processing at the mill has been at a standstill
since December 19.
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|
FRENCH INTERVENTION RATE CUT LIKELY, DEALERS SAY | The Bank of France is likely to cut its
money market intervention rate by up to a quarter point at the
start of next week. This follows a steady decline in the call
money rate over the past 10 days and signals from the Finance
Ministry that the time is ripe for a fall, dealers said.
The call money rate peaked at just above nine pct ahead of
the meeting of finance ministers from the Group of Five
industrial countries and Canada on February 22, which restored
considerable stability to foreign exchanges after several weeks
of turbulence.
The call money rate dropped to around 8-3/8 pct on February
23, the day after the Paris accord, and then edged steadily
down to eight pct on February 27 and 7-3/4 pct on March 3,
where it has now stabilised.
Dealers said the Bank of France intervened to absorb
liquidity to hold the rate at 7-3/4 pct.
While call money has dropped by well over a percentage
point, the Bank of France's money market intervention rate has
remained unchanged since January 2, when it was raised to eight
pct from 7-1/4 pct in a bid to stop a franc slide.
The seven-day repurchase rate has also been unchanged at
8-3/4 since it was raised by a half-point on January 5.
The Bank of France has begun using the seven-day repurchase
rate to set an upper indicator for money market rates, while
using the intervention rate to set the floor.
Sources close to Finance Minister Edouard Balladur said
that he would be happy to see an interest rate cut, and dealers
said any fall in the intervention rate was most likely to come
when the Bank of France buys first category paper next Monday,
although an earlier cut could not be excluded.
A cut in the seven-day repurchase rate could come as early
as tomorrow morning, banking sources said.
They said recent high interest rates have encouraged an
acceleration in foreign funds returning to France, discouraging
the authorities from making a hasty rate cut. But they also
pointed out that money supply is broadly back on target, giving
scope for a small fall in rates.
M-3 money supply, the government's key aggregate, finished
1986 within the government's three to five pct growth target,
rising 4.6 pct compared with seven pct in 1985.
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|
HONG KONG CD MARKET SHUTS DOWN AFTER NEW ISSUE | The Hong Kong dollar fixed rate market
was shut down this afternoon after a 200 mln H.K. Dlr
certificate of deposit issue for the Chinese state-owned Bank
of Communications Ltd Hong Kong branch suddenly surfaced,
bankers said.
Disgruntled dealers said the market was slowly on the road
to recovery after a bout of sell-off that began in early
February but it was still too fragile to absorb a new issue.
Brokers said the new deal took them by surprise and all
major players stopped making markets in existing issues.
The fixed rate market, which consists mainly of CDs tied to
swaps or asset repackaging, began to fall about a month ago due
to indigestion after 18 CD issues totalling 2.3 billion dlrs
flooded the market in January.
Bankers said the shake-up was a result of participants
pushing the market up too fast in January amid intense
speculation that the Hong Kong dollar's 7.80 peg rate against
the U.S. Dollar would soon be changed.
The speculation depressed local interest rates and
unleashed a flood of new issues.
But the speculation faded in early February and interest
rates climbed as the government remained adamant in maintaining
the peg, thus triggering an adjustment on the fixed rate
capital market.
By late February the market had recovered considerably but
Dai-Ichi Kangyo Bank and Morgan Guaranty Trust Co of New York
launched their issues and pushed the market down again. Since
then there has been no new issues for nearly two weeks until
China Development Finance Co (H.K.) Ltd (CDFC), a unit of the
Bank of China, launched the five-year deal at 7.05 pct with
quarterly interest payment in mid-afternoon today.
Brokers said the market was steady early this morning but
began to slip marginally by late morning as rumours of a new
issue circulated.
When the deal was launched the major players quickly
suspended trading and refused to quote prices for their own
issues, brokers said. "We just don't know where the market is
going," said a European banker.
They said the Bank of Communications issue traded at a low
of 99.70 but was later pushed up to 99.90/95, within the 10
basis point fee, adding that buying came mainly from sister
banks in the Bank of China group.
An official with one of the Chinese banks said the deal was
launched at an effective yield of 7.26 pct, in line with the
market at that time.
But a European banker said pricing was not an issue IN the
present market conditionS, "the timing was just not right."
"If banks had more patience they wouldn't launch any issues
now, and then the market would be all right," another dealer
said.
"But there is no reason to be overly pessimistic," he said.
"The effect of this issue on the market should not be as bad as
what happened after the DKB and Morgan deals."
Despite the criticism bankers said CDFC still managed to
recruit more than 10 underwriters though the composition of the
group has not yet been finalised.
"Any trader should recommend his bank against joining the
deal," said a dealer. "But there are other considerations such as
relationship." He admitted his bank has joined as co-manager.
A banker said he saw no reason why the market makers
decided to shut down if they were willing to join the new
issue.
"Perhaps they were jealous that for the first time a Chinese
entity has taken the sole lead position for a Chinese issue," he
said.
Previously Chinese entities have always acted as co-lead
managers, whether for Chinese or foreign issues.
REUTER
|
Bundesbank says it leaves credit policies unchanged
| |
U.K. GRAIN/POTATO FUTURES VOLUME DOWN IN FEBRUARY | Traded volumes for U.K. Grain and potato
futures in February were down on the previous month while
pigmeat and pig cash settlement futures were higher, official
figures show.
Combined wheat and barley futures trade declined to 892,700
tonnes from 1.19 mln in January, and the value fell to 97 mln
stg from 129 mln, Grain and Feed Trade Association (GAFTA)
figures show.
A total of 984,960 tonnes were registered for main crop
potato futures in February valued at 157 mln stg, versus
992,760 and 164 mln stg in January.
Soymeal futures trade totalled 76,340 tonnes against 90,680
in January, and value declined to nine mln stg from 10 mln.
Nine pigmeat contracts were traded in February, six more
than in the previous month, representing 450 carcases against
150, valued at 29,347 stg against 9,847 stg.
Pig cash settlement futures saw 201 contracts traded,
against 19 in January, and the value rose to 659,864 stg from
119,610 stg.
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BUNDESBANK LEAVES CREDIT POLICIES UNCHANGED | The Bundesbank left credit policies
unchanged after today's regular meeting of its council, a
spokesman said in answer to enquiries.
The West German discount rate remains at 3.0 pct, and the
Lombard emergency financing rate at 5.0 pct.
REUTER
|
MITSUI AND CO TO ISSUE EURODOLLAR WARRANT BONDS | Mitsui and Co Ltd said it plans to issue
300 mln Eurodollar warrant bonds in two tranches with payment
on March 30 through a syndicate led by Nomura International
Ltd.
One tranche is of five-year, 150 mln dlr bonds while the
rest is of seven-year, 150 mln dlr bonds, but other issue terms
have not yet been decided.
REUTER
|
BANK OF JAPAN TO SELL 500 BILLION IN BILLS | The Bank of Japan will sell tomorrow 500
billion yen of financing bills it holds to help absorb a
projected money market surplus, money market traders said.
Of the total, 300 billion yen will yield 3.9989 pct on the
sales from money houses to banks and securities houses in
27-day repurchase agreement, due April 2.
The remaining 200 billion yen will yield 3.9994 pct in a
39-day repurchase pact maturing on April 14, they said.
The repurchase agreement yields compare with the 4.0625 pct
one-month commercial bill discount rate today and the 4.50/43
pct rate on one-month certificates of deposit.
Tomorrow's surplus in the money market is estimated at 420
billion yen, mainly due to payment of national annuities, money
traders said. The operation will put the outstanding bill
supply at about 1,300 yen.
REUTER
|
ARGENTINA SEEKS NEW DEBT DEADLINES, OFFICIAL SAYS | Argentina will tell its creditors
it needs an extension of deadlines for payment of capital and
interest on its 50 billion dlr foreign debt, Industry and
Foreign Trade Secretary Roberto Lavagna told reporters.
"We, the developing countries, are going to insist on the
application of contingency clauses, to extend deadlines for the
payment of capital as well as interest," he said.
He said this could bring about what he called a possible
automatic capitalisation of those parts of debt interest that
could not be paid and even the elimination of a portion of the
debt.
REUTER
|
TURKEY TO IMPORT 100,000 TONNES OF CRYSTAL SUGAR | Turkey has announced a tender to import
100,000 tonnes of white crystal sugar with an advertisement in
local newspapers.
Turkish Sugar Factories said in the advertisement there was
a 50 pct option to increase or decrease the amount and bids
should reach it before March 24.
The semi-official Anatolian Agency recently quoted Turkish
Minister of Industry and Trade Cahit Aral as saying Turkey will
export 100,000 tonnes of sugar this year and import the same
amount.
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|
U.K. MONEY MARKET GIVEN FURTHER SMALL ASSISTANCE | The Bank of England said it provided the
money market with a further 20 mln stg of assistance during the
morning. It again bought bills for resale to the market on
April 2 at a rate of 10-15/16 pct. Earlier this morning, it
bought 17 mln stg of bills at the same rate and for resale on
the same date.
The Bank has thus given a total of 37 mln stg so far today,
which leaves the bulk of a 1.15 billion stg shortage still in
the system. Dealers noted that money market rates again eased
this morning and the Bank may have refused bill offers from the
discount houses at rates below its established dealing levels.
REUTER
|
MATSUSHITA ELECTRIC TRADING ISSUES WARRANT BOND | Matushita Electric Trading Co Ltd is
issuing a 100 mln dlr equity warrant eurobond due March 30,
1992 paying an indicated coupon of 2-3/4 pct and priced at par,
lead manager Nomura International Ltd said.
Final terms on the non-callable bond will be fixed on March
12. The selling concession is 1-1/2 pct while management and
underwriting combined pays 3/4 pct. The payment date is March
30 while listing will be in Luxembourg.
The issue is available in denominations of 5,000 dlrs. The
warrant exercise period is from April 15, 1987 until March 17,
1992.
REUTER
|
GUNMA BANK ISSUES 50 MLN DLR CONVERTIBLE EUROBOND | The Gunma Bank Ltd is issuing a 50 mln
dlr convertible eurobond due March 31, 2002 paying an indicated
2-1/4 pct and priced at par, lead manager Nomura International
Ltd said.
The issue is callable from March 31, 1990 at 104 pct
declining by 1/2 pct per annum to par thereafter but is not
callable until 1992 unless the share price exceeds 150 pct of
the conversion price.
The selling concession is 1-1/2 pct while management and
underwriting combined pays one pct. Final terms will be fixed
on March 12.
The issue is available in denominations of 5,000 dlrs and
will be listed in Luxembourg. The payment date is March 31.
The conversion period is from April 13, 1987 until March
22, 2002.
REUTER
|
GM <GM> LAYING OFF 5,500 AT TWO PLANTS | General Motors Corp said it ordered
temporary layoffs of 5,500 hourly workers to cut production and
thereby reduce inventories of cars built at two plants later
this month.
A spokesman said 2,000 workers would be laid off one week
beginning March 9 at GM's Detroit-Hamtramck luxury car plant.
Another 3,500 will be laid off a week effective March 23 at
GM's Lansing, Mich, plant which builds the company's "N-body"
compact cars.
Reuter
|
ICE UNCHANGED AT SOVIET OIL PORT OF VENTSPILS | Ice conditions are unchanged at the
Soviet Baltic oil port of Ventspils, with continuous and
compacted drift ice 15 to 30 cms thick, the latest report of
the Finnish Board of Navigation said.
Icebreaker assistance to reach Ventspils harbour is needed
for normal steel vessels without special reinforcement against
ice, the report said.
It gave no details of ice conditions at the other major
Soviet Baltic export harbour of Klaipeda.
Reuter
|
HUGHES TOOL <HT> SEEKS CHIEF OPERATING OFFICER | Hughes Tool Co said its board has
appointed a committee to search for a chief operating officer
in the event that it does not complete its merger with Baker
International Corp <BKO>.
Last night, Hughes directors said it would terminate its
agreement to merge with Baker because Baker would only proceed
if Hughes signed a consent decree with the U.S. Justice
Department that the Hughes board had determined to be
unreasonable.
The post of chief operating officer is now vacant at
Hughes. Chairman W.A. Kistler Jr. is chief executive officer.
Hughes said it proposed to Baker that the companies ask the
Justice Department to allow them to proceed with the merger on
condition that they find a buyer approved by the Department
for the domestic oilfield tricine rock bit assets of Baker's
Reed subsidiary, its Singapore plant and Baker Lift's domestic
electrical submersible pump business by April 22, the last date
the merger of Baker and Hughes could occur under their
agreement.
Hughes said its proposal would have been conditioned on it
not being required to license the purchaser with any Hughes
technology and on the imposition of no more adverse conditions.
Hughes said "For reasons Hughes does not fully understand,
Baker declined to proceed in this fashion and insisted that it
would proceed only if Hughes signed the consent decree."
The company said its board found the consent decree to be
unreasonable because some "unusual terms" in the decree posed a
substantial risk that control of the divestiture of Reed would
be passed to a trustee owing no duties to the shareholders of
the combined company, which would have been called Baker Hughes
Inc, and would include all of Reed's international assets and
its coring and diamond bit assets.
Hughes said the board also found unacceptable the consent
decree condition that the merged company fund ongoing losses of
Reed and Reed capital expenditures for as long as it took to
sell Reed.
The company said the board decision to adopt its own
divestiture plan and terminate the merger agreement if Baker
did not accept was unanimous.
Reuter
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SWISS OFFERS NEW SERIES OF MONEY MARKET PAPER | The Swiss Finance Ministry is inviting
tenders for a new series of three-month money market
certificates to raise about 150 mln Swiss francs, the Swiss
National Bank said.
Bids would be due on March 10 and payment on March 12.
The last issue of three-month paper conducted on February
12 yielded 2.969 pct.
REUTER
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EGYPTIAN CENTRAL BANK DOLLAR RATE UNCHANGED | Egypt's Central Bank today set the dollar
rate for commercial banks for March 6 at 1.373/87 dollars,
unchanged from the previous rate.
REUTER
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NO MINES DAMAGE REPORTED AFTER CHILE TREMOR | A tremor hit northern Chile early today
but there were no immediate reports of victims or of damage to
the country's vital mining industry, the National Bureau for
Emergencies, ONEMI, said.
The effects of the tremor at 0620 hrs (0920 GMT) registered
four to six degrees on the 12-degree Mercalli scale in
Antofagasta, 1,000 km north of Santiago, and five to six
degrees in Chuquicamata and Calama, at the centre of Chile's
mining region.
The tremor was followed by a milder aftershock at 0758 hrs.
An ONEMI spokesman said windows had been broken and a
number of cornices had fallen off buildings in the worst-hit
areas. These effects are described as up to seven degrees on
the Mercalli scale. The tremor caused a partial power cut in
northern Chile, the spokesman added.
Quoting from the latest report from the area, received at
8.37 A.M., He said the effects of the tremor registered two to
three degrees on the Mercalli scale in Arica, on the northern
border with Peru, and three to four in Copiapo, 700 km north of
Santiago.
ONEMI could not provide a reading on the Richter scale.
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TANZANIAN RAILWAYS SECURE 25.6 MLN DLRS AID | State-run Tanzania Railway
Corporation (TRC) has secured 25.6 mln dlrs aid from banks and
European countries for a one-year emergency repair program,
Transport Minister Mustafa Nyang'anyi said.
Nyang'anyi told Reuters on his return from a World Bank
sponsored donors' conference in New York that the aid would
enable TRC to buy spares for 32 locomotives, overhaul 800
wagons and replace 67,000 sleepers over the next 12 months.
The World Bank, African Development Bank, European
Community, Canada, Belgium, West Germany, Britain, Sweden,
Italy and Denmark had contributed to the package, he said.
TRC runs a rail network linking Dar es Salaam and the
northern port of Tanga with the coffee-growing area around
Mount Kilimanjaro and ports on Lake Victoria and Lake
Tanganyika.
It is under separate administration from the
Tanzania-Zambia railway linking Dar es Salaam with the Zambian
copperbelt and the railway system of southern Africa, which has
already received substantial aid as part of international
efforts to ease the dependence of landlocked African states on
trade routes through South Africa.
But this is the first international aid package for TRC,
which also carries cargo for Uganda, Zaire and Burundi.
REUTER
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MITSUI AND CO EUROBONDS FORMALLY LAUNCHED | The two 150 mln dlr equity warrant
eurobonds for Mitsui and Co Ltd, reported earlier today from
Tokyo, have now been formally launched, lead manager Nomura
International Ltd said.
The first tranche matures on March 30, 1992 and has an
indicated coupon of 2-3/4 pct while the second tranche matures
on March 30, 1994 and has a fixed coupon of three pct. Both
deals have an indicated pricing of par.
The selling concession for both deals is 1-1/2 pct while
management and underwriting combined pays 3/4 pct. Final terms
on the deals will be fixed on March 12.
Reuter
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BAKER INTERNATIONAL CORP SUES HUGHES TOOL SEEKING MERGER COMPLETION
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CARTER HAWLEY HALE STORES FEBRUARY SALES UP 7.6 PCT
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USAIR GROUP REJECTS TRANS WORLD AIRLINES TAKEOVER BID
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EARLY MARCH OPEC OUTPUT SEEN WELL BELOW CEILING | OPEC crude oil output in the first few
days of March was running at about 14.7 mln bpd, down from a 16
mln bpd average for February and well below the 15.8 mln bpd
ceiling the group adopted in December, a Reuter survey shows.
The figures were polled by Reuters correspondents from oil
traders, industry executives and analysts in Europe, the Middle
East, Africa, Latin America and Asia.
They back recent statements by OPEC ministers that the
group is producing within its ceiling to support the return to
a fixed price system, which came into effect last month.
OPEC output for the whole of February was about 200,000 bpd
above the ceiling, largely because of overproduction by the
United Arab Emirates and Kuwait, the figures show.
The UAE, together with the much smaller producer Ecuador,
was also producing above quota in the first days of March, the
survey reveals.
But such overproduction was compensated for by a sharp fall
in Saudi Arabian output, together with Iran"s inability to
export as much as its quota allows.
Iraq rejected its OPEC quota of 1.466 mln bpd and produced
1.75 mln bpd in February and early March, the figures showed.
Saudi output -- excluding movements into stocks -- fell to
3.1 mln bpd in early March from 3.5 mln bpd in February,
against a 4.133 mln bpd quota. The Saudi figures include a
200,000 bpd share of Neutral Zone production.
Kuwait, which has consistently denied quota violations, was
estimated to be pumping 1.4 mln bpd in February and 1.15 in
early March -- both figures including 200,000 bpd as its share
of Neutral Zone output -- against its 948,000 bpd quota.
Reports of customer resistance to fixed prices set by some
OPEC states were reflected in output from Qatar and Nigeria,
both substantially under quota in February and early March.
Qatar's February output was 230,000 bpd, and this fell to
180,000 bpd in early March compared with its 285,000 bpd quota.
Industry sources say Japanese buyers are resisting Qatar"s
prices and Gulf Arab oil states have pledged to make up for any
shortfall in sales which a fellow Gulf state suffers.
Nigeria's early March output was about one mln bpd, down
from 1.14 mln bpd in February and its quota of 1.238 mln bpd.
Industry sources say Nigeria's customers believe its Bonny
grades are overpriced compared with compatible Brent crudes
from the U.K. North Sea.
Country-by-country production figures are as follows, in
mln bpd -
COUNTRY CURRENT FEBRUARY QUOTA
ALGERIA 0.64 0.64 0.635
ECUADOR 0.26 0.26 0.210
GABON 0.15 0.15 0.152
INDONESIA 1.16 1.16 1.133
IRAN 1.80 2.20 2.255
IRAQ 1.75 1.75 1.466
KUWAIT 1.15 1.40 0.948
LIBYA 0.95 0.95 0.948
NIGERIA 1.00 1.14 1.238
QATAR 0.18 0.23 0.285
SAUDI ARABIA 3.10 3.50 4.133
UAE 1.10 1.15 0.902
VENEZUELA 1.50 1.50 1.495
TOTAL 14.7 16.0 15.8
REUTER
Reuter
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BETHLEHEM <BS> HAS INVESTIGATED CHAPTER 11 | Bethlehem Steel Corp has
investigated the ramifications of a filing for reorganization
under Chapter 11 of the federal bankruptcy laws but has no
present plans to file, a company spokesman told Reuters.
The spokesman said the investigation was made some time ago
and was undertaken as a precaution in the interest of prudent
management.
He said while Bethlehem, which has been losing money for
several years, does not intend to seek protection from
creditors now, it could do so if conditions worsened,
particularly if it ran out of cash.
But the spokesman said Bethlehem ended 1986 with over 460
mln dlrs in cash on hand, partly due to the sale of assets over
the year, and expects to maintain its cash position at around
that level through 1987.
At the end of 1985, Bethlehem had less than 100 mln dlrs in
cash.
Reuter
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CITY OF QUEBEC ISSUES 40 MLN CANADIAN DLR EUROBOND | The City of Quebec is issuing a 40 mln
Canadian dlr, nine pct bond due April 1, 1997 at 100-1/2 pct,
sole lead manager Societe Generale said.
The non-callable issue is of direct unsecured,
unsubordinated debt.
Fees are 1-1/4 pct for selling and 3/8 pct each for
management and underwriting. Payment date is April 1,
denominations are of 1,000 and 10,000 dlrs and listing is in
Luxembourg.
REUTER
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CARTER HAWLEY HALE <CHH> FEBRUARY SALES RISE | Carter Hawley Hale Stores Inc said
sales for the four weeks ended February 28 were up 7.6 pct to
240.8 mln dlrs from 223.8 mln dlrs a year before, with
same-store sales up 5.6 pct.
Sales for the prior year exclude John Wanamaker stores,
sold at the end of 1986.
Reuter
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BAKER <BKO> SUES TO FORCE HUGHES <HT> MERGER | Baker International corp said it has
filed suit in state court in Houston to compel Hughes Tool Co
to complete its proposed merger with Baker.
Late yesterday, Hughes said it had terminated the merger
agreement because Baker would not agree to an alternative
divestiture plan devised by Hughes. Hughes' board had
previously found unacceptable a U.S. Justice Department consent
decree that would have required broader divestitures.
Baker said it has not obtained any satisfactory explanation
from Hughes of its objections to the provisions of the Justice
Department consent decree.
Hughes yesterday adjourned the special meeting at which
shareholders were to vote on the merger without permitting the
counting of votes on the deal. Baker said it believes the vote
was overwhelmingly in favor of the merger.
Baker said the new terms that Hughes proposed for the
merger, as an alternative to the consent decree, were "more
burdensome" than those of the consent decree themselves.
Baker said divestitures under the consent decree would
reduce revenues for the combined company by about 65 mln dlrs
or three pct.
Baker said it will continue to pursue the divestitures of
the units named in the consent decree.
It said its suit names as defendants Hughes and certain of
its directors and seeks either an injunction forcing Hughes to
live up to the merger agreement or "substantial" monetary
damages it did not name.
Baker said it believes the merger to be in the best
interests of shareholders of both companies.
Reuter
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SPAIN DEREGULATES BANK DEPOSIT INTEREST RATES | Spain's Finance Ministry deregulated bank
deposit rates in an effort to raise competition among banks and
bring legislation into line with the European Community (EC), a
ministry spokesman said.
The measure was published today in the Official State
Gazette. It takes effect tomorrow and lifts restrictions on
rates, now limited to six pct on deposits of up to 180 days.
The government also enacted a decree cutting to one pct
from 13 pct the proportion of total assets which banks must
lend at favourable rates to industries classified "of public
interest."
Some bankers expect the deregulation of rates to result in
a 20 pct drop in profits this year.
Secretary of State for the Economy Guillermo de la Dehesa
told Reuters in a recent interview the reduction in fixed asset
investments would offset losses from the rate liberalisation.
REUTER
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USAIR <U> REJECTS TWA <TWA> TAKEOVER BID | USAir Group Inc said its board has
rejected Trans World Airlines Inc's offer to acquire USAir for
52 dlrs per share in cash as grossly in adequate and not in the
best interests of USAir shareholders, employees or passengers.
The company said the unsolicited bid by the Carl C.
Icahn-led TWA was "highly conditional."
USAir said its board and that of Piedmont Aviation Inc
<PIE> met separately yesterday to consider USAir's offer to
acquire 50.1 pct of Piedmont for 71 dlrs per share and
remaining shares for 1.5 to 1.9 common shares each, valued at
about 73 dlrs per share based on the average closing price of
USAir common during a period just before the merger.
The company said it is continuing talks with Piedmont on
arriving at a definitive merger agreement and the two companies
hope to reach one very shortly.
USAir said "In light of the highly conditional nature and
other terms of the TWA offer, the timing of the offer and the
circumstances under which it was made, USAir Group believes
that the purpose of the TWA offer is to interfere with USAir
Group's proposed acquisition of Piedmont.
"TWA's proposal is nothing more than an attempt by Carl
Icahn to disrupt at the eleventh hour USAir Group's acquisition
of Piedmont, a transaction which the USAir Group board views as
most beneficial to USAir Group shareholders, employees and
passengers and which Mr. Icahn obviously regards as contrary to
his own personal interests."
USAir said its board has authorized counsel to explore all
appropriate legal remedies against what it called TWA's
last-minute attempt to interfere with USAir Group's acquisition
of Piedmont.
The company said conditions to the TWA offer include TWA
obtaining financing, the USAir board redeeming defensive rights
issued to shareholders last year and acting to render the "fair
price" provision contained in USAir's charter inapplicable to
the TWA offer and Transportation Department approval.
Reuter...
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PAYLESS CASHWAYS INC <PCI> FEBRUARY SALES RISE | Payless Cashways Inc said its
sales for the four weeks ended February 28 rose six pct on a
comparable store basis to 108.6 mln dlrs from 89.3 mln dlrs a
year ago.
Year to date, it said sales advanced to 332.1 mln dlrs from
274.5 mln dlrs.
Reuter
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STERIVET <STVTF> TO DEVELOP NEW HORSE DRUG | Sterivet Laboratories Ltd said it is
proceeding with development of a new drug to treat navicular
disease in horses.
The company said it received an unspecified financial
contribution from the National Research Council of Canada to
help develop the drug for treating navicular disease, which
affects horses' feet.
Sterivet said the drug has produced promising results in
limited clinical trials conducted over the past 18 months in
Ontario.
Reuter
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U.S. EXPANSION THREATENED - CONGRESSIONAL REPORT | The U.S. economy is facing several
serious problems which threaten its continued expansion,
according to a Congressional report released today.
The report by the Democratic majority of the Congressional
Joint Economic Committee said the outlook was for sluggish
growth in the U.S. and the rest of the world for the near
future.
Committee Republicans released a separate, more optimistic
report predicting continued stable growth with low inflation.
Democrats have a 12 to eight majority on the committee,
which is made up of 10 Senators and 10 Representatives.
"The annual report of the committee surveys a 3.7 trillion
dlr economy whose tranquil appearance obscures the danger
signals that lie just below the surface," Committee chairman
Sen. Paul Sarbanes said in a statement.
"A close inspection of the economy reveals that the current
recovery, while long, is fragile, and we are skating on thin
ice," the Maryland Democrat said.
He said the danger signals included a decline in
investment, increased demand for borrowing which was straining
the financial system, a possible increase in inflation fueled
by higher oil prices and the depressed condition of the
nation's farmers.
Republicans said most private economists saw no likelihood
of a recession and were predicting a growth rate of around
three pct for this year and next, similar to Administration
forecasts.
"The economy appears to be on a path of stable growth. We're
comfortable with the current low rate of inflation, hopeful
that interest rates will continue to decline, optimistic that
employment opportunities will continue to improve and confident
in this nation's resilient, innovative and diversified economy,"
the Republican report said.
"The greatest economic challenge facing the 100th Congress
is reducing the federal deficit," the Republicans added.
Democrats said the budget deficit should be reduced but
also wanted the government to spend more on education, job
training, research and development and health care.
They said pressures on the dollar might make it difficult
for the Federal Reserve to use monetary policy to stimulate the
economy if this becomes necessary.
"There is now substantial concern about the inflationary
effects of a declining dollar and the buildup of monetary
pressure arising from the recent rapid growth in the money
supply," the Democrat report said.
"At the same time, the increased reliance on foreign sources
of capital in American investment markets means that the
Federal Reserve can no longer be as aggressive as in the past
in lowering interest rates and driving the dollar down."
"Taken together, the outlook for fiscal and monetary policy
is thus not very encouraging," the Democrats said.
The Democrats called on the Administration to be more
aggressive in removing foreign trade barriers and in seeking
new initiatives to solve the international debt problem.
The Democrats said much of the U.S. trade deficit had been
caused by misalignment of the world's currencies, especially
the overvaluation of the dollar that began in 1982.
Both Democrats and Republicans called for policies to
increase American productivity including incentives for saving
and investment in plant and equipment and development of a
better educated work force.
Reuter
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U.S. FIRST TIME JOBLESS CLAIMS FALL IN WEEK | New applications for unemployment
insurance benefits fell to a seasonally adjusted 332,900 in the
week ended Feb 21 from 368,400 in the prior week, the Labor
Department said.
The number of people actually receiving benefits under
regular state programs totaled 3,014,400 in the week ended Feb
14, the latest period for which that figure was available.
That was up from 2,997,800 the previous week.
Reuter
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