Month: July 2017

Greece successfully sold debt to private investors for the first time in three years Tuesday, taking a significant first step toward financial independence when its third international bailout ends next year.

The deal came a month after eurozone finance ministers signed off on a new loan and sketched out measures to chip away at Greece’s debt mountain after the current bailout finishes in August 2018.

Greek Finance Minister Euclid Tsakalotos hailed the successful sale, saying it was “a beginning” and a sign of confidence in the country’s economy.

“There will be a second and a third [market foray], to approach August 2018 with confidence and emerge from the bailouts,” he said.

In the test run to ensure it will be able to rely on market funding next year, Athens sold 3 billion euros of new five-year bonds alongside a tender to buy back outstanding five-year paper issued in 2014. That was to help lower its repayments in the years following the bailout exit.

Less demand

The deal did not attract as much demand as the country’s brief foray into markets in 2014, but Athens paid less to borrow the same amount.

The bonds were priced to yield 4.625 percent, 32 basis points below a bond of similar duration that Athens last sold in 2014. The coupon was set at 4.375 percent versus 4.75 percent on the 2014 bonds.

“The return of Greece to the capital markets was and is the goal of the ongoing adjustment program. We therefore welcome the fact that Greece has the chance to return to the market on a step-by-step basis,” a spokeswoman for the finance ministry in Germany, Europe’s biggest economy, said.

Analysts said some investors may be put off Greek government bonds because they have the lowest credit rating in the eurozone and are not eligible for purchase by the European Central Bank under its quantitative easing scheme.

When Greece sold 3 billion euros of five-year bonds in 2014, demand reached over 20 billion euros from 600 investors. Tuesday’s sale saw demand come from about 200 investors, a government official said.

Thomson Reuters’ International Financing Review reported over 6.5 billion euros of orders had been placed.

Greece’s comeback has been timed to take advantage of its borrowing costs hitting seven-year lows. But it is still paying 3.9 times Portugal’s borrowing costs on five-year paper.

A treasurer at one of Greece’s big banks, who wished to remain anonymous, told Reuters that he expected a large chunk of demand for the bond came from domestic banks and pension funds. He added that the deal would also open the way for Greek banks to borrow in capital markets.

Turning a page

Athens lost market access shortly after it sold bonds in 2014 because its newly elected leftist government quarreled with creditors over debt relief.

Some investors may have been put off by that experience, analysts said, especially as there are lingering concerns about Greece’s debt mountain. That stands at 180 percent of economic output versus the 60 percent or falling toward 60 percent required by the European Union.

“Given Greece’s fundamentals, the problem with this bond sale is that it fuels speculation about investor willingness to lend to an almost insolvent country,” said ABN AMRO senior fixed-income analyst Kim Liu. “Regardless of the success of the deal, debt-to-GDP levels of Greece will still be at high levels.”

But Europe’s economics commissioner, Pierre Moscovici, said Tuesday that he was confident Greece was “turning a page” from its economic crisis.

The bond sale is also emblematic of the recovery of the eurozone as a whole, coming five years after European Central Bank President Mario Draghi brought the bloc back from the brink of splintering with a pledge to do “whatever it takes.”

The International Monetary Fund, which has lent financial support to Greece alongside the European Union and the ECB, upgraded its 2017 gross domestic product growth projection for the eurozone and pointed to “solid momentum.”

“We believe that changes in the European political landscape, together with recent strong economic data, mean the bond should perform well,” said Nicholas Wall, a portfolio manager at Old Mutual Global Investors.
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Records show the head of the Environmental Protection Agency spent weekends in his home state during his first three months in office, frequently flying to and from Oklahoma at taxpayer’s expense.

EPA Administrator Scott Pruitt’s expense reports from March, April and May were released following a Freedom of Information request filed by Environmental Integrity Project, a non-profit watchdog group.

The records show Pruitt traveled home at least 10 times, typically leaving Washington on Fridays and returning on Mondays. Pruitt was either in Oklahoma or on trips that included stops there for nearly half the days encompassed in the three-month period, costing more than $15,000.

EPA spokeswoman Liz Bowman did not respond to emails or phone messages from The Associated Press on Monday seeking comment.

Pruitt, a Republican, served as Oklahoma’s attorney general prior to his appointment by President Donald Trump to lead EPA. Married with two children, Pruitt owns a home in Tulsa, Oklahoma. There were a couple of occasions where Pruitt traveled on a trip for EPA then paid out-of-pocket to fly to Tulsa before returning to Washington at government expense.

AP reported earlier this year that while Pruitt was in his state job, he was in frequent contact with political donors, corporate executives and industry groups opposed to new environmental regulations enacted under the Obama administration.

He appears to have continued that practice since coming to EPA, including traveling to accept an award from the Oklahoma Well Strippers Association, make a keynote address to a meeting of the American Legislative Exchange Council and deliver a speech to the National Association of Manufacturers.

EPA records indicate Pruitt also attended “informational meetings” during the trips, which were first reported by The New York Times. Though a trip to Oklahoma might last three or five days, it was not unusual for only one such meeting to be listed during Pruitt’s time away from Washington.

An example is Pruitt’s reported trip to Tulsa on Friday, May 19, on a flight scheduled to depart Washington at 5:37 p.m. The listed purpose of the trip was an “informational meeting” at the Brainerd Chemical Company in Tulsa. Pruitt’s return flight to Washington was scheduled to depart the following Monday morning at 6 a.m. local time.

Records show EPA paid $1,980 for Pruitt’s roundtrip ticket on a commercial airline, well in excess of what an economy class ticket typically costs on that route. Federal regulations allow government travelers to fly business class or first class only when no cheaper options are “reasonably available.” Pruitt was also reimbursed $127 for meals and expenses, according to the records.

Among the questions to which Bowman did not respond was whether EPA staff or members of Pruitt’s full-time security detail traveled with him. She also did not answer questions about the official purpose of specific trips or whether Pruitt flew first class.

A call to the family-owned distribution company’s chairman, Mat Brainerd, was not immediately returned. He testified before congressional panels in favor of extending the Keystone XL oil pipeline and against part of the Clean Air Act.

In a statement to the Times, Bowman said: “The administrator’s travel, whether to Utah, Michigan or Oklahoma, all serves the purpose of hearing from hard-working Americans about how EPA can better serve the American people.”

On a different May trip, records show Pruitt flew to Colorado to give a speech to the Heritage Foundation before buying his own ticket to Tulsa for the weekend and then returning to Washington. On that trip, EPA paid $2,690 in commercial airfare.

The Heritage Foundation, a free-market think tank that receives funding from groups tied to the fossil-fuel industry, paid for Pruitt’s hotel room in Colorado Springs, according to his travel form. Though Pruitt’s expense report indicates an “ethics form is prepared” to allow the outside group to pick up his hotel tab, a copy of that form was not provided by the EPA.

Eric Schaeffer, executive director of the Environmental Integrity Project, said the records obtained by his group reflect Pruitt’s priorities.

“These travel records show that Administrator Pruitt is more focused on cultivating his relationships with industry and conservative political organizations in his home state of Oklahoma than he is on protecting the environment and the public health for the rest of America,” said Schaeffer, who served as the head of EPA’s office of civil enforcement from 1997 to 2002.
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A Ghanaian teenager wanted to develop a video search engine that could challenge the dominance of YouTube. As Faith Lapidus reports, he’s well on his way.
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From recycled paint to rented jeans, businesses large and small are looking at ways to cut waste, use fewer resources and help create what has been coined a “circular economy” in which raw materials and products are repeatedly reused.

Unilever, Renault, Google and Nike are some of the companies starting to move towards a circular business model, experts say.

Cities too – including London, Amsterdam and Paris – are looking at how they can shift to a circular economy, which means reusing products, parts and materials, producing no waste and pollution, and using fewer new resources and energy.

London’s Waste and Recycling Board last month published a road map for how the city as a whole could make the shift, thereby cutting emissions and creating jobs.

“As London grows it faces unprecedented pressure on its land and its resources. If we are to meet these challenges, moving London to a circular economy will be vital,” Shirley Rodrigues, London’s deputy mayor for environment and energy, told the Thomson Reuters Foundation.

The city would likely need less land and infrastructure to manage waste, freeing up space for housing and saving up to 5 billion pounds ($6.5 billion) in infrastructure costs. The shift could generate 40,000 jobs, including 12,500 new jobs across London, she said.

It would also cut harmful greenhouse gas emissions.

“It is widely accepted that the circular economy has the potential to reduce greenhouse gas emissions … through using less resources to make products in the first place and releasing less gases from energy generation, for example,” Rodrigues said.

“This can also be achieved through using resources more efficiently by extending the life of products and through the sharing of goods,” she added.

PwC, which offers audit, tax and consulting services, is going circular, and offering advice about this to its clients, who number 26,000 in Britain with more overseas.

The company uses cooking fat from its canteens and other kitchens to fuel its offices, it re-uses and remanufactures office furniture where possible and donates the rest to charity, and when its computers and phones need upgrading – a frequent occurrence – they send them to another company which resells them.

‘Walk the talk’

Bridget Jackson, PwC’s head of corporate sustainability, is looking at everything from office carpets to recycled wall paint to see how to cut the company’s waste and use of resources. Even worn out company uniforms are taken apart and reused.

“There are big cost savings, there’s reputational benefits from being responsible, and it is a topic which is of a lot of interest to our employees,” Jackson said.

“We are often giving advice to clients about how they can make their operations more efficient and be more sustainable, and we try to walk the talk,” she said.

Some companies are looking for ways to become less reliant on raw materials because they fluctuate in price and become harder to source.

That can mean recycling aluminum for cars, old trainers for sportswear, and others are looking at reusing parts.

Many have developed ways to lease products – including jeans, lighting and photocopiers – to customers who return them when they want to upgrade.

London authorities are hoping that architects will increasingly design buildings which can be taken apart at the end of their lives and the materials and components used again.

“I think increasingly, everything that we do will be seen through the lens of a circular economy,” said Wayne Hubbard, chief operating officer of the London Waste and Recycling Board.

Experts say change is happening in pockets.

“We’re still in the early stages where you see some businesses, some cities, national governments playing around with these ideas and … starting to make moves towards a circular economy,” said Ashima Sukhdev, head of governments and cities at the Ellen MacArthur Foundation. “I’m very hopeful that London will become a circular economy.”
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More steps to free up trade globally have been taken since Donald Trump was elected than measures to restrict it, the World Trade Organization said, despite concerns his administration would introduce a raft of punitive rules to protect U.S. jobs.

The WTO’s global monitoring report, debated at a trade policy review on Monday, covers October 2016 to May 2017.

“The report shows an encouraging decrease in the rate of new trade-restrictive measures put in place — hitting the lowest monthly average since the financial crisis,” WTO Director-General Roberto Azevêdo said in a statement.

The semi-annual report, largely coinciding with the period since the election of U.S. President Donald Trump, showed that the 164 WTO members put 74 new restrictive measures in place, including tariffs, customs regulations and quantitative restrictions, with an impact of $49 billion of trade.

At the same time, they took 80 steps to help trade, such as cutting tariffs or simplifying customs procedures, affecting a much bigger $183 billion of trade.

Restrictions peaked in 2011

Trade-restrictive steps peaked at 22 per month in 2011, roughly twice the level in the period of the latest report.

During the period under review, the United States introduced new restrictions including a provisional duty on Canadian softwood lumber, suspecting it of being unfairly priced.

It also brought in “Buy America” provisions to ensure that, subject to some conditions, state loan funds are not used for water infrastructure projects unless all the steel used in the project was produced in the United States, the WTO report said.

Liberalized trade

Trump had also liberalized trade by scrapping broadband privacy rules, allowing Internet service providers to commericalize user data without explicit permission from the U.S. Federal Communications Commission, the report said.

China, routinely the WTO member most often accused of unfair pricing and illegal subsidies, had introduced new restrictions with a cybersecurity law, requiring data generated in China to be stored in China, and a film production law, requiring Chinese movies get two-thirds of the screen time at Chinese cinemas.

But it also eased approval requirements for foreign-owned banks to invest in Chinese banks and to supply some investment banking services in China, the WTO report said.
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Thailand’s justice ministry froze some of former Prime Minister Yingluck Shinawatra’s bank accounts, the ministry and her legal team said on Monday, in relation to a $1 billion fine imposed by the ruling junta over her administration’s rice-subsidy program.

She has filed a court petition to revoke the freezing of her bank accounts and to grant an injunction to suspend asset seizures, saying they were unlawful.

Yingluck, whose government was ousted by the junta in a 2014 coup, will deliver a closing statement in a separate criminal case over the rice subsidies next week.

The program, which helped Yingluck sail to victory in a 2011 election, bought rice from farmers at above-market rates and distorted global prices but proved popular with rural voters.

Finance Ministry permanent secretary Somchai Sujjapongse told reporters on Monday that government committees submitted details of 12 bank accounts which belong to Yingluck to the Legal Execution Department, which then took action.

Yingluck received a formal notice about her frozen accounts from the department on Monday, her legal team said.

Yingluck declined to comment when contacted by Reuters.

Her supporters have accused the courts of bias in frequently ruling against Yingluck and her family members.

The rice scheme was a policy engineered by Yingluck’s brother, former prime minister Thaksin Shinawatra, who was toppled in a 2006 coup and lives abroad, to avoid a two-year prison sentence from 2008 for graft in a land purchase case.

Thaksin won the hearts of voters in the populous northeast and the north but made enemies among the powerful, military-backed Bangkok elite.

In 2015, a military-appointed legislature banned Yingluck from politics for five years after finding her guilty of mismanaging the rice scheme.

The Supreme Court will give its verdict in the criminal case against Yingluck on Aug. 25.

Yingluck, who says the trial against her is politically motivated, faces up to 10 years in prison if she is found guilty of negligence over her role in the scheme.
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Brazil’s cash-strapped government is drawing up a voluntary redundancy plan for federal civil servants aimed at reducing its bloated payroll and saving about 1 billion reais ($318 million) a year, the Planning Ministry said on Monday.

It will also offer public employees a shorter workday in the latest effort to cut payroll costs and reduce a gaping budget deficit that cost Brazil its investment grade credit rating.

The ministry said in a statement that the plan would be announced this week.

The government’s income and spending estimates published last week show a payroll bill for this year of 284.5 billion reais. That marked the second largest outlay after social security benefits, which total an estimated 559.8 billion reais.

A two-year recession has reduced tax revenues and forced the government to freeze spending as it seeks to meet a 139 billion-real budget deficit target for 2017.

Political turbulence stirred by corruption charges against President Michel Temer has delayed approval in Congress of an unpopular overhaul of Brazil’s generous pension system that is the main cause of the budget deficit.

($1 = 3.1468 reais)
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