Trade gap widens
The US trade deficit rose to a 10-year high in 2018, defying President Trump’s campaign pledge to shrink the gap between US imports and exports. The goods and services trade deficit increased by 12 per cent to $621bn (£472bn), according to the US Census Bureau, the widest difference since the $709bn gap reported in 2008. The growth in deficit was attributed to a stronger economy boosting demand for imports, with retaliatory tariffs making it more difficult for US companies to sell goods abroad.
Credit clash
Hostile bid
The war of words between Provident Financial (PFG) and Non-Standard Finance (NSF) continued, with the former rallying its defences ahead of the release of full-year results on 13 March. The sub-prime lender announced that it had “substantially” resolved all the outstanding regulatory issues with the Financial Conduct Authority, including “significant progress” on the redress to be paid to resolve the investigation into Moneybarn’s affordability, forbearance and termination options. It has also appointed a new managing director and chairman of Vanquis Bank, to be unveiled in due course. It continued to assert that NSF’s bid had “significant flaws” and was detrimental to shareholders.
Coltrane agitating
Refinancing alternatives
Shares in Interserve (IRV) received a boost this week, after Coltrane Asset Management – a hedge fund owning 27 per cent of the outsourcer’s issued share capital – proposed underwriting a £110m rights issue to reduce debt and provide liquidity. Interserve confirmed it received an updated proposal from the hedge fund, but said considering the group’s “short-term liquidity requirements and given that Interserve's deleveraging plan is currently the only fully funded proposal that has the agreement of lenders, bonding providers and pension trustee” it could now consent to the hedge fund’s request to halt its deleveraging plan.
Tulloch on top
Calls for restructure
Following the ousting of former boss Mark Wilson in October, Aviva (AV.) appointed international insurance head Maurice Tulloch to the top job with immediate effect. Mr Tulloch was one of two front-runners for the role, alongside UK insurance chief Andy Briggs, after Mr Wilson was asked to step down following a disagreement with the board over strategy. The search for a successor took longer than anticipated, missing a mid-February deadline that had been set. Attention will now turn to whether Mr Tulloch will pursue a break-up of the group, which remains one of the only major composite insurers.
Greece into bond fray
Credit upgraded
After three bailouts from the EU and International Monetary Fund over the past decade, Greece sold its first 10-year bond in nine years. The country raised €2.5bn (£2.15bn) in debt, priced at a 3.9 per cent yield, although order books topped €11.8bn. The issuance came just four days after ratings agency Moody’s lifted Greece’s rating by two levels to a B1 rating – admittedly still denoting a higher level of risk. Yields – which move in the opposite direction to prices – on Greek debt fell to their lowest level since before the eurozone debt crisis, after the issuance.
Vodafone gets creative
Coco bond blend
Vodafone raised the largest ever sterling convertible bond in order to finance its acquisition of Liberty Global’s cable networks in Germany and eastern Europe. The €4bn (£3.4bn) of mandatory convertible bonds were issued via two tranches maturing in March 2021 and 2022, when they will be converted into equity. The telecoms group has combined the deal with derivatives from banks that allow it to buy back those shares at a hedged price, limiting the dilution to existing shareholders.
Bookie rebrand
Spending stateside
Paddy Power Betfair (PPB) announced plans to rename itself “Flutter Entertainment” to reflect the “increased diversity” of its brands and operations. Shareholders will vote on the renaming at the annual general meeting in May. The bookie reported a 9 per cent increase in revenue at constant currency to £1.87bn during 2018, although underlying cash profits fell 3 per cent to £451m due in part to £24m spent on the US sports betting business after legislation banning such betting was overturned in May.
