2024-05-06 21:06

SEOUL, May 7 (Reuters) - South Korea's foreign exchange reserves dropped in April by the biggest amount in 19 months as authorities intervened in the currency market to curb weakness in the won currency. Reserves stood at $413.26 billion at the end of April, down $5.99 billion from $419.25 billion a month earlier, central bank data showed on Tuesday. It was the biggest monthly fall since September 2022. The Bank of Korea said the fall was due to market stabilising efforts, including the utilisation of its currency swap line with the country's pension fund, along with a decline in foreign exchange deposits of financial institutions and a fall in the converted value of non-dollar assets. In mid-April, the won hit a major psychological level of 1,400 to the dollar, its weakest level since early November 2022, prompting authorities to issue warnings against excessive volatility. For the month, the won weakened 2.52% against the dollar, while the U.S. dollar index rose 1.76% amid market expectations for a delay in rate cuts and worries about heightening Middle East tensions. The BOK said domestic economic fundamentals remained stable when compared with September 2022, while external debt and foreign exchange reserves were also at stable levels. Sign up here. https://www.reuters.com/markets/currencies/south-korea-fx-reserves-log-biggest-monthly-drop-19-months-intervention-2024-05-06/

2024-05-06 20:49

May 6 (Reuters) - Top executives at U.S. oil giants Exxon Mobil (XOM.N) New Tab, opens new tab and Chevron Corp (CVX.N) New Tab, opens new tab said on Monday that the U.S. needs to clarify rules on energy subsidies to drive the rapid, large-scale investments needed to fight climate change. President Joe Biden has been trying to encourage energy producers to slash emissions using technologies like carbon capture and green hydrogen that are expensive and have yet to be proven at scale. Biden’s 2022 Inflation Reduction Act included big subsidies for those technologies, along with incentives for more solar and wind power, and electric vehicles. “Even today, the IRA has not been translated into regulation. And so, the certainty and the incentives for investing in this space are still being developed and formed,” Exxon CEO Darren Woods told a panel at the Milken Global Conference in Los Angeles. “And so as a business we've got to understand what are the implications for the investments? What are the returns for our shareholders, making sure it's competitive in our portfolio?” he said. U.S. climate envoy John Podesta criticized Woods during the panel for "not going fast enough" to cut emissions at Exxon. Chevron CEO Mike Wirth, also at the conference, said the world was not on track to decarbonize by 2050. Wirth cited the challenge of meeting rising energy demand in developing countries, and added U.S. rules for hydrogen subsidies were also a headwind. “Treasury is writing the rules and the rules are getting very restrictive, and they discourage investment,” Wirth said. “They make it difficult to get comfortable with a multi-billion dollar investment.. so we've had kind of these conflicting signals.” Woods and Wirth advocated for global, market-based systems – like a price on carbon - to encourage the advancement and deployment of climate friendly energy technologies. Woods also said on Monday that the company's acquisition of Pioneer will mean more oil production at lower cost. "We're bringing a unique set of technologies and development capabilities to a very attractive set of acreage. So we will produce more oil at a lower cost, which is good for the economy," Woods said at the conference. Sign up here. https://www.reuters.com/sustainability/climate-energy/exxon-chevron-ceos-seek-clear-rules-us-clean-energy-subsidies-2024-05-06/

2024-05-06 19:45

NEW YORK, May 6 (Reuters) - The Office of Financial Research (OFR), a U.S. Treasury Department-based research powerhouse, said on Monday it has adopted a final rule that will allow it to collect data on certain transactions in the repurchase agreement (repo) market. Most hedge fund activity in repo markets - where banks and other players such as hedge funds borrow short-term loans backed by Treasuries and other securities - is done bilaterally between brokers and customers. By establishing data collection for non-centrally cleared bilateral transactions, regulators want to improve visibility into this opaque but vital funding market for Wall Street. "The collected data will be used to support the work of the Financial Stability Oversight Council, its member agencies, and the OFR to identify and monitor risks to financial stability," the OFR said in a statement. "The OFR's permanent data collection will shine a spotlight into this opaque corner of the financial market, provide high-quality data on (non-centrally cleared bilateral repo) transactions, and remove a significant blind spot for financial regulators," it said. The rule, which becomes effective 60 days from Monday's publication, establishes two categories of companies subject to reporting, a timeline for the submission of data and a number of specific data elements required to be reported. The announcement coincides with a broader regulatory effort to contain potential episodes of stress in the $27 trillion U.S. government debt market - a building block of the global financial system. In particular, regulators have zeroed in on the basis trade, a popular hedge fund arbitrage trading strategy in Treasuries which is largely financed through bilateral repo deals. The unwinding of this trade is believed to have worsened market stress at the height of the COVID-19 pandemic in March 2020. In December, the U.S. Securities and Exchange Commission approved a key reform to boost the use of central clearing for U.S. Treasuries which will apply to the cash Treasury and repo markets. More centrally cleared trades could reduce the risk of disruption to counterparties caused by a rapid unwinding of hedge funds' leverage, analysts have said. Sign up here. https://www.reuters.com/markets/us/us-financial-markets-watchdog-collect-data-bilateral-repo-2024-05-06/

2024-05-06 19:43

May 6 (Reuters) - U.S. utility Allete (ALE.N) New Tab, opens new tab said on Monday that it had agreed a deal with investment firms Global Infrastructure Partners and CPP Investments to be taken private at a $6.2 billion valuation, inclusive of debt. The transaction is a rare example of a U.S. utility being taken private by investment firms, and comes at a time when such companies are receiving increased investor interest as technological innovations, such as artificial intelligence and data centers, boost power demand. For utilities such as Allete, this hunger for power comes as they are implementing a shift to greener forms of generation, creating the need for significant investment in their networks. Allete CEO Bethany Owen told Reuters that the Minnesota-based company's strategy involved spending $4.3 billion on renewables over the next five years, and further billions on investments after that. Raising these sums, while being a smaller utility in the public markets, would have been challenging. "We were looking for the right partners to provide ready access to capital so that we could execute that transformative strategy," said Owen, who will continue in her role after the transaction closes in mid-2025. The cash offer of $67 per share for Allete represented a 19% premium to the company's closing share price on Dec. 4, a day before Reuters reported the power company was exploring a sale. "This is a modest premium on several angles," said Guggenheim utilities research analysts, adding this "unique" deal would not set a precedent for other go-private deals. Shares of Allete initially rose following the deal announcement, but were 1.6% lower in mid-afternoon trading. Allete has nearly 188,000 customers in northern Minnesota and northwestern Wisconsin and also operates wind, solar, coal-fired, biomass and hydroelectric power generation assets across the Upper Midwest. Sign up here. https://www.reuters.com/markets/deals/us-utility-allete-goes-private-62-bln-deal-2024-05-06/

2024-05-06 19:24

Sabadell says BBVA's proposal undervalues its growth path Calls BBVA indicative offer unsolicited Sabadell sticks to standalone strategy BBVA regrets that Sabadell rejected its 'attractive offer' MADRID, May 6 (Reuters) - Sabadell's (SABE.MC) New Tab, opens new tab board rejected a merger proposal by larger rival BBVA (BBVA.MC) New Tab, opens new tab for a 12 billion euro ($12.93 billion) all-share merger, the Spanish lender said on Monday. The country's fourth-largest lender by market value said its board believed BBVA's proposal significantly undervalues the potential of Banco Sabadell and its growth prospects, calling the offer unsolicited. Propped up by higher interest rates and robust profits, European banks are flush with cash and their shares have hit multi-year highs, boosting speculation of more M&A activity, although clinching deals is far from easy. Last week, BBVA had offered an exchange ratio of one newly issued BBVA share for every 4.83 Sabadell shares, a premium of 30% over April 29 closing prices. "We regret that the board of Sabadell has rejected such an attractive offer," a spokesperson for BBVA said on Monday, without elaborating further. Last week, BBVA said it was ready to "move forward immediately with the transaction" and Chairman Carlos Torres in a letter called on Sabadell's board to give its assessment of the proposal as soon as possible. In its offer unveiled on Wednesday, BBVA said it aimed to create a lender with more than 100 million customers globally and total assets exceeding 1 trillion euros, second only to its rival Santander (SAN.MC) New Tab, opens new tab among Spanish banks. In a statement to the stock market supervisor on Monday, Sabadell said the recent material decline and volatility in the BBVA share price increased the uncertainty around the value of the proposal. Based on the May 6 closing prices of 9.840 euros for BBVA and 1.8895 euros for Sabadell, shares in Sabadell were well below the 2.2587 euros per share BBVA was offering taking into account the 30% premium against April 29. Since the indicative offer was announced by BBVA, Sabadell have risen 8.8% while shares in BBVA have fallen 9.7%. Taking into account Monday's closing share price, the premium would just be equivalent to 7.8%, valuing Sabadell at around 11 billion euros. Analysts said the gap between the offer and the current share price of Sabadell indicated there was risk that the deal would not go through. In November 2020, Sabadell and BBVA called off merger talks as they did not agree on the terms, including the price tag. A combination of the two entities would have now a combined market value of over 67.5 billion euros, and the new Spanish banking giant would rank as the third-biggest lender by capitalisation in the euro zone. The combined entity would also overtake Caixabank (CABK.MC) New Tab, opens new tab as the biggest domestic lender in Spain with over 625 billion euros in assets in the country, compared with Caixabank's just over 574 billion euros. SABADELL BELIEVES IN STANDALONE STRATEGY On Monday, Sabadell said its board undertook a detailed assessment of BBVA's proposal and concluded it was not in the best interest of its shareholders. Since the beginning of the year, shares in Sabadell have risen 70%, while shares in BBVA have risen 20%. Sabadell further said its board was highly confident in its growth strategy and its financial targets. It also said its board believes its rejection was aligned with the interest of Sabadell's clients and employees. Its board reiterated its commitment to distribute, on an ongoing basis, any excess capital above 13% to its shareholders. "The excess capital to be generated over 2024 and 2025, together with recurrent dividends during this period, according to a successful completion of the current business plan, is projected to be 2.4 billion euros," Sabadell said. ($1 = 0.9281 euro) Sign up here. https://www.reuters.com/markets/deals/sabadells-board-meets-analyse-bbva-bid-proposal-newspapers-say-2024-05-06/

2024-05-06 18:11

May 6 (Reuters) - Federal Reserve Bank of New York President John Williams said Monday that at some undefined point the U.S. central bank will lower its interest rate target. "Eventually we'll have rate cuts" but for now monetary policy is in a "very good place," Williams said in comments made before the Milken Institute 2024 Global Conference in Beverly Hills, California. The comments Monday followed last week's Federal Open Market Committee meeting. There, officials maintained their overnight target at between 5.25% and 5.5%, while signaling it's likely to stay there for some undefined period while they seek out additional evidence inflation is retreating back to target. Williams did not offer a time table for action but he said the economy was overall moving back into better balance, amid a shift to a slower rate of growth. Williams said he expects the nation's Gross Domestic Product to rise at between 2% to 2.5% this year after expanding rapidly last year. Williams also said the Fed’s efforts to shrink the size of its balance sheet have gone well and haven’t rattled markets. Sign up here. https://www.reuters.com/markets/rates-bonds/feds-williams-says-next-fed-move-likely-be-lower-rates-2024-05-06/