ASX to open lower 95b Ausnet bid as Transurban grabs Westconnex
1 of 1
A consortium led by toll road giant Transurban will take full control of Sydney’s WestConnex after winning the NSW government’s auction of its 49 per cent stake in the road, with a bid of more than $11 billion.
NSW Treasurer Dominic Perrottet said on Monday morning that the state had finalised the sale to Sydney Transport Partners (STP), consisting of Transurban, AustralianSuper, the Canada Pension Plan Investment Board and Abu Dhabi’s sovereign wealth fund.
Transurban will take full control of Sydney’s WestConnex for $11 billion. Credit:SMH
Total sale proceeds for the state were $11.1 billion, Mr Perrottet said.
STP bought a 51 per cent stake in WestConnex in 2018 for $9.26 billion and will own 100 per cent of Australia’s largest toll road project after the NSW government put the remaining share up for sale in two 24.5 per cent tranches in November 2020.
“This transaction continues our successful asset recycling strategy, which has been the cornerstone of our record $108.5 billion infrastructure pipeline that has built and upgraded schools, hospitals, road and rail across the State,†Mr Perrottet said.
Read the full story here
Fund managers are bracing for continued pressure on iron ore prices, with China’s moves to curb steel production to limit air pollution poised to squeeze share prices of big name miners and threaten federal government tax revenue.
The key steel-making material’s price has seen its value halve since record-breaking highs of $US230 per tonne in May, which caused stock values of ASX-listed producers such as Fortescue Metals, Rio Tinto and BHP to fall sharply last week.
Atlas Fund Manager’s chief investment officer Hugh Dive said he has had a “negative bet†on iron ore for months and the sharp declines in the sector were not a surprise.
Atlas Funds Management founder Hugh Dive. Credit:Louie Douvis
“It’s getting punched in the face most of this year, then it’s all made up in the last four to five weeks,†he said. “We went zero weight in Rio, FMG and BHP. So, I’m very happy about that.â€
The Chinese government on Friday slammed the new trilateral security partnership between Australia, the US and the UK, claiming the pact would intensify the arms race and “undermine regional peace and stabilityâ€.
The rebuke prompted fears Beijing’s fury could further inflame trade tensions, after the previous geopolitical spat related to the federal government’s support of an inquiry into COVID-19 origins saw China place sanctions on barley, beef and wine exports.
Read the full story here
China Evergrande Group bondholders are about to find out if the property giant’s liquidity crisis is as dire as it appears.
Interest payments on two Evergrande notes come due Thursday, a key test of whether the developer will continue meeting obligations to bondholders even as it falls behind on payments to banks, suppliers and holders of onshore investment products. Investors are pricing in a high likelihood of default, with one of the notes trading at less than 30% of face value.
A road along the China Evergrande Group Royal Mansion residential development under construction in Beijing.Credit:Bloomberg
Concern over Evergrande’s ability to make good on $US300 billion of liabilities is spilling into China’s financial markets. Shares of other real estate firms have plunged, while the yield on an index of dollar-denominated junk bonds has climbed to about 14%, the highest in nearly a decade. The People’s Bank of China injected $US14 billion of short-term cash into the financial system on Friday in a sign policy makers want to soothe nerves.
The Evergrande payments due Thursday include $US83.5 million of interest on an 8.25%, five-year dollar bond, Bloomberg-compiled data show. There is a 30-day period before a missed payment is considered a default, according to the bond’s covenants. Evergrande needs to pay a 232 million yuan ($US36 million) coupon on an onshore bond the same day.
In total, Evergrande has $US669 million in coupon payments coming due through the end of this year. Some $US615 million of that is on dollar bonds, Bloomberg-compiled data show. Fitch Ratings flagged the increased chance of a payment failure this month when it slashed the firm’s credit grade even deeper into junk territory, citing the risk of “probable†default.
Evergrande is also scheduled to pay interest on bank loans Monday, with a one-day grace period. Monday and Tuesday are public holidays in China. While details on the amount due aren’t publicly available, Chinese authorities have already told major lenders not to expect repayment, people familiar with matter said last week. Evergrande and banks are discussing the possibility of extensions and rolling over some loans, the people said.
Bond investors are rushing to lock in professional help as a potential restructuring for Evergrande edges closer to reality. Addleshaw Goddard has engaged with some of the company’s bondholders and is preparing to establish a creditor committee to negotiate with Evergrande, according to a person familiar with the matter.
Evergrande’s debt pile includes about 571.8 billion yuan of borrowings from banks and other financial institutions such as trusts, with 240 billion yuan due in less than one year. The average borrowing cost stood at 9.02% as of June 30. A portion of Evergrande’s borrowings was secured by a pledge of its properties and equipment, land use rights, cash held at banks and the equity interests of certain subsidiaries.
China Minsheng Banking Corp., Agricultural Bank of China Ltd. and Industrial & Commercial Bank of China Ltd. were among the developer’s principal banks at the end of last year.
Whether the selloff in Evergrande bonds drags down the broader credit market may depend on the company’s ability to buy time with banks. A messy default on loans could stoke fears of widespread contagion, something Xi Jinping’s government has been keen to avoid even as it tightens financing restrictions on overstretched developers and discourages government bailouts.
Bloomberg
Good Morning and welcome to what should be a big day on Markets Live following the big falls on Wall St Friday night.
Emma Koehn and Colin Kruger are editing the blog today and it could be an interesting one given the falls on Wall St Friday night.
This blog is not intended as financial advice.
Wall Street capped an up-and-down week of trading Friday with a broad sell-off that wiped out the major indexes’ gains for the week.
The S&P 500 lost 0.9% and posted its second straight weekly loss. Roughly 80% of the stocks in the benchmark index fell. Technology and communication companies accounted for much of the pullback. Industrial and financial stocks also were big drags on the index. Only the index’s health care sector managed a gain.
The US economy has been left battered by the pandemic.Credit:Bloomberg
The S&P 500 fell 40.76 points to 4,432.99. Despite being down about 0.6% for the week, the index is within 2.3% of the all-time high it set September 2.
The Dow Jones Industrial Average fell 166.44 points, or 0.5%, to 34,584.88, while the tech-heavy Nasdaq composite slid 137.96 points, or 0.9%, to 15,043.97.
Small-company stocks bucked the overall market slide. Bond yields rose broadly. Energy prices fell.
Trading has been choppy throughout the week as investors weighed a mixed bag of economic data reflecting how the economy is weathering a spike in COVID-19 cases and how it might continue its recovery in the coming months. Wall Street is also looking ahead to this Wednesday, when the Federal Reserve is due to deliver its latest economic and interest rate policy update.
“We’ve seen a gradual deterioration over the course of the week, with two little up periods, but for the most part, generally a weakening (stock) market,†said Alan McKnight, chief investment officer at Regions Asset Management.
Bond yields rose. The yield on the 10-year Treasury rose to 1.38% from 1.33% late Thursday.
Technology and communication stocks were the biggest weights on the market. Apple fell 1.8% and Facebook dropped 2.2%.
Oil prices fell 0.9% and natural gas prices fell 4.3%. The weak energy prices helped pull down energy stocks. Oilfield services company Schlumberger fell 1.9%.
Also influencing the market’s gyrations was “quadruple witching,†the simultaneous expiration of four kinds of options and futures contracts. The phenomenon happens four times a year and forces traders to tie up loose ends in contracts they hold. More than 750 billion single stock options were due to mature Friday, said McKnight.
“Just the sheer size of that plays into this,†he said. “It creates more volume in the market and some of the volatility associated with that.â€
Much of the week’s economic data pointed to an economy struggling to move forward in the last few months. Inflation remains a concern for businesses, which are dealing with supply chain problems and facing higher costs. Concerns about the highly contagious delta variant also have analysts worried that consumer spending, a key piece of economic growth, could stall.
Investors will have their eye on the Fed this week to see whether the central bank takes any action to address the impact of rising prices on businesses and consumers. The Fed has said higher costs for raw materials and consumer goods will likely remain temporary as the economy recovers, but analysts are concerned that the higher prices could stick around and dent companies’ bottom lines while also crimping spending.
AP
1 of 1
0 Response to "ASX to open lower 95b Ausnet bid as Transurban grabs Westconnex"
Post a Comment