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Latest Rating Actions by CariCRIS
▪ Telecommunication Services of Trinidad and Tobago rating downgraded to CariA- ▪ Trinidad and Tobago Mortgage Finance Company Limited rating reaffirmed at CariAA- ▪ The Government of Anguilla rating reaffirmed at CariBBB+ ▪ NCB Financial Group rating upgraded to CariA+ ▪ NCB Jamaica Limited rating upgraded to CariA- ▪ NGC’s rating reaffirmed at CariAA+ ▪ NCB Capital Markets Limited’s rating upgraded to CariBBB+ ▪ NCB (Cayman) Limited’s rating reaffirmed at CariA ▪ Colonial Fire & General Insurance Company Limited’s rating reaffirmed at CariA ▪ Home Mortgage Bank’s rating reaffirmed at CariA ▪ Mystic Mountain Limited’s rating upgraded to CariBBB ▪ NiQuan Energy Trinidad Limited’s rating reaffirmed at CariA+ ▪ Sagicor Financial Corporation Limited’s proposed bond issue initial rating assigned at CariAA ▪ Dominica Agriculture, Industrial and Development Bank’s rating reaffirmed at CariBB-
Please visit our website at www.caricris.com for the detailed Rationales on these and other ratings
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REGIONAL
Trinidad and Tobago
Forex shortage causes 5% freight surcharge Persistent shortages of foreign exchange at local commercial banks have led a number of shipping lines, either directly or through their agents, to introduce a 5 per cent Currency Adjustment Factor (CAF), according to the Shipping Association of T& T.
Witco falls $1.46 Overall market activity resulted from trading in 14 securities of which four advanced, seven declined and three traded firm.
Sagicor acquiring CLICO liabilities that exceed assets Sagicor Financial Corporation is paying nothing to CLICO and British American Trinidad to acquire their tradition insurance portfolios, worth over $8 billion, as the regional insurance company is acquiring insurance liabilities that have a greater value that the total investment assets that are to be transferred to Sagicor.
No formal offer to sell MHIL shares CLICO has not made a current, formal offer to sell its Methanol Holdings International Ltd (MHIL) shares to the methanol producer's minority shareholder, Consolidated Energy Ltd. MHIL is now 56.53 per cent owned by CLICO, with 43.47 per cent held by Consolidated Energy, which is 75- per cent owned by Switzerland-based Proman, while Helm AG, a German chemicals marketing concern, owns 25 per cent of the company.
Jamaica
Cari-Med to construct $6 billion complex in Bernard Lodge, St Catherine The Cari-Med Group this morning broke ground for the construction of a new $6 billion complex in Bernard Lodge, St Catherine.
Lee-Chin offers GHL shares to staff in Jamaica Having secured majority interest in insurance conglomerate, Guardian Holdings Limited (GHL), Jamaican/Canadian billionaire Michael Lee-Chin is mooting offering shares in the company to staff, particular to sales staff, as part of an impromptu deal struck on Monday.
Jamaica Continued
Business and consumer confidence dips — but still remains high The level of confidence in the economy by both businesses and consumers has declined in the third quarter of 2019, though the indices are just short of the highest they have ever been, according to a survey undertaken by Market Research Services (MRS) on behalf of the Jamaica Chamber of Commerce (JCC).
Guyana
SBM Offshore completes US$1.14 B financing for Liza Unity SBM Offshore, the Dutch firm that constructed Guyana’s first Floating Production Storage and Offloading (FPSO) vessel, the Liza Destiny, was pleased to announce, yesterday, that it was able to complete the project financing for the second FPSO called Liza Unity for a total of US$1.14 billion.
Guyana a step closer to mitigating effects of oil spills AS Guyana continues to prepare itself for oil production in the first quarter of 2020, the country is a step closer to ensuring that the necessary measures are in place to effectively respond to the unlikely negative impacts of the petroleum industry.
The Bahamas
Mar-Vellous: Resort Unveils $300m Expansion with Water Park BAHA MAR is set to launch a $300m phase of development that will provide jobs for up to 500 people and involve a major water park and entertainment amenity known as Baha Mar Bay.
IMF Slashes Bahamas GDP Growth By 50% The International Monetary Fund (IMF) yesterday slashed The Bahamas' 2019 growth forecast by 50 percent, and projected the economy will contract next year, due to Hurricane Dorian.
Cruise Line: 25% Of Passengers In Nassau Overnight A cruise line yesterday projected that up to one-quarter of its 250,000 annual passengers will “overnight” in Nassau hotels after making its first voyage to the Bahamian capital.
Dominica
Geothermal Energy plant fully funded according to Minister Ian Douglas Minister for Energy Ian Douglas is giving the public the assurance that the government has all the funding required for the construction of the long- awaited Geothermal Energy Plant in the Roseau Valley.
The Dominican Republic
Dominican wind farms 1st power plants to get carbon credits The two phases of the Los Cocos Wind Farm, of the Haina Electricity Generating Company (EGE Haina), became the first power plants in the Dominican Republic to receive Reduced Emission Certificates (CERs) (Cap-and-trade).
Grenada
Grenada is first Country to sign vesting order for Republic Bank acquisition of Scotiabank Prime Minister and Minister of Finance, Dr. the Right Honourable Keith Mitchell, on Wednesday became the first regional leader to sign the vesting order required to facilitate the acquisition of the Bank of Nova Scotia operations by Republic Bank Financial Holdings Limited.
INTERNATIONAL
United States
Morgan Stanley profit beats as bond trading surges; shares jump 4% Morgan Stanley beat estimates for quarterly profit on Thursday, buoyed by higher revenue from bond trading and M&A advisory fees, sending its shares up 4% in premarket trading.
Futures rise on Brexit deal; Netflix, Morgan Stanley earnings adds to cheer Wall Street was set for a higher open on Thursday, after Britain struck a preliminary last-minute deal with the European Union helping to ease some geopolitical jitters, while upbeat earnings from Netflix and Morgan Stanley affirmed a strong start to the reporting season.
United States Continued
Currency hit to North American companies' results stays above $20 billion The negative effect of currency fluctuations on North American companies’ second-quarter results eased slightly from the preceding quarter but remained at a historically elevated level, according to data from treasury and financial management firm Kyriba on Thursday.
United Kingdom
Brexit deal done: two EU officials Britain and the EU have concluded a Brexit deal, two officials with the bloc said.
Brexit deal at hand in Brussels, Johnson struggles to win support at home Britain and the European Union were on the verge of a last-minute Brexit deal on Wednesday but Prime Minister Boris Johnson still has work to do at home to ensure his government and factious parliament approve the plan.
UK retail sales growth softens as department stores disappoint British shoppers grew more cautious about their spending in the three months to September despite rising wages, official figures showed on Thursday, raising concerns about the health of the economy in the run-up to Brexit.
Europe
European markets roar approval at new Brexit deal Confirmation of a new Brexit deal lit a fire under Europe’s financial markets on Thursday, sending sterling to a five-month high, European stocks to a year-and-a-half peak and causing safe-haven assets to plummet.
Unilever suffers dip in emerging markets sales growth A slowdown in India and China put a brake on Unilever’s (ULVR.L) quarterly sales growth, highlighting the challenges facing Chief Executive Alan Jope as he tries to boost the consumer goods giant’s business in emerging markets.
Europe Continued
Ericsson earnings top forecast as 5G takes off Telecoms equipment maker Ericsson (ERICb.ST) beat quarterly earnings expectations on Thursday and lifted its market forecast for this year and its sales target for 2020, saying demand for superfast 5G networks was taking off more quickly than expected.
Euro jumps to near two-month highs on Brexit deal The euro rallied to its highest levels in nearly two months against the dollar on Thursday after the European Union and Britain struck a Brexit deal.
EU's Tusk says Brexit deal 'always better than a no-deal' European Council President Donald Tusk said of a new Brexit deal agreed on Thursday: “A deal is always better than a no-deal.”
European shares hit by Brexit deal doubts; Ericsson jumps European stocks recovered from a weak start on Thursday, helped by strong earnings from Swedish telecoms gear maker Ericsson as signs of continuing political barriers to a Brexit deal hit domestically-focused UK firms.
China
China says it hopes to reach phased trade pact with U.S. as soon as possible China hopes to reach a phased agreement in a protracted trade dispute with the United States and cancel tariffs as soon as possible, the Commerce Ministry said on Thursday, adding that trade wars had no winners.
Tesla gets approval to start manufacturing in China Tesla Inc was added to a government list of approved automotive manufacturers, China’s industry ministry said on Thursday, as it granted the electric-vehicle maker a certificate it needs to start production in the country.
Japan
Tesla to start Powerwall home battery installations in Japan Tesla Inc (TSLA.O) will start installing its Powerwall home power storage batteries in Japan next spring, the U.S. electric car and battery maker said on Tuesday, marking the product’s debut in Asia.
Japan's Fukoku Life triples domestic stock investment as yields tumble Japan’s Fukoku Mutual Life Insurance Co plans to triple its investment in domestic stocks this fiscal year as global monetary easing has crushed overseas bond yields, reducing the appeal of foreign debt.
Global
Oil falls but losses limited by new Brexit deal Oil prices fell on Thursday as industry data showed a larger-than-expected build-up in U.S. inventories but losses were limited after the United Kingdom and the European Union announced they had reached a deal on Brexit.
Chipmaker TSMC boosts capex by up to $5 billion, sees fourth-quarter sales jump on smartphones Apple Inc supplier TSMC raised its 2019 capital spending plan by up to $5 billion on Thursday and forecast a nearly 10% rise in fourth-quarter revenue on strong demand for faster mobile chips and new high-end smartphones.
Oil falls but losses limited by new Brexit deal Thursday 17th October, 2019 – Reuters
Oil prices fell on Thursday as industry data showed a larger-than-expected build-up in U.S. inventories but losses were limited after the United Kingdom and the European Union announced they had reached a deal on Brexit.
Global benchmark Brent crude oil LCOc1 was down by 15 cents at $59.27 a barrel by 1045 GMT. U.S. WTI crude oil CLc1 was down 23 cents at $53.13.
U.S. crude inventories soared by 10.5 million barrels to 432.5 million barrels in the week to Oct. 11, the American Petroleum Institute’s weekly report showed ahead of official government stocks data due on Thursday.[API/S]
Analysts had estimated U.S. crude inventories rose by around 2.8 million barrels last week.
The U.S. Department of Energy is scheduled to publish the official inventory data on Thursday.
“The U.S. sanctions imposed on the Chinese shipping company COSCO are seriously denting demand for imported crude oil... This has a profound impact on U.S. crude oil inventories as reflected in last night’s API report,” said Tamas Varga, an analyst at PVM Oil Associates.
“U.S. refinery maintenance is not helping to reverse the current trend and further builds in U.S. crude oil inventories can be expected in the next few weeks.”
The United States imposed sanctions on COSCO Shipping Tanker (Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co for allegedly carrying Iranian crude oil.
Adding to concerns about the global economy - and therefore oil demand - data from the United States showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity.
Still, the new Brexit deal helped limit the fall in oil prices. Prime Minister Boris Johnson said that Britain and the EU had agreed a “great” new Brexit deal and urged lawmakers to approve it at the weekend.
European Commission President Jean-Claude Juncker also said Britain and the EU had agreed a deal.
However, the Northern Irish party Johnson needs to help ratify any agreement has refused to support the deal.
Hopes of a potential U.S.-China trade deal also supported crude prices. China’s commerce ministry said on Thursday that China hoped to reach a phased agreement with Washington as early as possible, and make progress on cancelling tariffs on each others’ goods.
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Chipmaker TSMC boosts capex by up to $5 billion, sees fourth-quarter sales jump on smartphones Thursday 17th October, 2019 – Reuters
Apple Inc supplier TSMC raised its 2019 capital spending plan by up to $5 billion on Thursday and forecast a nearly 10% rise in fourth-quarter revenue on strong demand for faster mobile chips and new high-end smartphones.
The bullish forecast by the world’s top contract chipmaker should ease investor fears of a global tech slowdown, as the world economic growth outlook has dimmed largely due to a 15-month trade war between the United States and China.
“5G smartphone growth momentum is stronger than we expected... We have good reasons to increase our capex this year and next year,” TSMC CEO C.C. Wei told an earnings briefing after reporting the Taiwanese company’s strongest quarterly profit growth in more than two years.
Wei said TSMC almost doubled its forecast for fifth-generation (5G) smartphone penetration for 2020 to mid-teen percent from a forecast of single digit made just six months ago.
Smartphone makers including Samsung Electronics Co Ltd and Huawei Technologies Co Ltd are racing to develop phones enabled with the 5G technology, which could be up to 100 times faster than current 4G networks.
TSMC, formally Taiwan Semiconductor Manufacturing Co Ltd, whose clients also include Qualcomm Inc and Huawei, raised its 2019 capex to a record $14 billion-$15 billion on Thursday from an earlier forecast of $10 billion-$11 billion.
It expected fourth-quarter revenue of between $10.2 billion and $10.3 billion, up from $9.4 billion a year ago, and gross margin at 48%-50% versus 47.7% in the same period a year ago.
TSMC reported a 13.5% rise in third quarter net profit to T$101.07 billion ($3.30 billion), its strongest growth since the first quarter of 2017, thanks to strong sales to smartphone makers.
The profit figure compared with a T$96.33 billion average forecast drawn from 20 analysts, according to Refinitiv data.
Revenue rose 10.7% to $9.4 billion, compared with the company’s own estimate of $9.1 billion to $9.2 billion.
Sales earned from smartphone makers accounted for 49% of its total revenue, up from 45% from a year ago, while China sales amounted to 20%, up from 15%, making up for modest slowdown in every other major region including North America.
BIGGER THAN INTEL
TSMC shares closed down 1% on Thursday prior to the earnings announcement. They have risen 28% so far this year, giving it a market value of $251.3 billion, bigger than U.S. rival Intel Corp’s $232 billion.
The Taiwan company’s strong results come after Huawei, the world’s No.2 smartphone maker, said on Wednesday it has shipped 185 million smartphones in the first nine months of the year.
That implies a 29% surge in Huawei’s third-quarter shipments, as it benefited from promotions and patriotic purchases in China that more than offset weak international sales on U.S. trade sanctions.
New smartphone launches ahead of the year-end shopping season, as well as rising demand for new technologies such as 5G and artificial intelligence will continue to drive sales for TSMC’s high-performance chips, known as 7nm, analysts said.
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Morgan Stanley profit beats as bond trading surges; shares jump 4% Thursday 17th October, 2019 – Reuters
Morgan Stanley (MS.N) beat estimates for quarterly profit on Thursday, buoyed by higher revenue from bond trading and M&A advisory fees, sending its shares up 4% in premarket trading.
The results wrapped up earnings for the big U.S. banks, which largely beat subdued expectations in a quarter that was overshadowed by trade tensions and worries of an economic slowdown that forced the U.S. Federal Reserve to cut interest rates twice.
“We delivered strong quarterly earnings despite the typical summer slowdown and volatile markets,” Chief Executive Officer James Gorman said in a statement.
Net income attributable to the company rose marginally to $2.17 billion, or $1.27 per share, in the third quarter ended Sept. 30, from $2.11 billion, or $1.17 per share, a year ago.
Net revenue inched up to $10 billion from $9.9 billion.
Analysts were expecting a profit of $1.11 per share on revenue of $9.6 billion, according to IBES data from Refinitiv.
Overall sales and trading revenue rose 10% to $3.45 billion.
Revenue from investment banking, which includes advising on deals and helping corporations raise money, rose 4.3% to $1.64 billion.
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Futures rise on Brexit deal; Netflix, Morgan Stanley earnings adds to cheer Thursday 17th October, 2019 – Reuters
Wall Street was set for a higher open on Thursday, after Britain struck a preliminary last-minute deal with the European Union helping to ease some geopolitical jitters, while upbeat earnings from Netflix and Morgan Stanley affirmed a strong start to the reporting season.
British Prime Minister Boris Johnson said “we have a great new Brexit deal,” lifting the mood across global equities, while he is yet to receive approval for the agreement in a vote at a session of the British parliament on Saturday.
“Although, the agreement reached between the U.K. and EU needs to be approved by the British parliament, the headline news coupled with U.S. earnings should boost market sentiment,” said Peter Cardillo, chief market economist at Spartan Capital Securities in a client note.
Netflix Inc (NFLX.O) shares jumped 8.7% in premarket trading, after the video streaming service provider added slightly more paying subscribers than Wall Street expected in the third quarter.
Morgan Stanley (MS.N) gained 4% after the big lender beat analysts’ expectations for quarterly profit, buoyed mainly by a strong performance in its trading business.
This followed upbeat results earlier in the week from major U.S. lenders JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N), Bank of America (BAC.N) and healthcare giants Johnson & Johnson (JNJ.N) and UnitedHealth Group Inc (UNH.N).
The mood was also lifted after the Chinese Commerce Ministry said it hoped to reach a phased agreement in a protracted trade dispute with the United States and cancel tariffs as soon as possible.
Rising uncertainties around the U.S.-China trade war, increasing geopolitical risks and weak domestic economic indicators have recently hit sentiment, with investors now focusing on third-quarter earnings for clarity on these factors impacting Corporate America.
Analysts are expecting S&P 500 third-quarter earnings to fall by 3%, which would mark the first year-on-year contraction since the earnings recession that ended in 2016.
However, of the 43 S&P 500 companies to have posted quarterly results so far, 86% have beaten expectations.
At 7:12 a.m. ET, Dow e-minis 1YMcv1 were up 73 points, or 0.27%. S&P 500 e-minis EScv1 rose 8.25 points, or 0.28% and Nasdaq 100 e-minis NQcv1 were up 26.5 points, or 0.33%.
Among other stocks, International Business Machines Corp (IBM.N) slipped 5% after it missed quarterly revenue estimates due to weakness in its global technology services unit.
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Currency hit to North American companies' results stays above $20 billion Thursday 17th October, 2019 – Reuters
The negative effect of currency fluctuations on North American companies’ second-quarter results eased slightly from the preceding quarter but remained at a historically elevated level, according to data from treasury and financial management firm Kyriba on Thursday.
The collective exchange rate impact, including on companies in the United States, Canada and Mexico, was $21.01 billion, Kyriba said in a report.
This was less than the $23.39 billion negative effect in the first quarter, but marks the third straight quarter that the hit has totaled more than $20 billion, the longest such streak in more than a decade.
“What’s interesting about this is we continue to have this trend of north of $20 billion three quarters in a row. We have not seen that since we started this research in 2008-09,” Wolfgang Koester, senior strategy officer of Kyriba, said.
“We’ve also never had a $44 billion loss for the start of a year since we’ve been reporting it.”
Kyriba, which acquired currency risk consulting firm FIREapps earlier this year, said 291 North American companies reported negative currency impacts in the second quarter, roughly the same as in recent quarters.
A stronger dollar can hurt large U.S. companies that derive much of their revenue from abroad as they repatriate foreign earnings.
At the end of the second quarter, the U.S. dollar had risen nearly 3% against the euro from a year earlier. EUR=
Investors have favored the dollar for many months, thanks to relatively high U.S. interest rates and a strong economy.
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European markets roar approval at new Brexit deal Thursday 17th October, 2019 – Reuters
Confirmation of a new Brexit deal lit a fire under Europe’s financial markets on Thursday, sending sterling to a five-month high, European stocks to a year-and-a-half peak and causing safe-haven assets to plummet.
It wasn’t a completely clear Brexit road ahead. Familiar Irish border snags remained a spoiler for Northern Ireland’s Democratic Unionist Party, but after three years of tortuous uncertainty any deal was a deal to cheer.
“We have a great new Brexit deal,” British Prime Minister Boris Johnson said and “Where there is a will, there is a deal - we have one!” echoed European Commission President Jean-Claude Juncker as the news broke from Brussels.
Sterling, which has been the key gauge of Brexit sentiment all along, jumped more than a percent against the dollar, taking its gains over the last six days to 6% and which if it holds, will be a more than 30-year record.
It ran as far as $1.2988 GBP= to the highest against the euro since May at 0.86 pence. The euro also jumped to a near- two-month high against the dollar of $1.1139 EUR= in its sixth day of gains in the past seven.
“The deal has been announced, but the key hurdle of being voted into the UK Parliament remains,” said ING’s chief EMEA FX and interest rate strategist Petr Krpata.
London’s heavyweight FTSE and the pan-European STOXX 600 both jumped 0.6%, having been flat beforehand. UK Gilts GB10YT=RR, German Bunds DE10YT=RR, the Swiss franc, gold and most other safe havens began selling off.
Barclays Capital European equities strategist Emmanuel Cau said tha deal “should provide legs to the rotation from UK exporters to domestic plays” as it should help rebuild confidence.
TALKING TURKEY
Wall Street was expected to reopen higher and emerging-market stocks .MSCIEF gained for a sixth day — their longest winning streak since early April — after U.S. Treasury Secretary Steven Mnuchin said U.S. and Chinese trade negotiators were nailing down a Phase 1 trade deal text for their presidents to sign next month. [nL2N27126V]
But U.S. retail sales fell for the first time in seven months, suggesting manufacturing-led weakness was spreading to the broader economy. U.S. consumption has been one of few bright spots in the global economy, so the data fanned worries the trade war would ultimately tip the world into recession.
“While the U.S. suspended a hike in tariffs, it hasn’t gone as far as scrapping the tariffs altogether, so it is hard to expect a quick pick-up in the economy,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.
The dollar index =USD was last at 97.692, having reached its lowest level since Aug. 27. The dollar was flat at 108.75 JPY= after peaking at 108.90 to the Japanese yen and down against the euro at $1.11 EUR=.
In commodities, oil prices slipped after industry data showed a larger- than-expected build-up in U.S. crude stockpiles, adding to concerns that global demand for oil may weaken amid further signs of an economic slowdown.
Brent crude LCOc1 futures fell 0.25% to $59.27 a barrel. U.S. West Texas Intermediate crude CLc1 lost 0.5% to $53.01.
Turkey’s fragile markets remained in focus after the country’s military advance in Syria created tensions with United States and Europe and incurred mild sanctions. Turkish President Tayyip Erdogan is to meet with U.S. Vice President Mike Pence and Secretary of State Mike Pompeo later.
Although the U.S. pulled its troops out of the area to allow Turkey’s push, Pence and Pompeo are expected to urge Erdogan to declare a ceasefire, something Erdogan says will “never” happen. U.S. President Donald Trump warned of “devastating” sanctions if discussions did not go well.
Turkish stocks were down 1.8% and the lira weakened to 5.8877 to the dollar TRY=. It has lost nearly 5% this month, making it the world's worst performer for October.
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Unilever suffers dip in emerging markets sales growth Thursday 17th October, 2019 – Reuters
A slowdown in India and China put a brake on Unilever’s (ULVR.L) quarterly sales growth, highlighting the challenges facing Chief Executive Alan Jope as he tries to boost the consumer goods giant’s business in emerging markets.
Since taking the reins in January, Jope has promised accelerated growth through investment in the likes of Vietnam and Bangladesh, where growing populations and an emerging middle class are driving demand for household products.
Yet two of the Dove soap and Ben & Jerry’s ice cream maker’s biggest emerging markets show signs of slowing growth, with the impact of trade wars hitting domestic consumption in China and irregular monsoons curbing rural spending in India.
“There have definitely been signs of slowing markets in India and China ... In India, we are going from very high rates of market growth to growth rates in the mid-single digits of growth,” Unilever finance chief Graeme Pitkethly told Reuters.
In China, sales growth within bricks-and-mortar retailers slowed to 1% from 2% a year earlier, he added.
In Argentina, another of its big emerging markets, hyperinflation has kept shoppers away from stores and led to a 4% drop in volumes.
These factors contributed to a sharp slowdown in emerging market sales, which were up 5.1% in the third quarter but a far cry from the 7.4% growth in the previous quarter. Emerging markets contribute 60% to the company’s overall sales.
COMPETITIVE MARKETS
Growth in developed markets also stalled, falling 0.1% as shoppers shift to more niche products and Europe faces tougher comparisons with last year, when a warm summer boosted ice cream sales in the region.
Overall, underlying sales growth rose to 2.9% in the quarter, missing an average forecast of 3%, according to a company supplied analyst consensus. That lagged rival Nestle (NESN.S), which reported 3.7% sales growth for the period.
Nestle also reported flat growth in China and said it has been unable to raise prices in competitive markets globally.
Still, Unilever reported a 5.8% rise in turnover to 13.3 billion euros, ahead of analyst estimates, helped by acquisitions and a weaker pound.
It also stuck to its full-year target for underlying sales growth in the lower half of a 3% to 5% range and a 20% operating margin in 2020.
Shares in the Anglo-Dutch company were up 1.7% at 46.89 pounds in morning trade and were the third-biggest gainer on the blue-chip FTSE 100 index .FTSE. The stock is up 11.2% this year.
Nestle shares were down 0.5% at 105.54 Swiss francs.
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Ericsson earnings top forecast as 5G takes off Thursday 17th October, 2019 – Reuters
Telecoms equipment maker Ericsson (ERICb.ST) beat quarterly earnings expectations on Thursday and lifted its market forecast for this year and its sales target for 2020, saying demand for superfast 5G networks was taking off more quickly than expected.
5G networks are at the center of a brewing technology war between United States and China, as they are expected to host critical functions from driverless vehicles to smart electric grids and military communications, underscoring their importance to national security.
Washington has put Chinese supplier Huawei on a trade blacklist and led a worldwide campaign to persuade allies to ban the firm from their 5G networks, alleging its equipment could be used by Beijing for spying - which Huawei has repeatedly denied.
Sweden’s Ericsson, which together with Finland’s Nokia (NOKIA.HE) and Huawei sells the bulk of radio access network equipment that is key for 5G mobile services, said it was now targeting sales of 230-240 billion Swedish crowns ($23.5-24.5 billion) in 2020, up from 210-220 billion previously.
“We see a much faster pace of introduction of 5G than expected,” Ericsson CEO Borje Ekholm told a conference call, citing particular strength in the United States and South Korea.
“Should we have expected this? To some extent we should have, but the reality is it’s happening even faster than we expected just a few months ago”.
Ericsson shares jumped as much as 7.4% to a three month high of 89.94 crowns, pulling up Nokia’s shares in their wake.
The Swedish company’s adjusted third-quarter operating earnings rose to 6.5 billion crowns from 3.8 billion a year earlier, corresponding to an 11.4% margin and beating the 5.2 billion mean forecast seen in a Refinitiv poll of analysts.
Still, Ericsson kept its target for an operating margin of more than 10% for 2020, citing short-term pressure from some contracts and higher initial costs for new 5G products.
The company said it expected 5G deployments in China, where it has invested to gain market share, to start “near term”, adding they were likely to have “challenging margins” initially.
It changed its 2022 margin target to 12-14% from more than 12% previously.
TARGETS CONSERVATIVE
Activist investor Cevian Capital, Ericsson’s largest owner by shares and third largest by votes, said the targets were conservative and the company could deliver more.
“Borje (Ekholm) continues to set targets at a level where it’s basically impossible not to exceed them”, Cevian managing partner Christer Gardell told Reuters.
Ericsson said it now expected the Radio Access Network (RAN) equipment market to grow by 5% in 2019, up from July’s forecast for 3% growth.
Ericsson shares were up 6.7% at 0840 GMT, the biggest rise by a European blue-chip stock. But they are still down 1% since the firm’s second-quarter results in July, when it warned costs related to winning new contracts for its network business would likely hit profit margins in the second half of the year.
Credit Suisse said in a research note that Ericsson’s third-quarter results were “better on all metrics”, while Carnegie said the update was “very strong”.
While some analysts are expecting Ericsson to benefit from Huawei’s problems, Ekholm said the firm had still not seen any impact on sales from the turmoil surrounding its rival, which had instead made some customers more cautious about investing.
“What it has created is uncertainty in the market and perhaps a certain worry amongst equipment suppliers,” he told Reuters. “So if we see anything, it’s some short-term headwind rather than something positive”.
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Euro jumps to near two-month highs on Brexit deal Thursday 17th October, 2019 – Reuters
The euro rallied to its highest levels in nearly two months against the dollar on Thursday after the European Union and Britain struck a Brexit deal.
Though the deal remains to be ratified by British lawmakers, traders briefly sent the British pound GBP=D3 and the euro up by more than one percent and 0.5 percent EUR=EBS respectively.
The euro has struggled, falling more than 3% so far this year, as a broader economic slowdown in Europe fuelled by the protracted trade war between Washington and China has hurt investor sentiment towards the single currency.
But hopes of a Brexit deal this week has dragged the euro out of a downtrend and pushed it above $1.11 for the first time in a month.
Britain clinched a Brexit deal with the European Union on Thursday, European Commission President Jean-Claude Juncker said, just a few hours before the start of a summit of the bloc’s leaders in Brussels.
“A move above $1.1210.. and the 200-day moving average is needed to boost confidence that a low is in place,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
On Thursday, the single currency briefly gained 0.5% to $1.1140 before trimming some gains to stand 0.4% up at $1.1112.
The euro’s surge washed over into currencies that extended gains against the struggling dollar.
Sterling surged more than 1% and British share prices rallied on Thursday on the Brexit deal news. [GBP/]
Against a basket of its rivals .DXY, the greenback fell 0.4% to 97.496, its lowest since late-August.
The dollar also suffered in early London trading due to weak U.S. data.
U.S. retail sales fell for the first time in seven months in September while a report from the U.S. Federal Reserve described the economy’s progress in cautious terms.
Elsewhere, the Norwegian crown weakened to an all-time low of 10.1800 against the euro EURNOK=D3. Some analysts blamed the crown’s recent weakness on global trade jitters, while others said the speed and magnitude of the drop were hard to explain.
The Australian dollar AUD=D3 held near the day's highs, up 0.3% against the dollar after jobs data showed buoyant hiring, lowering chances of monetary easing in November.
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EU's Tusk says Brexit deal 'always better than a no-deal' Thursday 17th October, 2019 – Reuters
European Council President Donald Tusk said of a new Brexit deal agreed on Thursday: “A deal is always better than a no-deal.”
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European shares hit by Brexit deal doubts; Ericsson jumps Thursday 17th October, 2019 – Reuters
European stocks recovered from a weak start on Thursday, helped by strong earnings from Swedish telecoms gear maker Ericsson as signs of continuing political barriers to a Brexit deal hit domestically-focused UK firms.
By 0820 GMT, the pan-European STOXX 600 was little changed, with bourses in Germany .GDAXI, Spain .IBEX and Italy .FTMIB rising about 0.2%.
Ericsson (ERICb.ST) was the index’s top performer, jumping 6.4% after posting quarterly core earnings that were well ahead of expectations and lifting its 2020 sales target. Shares of Finnish peer Nokia (NOKIA.HE) also gained 3.4%.
“There was a consensus view on Ericsson that maybe they’ve disappointed on the margins which was holding people back,” said Mark Taylor, sales trader at Mirabaud.
“But there’s a lot of demand to get into the 5G theme, and Ericsson’s probably the biggest, most liquid name in Europe to play that theme.”
Coming off its best weekly performance since February, the STOXX 600 has fallen modestly since last Friday in a week dominated by worries over whether UK will be able to seal a deal to smoothly leave the European Union by Oct. 31.
Northern Ireland’s Democratic Unionist Party maintained on Thursday that it could not support the withdrawal agreement proposed by Prime Minister Boris Johnson and the European Union in its current form.
That stoked doubts over whether Johnson will be able to win the British parliament’s approval for any deal, although talks are continuing.
“We also know that if the DUP doesn’t go for it, then it’s likely that neither will many of the hardline pro-Brexit Conservative MPs who’ve rejected the deal in the past,” said ING economist James Smith.
London's blue-chip FTSE 100 .FTSE outperformed with a 0.4% rise as the index's export-focused firms benefited from a weakness in the pound. The domestically-focused midcaps index .FTMC, however, dropped 0.3% and Irish shares fell 0.3%
Fears of a slide into recession continue to dog Europe and not all earnings were upbeat, with banking software maker Temenos (TEMN.S) tumbling more than 13%, its worst day in more than four years, after traders said third-quarter core profits missed expectations.
Nestle (NESN.S) was the biggest drag on the benchmark index as organic sales growth dipped in the third quarter, outweighing the announcement of a plan to buy back up to 20 billion Swiss francs ($20.13 billion) in shares.
Shares of Pernod Ricard (PERP.PA) slipped 2.8% after the spirits maker missed expectations for quarterly organic sales, reflecting slower growth rates in China and India and French car parts group Faurecia (EPED.PA) dropped 6.9% after posting lower-than-expected third quarter sales.
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Brexit deal done: two EU officials Thursday 17th October, 2019 – Reuters
Britain and the EU have concluded a Brexit deal, two officials with the bloc said.
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Brexit deal at hand in Brussels, Johnson struggles to win support at home Thursday 17th October, 2019 – Reuters
Britain and the European Union were on the verge of a last-minute Brexit deal on Wednesday but Prime Minister Boris Johnson still has work to do at home to ensure his government and factious parliament approve the plan.
“The basic foundations of this agreement are ready and theoretically we could accept a deal tomorrow,” said European Council President Donald Tusk, who will chair a summit of EU leaders, including Johnson, on Thursday and Friday.
However, Tusk said in comments broadcast by Polish broadcaster TVN 24 that “certain doubts have appeared from the British side”, a reference to Johnson’s need to win over politicians who fear he may have conceded too much.
French President Emmanuel Macron said an agreement was being finalised and hoped it could be approved on Thursday.
“I want to believe an agreement is being finalised and that we will be able to endorse it tomorrow,” Macron said at a news conference with German Chancellor Angela Merkel in Toulouse.
Merkel said she believed slightly more that a deal was possible.
Any approval by the EU of a deal at their summit would be conditional on the British House of Commons backing it at a special sitting on Saturday. A short delay of Britain’s Oct. 31 departure date would follow to polish the detail.
If Johnson fails to nail down the terms of Britain’s exit from the European Union, or fails to get a deal ratified in the UK house, he will almost certainly have to seek a longer extension of the departure date more than three years after the country voted in a referendum to leave.
After another day of technical talks in Brussels, EU officials said an agreement had been reached on customs arrangements for Northern Ireland, ‘level playing field’ provisions on labor and environment standards that the EU has insisted on to ensure fair competition under a new trade deal after Brexit.
That also went for the consent by the Northern Irish assembly renewable every four years to go on aligning the province’s regulations with the EU ones after Brexit.
VAT was the only outstanding element, EU sources said, and a UK government source expected no further movement on Wednesday toward finalizing the deal. The person said that there were issues holding up the deal both at home and with the EU.
While differences over the divorce between the world’s fifth-largest economy and its biggest trading bloc had almost all been resolved, “overall backing from the British government” was still needed to seal an agreement, an EU diplomat said.
The main stumbling block remaining for Johnson appeared to be objections from a small Northern Ireland political party whose votes he must secure to get any deal through parliament.
WINNING OVER THE DUP
The sticking point in the long-running talks with Brussels over Brexit, which has already been delayed twice, was the border between EU member Ireland and the British province of Northern Ireland.
The conundrum for London was how to prevent the frontier becoming a backdoor into the EU’s single market without erecting controls which could undermine the 1998 peace agreement that ended decades of conflict in the province.
It eventually proposed that Northern Ireland remain in the UK customs area. However, tariffs would apply on goods crossing from mainland Britain to Northern Ireland if they were deemed to be headed further, to Ireland and the bloc’s single market.
To get a deal that hinges on this through parliament, where he does not have a majority, Johnson will likely need backing from the Democratic Unionist Party (DUP), which says maintaining the United Kingdom’s economic integrity is sacrosanct.
Pro-Brexit lawmakers from Johnson’s governing Conservative Party say they will only back a deal if it has gained the support of the DUP, which fears Northern Ireland could be left behind in the EU’s orbit when Britain leaves.
A central figure in the 2016 referendum who came to power as leader of the Conservative Party in July, Johnson has pledged to take Britain out of the EU on Oct. 31 with or without a deal.
But parliament has passed a law saying Britain cannot leave without one, and Johnson has not explained how he can get around that.
EMERGENCY BREXIT SUMMIT AHEAD?
Irish Prime Minister Leo Varadkar said earlier on Wednesday that if an agreement cannot be reached before the summit, there was still time left to act before the Oct. 31 deadline.
“October 31 is still a few weeks away and there is the possibility of an additional summit before that if we need one ... Although time is running short, I am confident that (Ireland’s) objectives can be met,” he said.
Sterling was on a roller coaster ride through the day as varying reports suggested a deal was nigh or pointed to last-minute hurdles.
Britain’s Brexit minister, Steve Barclay, said he would not accept a delay beyond Oct. 31, even if it was only used to tie up the necessary legal requirements of an agreement. Extension options mulled by the EU range from an additional month to half a year or more.
If necessary, the bloc may hold an emergency summit later in October to either approve a deal, grant an extension or make final preparations for a chaotic split.
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UK retail sales growth softens as department stores disappoint Thursday 17th October, 2019 – Reuters
British shoppers grew more cautious about their spending in the three months to September despite rising wages, official figures showed on Thursday, raising concerns about the health of the economy in the run-up to Brexit.
Consumer spending has been the biggest driver of British economic growth since June 2016’s referendum to leave the European Union, but there have been increasing signs that this is starting to soften.
Looking at the third quarter as a whole, which strips out monthly volatility, quarterly sales growth held steady at 0.6% while the annual pace of expansion dropped to 3.1% from 3.6% in the second quarter, the weakest since the late 2018.
Stripping out inflation adjustments, growth in retail spending was the weakest in more than three years.
Sterling showed little reaction to the data, with markets focused on whether Prime Minister Boris Johnson can broker a Brexit deal that is acceptable both to Brussels and Britain’s parliament before the country is due to leave on Oct. 31.
“September’s retail sales figures were perhaps a bit of a relief given the intense Brexit uncertainty, but were hardly a picture of strength,” economist Ruth Gregory of consultancy Capital Economics said.
Monthly retail sales volumes were flat in September and annual sales growth picked up to 3.1% from a weak 2.6% in August, the Office for National Statistics said - slightly less of a recovery than economists had forecast in a Reuters poll.
“Food shops bounced back after a weak few months, but there was yet more bad news for department stores, with sales continuing to fall in September,” ONS statistician Rhian Murphy said.
Some retailers said unusually rainy weather had hurt demand too, the ONS added.
DEPARTMENT STORES DOWN
Sales in the ‘non-specialized stores’ category - which includes department stores - dropped by an annual 2.0% in the third quarter, the biggest decline since the first three months of 2009 when Britain was mired in recession.
At the start of this month, major retailer John Lewis Partnership said it would cut a third of senior managers and merge its supermarket and department store divisions to better tackle challenges from online stores.
The lackluster ONS figures are less bleak than a British Retail Consortium survey that showed the biggest fall in retail spending of any September since at least the mid-1990s.
In recent months, surveys by the BRC and Confederation of British Industry have painted a weaker picture of the retail sector than subsequent official data - in part due to the former focusing more on large high-street chains.
The ONS data has a broader sample that includes more online and small retailers, and its measure of retail spending showed annual growth slowing to 3.5% in the third quarter from 4.1% in the second quarter, the weakest since the second quarter of 2016.
Until recently consumers appeared to have largely taken Brexit in their stride, helped by weaker inflation and stronger growth in wages which are rising at the fastest pace in more than a decade.
That has aided the world’s fifth-biggest economy at a time when many companies have been cutting back on investment because of uncertainty about Brexit.
A separate Bank of England survey on Thursday showed British lenders expect business loans will dry up in the next few months at the fastest rate since the financial crisis, boding poorly for investment as Brexit nears.
There have also been signs that consumers are turning more cautious as Britain’s political crisis drags on.
Several British retailers, including supermarkets Asda (WMT.N) and Morrisons (MRW.L) and home improvement group Kingfisher (KGF.L), have highlighted the drag of Brexit uncertainty on bigger purchases.
But clothing retailer Next (NXT.L) attributed a disappointing start to autumn trading to unusually warm weather in parts of Britain, rather than shoppers holding back on buying new items because of Brexit.
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Tesla to start Powerwall home battery installations in Japan Thursday 17th October, 2019 – Reuters
Tesla Inc (TSLA.O) will start installing its Powerwall home power storage batteries in Japan next spring, the U.S. electric car and battery maker said on Tuesday, marking the product’s debut in Asia.
The 13.5 kilowatt-hour (kWh) Powerwall can store power generated by solar panels and costs 990,000 yen ($9,135), including the Backup Gateway system which manages the grid connection, but excluding installation costs and retail tax.
It will be sold directly online by Tesla or via certain third-party installers.
The company has been taking orders online from Japanese customers since 2016, but had not announced when installations would start, a company spokeswoman said.
“Tesla believes that the Japanese home battery market has big growth potential,” Shinji Asakura, country manager of energy products in Japan, told reporters in Tokyo.
He cited feed-in-tariffs, which had guaranteed minimum power prices to spur solar development, are starting to expire later this year.
The need for backup power supply during outages due to natural disasters also offers growth potential, he said.
Tesla has installed Powerwall systems at about 50,000 sites in seven countries since its launch in 2015, a company official said.
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Japan's Fukoku Life triples domestic stock investment as yields tumble Thursday 17th October, 2019 – Reuters
Japan’s Fukoku Mutual Life Insurance Co plans to triple its investment in domestic stocks this fiscal year as global monetary easing has crushed overseas bond yields, reducing the appeal of foreign debt.
Fukoku, which had 6.28 trillion yen ($57.74 billion) in total assets as of March, plans to halve its investments in foreign bonds this fiscal year.
The company bets it can generate better returns on domestic stocks with attractive dividends, Yusuke Onodera, general manager of investment planning at Fukoku, told Reuters.
In August, government bond yields around the world plunged to unprecedented levels, pushing yields on some debt into minus territory. In some cases, entire yield curves went negative, which has made some institutional investors more cautious.
“Given low domestic bond yields and the risks from investing in overseas bonds, it makes sense to buy Japanese stocks that promise to deliver good dividends,” Onodera said in an interview on Wednesday.
Bond yields have since risen from their lows touched in August, but expectations are still strong that central banks in Europe, the United States and elsewhere will need to ease monetary policy further.
A bruising trade war between the United States and China is slamming the brakes on global economic growth, and the situation could get worse unless the world’s two-largest economies find a way to quickly scale back punitive tariffs.
For the year ending March 2020, Fukoku plans to invest 60 billion yen in Japanese equities. This is an upward revision from the 20 billion yen in purchases it had planned in May, the insurer said.
The insurer will look to buy Japanese equities on dips that have higher dividend yields than returns expected from overseas debt, Fukoku’s Onodera said.
Some equity analysts are worried that corporate profits will weaken, but the chance of corporate share buybacks and expectations for stable dividends still make Japanese shares attractive, he said.
In fiscal 2019, Fukoku will buy 20 billion yen in foreign bonds, half the 40 billion yen it had planned in May. Fukoku will reduce purchases of currency-hedged overseas debt to 40 billion yen from its previous plan of 50 billion yen in purchases.
The insurer now plans to sell 40 billion yen in unhedged overseas debt this fiscal year, more than its previous plan for a 30 billion yen reduction.
The U.S. Federal Reserve has cut interest rates twice this year in response to sluggish inflation and worries about the U.S.-China trade war. Traders are betting that the Fed will cut rates further, futures show.
In September, the European Central Bank stunned investors by agreeing to cut rates deeper into negative territory and revive purchases of government debt as the continent struggles with the threat of recession.
Fukoku will reduce holdings of yen-denominated debt by 50 billion yen in fiscal 2019, more than its previous plan of a 30 billion yen reduction issued in May.
Years of aggressive monetary easing by the Bank of Japan (BOJ) has depressed yields, making it harder for institutional investors to generate returns on Japanese government bonds.
Expectations are growing that the BOJ will expand its negative interest rate policy due to worries about the economy but take some measures to steepen the yield curve.
Onodera questioned the BOJ’s ability to steepen the yield curve, saying the central bank can push down yields at the short end but has not found a way to make longer-term yields gain.
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China says it hopes to reach phased trade pact with U.S. as soon as possible Thursday 17th October, 2019 – Reuters
China hopes to reach a phased agreement in a protracted trade dispute with the United States and cancel tariffs as soon as possible, the Commerce Ministry said on Thursday, adding that trade wars had no winners.
A phased agreement would help restore market confidence and reduce uncertainty, ministry spokesman Gao Feng told reporters, adding that both sides were maintaining close communication.
“The final goal of both sides’ negotiations is to end the trade war and cancel all additional tariffs,” Gao said. “This would benefit China, the U.S. and the whole world. We hope that both sides will continue to work together, advance negotiations, and reach a phased agreement as soon as possible.”
U.S. President Donald Trump on Oct. 11 outlined the first phase of a deal and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done.
Trump had originally planned to proceed with a rise in tariffs to 30% from 25% on about $250 billion worth of Chinese goods last week. But the U.S. administration has yet to make a decision on how to address planned 10% tariffs on roughly $156 billion of Chinese goods due to take effect on Dec. 15.
U.S. and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month, U.S. Treasury Secretary Steven Mnuchin said on Wednesday.
Mnuchin said the Trump administration’s “objective” was for the agreement to be signed between the presidents of the two countries at a Nov. 16-17 summit of Asia-Pacific Economic Cooperation countries in Santiago, Chile.
Working-level representatives from both countries were working on specifics of an agreement now, Gao said.
There have been positive signs from China in recent days.
China’s securities regulator on Friday unveiled a firm timetable for scrapping foreign ownership limits in futures, securities and mutual fund companies for the first time. Increasing foreign access to the sector is among the U.S. demands at the trade talks.
A day before, the U.S. Department of Agriculture confirmed net sales of 142,172 tonnes of U.S. pork to China in the week ended Oct. 3, the largest weekly sale to the world’s top pork market on record.
Trump said China had agreed to make purchases of $40 billion to $50 billion of U.S. agricultural goods. Mnuchin said the purchases would be scaled up to that amount annually.
On Wednesday, Chinese Premier Li Keqiang said China would remove business restrictions on foreign banks, brokerages and fund management firms, without giving details.
“Since this year, under the effect of China-U.S. trade frictions, trade and investment between the U.S. and China have fallen,” Gao said.
“This fully demonstrates that trade wars have no winners.”
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Tesla gets approval to start manufacturing in China Thursday 17th October, 2019 – Reuters
Tesla Inc was added to a government list of approved automotive manufacturers, China’s industry ministry said on Thursday, as it granted the electric-vehicle maker a certificate it needs to start production in the country.
The list was published by the Ministry of Industry and Information Technology.
This means “the green light is fully given to Tesla for production in China,” said Yale Zhang, head of the Shanghai-based consultancy Automotive Foresight. Tesla can start production any time, he said
Tesla did not immediately respond to an e-mailed request for comment. The $2 billion factory it is building in the eastern Chinese city of Shanghai is its first car manufacturing site overseas.
Reuters reported earlier this month that Tesla plans to start production at its China factory this month. It is unclear when it will meet year-end production targets because of uncertainties around orders, labor and suppliers.
Tesla intends to produce at least 1,000 Model 3s a week from the Shanghai factory by the end of this year, as it tries to boost sales in the world’s biggest auto market and avoid higher import tariffs imposed on U.S. cars.
The factory, China’s first fully foreign-owned car plant, also reflects Beijing’s broader shift to open up its car market.
Shanghai authorities have offered Tesla assistance to speed up construction, and China excluded Tesla models from a 10% car purchase tax on Aug. 30.
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Forex shortage causes 5% freight surcharge Thursday 17th October, 2019 – Trinidad Express Newspaper
PERSISTENT shortages of foreign exchange at local commercial banks have led a number of shipping lines, either directly or through their agents, to introduce a 5 per cent Currency Adjustment Factor (CAF), according to the Shipping Association of T& T.
The 5 per cent surcharge 'is effectively an increase in the freight rate, if paid in local currency,' and would impact both imports and exports, the Shipping Association said in a statement on Tuesday.
Asked to assess the impact of the measure on the cost of goods imported in T& T, general manager of the association, Joanne Edwards said: 'The increase to the price of goods should be directly proportional to the CAF. Unless of course the importer decides not to pass along the cost.'
In the statement, the Shipping Association said: 'A CAF is a mechanism used in international shipping to offset/mitigate against losses where cargo and/or freight is payable in foreign currency and this currency is subject to major exchange rate fluctuations (or shortages). It is often charged as a percentage of the basic sea freight.'
It explained that given what is now a persistent shortage of foreign exchange, carriers/shipping lines and/or shipping agents have been forced to engage in a number of sophisticated financial options (including cross-currency swaps) to acquire the foreign exchange needed for repatriation.
Even with the cross-currency swaps, 'there are now chronic delays in sourcing the foreign exchange resulting in a backlog of outstanding foreign currency payments.'
The shipping lines are no longer prepared to absorb the associated costs and risks, and have opted to introduce the surcharge to mitigate the risks and recover the costs.
While the CAF will not be applied when payment is being made in the required foreign currency, affected parties can expect to see charges starting at 5 per cent of basic freight rates if payment is in TT dollars, the association said.
The Shipping Association said the charge will of course be dependent on the cost structure/s faced by the liner or shipping agent.
'Importers/ exporters /manufacturers/ consignees are encouraged to demand an explanation from their agent where they experience a charge way in excess of this baseline (5 per cent),' according to the association.
Reacting to the imposition of the measure, T& T Chamber CEO, Gabriel Faria said the body called various shipping lines who explained that they pay for the shipping costs in foreign currency which they need to source and it takes a lot of administrative oversight to get the required funds over what could be sometimes weeks.
'Based on this they decided to allow their local customers to pay in the currency the shipping lines bills them at or charge an administration fee if the customer wanted to pay in TT dollars,' said Faria.
He said the introduction of the CAF leaves customers who have to pay for shipping with three choices: Pay in the currency the shipping line invoices in, which is usually US dollars; pay in TT$ and pay an additional fee to the agent to deal with the administration process; or select a shipping line which is not part of the group and negotiate to pay in TT dollars.
Edwards said she expected the 5 per cent charge to be universally applied in T& T, adding: 'Generally, once one liner adopts a charge, all follow suit since they're all generally affected by the same phenomena.'
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Witco falls $1.46 Thursday 17th October, 2019 – Trinidad Express Newspaper
OVERALL market activity resulted from trading in 14 securities of which four advanced, seven declined and three traded firm.
Trading activity on the first tier market registered a volume of 452,864 shares crossing the floor of the Exchange valued at $20,847,151.46.
• The Composite Index declined by 3.75 points (0.27 per cent) to close at 1,410.57.
• The All T& T Index declined by 5.63 points (0.32 per cent) to close at 1,750.71.
• The Cross Listed Index declined by 0.25 points (0.17 per cent) to close at 145.14.
• The SME Index remained at 80.00.
Massy Holdings Ltd was the volume leader with 300,000 shares changing hands for a value of $16,429,315.40, followed by Scotiabank T& T with a volume of 53,140 shares being traded for $3,145,356.60. Sagicor Financial Corporation contributed 32,352 shares with a value of $341,947.76, while JMMB Group added 29,380 shares valued at $60,062.40.
Massy Holdings registered the day's largest gain, increasing $0.21 to end the day at $54.76. Conversely, West Indian Tobacco Company registered the day's largest decline, falling $1.46 to close at $104.54.
CLICO Investment Fund was the only active security on the mutual fund market, posting a volume of 28,187 shares valued at $676,586.70. CLICO Investment Fund declined by $0.07 to end at $24. Calypso Macro Index Fund remained at $15.75.
The second tier market did not witness any activity.
The SME market did not witness any activity. CinemaOne remained at $8. The USD equity market did not witness any activity. MPC Caribbean Clean Energy Ltd remained at US$1.
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Sagicor acquiring CLICO liabilities that exceed assets Wednesday 16th October, 2019 – Trinidad Express Newspaper
SAGICOR Financial Corporation is paying nothing to CLICO and British American Trinidad to acquire their tradition insurance portfolios, worth over $8 billion, as the regional insurance company is acquiring insurance liabilities that have a greater value that the total investment assets that are to be transferred to Sagicor.
This is what multiple insurance sources told Express Business last week In statement released on October 7, Sagicor disclosed that about 'US$1.2 billion of total investment assets are proposed to be acquired to offset a similar amount of actuarial liabilities which are expected to be assumed.'
That Sagicor statement confirmed that the regional insurance company will acquire tradition insurance portfolio assets equal to about $8.16 billion. A related party of one of companies involved in the transaction said: 'The liabilities being acquired exceed the assets by several hundred million dollars.
Hence the 'payment' for the portfol.'
That related party said on Monday that the liabilities being acquired by Sagicor are 'close enough' to $8.4 billion, which means the CLICO/BAT liabilities exceed the insurers' asset by about $300 million.
Responding to questions on Friday, the Central Bank declined to answer specific questions on the valuation of the acquisition, stating: 'The process for complete sale and transfer of the traditional portfolios is still underway so the Central Bank cannot comment at this stage on the numbers related to the sale.'
But responding to a question on whether there will be proceeds from the sale of the traditional portfolios, the Central Bank said: 'Since the liabilities to be transferred will exceed the assets to be transferred, this will result in some assets (which were previously used to back liabilities) being available for use, including potentially to pay creditors.'
CLICO's separate financial statements for the year ending December 31, 2018, reveal a company in very good financial health with $15.33 billion in total assets, $12.66 billion in liabilities and a surplus of $2.67 billion.
Using the estimates provided by Express Business, another insurance executive mulled over the Central Bank comment about the process resulting in some assets 'being available for use, including potentially to pay creditors'.
Providing a hypothetical example of what CLICO could look like if its assets are reduced by $8.16 billion, and the liabilities by $8.4 billion, the executive said CLICO is left with assets of $7.17 billion and liabilities of $4.26 billion, which still leaves over $2 billion in surplus available to extinguish the insurance company's debt to the Government for the for the $18 billion bailout that started in 2009.
Asked how does the company acquiring the assets turn a profit, if the liabilities to be acquired exceed those assets, the related party said: 'There are many factors that determine insurance liabilities including actuarial assumptions about mortality rates, surrenders, interest rate assumptions, cost of servicing the policies etc. These are reviewed every year.
'One example of how a company can make a profit in this scenario would be if you can reduce the cost of servicing a policy it would reduce your reserve for this and therefore reduce the future liability.'
Speaking in the 2020 budget presentation, Finance Minister Colm Imbert said: 'As a result of decisive intervention by this Government, CLICO has now settled approximately $15 billion of its debt to taxpayers. This excludes the funds which will be received from the sale of the traditional portfolio. We are now in the process of analyzing the remaining debt to be repaid by CLICO and CL Financial.'
Having paid back $15 billion, CLICO has $3 billion left to end its debt to the Government, according to Central Bank calculations.
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No formal offer to sell MHIL shares Wednesday 16th October, 2019 – Trinidad Express Newspaper
CLICO has not made a current, formal offer to sell its Methanol Holdings International Ltd (MHIL) shares to the methanol producer's minority shareholder, Consolidated Energy Ltd. MHIL is now 56.53 per cent owned by CLICO, with 43.47 per cent held by Consolidated Energy, which is 75- per cent owned by Switzerland-based Proman, while Helm AG, a German chemicals marketing concern, owns 25 per cent of the company.
Express Business enquiries into the status of the offer to sell CLICO's shares in MHIL followed comments in the 2020 budget presentation by Finance Minister Colm Imbert last week Monday on the Government's plans to use the proceeds of the sale of CLICO's stake in the Oman-based methanol producer.
In his budget speech, Imbert said: "Barring unforeseen circumstances, I propose to introduce in fiscal 2020 a second National Investment Fund Bond Issue which will be based, among other things, on the proceeds from the sale of certain shares held by CLICO that are currently valued at $2.6 billion. We will maintain the current ratio of 2:1 relating to the assets and the corporate bonds issued by the first National Investment Fund."
The Express Business was told that the last formal offer to sell the MHIL shares by CLICO, which has been under the control of the Central Bank for more than ten years, came in July/ August 2016. The governmental authorities in charge of the effort to recover CLICO's $18 billion bailout held informal discussions with Consolidated Energy, following earlier comments made by Imbert at a news conference on March 29, 2019. Those talks did not develop into a formal CLICO proposal to sell. Such a proposal is important because the shareholders' agreement, which led to the establishment of MHIL, provides that if either the majority or minority parties to the agreement wish to sell their shares in the company, those shares must first be offered to the other party. Another stipulation in the shareholders' agreement is that the shares of either party cannot be sold to a direct competitors of MHIL, which would be another methanol producer.
At the time of the July/August 2016 offer the MHIL shareholders were: CLICO with 49 per cent, CL Financial with 7.53 per cent, which it held in trust for CLICO, and CEL with 43.47 per cent.
Both CLICO's 49 per cent stake and the 7.53 per cent held by CL Financial in trust for CLICO were offered to CEL in 2016, according to the Central Bank's statutory quarterly report on CLICO, as at June 30, 2019, which is by law delivered to the High Court and Parliament.
The Central Bank instructed CLICO on October 27, 2015 to proceed to sell its shareholding in MHIL to a suitable buyer, "consistent with the independent valuation and with the requirements of the MHIL shareholders' agreement. This agreement regulates the relations among Consolidated Energy Limited (CEL), CLICO and CL Financial, the three shareholders of MHIL," according to a November 6, 2015 statement on the Central Bank website.
According to that first update of the original March 2015 CLICO resolution plan, which was formulated under the stewardship of former governor Jwala Rambarran: "Based on changes in the global energy markets, Central Bank instructed CLICO on May 6 2015 to up - date a November 2014 valuation of MHIL done by Duff & Phelps, a global financial advisory and investment banking firm. "On August 3 2015, Duff & Phelps completed the final independent valuation report of MHIL. After review, Central Bank forwarded the MHIL valuation report to the Minister of Finance on August 26 2015 and consultations were completed on September 28 2015. Central Bank subsequently instructed CLICO on October 27 2015 to proceed to sell CLICO's shareholding in MHIL to a suitable buyer, consistent with the independent valuation and with the requirements of the MHIL Shareholders' Agreement. This agreement regulates the relations among Consolidated Energy Limited (CEL), CLICO and CL Financial, the three share - holders of MHIL.
"The first offer process concluded without a sale," bluntly states the most recent quarterly Central Bank report, without any further explanation.
Express Business understands that the par- ties had different approaches on how to structure a deal with the Government's preferred approach being a straight sale of shares by CLICO/CL Financial to Consolidated Energy, with Consolidated Energy suggesting a different approach.
Consolidated Energy owns 100 per cent of Methanol Holdings Trinidad Ltd (MHTL), the Point Lisas Industrial Estate-based petrochemical producer, which with its associate companies has the largest footprint of any single entity on the estate.
In his budget speech, Imbert said of MHTL: "Further, in 2011, an arbitration caused by the then Government's arbitrary transfer of shares in Methanol Holdings Trinidad Limited to CLICO without first offering the shares to the minority shareholder, concluded with the sale of the asset at a price significantly lower than market – losing $3 billion in value in the process." MHIL itself is a 49 per cent joint venture partner in the Oman Methanol Company LLC (OMC), whose majority partner is the Omar Zawawi Establishment (Omzest). With a 56.53 per cent stake in a 49 per cent joint venture, CLICO effectively owns 27.7 per cent of OMC, while Consolidated Energy owns 21.3 of the methanol company, which produces about 1 million tonnes per annum. The OMC website reveals that the company has a single-offtake agreement with Helm, the minority partner in Consolidated Energy.
Second offer
According to the Central Bank's quarterly report on CLICO, the insurance company and CL Financial made a second offer to Consolidated Energy of the 56.53 per cent stake in MHIL. The second offer may have been slowed down by the appointment of liquidators to wind up the affairs of CL Financial in September 15, 2017. "The liquidators filed an application to the Court for permission to sell the said 7.53 per cent MHIL shareholding jointly with CLICO's sale of its shares in MHIL, which was granted by the Court on September 18, 2018," according to the Central Bank quarterly report.
"The second offer was withdrawn by both CLICO and the liquidators," states the Central Bank report, again without explanation. The report, however, states that the joint liquidators and CLICO "are working through the necessary arrangement to facilitate the transfer of the MHIL shares." On Friday, Express Business asked the Central Bank to confirm that if the sale of CLICO's 56.53 per cent stake in MHIL for $2.6 billion was completed, it would mean the insurance company would only need to pay the Government an additional $300 million to extinguish
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Geothermal Energy plant fully funded according to Minister Ian Douglas Thursday 17th October, 2019 – Dominica News Online
Minister for Energy Ian Douglas is giving the public the assurance that the government has all the funding required for the construction of the long- awaited Geothermal Energy Plant in the Roseau Valley.
The Dominica Geothermal Development Company Limited in collaboration with the Ministry of Trade, Energy and Employment conducted testing of the well in that area recently.
Recent Geothermal testing in Roseau Valley Dougls said the concept design for the geothermal plant has been completed including the revised route for the re-injection pipeline from Laudat to Wotten Waven and Trafalgar.
“Negotiations between the World Bank and the government on funding to build the power plant has been finalized, so in fact we have all of the money we need to start building the Geothermal Development Plant,” according to Douglas.
Lands he said have also been identified for the project and the ministry of lands is now working on acquiring that land from the owners.
“Those land owners have been written to advising them of the pending acquisition process for the government to acquire the lands needed to place the geothermal plant,” Douglas stated.
The government has reportedly spent over $50-million exploring the island’s geothermal potential but there have been complaints in some quarters that the project has been placed on the back burner.
The quest by the current administration to tap Dominica’s geothermal energy potential started as far back as 2011 when the government signed a contract for the exploratory drilling of geothermal wells in the Roseau Valley.
Drilling for the island’s geothermal project officially ended in 2015 and the project entered a new stage.
In his budget address that same year, Prime Minister Skerrit said that negotiations were underway for a joint venture with a French investment consortium, to build and operate the domestic plant with the aim of exporting electricity to Guadeloupe and Martinique.
The government subsequently announced in 2016, that it had taken a decision to run the geothermal project as a company solely owned by the government and people of Dominica and would go ahead alone, in constructing a small geothermal plant in Dominica. Then, it committed to investing US$15M into the geothermal company with funds from the Citizenship by Investment Programme (CBI).
In September 2016, Dominica and New Zealand signed an EC$4-million Partnership Agreement to support the construction of a 7 MW geothermal power plant on the island.
It is the governments hope to make Dominica the world’s first climate resilient country with a cheaper, cleaner, more reliable source of energy.
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Cari-Med to construct $6 billion complex in Bernard Lodge, St Catherine Wednesday 17th October, 2019 – Jamaica Gleaner
The Cari-Med Group this morning broke ground for the construction of a new $6 billion complex in Bernard Lodge, St Catherine.
The 258,000 square foot facility will house the company’s administrative offices and warehouses for its consumer good division.
The group comprises Cari-Med Distributors, Kirk Distributors and Cari-Med International.
Chief Executive Officer Glen Christian said that due to the rapid growth and diversification of the companies, operations have been consolidated under a more streamlined organisational structure.
He said the new facility is a part of the consolidation strategy.
“Currently, our consumer good warehouses are based at several locations in St Andrew. Going forward, we will be consolidating these warehouses and the associated commercial and support services at this location,” he said.
Christian also indicated that during the construction of the facility some 150 jobs will be created as well as new employment once it is completed.
The facility is being constructed in two phases, the first of which is expected to be completed by December 2020.
The contract for the project has been awarded to Tank Weld Limited.
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Lee-Chin offers GHL shares to staff in Jamaica Wednesday 16th October, 2019 – Jamaica Observer
Having secured majority interest in insurance conglomerate, Guardian Holdings Limited (GHL), Jamaican/Canadian billionaire Michael Lee-Chin is mooting offering shares in the company to staff, particular to sales staff, as part of an impromptu deal struck on Monday.
The deal was struck as Lee-Chin addressed a Guardian Life Special Sales Force Meeting at AC Marriot Hotel, Lady Musgrave Road, near New Kingston, where the large gathering of sales staff from across the island bought into his deal for them to attain a 50 per cent increase in gross premium income to grow the company locally.
“I will to do everything in my power to make that happen,” he promised, and mooted offering shares to the staff in the new-look GHL.
National Commercial Bank (NCB) Group, which is chaired by the 68-year- old billionaire, recently acquired 62 per cent majority shares in the Trinidad-based GHL, which is the parent company of Guardian Life Insurance Company. Lee-Chin has mandated Guardian Life president, Eric Hosin and his management team to work out the mechanics to make possible for staff to purchase shares.
Lee-Chin encouraged staff to “buy now”, while making the point that they could be acquiring shares in GHL at a much lower price than he got for NCB earlier this year.
Five months ago NCB completed the purchase of an additional 74.24 million ordinary shares in GHL at an enhanced price of US$2.79 per share.
That enhanced price came in at $0.44 higher than the Jamaican bank's initial offer, aimed at settling a dispute over pricing with minority owners.
Based on current estimates the shares are now worth TT$18.35, which is converted to US$2.70.
NCB first acquired a 29.99 per cent stake in Guardian in 2016 from key shareholders such as Arthur Lok Jack and Imtiaz Ahamad in May 2016. Lee-Chin encouraged the Guardian Life sales staff to replicate the example of NCB, which he acquired in 2002 and has made into the biggest and most profitable bank in Jamaica.
He drew an example of the success an investor would have had if that individual invested US$100,000 in NCB in 2002. “That investment would be worth today US$3 million,” Lee-Chin stated.
He argued “if the investment was made on New York Exchange Standard Motor Products (SMP) stock in 2002, today it would be worth US$320,000; it you had invested in Morgan Stanley, the return would be US$420,000 today; while the said investment in Berkshire Hathaway would now be valued at US$$422,000.“.
Lee-Chin encouraged Guardian Life staff, “make sure this company replicates what NCB did, and it will start here with you and it will start here with sales. It will start with the products you sell, training, expectation...I am willing to do what is needed because I have money on the line, so by now your goal is to increase gross premiums by 50 per cent”.
When questioned by the Business Observer whether the share offer to staff would be done by way of a cross listing of the shares on the Jamaica Stock Exchange or by way of an employee share ownership programme (ESOP), Hosin conceded that he had just been made aware of this intent having spoken earlier to Lee-Chin. He pointed out that Lee-Chin advised that he would be speaking with the other principals in GHL to get the ball rolling.
At present, GHL shares are not traded on the Jamaica Stock Exchange but on the Trinidad Stock Exchange.
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Business and consumer confidence dips — but still remains high Wednesday 16th October, 2019 – Jamaica Observer
The level of confidence in the economy by both businesses and consumers has declined in the third quarter of 2019, though the indices are just short of the highest they have ever been, according to a survey undertaken by Market Research Services (MRS) on behalf of the Jamaica Chamber of Commerce (JCC).
Managing director of MRS, Don Anderson reported that declines in consumers' perception of current business conditions, and expectations for jobs in the future for the third quarter of 2019, are the reasons for the break in the upward trend in consumer confidence over the last seven quarters.
“When we see the trends of the last five years, we will see that we're at a period in time when the indices are the highest they have ever been, but it is noticeable that over the last quarter there has been a fall-off , and it has to be noted and watched very carefully,” Anderson said.
CONSUMER CONFIDENCE
Consumer confidence in the economy has declined from its all-time high of 183.4 points in the second quarter to 179.9 points in the period under review.
According to Anderson, this decline is more pronounced among people living outside of urban areas who are the least optimistic and reported the greatest decline in optimism, from 174.4 points to 166.7 points.
“Consumers on the whole are confident about current jobs but are less so about future jobs coming on stream to absorb the growing demand and expectations of consumers. Accordingly, the optimism about future jobs is lower, down from 127 points in quarter two to 120 points [in quarter three],” Anderson said in the report summary presented at Courtyard by Marriott in New Kingston on Tuesday (October 15).
“Twelve per cent of consumers now feel that jobs are plentiful — this is an extremely low figure, but it is the highest it has ever been. But generally therefore, consumers are weary about the availability of jobs,” he continued.
Anderson noted that while consumers' expectation for income gains remained stable, year-to-date average percentage receipt of remittances is 33 per cent, an all-time low when compared to the peak of 38 per cent in households in 2016.
The report also indicated that the majority of consumers do not anticipate purchasing either a home or a car, with 40 per cent anticipating taking a vacation in the year ahead.
BUSINESS CONFIDENCE
Concurrently, while business confidence marginally dipped in the second quarter of 2019, the data for the third quarter reports a meaningful decline in the index from 150.7 points to 141.2.
“The third quarter has confirmed that business confidence is indeed down. This decline continued into the third quarter with index falling eight percentage points, a reduction which is of course quite noticeable and dramatic,” Anderson said.
“The view from business is that current profits are better than expected, however businesses do not remain at the same level of optimism for future profits and business conditions, as the indices dropped from 143 to 129. So while firms are comfortable about where they have been, they're looking down the road and saying we're not as quite as confident as we would like to be about how the future looks,” he continued.
Correspondingly, just over 50 per cent of the businesses expressed the view that return on capital invested is as expected, but other firms are of the opposing view that returns were not as good as expected.
While most firms, 64 per cent, remained convinced that it is a good time to invest, this was marginally less than the 67 per cent recorded in quarter two of 2019.
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Dominican wind farms 1st power plants to get carbon credits Wednesday 16th October, 2019 – Dominican Today
The two phases of the Los Cocos Wind Farm, of the Haina Electricity Generating Company (EGE Haina), became the first power plants in the Dominican Republic to receive Reduced Emission Certificates (CERs) (Cap-and-trade).
Carbon credits, granted by the United Nations Framework Convention on Climate Change of the UN are an international mechanism that promotes the reduction of pollutant emissions into the environment, causing global warming.
Los Cocos Wind Farm located between Juancho, Pedernales, and Enriquillo, Barahona (southwest) received a total of 636,531 CERs. These carbon credits are generated in proportion to the amount of equivalent tons of carbon dioxide that are no longer released into the atmosphere.
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Grenada is first Country to sign vesting order for Republic Bank acquisition of Scotiabank Wednesday 16th October, 2019 – Government of Grenada
Prime Minister and Minister of Finance, Dr. the Right Honourable Keith Mitchell, on Wednesday became the first regional leader to sign the vesting order required to facilitate the acquisition of the Bank of Nova Scotia operations by Republic Bank Financial Holdings Limited.
The planned acquisition was first announced in 2018 and in September this year, the Eastern Caribbean Central Bank in consultation with the ECCB Monetary Council approved the application for the transfer of Scotiabank’s assets and liabilities in Grenada and five other Caribbean countries.
Dr. Mitchell who is the current Chairman of the ECCB Monetary Council, said it was important for Grenada to show leadership in the conclusion of the matter. “I wanted to signal that Grenada is the first to sign that vesting order. I felt this initiative was important to demonstrate that we have in fact settled the issues that were concerning to us. Having sat at the table of the Monetary Council and having to confront all of the issues that faced us with regard to the sale of Scotiabank, I did my best to counsel others to approach this with an understanding of the importance of finance to the region and the implications it has for the regional banking system, knowing the challenges that we face.”
The Prime Minister spoke of the importance of banks in Grenada and other Caribbean countries having international relations with powerful banking institutions.
“I see Republic Bank, given its history of banking relations with international institutions, as an important factor in the decision made in Grenada’s case. Also, for the Monetary Council when we debated the issue, we felt that was a key factor.”
He also underscored the importance of the acquisition from a regional perspective. “This has to be seen as a unified approach, especially in the context of the ECCB; it is not just about individual countries.
That’s why we have been counselling our friends throughout the region and Antigua and Barbuda in particular that we have to do this together.
Government has earned just over two million dollars in taxes from the acquisition deal. More importantly, Dr. Mitchell said protecting the rights of workers was a key consideration in giving final approval to the acquisition and he spoke of consultation with the Technical and Allied Workers Union in ensuring fair treatment of Scotiabank’s employees.
Also present at Wednesday’s signing ceremony were Scotiabank’s Managing Director, Caribbean East, Mr. David Parks, Managing Director, Republic Bank, Mr. Keith Johnson and President General of the technical and Allied Workers Union, Senator Andre Lewis.
They all expressed confidence that the interest of workers was well protected in the acquisition. A Memorandum of Understanding between Scotiabank and TAWU was signed in September, setting out provisions to safeguard the rights of workers with respect to continued employment or severance.
The role of Government in facilitating the transaction was also recognised and assurances were given that customers would continue to experience excellent customer service and appreciation expressed for the loyalty of customers over the years.
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SBM Offshore completes US$1.14 B financing for Liza Unity Thursday 17th October, 2019 – Kaieteur News
SBM Offshore, the Dutch firm that constructed Guyana’s first Floating Production Storage and Offloading (FPSO) vessel, the Liza Destiny, was pleased to announce, yesterday, that it was able to complete the project financing for the second FPSO called Liza Unity for a total of US$1.14 billion.
The company said that the project financing was secured by a consortium of nine international banks while noting that it expects to draw the loan in full, phased over the construction period of the FPSO. Kaieteur News understands that the financing will become non-recourse once the FPSO is completed and the pre-completion guarantees have been released.
It was further explained that the Liza Unity FPSO’s design is based on SBM Off shore’s industry leading Fast4Ward® programme as it incorporates the Company’s new build, multi-purpose hull combined with several standardized topsides modules.
This newspaper understands that the FPSO will be designed to produce 220,000 barrels of oil per day, will have associated gas treatment capacity of 400 million cubic feet per day and water injection capacity of 250,000 barrels per day.
The FPSO will be spread moored in water depth of about 1,600 meters and will be able to store around 2 million barrels of crude oil.
LONG TERM AGREEMENT
A few weeks ago, SBM Offshore also inked a Long-Term Agreement with ExxonMobil covering potential future FPSO orders. SBM noted in a missive to the media that this agreement is non-exclusive and establishes the general legal framework and specific terms in relation to the engineering, procurement, construction and installation work regarding potential future contracts relating to leased FPSOs, which includes Build-Operate-Transfer projects that generally cover a short lease term.
The company noted that the relationship between SBM Offshore and ExxonMobil is well-established. It goes back over four decades, starting in the 1970s. During this period, SBM Offshore said it has supplied more than 10 floating systems to ExxonMobil in five countries, including five FPSOs, deep water offloading systems and an FSO. Additionally, multiple major projects are currently in various stages of progress.
Currently, ExxonMobil is ramping up efforts to secure an environmental permit for its third field development project in the Stabroek Block called Payara. It recently noted that the FPSO for this field will be bigger than the Liza Destiny and will be called “Prosperity”.
The Stabroek Block which will be holding the said FPSOs is 6.6 million acres (26,800 square kilometers). ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), is the main operator and holds 45 percent interest.
Hess Guyana Exploration Ltd. holds 30 percent interest and CNOO/ Nexen Petroleum Guyana Limited holds 25 percent interest.
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Guyana a step closer to mitigating effects of oil spills Thursday 17th October, 2019 – Guyana Chronicle
AS Guyana continues to prepare itself for oil production in the first quarter of 2020, the country is a step closer to ensuring that the necessary measures are in place to effectively respond to the unlikely negative impacts of the petroleum industry.
On Wednesday, the Civil Defence Commission (CDC) hosted its final workshop on the National Oil Spill Contingency Plan (NOSCP) at Herdmanston Lodge. The workshop was attended by representatives of the CDC, Guyana Geology and Mines Commission (GGMC), Guyana Energy Agency (GEA), Maritime Administration (MARAD), Coast Guard, the Environmental Protection Agency (EPA) and other stakeholders.
In January 2019, the CDC established the National Oil Spill Contingency Planning Working Group. A National Oil Spill Planning Committee was also formed, which met regularly on Tuesdays to identify key roles, responsibilities and to craft the NOSCP.
Commending the commission for their efforts on the issue, Minister of State, Hon. Dawn Hastings-Williams expressed confidence that the forum will provide valuable knowledge and reiterated government’s commitment to engaging stakeholders.
“I urge you not to underestimate the task at hand. It is of the utmost national priority; your government is supremely aware of this and has consistently left no stone unturned in matters of this nature. As evidenced by today’s activity, we will continue to work assiduously to ensure we address this issue as much as possible.”
She reminded the participants that this remains a national issue in which all must be involved while emphasising the administration’s willingness to continuously engage stakeholders at every level of the sector’s development.
In brief remarks, Director-General (DG) of the CDC, Lt. Col. Kester Craig stated that the plan was developed using several guidelines and templates and caters for both onshore and offshore oil spills. He also described it as a living document.
“The CDC remains the custodian of the plan, and any update or adjustment will be documented and shared… so, from time to time, we will have different versions of the plan. So, whenever you have the latest version, that is the version you will be using in the event of any spill,” Lt. Col. Craig stated.
The contingency plan outlines critical roles and responsibilities for agencies in oil spill response both onshore and offshore. The CDC has been identified as the Competent National Authority for Oil Spill Management, and, as such, has overall responsibility for response to oil spill emergencies and should be given the authority to make and implement decisions to mitigate the impacts of an oil spill.
According to the CDC “the finalisation of the NOSCP will be very crucial in contributing towards the country’s capacity for sustainable oil exploration and production in 2020 and beyond, as it will establish and empower agencies to effect their roles in response to any oil spill to minimise impacts and losses.”
The NOSCP committee aimed to ensure that focus was given to the review, update and finalisation of the plan, as well as the establishment of the systems which would be outlined in the plan to ensure effective and efficient oil spill management in Guyana.
The draft has been reviewed by the US Coast Guard and Regional Activity Centres/ Regional Marine Pollution Emergency, Information and Training Center for the Wider Caribbean (RAC/REMPEITC-Caribe), which have continuously provided feedback on the draft Plan, given their expertise and experience in the oil response field. (DPI)
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Mar-Vellous: Resort Unveils $300m Expansion with Water Park Wednesday 16th October, 2019 – Tribune 242
BAHA MAR is set to launch a $300m phase of development that will provide jobs for up to 500 people and involve a major water park and entertainment amenity known as Baha Mar Bay.
A Heads of Agreement between resort representatives and the government was signed at Cabinet Office yesterday. The move will bring Baha Mar’s total investment up to $4.8bn.
The investment will include significant renovations and enhancements to the Melia Nassau Beach Resort, the arrival of new luxury, beachfront adventure experiences for guests and developments to Long Cay, all of which is expected to be completed within the next 12 to 24 months, officials said.
Prime Minister Dr Hubert Minnis said Baha Mar Bay will be built on the site of the former Wyndham Hotel on approximately 15.3 acres of land between the SLS and Melia hotels.
“It will include a family friendly recreational area with water attractions for guests of all ages,” he said. “There will be a ‘public entry area where the general public can enter Baha Mar Bay to enjoy the attractions and activities. Phase two will also include the widening and lengthening of the existing pier in front of the Baha Mar resort.”
“The existing pier that extends off the beach at the Baha Mar resort is being expanded to better allow for boats to more safely dock at the Baha Mar resort for day excursions and to provide enhanced amenities for guests.
“The new Pier restaurant will provide a greater variety of beachfront and pool dining options for the guests at the resort and Baha Mar Bay, and will complement the existing food and beverage offerings at the resort. An upgrade and refurbishment programme will be launched for the Melia hotel which will include the upgrade to the mechanical, electrical and plumbing infrastructure of the hotel and upgrades to specifically identified guest rooms.”
Dr Minnis said there will be upgrades to the kitchen, convention and meeting spaces, gym, restaurants and public areas. Children’s programming to educate and entertain children between three and 12 with “activities ranging from Bahamian history, conservation activities, cooking demonstrations, arts and crafts, theatre, virtual reality gaming and storytelling” will be featured at two activity centres to be constructed, he said.
Long Cay, a private island owned by the project company, will be developed to include enhancements to the “beach areas, design and construction of an extended pier for the safe landing of guests, design and construction of new food and beverage facilities, design and construction of a beach club and construction of facilities necessary to offer recreational and water sports activities,” Dr Minnis said.
Baha Mar currently employs 5,000 people. Resort President Graeme Davis said the new phase will result in 500 direct and 1,000 indirect jobs. He said officials have hired a local firm to do work, with 80 percent or more of people already engaged being locals. It’s not clear whether the supplemental Heads of Agreement stipulates specific requirements regarding locals in the workforce.
“As we phase the opening, jobs are starting today,” he said, noting officials are starting to hire lifeguards and food servers, which is expected to continue.
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IMF Slashes Bahamas GDP Growth By 50% Wednesday 16th October, 2019 – Tribune 242
The International Monetary Fund (IMF) yesterday slashed The Bahamas' 2019 growth forecast by 50 percent, and projected the economy will contract next year, due to Hurricane Dorian.
Unveiling its latest World Economic Outlook report, the Fund said this nation's gross domestic product (GDP) expansion will fall from 1.8 percent to just 0.9 percent for 2019, with the brunt of the Category Five storm's economic fall-out to be felt next year.
It forecast that the Bahamian economy will shrink by 0.6 percent, compared to previous forecasts for 1.7 percent growth, thereby giving the first insight into just how big a short-term setback Dorian has dealt to output and job creation.
Based on Department of Statistics data showing that The Bahamas had a $10.8bn economy at year-end 2018, the IMF's revised forecasts suggest that some $97.2m has been shaved off GDP growth estimates for 2019 - a significant sum for a nation this size.
And the 2.3 percent "reversal" for 2020, if it holds true, represents around a $232.4m "swing" on the IMF's 1.7 percent growth projection that was released in early July together with its Article IV report on The Bahamas.
Cabinet ministers and private sector executives yesterday both agreed that the Fund's revised estimates were not "unexpected" given the devastation inflicted by the category five storm, but expressed hope that several multi-million dollar investment projects will come to fruition and lead to improved projections within 18 months.
Krystelle Rutherford-Ferguson, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, told Tribune Business: "While we understand the difference in projections, we also understand its based on the fall-out in the tourism sector as a result of Hurricane Dorian.
"We also appreciate there are numerous multi-million dollar investment projects in the works in The Bahamas, which will impact GDP in the medium term. We expect an improvement in the projections in the next 12-18 months.
"There's a lot of restoration work to be done and we remain optimistic the projections will improve as the country goes about restoring the second and third largest economies in The Bahamas."
Mrs Rutherford-Ferguson was likely referring to the $100m Carnival cruise port in Grand Bahama, for which a Heads of Agreement was signed recently, and the ITM Group/Royal Caribbean joint venture that plans to acquire the Grand Lucayan and transform Freeport Harbour in a $195m first phase development.
K Peter Turnquest, deputy prime minister, added that reinsurance inflows and construction activities associated with post-Dorian restoration may also mitigate some of the impact the IMF is projecting for GDP growth.
"Some contraction is not unexpected given the severity of the destruction to Abaco tourism and business infrastructure, as well as Grand Bahama to a lesser extent, save that the rendering of the US terminal [at the airport] as useless leaves that sector also seriously crippled," he told Tribune Business.
"Fortunately, the cruise business to Grand Bahama has been restored and they are now receiving cruise passengers at new sites, which based upon feedback has been well received. The return of this business, as well as the day cruise passengers, bodes well for the recovery there.
"Add to that the reconfirmation of the investment projects at the new cruise port and hotels, we should see some stabilisation by year-end," Mr Turnquest continued. "Abaco may be a bit more of a challenge due to the severity of damage to the economic infrastructure.
"That said, the reinvestment in these businesses from insurance provisions and private sector investments will provide some boost. The fall-off from Nassau arrivals has already stabilised."
John Rolle, the Central Bank governor, last week told Tribune Business that the IMF's revised GDP growth projections were likely to be "conservative", indicating that The Bahamas could outperform its estimates for both 2019 and 2020.
The Fund's projections match almost exactly the Central Bank's own forecast, which also suggested the possibility of a small Bahamian economic contraction next year as reconstruction began in earnest. However, the Bahamian institution said this could be mitigated - and the country even enjoy modest growth - if Abaco's vacation rental market could be directed to other islands.
The Central Bank, in a report released a fortnight ago, forecast that The Bahamas will "resume healthy economic growth" in 2021 following a potential Dorian-induced contraction next year as rebuilding gathers pace.
In line with the IMF it suggested that this nation's gross domestic product (GDP) would still expand in 2019 - albeit a much lower pace than the previous 1.8 percent - as winter season tourism gains had already been locked-in prior to the category five storm's arrival.
With its analysis suggesting Dorian's impact will likely be a short-term blip if any further hurricanes are avoided, the Central Bank said expectations of an earlier return for Grand Bahama's economy underpinned its 2021 assessment - especially given the "lengthier absence of commerce" on Abaco and the surrounding cays. However, tourism's recovery may go beyond 2020.
Abaco's loss will be felt most dearly in the vacation rental market, as the island accounted for 17.5 percent - or almost one in five - listed bookings during the eight months to end-August 2019. Together with Grand Bahama, the two islands have received more than one-quarter or 25.6 percent of all bookings in that market segment prior to Dorian's arrival.
Yet the Central Bank added: "Two factors that could mitigate the depth and duration of the economic slowdown are the size of the available pool of construction labour to expedite the rebuilding process, and the degree of substitutability of tourism capacity elsewhere in The Bahamas for the facilities taken offline in Abaco and Grand Bahama.
"Available construction skills speak to the speed at which the housing and commercial plant will be returned to use. In the meantime, underused tourism capacity in New Providence and other Family Islands could provide some offsetting relief to displaced visitor demand.
"For vacation rentals, in particular, the current average occupancy rates approaching 50 percent provides space for near-term business expansion without required growth in the physical plant, providing the marketing and other support infrastructure are aligned."
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Cruise Line: 25% Of Passengers In Nassau Overnight Wednesday 16th October, 2019 – Tribune 242
A cruise line yesterday projected that up to one-quarter of its 250,000 annual passengers will “overnight” in Nassau hotels after making its first voyage to the Bahamian capital.
Francis Riley, Bahamas Paradise Cruise Lines’ senior vice-president of marketing, told Tribune Business it is targeting a “20 percent to 25 percent cruise and stay” among its Grand Classica passengers given that Nassau is larger and more modern than its previous Grand Bahama destination.
With the Grand Classica set to call on Nassau for the “foreseeable future”, Riley said its “cruise and stay” passengers will be a huge economic boost for Nassau. Bahamas Paradise Cruise Lines is now in talks with Atlantis on the mega resort’s potential participation in their programme.
However, Dionisio D’Aguilar, minister of tourism and aviation, describe the Grand Classica ‘s Nassau calls as “a zero sum game” because the capital is gaining at Freeport’s expense. Bahamas Paradise Cruise Lines has diverted the vessel here because of the damage inflicted upon Grand Bahama by Hurricane Dorian.
“It’s a zero sum game,” he told Tribune Business. “I don’t see any increase: It’s just a shifting temporarily of that book of business from Grand Bahama to Nassau. I’m sure the people in Grand Bahama are anxious for it to come back.”
Oniel Khosa, Bahamas Paradise Cruise Lines’ chief executive, said the Grand Classica will dock in Nassau every two nights for at least 15 calls per month as it sails between the Bahamian capital and Palm Beach, Florida.
He added that it was too early to determine the economic and financial impact from changing the port of call, but said coming to Nassau would bring more of a city experience for passengers as opposed to Grand Bahama’s beaches.
Asked how long he expects the Grand Classica to call on Nassau, Mr Khosa replied: “We don’t know how much longer it will take for Grand Bahama to reach a situation where they can sustain two cruise ships, so we don’t have a sense of timing as yet, but certainly I see us coming into Nassau for the foreseeable future.”
He added that the cruise line wanted its passengers to stay at at all the major hotels that are part of the Nassau/Paradise Island Promotion Board, and said it has started marketing the Melia, Comfort Suites, and Baha Mar’s SLS Lux and the Grand Hyatt so visitors can “choose their destination”.
Fred Lounsberry, the Nassau/Paradise Island Promotion Board’s chief executive, said this latest cruise option will have a big impact for Nassau given that it will bring about 250,000 passengers per year.
He said: “I think it, for the most part, will be incremental business. They are looking at about 250,000 passengers a year and they cruise out of Palm Beach. I think the very unique thing is that you can cruise over and stay for two, four or six nights and cruise back.”
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