In Brief
Thames River Capital shuns Greek paper Thames River Capital is shunning bonds from Ireland, Portugal and Greece on bets holders of the securities will face losses as governments of the euro area’s highest-deficit nations are forced to restructure their debts. The fund, part of London-based F&C Asset Management Plc, which manages $172 billion in assets, began selling German bunds last month as it expects the region’s largest economy will end up paying for «insolvent» countries, according to Peter Geikie-Cobb, a portfolio manager at Thames River. Policymakers’ plans to boost the size of a rescue fund will help debt-strapped countries to delay, not avoid, restructuring, he said. «These countries have huge primary deficits and it’s unlikely they are going to be able to grow their way out of this problem,» Geikie-Cobb said in an interview. «Their current austerity measures aren’t going to be enough to get them back on track, and any tougher packages won’t be acceptable to their people. I don’t think we say anything outrageous when we say European bondholders will ultimately have to take haircuts.» (Bloomberg) Israel submits Cypriot LNG plant proposal NICOSIA (AFP) – Cyprus yesterday confirmed that Israeli firm Delek had submitted a proposal to build a liquefied natural gas (LNG) facility on the Mediterranean island and that Nicosia did not rule out cooperation with the Jewish state. «There is a letter addressed to the president of the republic from Delek which declares an interest and presents a proposal of cooperation on this issue [natural gas],» Commerce Minister Antonis Paschalides told reporters. «Any decision to be taken will be made in such a way that it takes into account developments happening around us and, of course, our own reserves,» he added. According to reports, Delek has proposed the creation of an LNG facility on the island to process deposits Israel has discovered offshore and which Cyprus hopes to uncover. Local daily newspaper Phileleftheros yesterday made public the letter in which Delek suggests establishing a multipurpose terminal that would process gas into LNG at a location of the government’s choosing. Delek says such a deal would turn Cyprus from being totally reliant on gas and oil imports into a net exporter. «We are confident that this project will enable Cyprus to meet domestic energy needs in a clean and cheap source and convert Cyprus, an importer of energy, into a regional hub for exporting gas.» Judge sacked Bulgaria’s Supreme Judicial Council dismissed a senior judge yesterday as the country tries to prove it is serious about tackling high-level corruption and cleaning up its system of justice. The European Union nation is under pressure to show Brussels by July that it can reform its slow-moving and graft-prone judiciary, and put corrupt officials and organized crime bosses behind bars. The Council, which appoints judges, sacked Veselin Pengezov, the Sofia Court of Appeal chairman, after media revealed his daughter had received rights in 2005 to build on municipal land in a Black Sea resort at a discount price. The Council ruled that Pengezov, who had been aware of the deal, had breached the judiciary’s ethical code. (Reuters) Stress tests Europe’s next wave of bank stress tests will be tougher than exams last year, taking sovereign-debt risk and liquidity into account, the region’s financial services chief said. «We need more stringent and more reliable tests,» European Union Financial Services Commissioner Michel Barnier told reporters following a meeting of EU finance ministers in Brussels yesterday. «There was a general agreement that they should be marked by total transparency taking into account sovereign risk.» Ministers from the 27-nation EU and European Commission officials are seeking ways to bolster confidence in the bloc’s financial industry as the sovereign debt crisis prompted austerity measures from Greece to Ireland. Barnier said banks should show moderation in awarding bonuses while other parts of society are «suffering.» The 2010 stress tests were criticized as not stringent enough after they indicated lenders in the 27-nation region were shown to need 3.5 billion euros ($4.7 billion) of new capital, about a 10th of the lowest analyst estimate. The tests didn’t include an assessment of how banks would cope with a sovereign default. (Bloomberg)
