The Danish central bank, also known as Danish Nationalbank, is seen in Copenhagen, January 22, 2015. REUTERS/Fabian Bimmer/File Photo Acquire Licensing Rights
COPENHAGEN, Nov 28 (Reuters) – Denmark’s central bank said on Tuesday that the risk of further price drops in the commercial property market could be accelerated by Swedish real estate firms selling out of their Danish portfolios, which could hurt banks.
Swedish property firms struggling to refinance their debt amid rising interest rates have begun selling their portfolios, which could have a spillover effect on the Danish property market by pushing down prices, the central bank said.
“Due to the low level of transactions, a price correction related to divestment by the Swedish firms at this point in time would have a relatively great effect,” the central bank said in a financial stability report on Tuesday, adding that the largest Swedish firms have properties in Denmark worth 99 billion Danish crowns ($14.5 billion).
Any heavy divestment by Swedish firms would come amid a sharp drop in the number of commercial real estate deals in Denmark this year, which according to the central bank indicates that prices have not yet adjusted to the new interest rate level.
The central bank warned that as commercial real estate prices fall, the collateral pledged by property firms for loans may not be sufficient to cover their full exposure to banks.
“This may lead to losses for the institutions in the case of default of the loans,” the bank said.
Lending by Danish credit institutions to real estate firms has increased in recent years, amounting to 537 billion crowns or around 38% of their exposure to companies.
The central bank also said Danish real estate firms do not face the same refinancing risks as their Swedish counterparts, because they mostly are financed by mortgage loans with long maturities.
($1 = 6.8090 Danish crowns)
Reporting by Louise Rasmussen and Anna Ringstrom, editing by Louise Rasmussen and Kim Coghill
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The trading floor of Norges Bank Investment Management, the Nordic countryÕs sovereign wealth fund in Oslo, Norway, June 2, 2017. REUTERS/Ints Kalnins/File Photo Acquire Licensing Rights
OSLO, Nov 28 (Reuters) – Norway’s $1.5 trillion sovereign wealth fund, the world’s largest, should include private equity investments in its portfolio, allocating up to $70 billion, the country’s central bank recommended on Tuesday.
The Norwegian finance ministry in March asked the executive board of Norges Bank, which manages the fund, to assess whether unlisted shares should be added as an asset class.
Some 3-5% of the fund’s assets could gradually be moved to private equity funds, equivalent to between $40 billion-$70 billion, the central bank said in a statement.
A final decision will be made next year by parliament. It has previously rejected requests by the fund to move assets into private equity, arguing it could be too costly and would hamper the ability to judge its performance on an ongoing basis.
The fund, which invests Norway’s surplus oil and gas revenue abroad, is the world’s biggest single stock market investor, owning some 1.5% of all globally listed shares, and has stakes in more than 9,200 companies.
“Norges Bank considers it a natural evolution of the investment strategy for unlisted equity investments to be permitted on a general basis,” the central bank wrote in a letter to the finance ministry.
“A broader investment universe will provide more investment opportunities and help the fund benefit from a larger share of global value creation than today,” it added.
At the end of September, 70.6% of the fund’s assets were invested in listed stocks, 27.1% in fixed income, 2.2% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.
By way of comparison, the ten largest investors in private equity had an average of $80 billion invested at the end of 2022, Norges Bank said.
The fund in 2018 sought permission to acquire unlisted shares via private equity funds or by investing alongside such funds, but the then-government rejected the proposal, arguing it would impede transparency and drive up asset management costs.
But in 2022, a government-appointed commission again raised the topic of private equity, arguing that this could allow the fund to invest in promising companies at an earlier stage and thus potentially earn higher returns.
Reporting by Victoria Klesty and Terje Solsvik; Editing by Essi Lehto, Anna Ringstrom, Louise Rasmussen and Jan Harvey
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Mexico’s President Andres Manuel Lopez Obrador speaks during his regular press conference where he said that his government will help Cuba, including providing it with oil, at the National Palace in Mexico City, Mexico October 16, 2023. Mexico Presidency/Handout via REUTERS Acquire Licensing Rights
MEXICO CITY/COPENHAGEN, Nov 24 (Reuters) – A Danish fund will invest $10 billion in a development hub in southern Mexico to produce green hydrogen for ships and to replace fossil fuel use, Mexican President Andres Manuel Lopez Obrador said on Friday.
One of Lopez Obrador’s key infrastructure projects is the development of an industrial corridor connecting the Pacific and Atlantic oceans in Mexico’s poorer south.
“It is a financial economic fund from Denmark, they are going to invest in a development hub (…) $10 billion, because they are going to produce green hydrogen to replace fossil fuels,” the president told a press conference.
In August, Lopez Obrador said that Danish asset manager Copenhagen Infrastructure Partners (CIP) was going to begin construction of a green hydrogen plant in the southern port of Salina Cruz to supply ships with the fuel.
At the time, the president did not mention the size of the investment, and a spokesperson for CIP said on Friday that its plans for Mexico were known.
“We can confirm that we are involved in a large-scale green hydrogen project in the Oaxaca region in Mexico. Further development will take place in collaboration with local authorities and partners,” CIP said when contacted on Friday. “We will provide further updates as the project progresses.”
The CIP spokesperson said they did not know whether Lopez Obrador was talking about the same project on Friday and declined to confirm the sum he cited as its planned investment.
Lopez Obrador, a strong proponent of fossil fuels since taking office in late 2018, said that new vessels around the world will use the green hydrogen obtained through wind and solar energy via electrolysis.
“We are talking about the era of non-pollution, of everything being done to prevent climate change,” the president added, without providing further details on the investment or its timeline.
Denmark’s embassy in Mexico did not immediately respond to a request for comment on the president’s comments.
Reporting by Raul Cortes Fernandez; Additional reporting by Dave Graham in Mexico City and Johannes Birkebaek in Copenhagen; Writing by Brendan O’Boyle; Editing by Alistair Bell
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FILE PHOTO: The logo of SBB is seen at company’s headquarters in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes/File Photo/File Photo Acquire Licensing Rights
COPENHAGEN, Nov 22 (Reuters) – Fitch on Wednesday downgraded Swedish property company SBB’s (SBBb.ST) long-term issuer default rating to CCC+ from B-, and its senior unsecured debt rating to B from B+, driving the group’s bonds deeper into speculative or ‘junk’ territory.
Loss-making SBB is at the centre of a Swedish property crash, having racked up vast debt by buying public real estate, including social housing, government offices, schools and hospitals.
“The downgrades reflect SBB’s third quarter results and its tight liquidity, including insufficient existing liquidity to reduce refinancing risk after the end of the third quarter 2024, and unfavourable real estate and capital market conditions,” Fitch said in a statement.
“SBB continues to undertake asset disposals but execution risk remains high,” the ratings agency added.
SBB did not immediately respond to a request for comment.
Fitch already in May cut the group to below investment grade status for the first time and again downgraded the company in August.
Fitch on Wednesday said SBB was unlikely to have capital market access to refinance its unsecured bonds, adding that without an ability to tap bond markets, the real estate company would have to sell assets to meet debt maturities.
Rival ratings agency S&P on Friday said it had placed SBB on credit watch for a potential downgrade to a selective default over the company’s offer to use proceeds from a property sale to buy back debt for up to $650 million.
If debt is bought at a substantial discount to the original value, this could be considered tantamount to default, S&P said.
($1 = 10.4988 Swedish crowns)
Reporting by Louise Breusch Rasmussen in Copenhagen, Marie Mannes in Stockholm, editing by Anna Ringstrom, Terje Solsvik and Bernadette Baum
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LONDON, Nov 16 (Reuters) – World stocks fell for the first time in five sessions, oil slipped and the dollar saw a slight lift on Thursday, as markets continued to acclimatize to falling borrowing costs after nearly two years of relentless gains.
Europe’s moves saw the STOXX 600 (.STOXX) slip from a more than one-month high, Wall Street look set for an early dip, and Taiwan’s dollar rise after China’s President Xi Jinping and U.S. counterpart Joe Biden agreed to reopen key military communications channels between the two superpowers.
Xi also underscored the point by saying China would not “fight a cold war or a hot war with anyone”.
Global markets have rallied sharply this month as inflation data out of the United States and parts of Europe, such as Britain, have reinforced hopes that major central banks are now done raising borrowing costs.
Robust U.S. retail sales figures on Wednesday were a reminder that it might not be a straight line move, however, with the focus now squarely on weekly U.S. jobless claims data later and a monthly euro zone inflation print on Friday.
“If you don’t get confirmation of the slowing economic direction from every single piece of data every single day we risk running out of momentum on the big trades,” Societe Generale FX strategist, Kit Juckes, said.
“Until we get to the point where rate cuts are just around the corner, everything is going to be very stop-start. The dollar sell-off is stop-start, the bond market rally is really stop-start and the equity market is all over the place.”
Key government bond market borrowing costs resumed their broad downward trend on Thursday, driven by increasing confidence that rate cuts are coming next year.
Germany’s 10-year bond yield dipped to 2.62% but held above the previous day’s two-month low of 2.568%, while sterling sank to a six-month low against the euro as dealers in London inched closer their predictions on when the Bank of England (BoE) will start cutting rates. EUR/GVD
Many now think it might be as soon as May although BoE policymaker Meg Greene warned on Thursday that investors are missing the message that central banks have been pushing recently that interest rates will remain higher for longer.
“I think markets globally haven’t really clocked on to this,” Greene told Bloomberg Television, adding that the BoE was not talking about cutting rates.
CHINA PROPERTY
Asian stocks fell overnight as new Chinese data showed continued weakness in its problem-hit property sector which dented recent optimism about a recovery in the world’s second-largest economy.
While data this week showed China’s industrial and retail sectors are now making a comeback, figures have also shown a sharp drop in property investment and weak home prices, underscoring the ongoing drag the sector is having.
There was mixed news from Japan too, where exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel.
“The weak economic data from both countries indicate the fact that the global economy is slowing down, highlighting ongoing macro headwinds that businesses face,” said Tina Teng, market analyst at CMC Markets.
XI AND BIDEN
Australian shares (.AXJO) ended their day down 0.7% as strong wage data indicated that inflationary pressures there are still running high.
Japan’s Nikkei (.N225) dipped 0.3%, moving into reverse after it, along with the main MSCI Asian and emerging market indexes, all posted their biggest gains in a year on Wednesday.
Chinese stocks showed some disappointment at Xi and Biden’s first meeting in years, with Shanghai’s blue-chip CSI300 index (.CSI300) closing down 1% and Hong Kong’s Hang Seng index (.HSI) ending 1.3% lower.
While the two leaders agreed to resume military-to-military communications and cooperate on anti-drug policies, a sign ties are improving, some investors were disappointed at a lack of other breakthroughs in the talks.
The MSCI main 47-country global stocks index (.MIWD00000PUS) was down for the first time in five sessions after a near 8% surge this month.
Wall Street futures pointed to a slightly weaker start there too, although there was modest relief that the Senate had overwhelmingly approved a temporary funding measure to avert another U.S. government shutdown for now.
Money market traders have now fully priced in that the Federal Reserve will keep U.S. interest rates steady in December. They see the first rate cut of the cycle in May.
The yield on benchmark 10-year Treasury notes was back under 4.5% compared with its U.S. close of 4.537% on Wednesday. The two-year yield hovered at 4.88% compared with a U.S. close of 4.916%.
In currencies, the euro was flat at $1.0848, having gained 2.5% in a month, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was fractionally higher.
Oil traders, meanwhile, nudged U.S. crude down 0.3% to $76.55 a barrel. Brent crude was at $80.90 per barrel while safe-haven gold was slightly higher at $1,965 per ounce .
Additional reporting by Julie Zhu in Hong Kong; Editing by Christina Fincher and Mark Potter
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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 30, 2023. REUTERS/Staff/File Photo Acquire Licensing Rights
A look at the day ahead in European and global markets from Kevin Buckland
Chip stocks gave Asian equity investors some small bit of cheer to start the week, picking up where Wall Street left off while U.S. yields stayed subdued, which kept a lid on the dollar, too.
But elsewhere, bears were firmly in control.
A lot of that can likely be traced to China, rather than to the Moody’s downgrade to the outlook for the U.S. sovereign debt rating, which investors have taken in stride.
The Chinese consumer has so far refused to ride to the rescue of the world’s second-largest economy. Monthly retail sales data is due on Wednesday but the country’s Singles Day shopping extraganza over the weekend – equivalent to Black Friday sales elsewhere – recorded only meagre growth.
Looking across the region, Japan’s tech-heavy Nikkei managed to keep its head above water, buoyed by gains for its two biggest chip-related shares; Taiwan’s benchmark advanced 0.8%.
But Hong Kong flipped from early gains to a loss of about 0.15%. A sub-index of tech shares remained firmly positive but another of mainland property developers slumped more than 1%.
China’s blue chips fell 0.5%.
U.S. retail sales data is also due on Wednesday, preceded by CPI a day earlier. The figures could be key in helping the Federal Reserve to plot the path ahead for interest rates, including whether another hike is needed.
The Fed’s rhetoric has taken a hawkish turn recently, but markets so far are more focused on the data, particularly the soft non-farm payrolls numbers at the start of this month.
ECB President Christine Lagarde last week said that rates will stay restrictive at least for several quarters. Lagarde deputy Luis de Guindos has his say a little later today, giving the keynote speech to kick off Euro Finance Week.
Elswhere, Bank of England board member Catherine L. Mann will take the podium, after the bank’s chief economist, Huw Pill, said last week its projection that monetary policy will need to remain restrictive for an extended period should not be taken as a promise.
Key developments that could influence markets on Monday:
-ECB’s de Guindos, BoE’s Mann speak
-UK Rightmove house prices
-Sweden SEB housing
-New York Fed consumer expectations survey
Reporting by Kevin Buckland; Editing by Edmund Klamann
Our Standards: The Thomson Reuters Trust Principles.
Two women walk next to the Reserve Bank of Australia headquarters in central Sydney, Australia February 6, 2018. REUTERS/Daniel Munoz/File Photo Acquire Licensing Rights
A look at the day ahead in European and global markets from Tom Westbrook:
Bond markets have curbed a little of last week’s enthusiasm about a prospective peak in global interest rates, but still cheered a rate hike in Australia that looks to be the last of the cycle.
The Aussie dollar fell more than 0.8% and Australian government bonds rallied because the 25 basis point hike by the Reserve Bank of Australia came with a softening of language on whether further hikes would be needed.
The ASX200 (.AXJO) lifted from mid-session lows.
It was an otherwise quiet session in the absence of major updates that might have consequences for the interest rate outlook.
Gravity dragged South Korean shares back to earth, with the Kospi (.KS11), which soared 5.7% on Monday after a short-selling ban was re-imposed, falling 3%.
Three days of strong gains for the MSCI Asia ex-Japan index (.MIAPJ0000PUS) also came to an end.
Data showed Chinese imports unexpectedly grew in October, a welcome signal on domestic consumption, but exports contracted at a quicker pace than expected, giving a mixed picture overall.
Last week’s chaos in Chinese money markets has subsided but it left behind a glimpse of financial pressures beneath the surface and the challenges around China’s uneven recovery from the COVID-19 pandemic.
Read Reuters’ exclusive report on what happened here: Clashing priorities behind China’s rare money market distress.
British house prices, German industrial output and European producer prices are due later on Tuesday, as are earnings from UBS (UBSG.S).
Overnight news from the U.S. included the latest humbling of WeWork (WE.N), which sought bankruptcy protection. It expects to continue in business, but the move represents an admission by majority owner SoftBank that the office-space firm cannot survive unless it renegotiates its pricey leases.
Israeli Prime Minister Benjamin Netanyahu said his government would consider “tactical little pauses” in fighting to facilitate the entry of aid or the exit of hostages from the Gaza Strip, but again rejected calls for a ceasefire despite international pressure.
Without a Fight won the 163rd Melbourne Cup by two lengths.
Key developments that could influence markets on Tuesday:
Earnings: UBS
Economics: German industrial output, Euro zone producer prices, UK house prices, NY Fed household debt report
Speakers: Fed’s Waller, Logan and Schmid, ECB’s de Guindos and McCaul, BoC’s Kozicki
Reporting by Tom Westbrook; Editing by Edmund Klamann
Our Standards: The Thomson Reuters Trust Principles.
The tail fin of a parked Scandinavian Airlines (SAS) airplane is seen on the tarmac at Copenhagen Airport Kastrup in Copenhagen, Denmark, July 3, 2022. REUTERS/Andrew Kelly/File Photo Acquire Licensing Rights
Nov 4 (Reuters) – Scandinavian airline SAS (SAS.ST) secured an investment agreement with a consortium for restructuring aid of 13.2 billion Swedish crowns ($1.21 billion), with a loan from Castlelake replacing its previous debtor-in-possession financing by Apollo Global Management (APO.N), the carrier said on Saturday.
The winning bidder consortium which also includes Air France-KLM (AIRF.PA), Lind Invest ApS and the Danish state, increased its proposed investment by $25.26 million.
In October, the company said Castlelake would take a stake of about 32%, while Air France-KLM’s will be around 20% and the Danish state will hold about 26%, adding that total investments in the reorganized SAS would amount to $1.16 billion.
The airline’s credit agreement for $505.25 million with Castlelake will be used to refinance its loans, increase liquidity and support its exit from voluntary restructuring proceedings, according to the statement.
Air France confirmed the increased restructuring aid financing.
SAS’s chief executive, Anko van der Werff, said: “By entering into this investment agreement, SAS is taking the next step in its Chapter 11 process in the U.S.”
The company now seeks U.S. Court approval of the investment agreement and the new debtor-in-possession financing as soon as possible in November.
In August of last year, the Scandinavian airline entered into an agreement with U.S.-based investment fund Apollo Global to raise $700 million of fresh financing.
Scandinavia’s biggest carrier filed for bankruptcy protection in the United States in mid-2022 after years of struggling with high costs coupled with low customer demand brought on by the pandemic.
Castlelake and Lind Invest did not immediately respond to a request for comment.
($1 = 10.8856 Swedish crowns)
Reporting by Gursimran Kaur in Bengaluru
Editing by Emelia Sithole-Matarise, Philippa Fletcher, Ira Iosebashvili and Matthew Lewis
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[1/4]View of the construction site of the Elbtower building, owned by Rene Benko’s Signa and a Commerzbank subsidiary, in Hamburg Germany, November 2, 2023. REUTERS/Fabian Bimmer Acquire Licensing Rights
FRANKFURT, Nov 3 (Reuters) – Construction of one of Germany’s tallest buildings has suddenly halted midway after the developer stopped paying its builder, yet another ominous sign for the nation’s troubled property sector.
Signa, the Austrian property giant and an owner of New York’s Chrysler Building, had been making steady progress this year on the planned 64-story Elbtower skyscraper in Hamburg.
But Signa, founded by René Benko, has fallen behind on its payments to its builder, Lupp, an executive of the construction firm said.
“Our construction activities at Elbtower have been temporarily suspended due to outstanding payments from the developer,” Matthias Kaufmann, who oversees Lupp’s finances, said in an email to Reuters.
Signa didn’t respond to requests for comment. The city of Hamburg and a minority investor, the real-estate subsidiary of Germany’s Commerzbank (CBKG.DE), confirmed the stoppage.
The interruption raises questions about the future of the tower, with an estimated value of 1.3 billion euros ($1.38 billion) upon completion. It has also prompted warnings from city officials, and is another indicator of troubles hitting the property sector in Europe’s largest economy.
The real-estate sector was a bedrock of Germany’s livelihood for years, accounting for roughly a fifth of output and one in 10 jobs. Fuelled by low interest rates, billions were funnelled into property, which was viewed as stable and safe.
Now a sharp rise in rates and building costs has put an end to the run, tipping developers into insolvency as bank financing dries up, deals freeze and prices fall.
Commerz Real, the Commerzbank subsidiary, said talks were ongoing with Signa and Lupp to “find a common solution” and it expected building to resume.
Elbtower is in the HafenCity district that is also home to a new concert hall, the Elbphilharmonie. Tenants are to include a Nobu hotel and restaurant, the risk advisor Aon (AON.N), and a local bank.
Timo Herzberg, CEO of Signa Real Estate, hosted viewers just weeks ago to the site as the shell of the building neared 100 metres (330 feet) high.
“The distinctive concrete pillars now give an increasingly clear idea of the shape that Hamburg’s future landmark will have once it is completed,” he posted on LinkedIn.
Karen Pein, Hamburg’s senator for city development and housing, warned that Signa needed to stick to agreed milestones or face consequences.
A contract “allows the City of Hamburg to dismantle the construction work performed to date, sell it to a third party for completion, or complete the construction itself,” she said in a statement.
($1 = 0.9406 euros)
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A Skanska worker is pictured at a construction site in the centre of Warsaw February 6, 2012. REUTERS/Kacper Pempel//File Photo Acquire Licensing Rights
STOCKHOLM, Nov 1 (Reuters) – Swedish builder Skanska (SKAb.ST) reported third-quarter earnings far below market expectations on Wednesday as weak property markets took a toll in the shape of asset writedowns and goodwill impairment charges, sending its shares down 12%.
The Nordic region’s largest builder, which is also one of the biggest players in the United States, said operating profit fell to 549 million crowns ($49 million) from 1.52 billion a year ago, below a forecast of 1.58 billion, according to LSEG estimates.
The one-off charges, which were not included in estimates, amounted to 0.9 billion crowns, the company said.
“Based on recent market developments, we have reassessed the value of assets in our Property Development operations and recognized impairments of some of these,” Skanska CEO Anders Danielsson said in a statement.
A series of interest rate hikes across the world to tame surging inflation has pummelled residential and commercial property businesses over the past year, while construction activity has held up well, above all, in the United States.
Skanska said order bookings at its construction business, which accounts for the bulk of group revenue, fell 29% quarter-on-quarter adjusted for currency swings after it chalked up its best intake in more than a decade in the preceding quarter.
Heavily indebted property developers in Skanska’s home market Sweden in particular have faced growing problems and while a plunge in the housing market there has levelled out, construction activity related to both sectors has tumbled.
“I think we need to see inflation stabilising in our markets and that interest rates stabilise,” Danielsson said when asked when a recovery for the development businesses might kick in. “There is too much uncertainty today,” he told Reuters.
Skanska forecast weak residential and commercial property markets in the Nordics over the coming year but said it still expected strong construction activity in the key U.S. market, where state and federal investment is driving demand.
“Focus today will all be on Property, where we remain cautious amid the current rates environment,” analysts at Jefferies said in a research note. “We would expect to see share price weakness today.”
($1 = 11.1827 Swedish crowns)
Reporting by Niklas Pollard, editing by Anna Ringstrom, Sonia Cheema and Tomasz Janowski
Our Standards: The Thomson Reuters Trust Principles.