HOUSTON/CARACAS, March 23 (Reuters) – Expanded oil export contract reviews at Venezuela’s state-run PDVSA have nearly halted all commercial crude and fuel releases, as officials seek to match past invoices with payments, according to documents and people familiar with the matter.
An anti-corruption probe has led to the recent arrests of about 20 PDVSA employees, judges and politicians, and prompted the resignation of powerful oil minister Tareck El Aissami. An oil export suspension that first began in January under El Aissami has worsened, internal documents showed.
PDVSA, which accounts for most of the OPEC nation’s export revenue, delivered documents to prosecutors that revealed $21.2 billion in commercial accounts receivable in the last three years, of which $3.6 billion are potentially unrecoverable.
Across Venezuela’s export terminals, only four PDVSA customers were active this week: Iran’s Naftiran Intertrade Company (NICO), U.S.-based Chevron (CVX.N), Cuba’s state-owned Cubametales and Hangzhou Energy, according to PDVSA schedules.
NICO, Chevron and Cubametales are taking cargoes as compensation for pending debt or oil swaps, which reduces PDVSA’s risk of failed payments. Hangzhou Energy’s contract is the only one so far ratified after the audit, according to one of the sources, who spoke on condition of anonymity.
PDVSA, Venezuela’s oil ministry, Cuba’s foreign affairs ministry and a Chevron spokesperson did not immediately reply to requests for comment. Hangzhou Energy could not be reached for comment.
AUDIT EXTENDED
The anti-corruption investigation has focused on determining whether customers with contracts that required prepayments had delivered payments. More recently, officials have expanded the scope of the audit to include price discrepancies, and the performance of PDVSA subsidiaries and joint ventures, company sources said.
A bottleneck of tankers waiting for PDVSA to allocate export cargoes has worsened, according to PDVSA’s schedules and vessel monitoring service TankerTrackers.com.
TankerTrackers.com estimated on Thursday there were 23 supertankers, 16 of them near the Jose Terminal, the country’s main export terminal, waiting to load Venezuelan crude and fuel for export. That was up from 21 at the end of January.
Contributing to the shipping delays: Privately-owned shipping agencies working for PDVSA and its customers were placed on hold to revise their registration documents, the people said. Only two agencies continued to service companies.
The delays are worrying some customers whose cargoes of crude, fuel and byproducts have not been shipped on time, according to other people familiar with the matter.
On Tuesday, PDVSA head Pedro Tellechea, who also was appointed as oil minister after El Aissami’s resignation, named two new top executives at the company: Hector Obregon as executive vice president, and Luis Molina as vice president of exploration and production.
Reporting by Marianna Parraga in Houston, Deisy Buitrago in caracas; Additional reporting by Sudarshan Varadhan in Singapore; Editing by Paul Simao
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SEOUL, March 15 (Reuters) – Samsung Electronics Co Ltd (005930.KS) on Wednesday said it will invest around 300 trillion won ($230 billion) by 2042 to develop what the government called the world’s largest chip-making base, in line with efforts to enhance South Korea’s chip industry.
The amount makes up most of the 550 trillion won in private-sector investment announced by the government on Wednesday, under a strategy that expands tax breaks and infrastructure support to increase the competitiveness of high-tech industries including those involving chips, displays and batteries.
Samsung’s manufacturing additions will include five chip factories and attract up to 150 materials, parts and equipment makers, fabless chipmakers and semiconductor research-and-development organisations, the Ministry of Trade, Industry and Energy said in a statement.
Other countries have announced plans to bolster domestic chip industries, including the United States which last month released details of its CHIPS Act, which offers billions of dollars in subsidies for chipmakers that invest in the country.
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South Korea, home to the world’s two biggest memory chip makers, Samsung Electronics and SK Hynix Inc (000660.KS), is seeking to improve supply-chain stability to become a major player in the non-memory chip field, currently dominated by chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) and Intel Corp (INTC.O).
($1 = 1,305.1200 won)
Reporting by Heekyong Yang and Joyce Lee; Editing by Christopher Cushing
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March 11 (Reuters) – The managers of Silicon Valley Bank’s (SIVB.O) investment banking arm, SVB Securities, are exploring ways to buy the collapsed lender back from its parent company, Bloomberg News reported on Saturday.
SVB Securities Chief Executive Officer Jeff Leerink and his team are seeking help to finance a potential management buyout of the business, the report said, citing people familiar with the matter.
Silicon Valley Bank and SVB Securities did not immediately respond to Reuters’ requests for comment.
There is no certainty that a deal will be reached and other potential buyers could also emerge for the unit, Bloomberg said.
On Friday, startup-focused lender SVB Financial Group became the largest bank to fail since the 2008 financial crisis.
California banking regulators closed the bank, which did business as Silicon Valley Bank, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the later disposition of its assets.
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Earlier on Saturday, SVB Securities said its business operations would not be directly impacted by the FDIC taking control of its parent company. “SVB Securities is financially stable and will continue to operate as usual,” Leerink said in a statement.
SVB Financial Group is working with an investment bank and a law firm to find buyers for its other assets, which include SVB Securities, Reuters reported on Friday, adding that these assets could attract competitors and private equity firms.
Reporting by Kanjyik Ghosh and Mrinmay Dey in Bengaluru; editing by Grant McCool and Paul Simao
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LONDON, March 10 (Reuters) – The easy-cash era is over and its impact is only just starting to felt by world markets yet to see the end of the sharpest interest rate hiking cycle in decades.
Risks were brought to a fore this week as U.S. tech specialist Silicon Valley Bank was shut by California banking regulators on Friday, sparking a rout in bank stocks. SVB was seeking funds to offset a hit on a $21 billion bond portfolio, a result of surging rates, as customers withdrew deposits.
Central banks meanwhile are shrinking their balance sheets by offloading bond holdings as part of their fight against hot inflation.
We look at some potential pressure points.
1/ BANKS
Bank have shot up the worry list as the SVB rout hit bank stocks globally on contagion fears. European banks slid on Friday after JPMorgan (JPM.N) and BofA (BAC.N) shares fell over 5% on Thursday.
SVB’s troubles stemmed from deposit outflows as clients in the tech and healthcare sectors struggled to raise cash elsewhere, raising questions over whether other banks would have to cover deposit outflows with loss-making bond sales too.
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In February, U.S. regulators said U.S. banks had unrealised losses of more than $620 billion on securities, underscoring the hit from rising interest rates.
Germany’s Commerzbank issued a rare statement playing down any threat from SVB.
For now, analysts saw SVB’s issues as idiosyncratic and took comfort from safer business models at larger banks. BofA noted European banks’ bond holdings have not grown since 2015.
“Normally speaking, banks would not be taking big duration bets with deposits, but with such rapid rate rises it is clear why investors could be worried and are selling now and asking questions later,” said Gary Kirk, partner at TwentyFour Asset Management.
2/ DARLINGS NO MORE
Even after a first-quarter surge in stock prices, higher rates have dampened the willingness to take punts on early-stage or speculative businesses, especially as established tech firms have issued profit warnings and cut jobs.
Tech firms are reversing pandemic-era exuberance, cutting jobs after years of hiring sprees. Google owner Alphabet plans to axe about 12,000 workers; Microsoft, Amazon and Meta are together firing almost 40,000.
“Despite being a rate sensitive investment, NASDAQ has not responded to the implications of interest rates. If rates continue to rise in 2023, we may see a significant sell-off,” said Bruno Schneller, a managing director at INVICO Asset Management.
3/ DEFAULT RISKS
The risk premium on corporate debt has fallen since the start of the year and signals little risk, but corporate defaults are rising.
S&P Global said Europe had the second-highest default count last year since 2009.
It expects U.S. and European default rates to reach 3.75% and 3.25%, respectively, in September 2023 versus 1.6% and 1.4% a year before, with pessimistic forecasts of 6.0% and 5.5% not “out of the question.”
And with defaults rising, the focus is on the less visible private debt markets, which have ballooned to $1.4 trillion from $250 billion in 2010.
In a low rate world, the largely floating-rate nature of the financing appealed to investors, who can reap returns up to the low double digits, but now that means ballooning interest costs as central banks hike rates.
4/CRYPTO WINTER
Bitcoin staged a recovery at the start of the year but was languishing at two-month lows on Friday .
Caution remains. After all, rising borrowing costs roiled crypto markets in 2022, with Bitcoin prices plunging 64%.
The collapse of various dominant crypto companies, most notably FTX, left investors shouldering large losses and prompted calls for more regulation.
Shares of crypto-related companies fell on March 9, after Silvergate Capital Corp (SI.N), one of the biggest banks in the cryptocurrency industry announced it would wind down operations and sparked a crisis of confidence in the industry.
5/FOR SALE
Real estate markets started cracking last year and house prices will fall further this year.
Fund managers surveyed by BofA see China’s troubled real estate sector as the second most likely source of a credit event.
European real estate reported distress levels not seen since 2012 by November, law firm Weil, Gotshal & Manges found.
How the sector funds itself is key. Officials warn European banks risk significant profit hits from sliding house prices, which is making them less likely to lend to the sector.
Real estate investment management firm AEW estimates the sector in UK, France and Germany could face a 51 billion euro debt funding gap through 2025.
Asset managers Brookfield and Blackstone recently defaulted on some debt tied to real estate as interest rate hikes and falling demand for offices in particular hit property values.
“The reality that some of the values out there aren’t right and perhaps need to be marked down is something that everyone’s focused on,” said Brett Lewthwaite, global head of fixed income at Macquarie Asset Management.
($1 = 0.9192 euros)
Reporting by Yoruk Bahceli, Chiara Elisei, Nell Mackenzie, Dhara Ranasinghe, Naomi Rovnick, Elizabeth Howcroft; Graphics by Kripa Jayaram and Vincent Flasseur; Editing by Dhara Ranasinghe and Toby Chopra
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March 2 (Reuters) – Best Buy Co Inc (BBY.N) on Thursday joined peers with a cautious annual earnings forecast as uncertainty over the U.S. economic outlook tempers expectations for a recovery in demand for TVs, laptops and other electronic products.
U.S. retailers offered bigger discounts than usual during the holiday season to stoke demand as surging costs of rent and food over the last year hammered spending on non-essentials.
Best Buy’s comparable sales decreased 9.3% in the holiday quarter, slightly more than Wall Street expectations.
The company sees no relief this year, forecasting comparable sales to fall 3% to 6%. Analysts on average were expecting a 1.9% decline.
“As we enter fiscal 2024, macroeconomic headwinds will likely result in continued volatility, and we are preparing for another down year for the (consumer electronics) industry,” Chief Executive Officer Corie Barry said in an analyst call.
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Best Buy will also close or remodel some of its larger stores, and open more smaller-sized outlets that sell used and refurbished electronics to pull in more budget-oriented shoppers, she added.
The company expects fiscal 2024 adjusted earnings per share of $5.70 to $6.50, below analysts’ estimates of $6.71.
Walmart (WMT.N), Target Corp (TGT.N) and other retailers have also issued conservative forecasts as still high U.S. consumer prices have raised fears that the Federal Reserve could further lift borrowing costs to cool demand.
However, Best Buy’s forecast was even more conservative than its big-box retail rivals, as it has greater exposure to discretionary categories, M Science Senior Analyst John Tomlinson said.
“Best Buy’s forecast implies things are worse than they were pre-pandemic, while trends, relative to 2019, are generally still much higher for many other companies,” Tomlinson said.
On an adjusted basis, the company earned $2.61 per share in the fourth quarter ended Jan. 28, beating analysts’ estimates of $2.11, according to IBES data from Refinitiv.
Best Buy’s shares were last up about 1% in early trading.
Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva and Sriraj Kalluvila
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Feb 24 (Reuters) – A California federal judge on Thursday dismissed antitrust claims against commercial real estate information services company CoStar Group Inc (CSGP.O), in a feud with an industry rival platform that alleged it was unlawfully boxed out of competition.
U.S. District Judge Consuelo Marshall in Los Angeles found CoStar’s commercial real estate listing practices and contracting terms were not anticompetitive and that allegations in the case failed to show the company held monopoly power.
The order addressed counterclaims against CoStar in its intellectual property lawsuit against rival Commercial Real Estate Exchange Inc (CREXi).
CREXi had alleged CoStar “spent billions of dollars buying up and elbowing out competitors.” CREXi competes with industry leader CoStar, which saw $2.1 billion in revenue last year, for online commercial real estate data and technology services.
In the counterclaims, CREXi claimed CoStar was abusing its power in an effort to stop brokers from working with it.
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The court’s ruling said CREXi could not refile antitrust claims. Los Angeles-based CREXi still has a pending trademark infringement claim against CoStar.
A representative from CREXi and lawyers for the company at Keker, Van Nest & Peters did not immediately respond on Friday to messages seeking comment.
Washington, D.C.-based CoStar in a statement said CREXi’s “competition claims were long on bombastic hyperbole, but utterly devoid of substance.”
CoStar’s lawsuit alleged CREXi was attempting to use stolen content from CoStar and unauthorized use of its services to build a competing platform.
CoStar said last week in an updated complaint it had “identified more than 50,000 CoStar-copyrighted photographs copied, displayed, or reproduced by CREXi without permission.”
A trial in the underlying copyright case is set for next year.
The case is CoStar Group Inc v Commercial Real Estate Exchange Inc, U.S. District Court, Central District of California, 2:20-cv-08819-CBM-AS.
For plaintiff: Nick Boyle and Jessica Stebbins Bina of Latham & Watkins
For defendant: Elliot Peters and Warren Braunig of Keker, Van Nest & Peters
Reporting by Mike Scarcella; editing by Leigh Jones
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Feb 23 (Reuters) – French construction-to-telecoms conglomerate Bouygues (BOUY.PA) on Thursday reported a jump in its annual operating profit, boosted by its Equans acquisition and good commercial performance in all business segments.
The construction, telecoms and media group reported current operating profit of 1.96 billion euros ($2.08 billion) for 2022, compared with 1.69 billion euros a year earlier.
Excluding Equans, the former services unit of French power group Engie (ENGIE.PA) Bouygues acquired in October, the group’s current operating profit rose by 152 million euros.
Bouygues said it expected 2023 sales to be close to those of last year, citing an unstable environment marked by inflation, rising interest rates and currency volatility. The group had sales of 44.32 billion euros in 2022.
For Equans, the group targets a slight sales increase in 2023 and 2024, and aims to accelerate its organic sales growth to align with market peers from 2025.
Bouygues, which operates in more than 80 countries and has around 200,000 employees, later on Thursday hosts a Capital Markets Day dedicated to Equans.
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($1 = 0.9414 euros)
Reporting by Diana Mandiá in Gdansk; Editing by Milla Nissi
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LONDON, Feb 20 (Reuters) – Average asking prices for British residential property rose by just 14 pounds ($17) in February from January, the smallest rise on record for a month which normally sees a big seasonal increase, data from property website Rightmove showed on Monday.
Rightmove said the minimal increase – effectively zero in percentage terms – suggested that property sellers were heeding advice to price their homes realistically in order to sell them into a market which has slowed sharply in recent months.
Tim Bannister, Rightmove’s director of property science, said asking prices usually rose at this time of the year, which marks the start of the spring selling season.
“This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint,” he said.
The monthly change – which is not seasonally adjusted – was the smallest January to February move since Rightmove’s records started in 2001. Compared with a year earlier, asking prices were still 3.9% higher.
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At the start of February, mortgage lender Nationwide Building Society reported the longest run of monthly falls in selling prices since the global financial crisis.
Asking prices remaining flat on the month, rather than falling, could be a positive sign for the housing market, suggesting a softer landing than many analysts have forecast, Rightmove said.
Economists polled by Reuters in November forecast prices would fall by 5% this year, while analysts at Japanese bank Nomura predicted last month that there would be a 15% decline by mid-2024.
Rightmove said there had been some recovery in demand since late 2022, when mortgage rates soared following former prime minister Liz Truss’s “mini-budget”.
Buyer demand was up by 11% in the first two weeks of February compared with the same period in 2019.
The number of sales agreed was down 11% on pre-pandemic levels, compared with a 30% crash just after the mini-budget.
British house prices had risen by more than a quarter since the start of the COVID-19 pandemic, mirroring a trend in other rich economies which reflected ultra-low interest rates and a greater desire for living space during lockdowns.
Since December 2021, British interest rates have risen steeply. The Bank of England raised interest rates from 3.5% to 4% this month to tame double-digit inflation, and markets expect the main rate to peak at 4.5% in June.
“The frantic market of recent years was unsustainable in the long term, and our key indicators now point to a market which is transitioning towards a more normal level of activity after the market turbulence at the end of last year,” Bannister said.
($1 = 0.8363 pounds)
Reporting by Suban Abdulla; editing by David Milliken
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LISBON, Feb 16 (Reuters) – Portugal announced on Thursday a 900-million-euro package of measures to tackle a housing crisis, including the end of its controversial “Golden Visa” scheme and a ban on new licenses for Airbnbs and other short-term holiday rentals.
Portugal is one of the poorest countries in Western Europe. More than 50% of workers earned less than 1,000 euros per month last year while rents and house prices have skyrocketed. In Lisbon alone, rents jumped 37% in 2022.
Low salaries, a red-hot property market, policies encouraging wealthy foreigners to invest and a tourism-dependent economy has for years made it hard for locals to rent or buy, housing groups say. Portugal’s 8.3% inflation rate has exacerbated the problem.
Prime Minister Antonio Costa told a news conference the crisis was now affecting all families, not just the most vulnerable.
It is not clear when the measures, worth at least 900 million euros ($962.19 million), will come into effect. Costa said some would be approved next month and others will be voted on by lawmakers.
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A mechanism would be introduced to regulate rent increases, he added, and the government will offer tax incentives to landlords who convert tourism properties into houses for locals to rent.
New licenses for tourism accommodations, such as Airbnbs, will be prohibited – except in less populated rural areas.
To address the housing shortage, Costa said the state would rent vacant houses direct from landlords for a period of five years and put them on the rental market.
Portugal’s golden visa programme, which offers EU passports to non-EU nationals in return for investments including in real estate and has been criticised for sending house prices and rents up, will end, Costa said.
The scheme attracted 6.8 billion euros in investment since its launch in 2012, with the bulk of the money going into real estate.
Housing groups said the measures would mean little if the government continued to promote other policies to attract wealthy foreigners to Portugal, such as the “Digital Nomads Visa” introduced in October, which gives foreigners with high monthly income from remote work to live and work from Portugal without paying local taxes.
At a small housing protest in Lisbon, 23-year-old activist Andreia Galvao accused the government of failing to live up to promises it made to address the housing crisis in the past.
“The goal was that by 2024 all Portuguese would have access to quality housing – it doesn’t look like that will happen,” she said. “The situation is dramatic.”
($1 = 0.9354 euros)
Reporting by Patricia Rua, Catarina Demony and Sergio Goncalves; Editing by Aislinn Laing and Sandra Maler
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Feb 15 (Reuters) – Wall Street’s top regulator on Wednesday adopted rules tightening the time-frame for stock trades in an effort to tamp down the kind of risk seen in 2021’s GameStop fiasco, when retail investors suffered heavy losses.
The U.S. Securities and Exchange Commission (SEC) also proposed changing rules protecting client assets held by investment managers, in a move that would likely prevent cryptocurrency platforms from serving a key marketplace role.
In a 3-2 vote, the SEC opted to shorten the time between when a securities order is placed and when a trade concludes can lessen the kind of “systemic risk” spotlighted in early 2021 when the share price of the consumer electronics retailer GameStop Corp (GME.N) plummeted amid intense market volatility.
Trade groups have broadly welcomed the commission’s proposal to cut the so-called settlement cycle to a single business day from two, six years after an earlier SEC rule shortened the period from three days.
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Market participants’ eagerness to move to the shorter settlement cycle “will help expedite the transition and overcome any obstacles,” such as expensive systems updates and industry-wide changes to processes, Cornell University Law Professor Birgitta Siegel said in a comment submitted to the SEC.
Industry players have complained, however, that the SEC was moving to require compliance too quickly. The new rule takes effect by May 28, 2024, earlier than they would like but later than the originally proposed effective date of Mar 31, 2024.
Republican Commissioners Hester Peirce and Mark Uyeda voted against the move, citing the insufficient transition period.
In a report on the events surrounding the GameStop trades of early 2021, SEC staff said the longer a trade remained unsettled, the greater the likelihood that a buyer or seller would default — by refusing to pay or to hand over shares sold.
Clearing houses often require trading platforms to offset such risks with high-dollar margin deposits, costs that can skyrocket during periods of volatility and market stress.
GameStop’s share price tanked after its earlier volatility resulted in a multi-billion-dollar margin call on trading platform operators such as Robinhood Markets Inc (HOOD.O). Robinhood and others responded by blocking users from buying the stock.
A shorter settlement cycle should see fewer defaults and thus help cut margin deposit costs, thereby reducing the chances of such a scenario recurring, according to the SEC.
SEC TAKES AIM AT CRYPTO ‘CUSTODIANS’
In a 4-1 vote, the commission proposed new requirements for investment advisers, who can only maintain custody of client funds or securities if they meet requirements to protect the assets.
The SEC’s draft proposal would expand these requirements to any client assets, such as cryptocurrencies.
Advisers need to hold investors’ assets with a firm deemed to be a “qualified custodian.” SEC enforcement staff have been probing registered investment advisors over whether they are meeting those existing rules when it comes to clients’ digital assets, Reuters has previously reported.
The proposal would prevent many crypto platforms from serving as these custodians by requiring them to have independent audits and ensuring that clients’ assets are segregated and held in accounts to protect them in the event of a bankruptcy.
That would make it more difficult for hedge funds and private equity firms investing in digital assets on behalf of clients to work with crypto firms.
“Make no mistake. Based upon how crypto platforms generally operate, investment advisers cannot rely on them as qualified custodians,” SEC chair Gary Gensler said in a statement about the proposal.
Reporting by Douglas Gillison; Editing by Megan Davies, Bradley Perrett and Nick Zieminski
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