Business News: Little Relief for Madoff Victims

Business News: Little Relief for Madoff Victims

Little Relief for Madoff Victims

Posted: 11 Jan 2011 07:01 PM PST

Why Medicare Can't Catch the Fraudsters

Posted: 06 Jan 2011 02:00 PM PST

The Geek Who's Policing Your Privacy

Posted: 06 Jan 2011 02:00 PM PST

The Public-Pension Punching Bag

Posted: 12 Jan 2011 04:56 AM PST

Christie Calls for N.J. Pension Overhaul

Posted: 11 Jan 2011 02:22 PM PST

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By Terrence Dopp and Esmé E. Deprez

(Updates with union comments starting in 15th paragraph, Democratic response in 19th.)

Jan. 11 (Bloomberg) -- New Jersey Governor Chris Christie said he will strive to reduce the costs of government pensions, benefits and education as he seeks to balance the budget without raising taxes.

The Republican governor, in his first State of the State speech since taking office a year ago, told lawmakers he hopes to contribute to the state’s underfunded pension system and secure passage of his plan to overhaul the retirement plan. Christie also said he’ll seek to control growth of the highest property taxes in the U.S.

Christie urged the Democratic-led Legislature to pass the remaining items in his “toolkit” of measures designed to help schools and municipalities stay within his 2 percent cap on annual property-tax increases that took effect this year. The state needs to maintain fiscal controls as employment and revenue recover slowly from the longest recession since the 1930s, the governor said.

“We can’t continue to spend money we don’t have,” Christie, 48, said in the 37-minute speech in Trenton, the capital. “So we have to continue to make some very tough decisions about what we can afford and what we can’t.”

Annual Deficits

New Jersey has run consecutive annual budget deficits for a decade. Christie, who said he will release his fiscal 2012 budget next month, told reporters in December that balancing the next spending plan will be even tougher than the current one.

Christie may face a deficit next year equivalent to more than a third of his current $29.4 billion budget, the nonpartisan Office of Legislative Services projected in July. This fiscal year, which ends June 30, he closed a record $10.7 billion gap by slashing school and municipal aid and skipping a $3 billion pension payment.

New Jersey’s pension-funding gap increased $8.05 billion, or 18 percent, this year to $53.9 billion, from $45.8 billion as of June 2009. Christie in a Jan. 4 interview said the deficit would have grown even if he made the recommended payment.

The governor said his priorities for the coming year will include jump-starting debate on pension measures he unveiled in September that would reverse a 9 percent benefit increase approved in 2001, raise the retirement age and freeze annual cost-of-living increases. Christie said his ability to make a partial payment of $512 million next fiscal year will depend on the state’s financial condition and whether lawmakers approve his pension package.

Approval Rating

Christie ousted incumbent Jon Corzine in the November 2009 election as voters rejected the one-term Democrat’s handling of the state’s economy.

A Fairleigh Dickinson University poll released today shows 53 percent of voters said they approve of Christie’s job performance and support cutting spending rather than raising taxes. The results, which are up from 49 percent in Fairleigh Dickinson’s November poll, follow Christie’s clashes with unions representing teachers and public workers, $1.3 billion in cuts to aid to municipalities and his move to cancel a proposed commuter-rail tunnel to Manhattan.

“The old direction was driving our state off a cliff -- into the abyss of no growth, high unemployment and a fleeing population,” he said in today’s speech. “In one year, New Jersey has gone from being a basket case to being a national model.”

Democratic Resistance

The first Republican elected governor since 1997, Christie has encountered resistance to his pension proposals from Democrats including Senate President Stephen Sweeney, who has said he’ll block the legislation unless Christie pays into the fund.

Assembly Speaker Sheila Oliver, a Democrat from East Orange, and Sweeney, of West Deptford, are sponsoring a plan that would require current workers to pay more to preserve the 2001 benefits increase.

The underfunded pension was one of the reasons cited by Moody’s Investors Service for its decision to lower the outlook on $31.6 billion of New Jersey bonds to negative from stable in September.

Robert Master, political director of the Communications Workers of America District 1, which represents 55,000 state and local government workers, said New Jersey needs to have a “serious conversation about protecting our pension plan.”

Union Side

Master, who joined Sweeney in criticizing the governor’s decision last year to veto the extension of an income-tax surcharge on those earning more than $1 million, said unions have yet to meet with Christie even as their contracts are set to expire June 30.

“He talked about shared sacrifice, but what I heard was that hardworking state employees are going to pay more for pensions and more for health care,” Master said. “The wealthiest, the most comfortable people, are being asked to do nothing.”

New Jersey, the third-most indebted state, also will contend with the loss of $900 million in federal stimulus funding for Medicaid this year, Christie said in the Jan. 4 interview. He was among 29 Republican governors last week who signed a letter urging President Barack Obama to allow them to cut outlays below federally assigned levels.

‘We’re Struggling’

“In Chris Christie’s New Jersey, crime is going up, schools are not doing as well, we’re struggling, our roads are failing,” Sweeney told reporters. “Chris Christie’s New Jersey is not the New Jersey he promised when he ran for governor. The only people in Chris Christie’s New Jersey that do well are millionaires.”

U.S. states will face deficits that may reach $140 billion next fiscal year, according to the Washington-based Center on Budget and Policy Priorities.

“This is a powerful and optimistic speech,” said Senate Minority Leader Thomas H. Kean Jr. “It talked about where we have come, but it also talked a great deal about the future, about the continuing decisions that we have to make. Chris Christie is not one to rest on his laurels.”

--Editors: Mark Schoifet,

To contact the reporters on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net; Esmé E. Deprez in New York at edeprez@bloomberg.net.

To contact the editor responsible for this story: William Glasgall at wglasgall@bloomberg.net

The Financial Nightmares Facing Boomers

Posted: 05 Jan 2011 08:54 PM PST

Uniqlo: Asia's Top Clothier Goes Back to Basics

Posted: 06 Jan 2011 02:00 PM PST

A Market Rally in Japan?

Posted: 06 Jan 2011 02:00 PM PST

Brazil's Credit Boom Could End in Tears

Posted: 06 Jan 2011 02:00 PM PST

Snowstorm Falls on New York, Boston and U.S. Northeast

Posted: 12 Jan 2011 04:43 AM PST

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By Brian K. Sullivan and Nidaa Bakhsh

(Updates with NYC schools open and snowfall totals in third paragraph.)

Jan. 12 (Bloomberg) -- Cities across the U.S. Northeast deployed thousands of plows and sand-spreaders to tackle the second major snowstorm in a little more than two weeks.

New York City declared a weather emergency, urging people to stay off the roads, as the storm moved in with as much as 12 inches (30 centimeters) of snow. A winter storm warning is in effect until noon local time today, according to the Weather Service.

New York’s public schools remained open. More than 12 inches of snow fell on parts of the Bronx and northern New Jersey while Central Park had received 9.1 inches as of 7 a.m., when skies over Manhattan began to clear, the National Weather Service said. Boston may experience the heaviest snowfall through mid-morning, with as much as 16 inches.

“The heaviest corridor is going to be from northern New Jersey right up that I-95 corridor through Portland, Maine,” said Carl Erickson, a senior meteorologist with AccuWeather Inc. in State College, Pennsylvania. “In New York, in the five boroughs, it will probably be closer to a foot when things are said and done.”

Amtrak reduced the number of scheduled trains between New York City and Albany, according to a statement. More than 300 of today’s flights originating from the three major airports serving New York City are canceled, according to tracking company FlightAware. The Metropolitan Transportation Authority said in a statement that all services in the city are operating for the morning rush hour, some on reduced schedules.

‘Blizzard-like Conditions’

“Initially, there isn’t going to be much in the way of wind, but as the storm bombs out off the New England coast the winds will pick up and basically create blizzard-like conditions,” Erickson said. He expects an area stretching from central Long Island through eastern Connecticut into Rhode Island and Massachusetts, including Boston, to receive the heaviest snow.

The storm combines two systems, one from the Midwest and another that dropped snow across the South, forcing the governors of Georgia and South Carolina to declare emergencies.

New York City, where 20 inches of snow fell in a blizzard that began the day after Christmas, had 1,700 plows ready along with 365 salt trucks to tackle the municipal street cleanup, according to Mayor Michael Bloomberg, founder and majority owner of Bloomberg LP, parent of Bloomberg News.

Using Technology

Crews were equipped with video feeds and GPS systems to pinpoint trouble spots, he said at a press conference yesterday.

The MTA, which operates New York City’s buses and subways, deployed de-icers and snow blowers. During a post-Christmas blizzard, 600 buses stalled and hundreds of commuters were stranded.

New York state dispatched 685 trucks to keep state highways clear, according to a statement from Governor Andrew Cuomo. The Long Island Power Authority had 300 linemen and 100 additional contractors ready to deal with electrical outages, according to the statement.

New Jersey Transit said it would in a statement that it would “cross-honor” all tickets last night, allowing people holding a ticket for one form of public transport to use it on another.

Tom Feeney, spokesman for the New Jersey Turnpike Authority, which maintains that roadway and the Garden State Parkway, said the agency had 550 trucks and plows ready to respond.

Heating Oil Climbs

Heating oil surged to a 27-month high yesterday on the forecast for Northeast snow. The February delivery contract fell 0.2 percent to $2.6041 a gallon at 7:01 a.m. local time in electronic trading on the New York Mercantile Exchange. Hovensa LLC and Sunoco Inc. have units shut at refineries supplying the East Coast, including New York Harbor, the delivery point for heating oil and gasoline futures.

The forecast for southern New England is for clear skies for at least a few days once the storm has dissipated. There is a chance snow will fall just before the National Football League’s New England Patriots host the New York Jets on Sunday in the second round of the American Football Conference playoffs, Erickson said.

The storm comes two weeks after a blizzard struck New York and the Northeast, dropping at least 20 inches of snow on Central Park and forcing the cancellation of more than 8,000 flights.

The Dec. 26 to Dec. 27 storm left some New York City streets unplowed for days and garbage pickups backlogged. It cost New York at least $20 million of its $38.8 million snow- removal budget, according to the city’s Sanitation Department.

--With assistance from Mary Jane Credeur in Atlanta; Martin Z. Braun and Esme E. Deprez in New York; Terrence Dopp in Trenton, New Jersey; and Mary Schlangenstein and Barbara Powell in Dallas. Editors: Charlotte Porter, David Marino

To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net; Nidaa Bakhsh in London at nbakhsh@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

Hezbollah May Quit Lebanon Cabinet Over UN Inquiry

Posted: 12 Jan 2011 04:34 AM PST

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By Massoud A. Derhally

(Updates with analyst in eighth paragraph, UN in last.)

Jan. 12 (Bloomberg) -- Hezbollah and its allies said they may pull out of Lebanon’s Cabinet, a step that may topple the government of U.S.-backed Prime Minister Saad Hariri.

The move by the Shiite Muslim group follows the failure of a Saudi-Syrian drive to resolve disputes over the United Nations investigation into the murder of former premier Rafiq Hariri. Hezbollah, whose ally Syria is blamed by many Lebanese for the killing, has demanded an end to the inquiry. Hezbollah spokesman Ibrahim Moussawi said in a text message that the ministers will quit and Ali Hamdan, adviser to parliament Speaker Nabih Berri, also said resignations are possible.

“We’ve reached a dead end,” Michel Aoun, a Christian lawmaker who is a key ally of Hezbollah, said at a news conference yesterday, referring to the collapse of the Saudi- Syrian initiative. Lebanon’s benchmark stock index plunged toward its biggest drop for six months.

Tensions have escalated as the UN tribunal prepares to make an indictment, on concern it may implicate Hezbollah in the 2005 murder of Rafiq Hariri, the current premier’s father. That would raise the prospect of a return to violence in a country that emerged from a 15-year civil war in 1990 and has seen frequent recurrences of sectarian strife since then.

Hezbollah and Syria deny responsibility for the killing. Hezbollah has called for the abolition of the UN tribunal, described as unconstitutional by leader Hassan Nasrallah in a Nov. 11 speech. He said Hezbollah won’t allow its members to be detained and would “cut off the hand” of anyone who attempted to make arrests.

Brokering Compromise

Saad Hariri has pledged support for the UN effort to identify his father’s killers. Saudi Arabia, which backs Hariri, and Syria have been seeking to broker a compromise, without disclosing their proposed solution.

The Hezbollah bloc may quit today before Hariri’s scheduled meeting with U.S. President Barack Obama in Washington, Al Jazeera television reported citing lawmaker Abbas Hashem.

The risk of a government collapse pushed Lebanese stocks toward the biggest drop since July. The benchmark BLOM Stock Index tumbled 3.1 percent to 1,490.08 at midday in Beirut.

“The fluctuation of share prices on the Beirut Stock Exchange is driven by political sentiment rather than by the underlying performance of listed companies,” said Nassib Ghobril, head of research at Lebanon’s Byblos Bank SAL.

Hezbollah’s withdrawal from the government may also set back an economy that performed “remarkably well” through the global crisis because of the “more stable environment” under Saad Hariri, according to an October report by the International Monetary Fund. The IMF projected growth of 8 percent for 2010 slowing to 5 percent this year.

‘Further Slowdown’

Political tension has already hurt the economy and “if this resignation happens, it will further erode confidence and may heighten the risk of a further slowdown,” Eric Mottu, the IMF representative in Beirut, said by phone today. “For growth, investment, consumption and tourism it could be a risk.”

Saad Hariri’s pro-Western bloc in the Cabinet has 15 ministries, compared with 10 for Hezbollah and its Christian allies. The remaining five are nominees of President Michel Suleiman, under a formula that gives neither Hariri’s movement, which won 2009 elections, nor Hezbollah a majority.

Hariri pledged “to keep the doors open for the Lebanese to reach solutions that ensure stability and calm, and preserve national unity,” in a statement late yesterday.

Hezbollah and its allies say the UN investigation is politically motivated and marred by U.S. intervention. They pledged to block Lebanese funding for the probe, a dispute that prevented parliament from passing the state budget last year.

Roadside Bomb

Rafiq Hariri and 22 others were killed by a roadside bomb in Beirut in February 2005, sparking protests by millions of Lebanese that led to the ouster of Syrian troops from the country after 29 years.

UN prosecutor Daniel Bellemare is expected to file his indictment with the pretrial judge, Daniel Fransen, by the end of March.

An initial UN inquiry charged four pro-Syrian officials in Lebanon’s security services. They were held in jail for four years before being released in 2009 by the tribunal due to a lack of evidence, after some witnesses changed or retracted statements. Hezbollah has called for the prosecution of the so- called “false witnesses.”

The last time Hezbollah walked out of a government, quitting the Cabinet of then-Prime Minister Fouad Siniora in 2006, it marked the start of an 18-month paralysis of the government. That culminated in an outbreak of civil strife in May 2008, when at least 80 people were killed after Hezbollah and its allies seized control of west Beirut.

Michael Williams, the UN’s special coordinator for Lebanon, said in an e-mailed statement today that he is “concerned at the possibility of a prolonged political crisis.”

--Editors: Inal Ersan, Ben Holland.

To contact the reporter on this story: Massoud A. Derhally in Beirut, Lebanon at mderhally@bloomberg.net

To contact the editor responsible for this story: Louis Meixler at lmeixler@bloomberg.net.

Stocks, U.S. Futures Gain on Bailout Bets; Commodities Advance

Posted: 12 Jan 2011 04:32 AM PST

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By Stephen Kirkland

Jan. 12 (Bloomberg) -- Stocks rose, sending the MSCI World Index to the highest in more than two years, U.S. index futures climbed and credit risk subsided on speculation European officials are stepping up efforts to solve the debt crisis. Commodities gained for a third day.

The MSCI World added 0.5 percent at 7:20 a.m. in New York, led by banks, as the cost of insuring against default by European financial companies dropped. Standard & Poor’s 500 Index futures increased 0.6 percent. Portuguese 10-year debt fluctuated between gains and losses after a government auction of 2014 and 2020 securities. The euro pared its advance against the dollar, appreciating less than 0.1 percent. The S&P GSCI Index of commodities rose 0.3 percent, led by cotton.

Europe’s bailout fund “should be reinforced and the scope of its activity widened,” European Union Economic and Monetary Affairs Commissioner Olli Rehn said in a speech today in Brussels. Japan may extend purchases of bonds by a European financial aid fund in coming months to support the recovery, said two government officials familiar with the matter. Portugal sold 1.25 billion euros ($1.6 billion) of debt, before tomorrow’s auctions by Spain and Italy.

“The policy debate might be evolving towards a more forceful euro-wide response to the crisis,” Jacques Cailloux, a strategist at Royal Bank of Scotland Group Plc in London, wrote in a research note. “European policy makers might be finally starting to grasp the seriousness of the situation as Italy, Belgium and Spain show increasing signs of strains.”

Santander, EADS

The Stoxx Europe 600 Index advanced 1 percent as Banco Santander SA, Spain’s biggest lender, surged 6.3 percent and UniCredit SpA, Italy’s largest bank, jumped 5.3 percent. European Aeronautic Defence & Space Co. climbed 4.6 percent after its Airbus SAS unit won the biggest order in commercial aviation history, worth $15 billion at list prices.

The cost of insuring European bank bonds using credit- default swaps tumbled from near a record high, with the Markit iTraxx Financial Index falling 8 basis points to 192, according to JPMorgan Chase & Co.

Irish 10-year bond yields fell six basis points to 8.73 percent, with Spanish yields down five basis points and Italian 10-year yields two basis points lower.

The cost of insuring Portuguese government debt against default fell 23 basis points to 513, according to CMA.

Portugal’s Auction

Portugal sold 599 million euros of bonds due in 2020 at a yield of 6.716 percent, compared with 6.806 percent at the previous auction on Nov. 10. The government placed 650 million euros of 2014 bonds at a yield of 5.396 percent, up from 4.041 percent on Oct. 27. Investors asked for 3.2 times the amount of 10-year bonds sold, up from 2.1 times at the previous sale, and sought 2.6 times the 2014 bonds, less than the 2.8 times earlier.

The gain in S&P 500 futures indicated the benchmark gauge for U.S. equities will rise for a second day. Labor Department figures today may show the price of goods imported into the U.S. climbed 1.2 percent in December, compared with a 1.3 percent increase in November, according to estimates compiled by economists. The Federal Reserve is scheduled to release its report on regional economic activity, known as the Beige Book.

The Dollar Index, which tracks the U.S. currency against those of six trading partners, declined 0.2 percent, the measure’s third straight drop.

Cotton jumped 2.2 percent before the U.S. Department of Agriculture’s monthly crop outlook. Palladium climbed 2.6 percent after Credit Suisse Group AG forecast prices may rise.

The MSCI Emerging Markets Index rose 1.3 percent, the biggest gain on a closing basis in five weeks, as energy and raw-materials companies climbed. India’s Bombay Stock Exchange Sensitive Index advanced 1.9 percent as the slowest pace of industrial-production growth in 18 months eased concern of interest-rate increases. Thailand’s baht strengthened 0.4 percent against the dollar after the central bank raised its benchmark repurchase rate for the fourth time in seven months.

--With assistance from Mark Gilbert, Abigail Moses, Michael Patterson, Andrew Rummer and Daniel Tilles in London. Editors: Stephen Kirkland, Justin Carrigan

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net.

To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net.

U.K. Pubs Can Open Until 1 a.m. for Royal Wedding

Posted: 12 Jan 2011 04:32 AM PST

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By Kitty Donaldson

(Updates with comment from Cameron in sixth paragraph.)

Jan. 12 (Bloomberg) -- The U.K. will allow pubs and bars to open until 1 a.m. to celebrate the wedding of Prince William, second in line to the throne, and his bride Kate Middleton on April 29.

Venues will also be able to extend opening hours on the following day, allowing an average extra two hours for live music and other forms of entertainment, Crime Prevention Minister James Brokenshire said in an e-mailed statement today.

“The Royal Wedding is a time of national celebration and we want everyone to be able to participate,” he said. “We recognize that people may want to extend their festivities to mark this important occasion which is why we intend to allow pubs, bars, community and village halls and other licensed venues to be able to open later.”

Under current rules, the 67 percent of licensed premises in the country that close before midnight must apply to their local council for a special license costing 21 pounds ($33) if they wish to extend their opening hours. That cost will be scrapped for the two days of celebrations.

“This is great news, and it is really good to see the government recognizing that this is a brilliant opportunity for us all to get together in the pub, to celebrate a great national event,” Brigid Simmons, chief executive of the British Beer and Pub Association, said in an e-mailed statement.

Prime Minister David Cameron said the government would allow road closures so people can celebrate the wedding. “We should make it easier for people to close streets and have street parties,” he told lawmakers in Parliament today.

The royal engagement was announced on Nov. 16, ending years of speculation. William, son of Prince Charles and the late Diana, Princess of Wales, had been dating Middleton since 2003. The wedding day will be a public holiday.

--Editors: Andrew Atkinson, Eddie Buckle

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.

Portugal Aid, Buybacks, Debt Rules Weighed in EU Plan

Posted: 12 Jan 2011 04:21 AM PST

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By James G. Neuger

(Updates to add Merkel’s comments in seventh paragraph.)

Jan. 12 (Bloomberg) -- European governments are considering aid for Portugal, debt buybacks, lower interest rates on rescue loans and guarantees against excessive debt as part of a package to quell the financial crisis, according to two people with direct knowledge of the talks.

The plan, which may include a loan to Portugal of about 60 billion euros ($78 billion) and purchases of outstanding Greek debt, would mark an attempt to contain a crisis that has frustrated unprecedented efforts by policy makers to calm markets and raised questions about the health of the 17-nation euro economy.

Euro-area finance ministers will discuss elements of the package next week, though the debate is so sensitive in Germany that decisions may wait until a scheduled summit of political leaders on Feb. 4, said the people, who declined to be named because the deliberations are private.

“We need to review all options for the size and scope of our financial backstops,” European Union Economic and Monetary Commissioner Olli Rehn told a conference in Brussels today. Failure to clean up the fiscal mess would put Europe “at the mercy of market forces.”

The cost of insuring European sovereign debt has climbed to a record as the crisis that last year led to 178 billion euros in EU and International Monetary Fund aid for Greece and Ireland threatened to claim Portugal as its next victim.

The euro, down about 10 percent against the dollar the past year, was little changed at $1.2983 at 1:10 p.m. in Berlin.

‘Whatever Is Necessary’

“We will do whatever is necessary and everything will be discussed step by step,” German Chancellor Angela Merkel told reporters today in Berlin. “Germany will do whatever is necessary so that the euro remains stable.”

For months, the European Central Bank has borne the brunt of the crisis-fighting burden, bending its original mission by buying 74 billion euros in distressed countries’ bonds as political leaders clashed over bolstering the aid funds.

ECB President Jean-Claude Trichet has pressed for a tougher firewall against contagion, telling a group of German lawmakers on Jan. 7 that “monetary-policy responsibility cannot substitute for government irresponsibility. Europe cannot afford to rest halfway, we need to be more ambitious.”

Portugal today raised 599 million euros in the sale of 10- year bonds at an average yield of 6.72 percent, down from a yield of 6.81 percent at a sale on Nov. 10. The decline in borrowing costs provided a respite from speculation that Portugal will be soon forced into an aid package.

Portugal’s Need

Portugal has brushed aside suggestions that it will have to fall back on EU help. Noting that last year’s deficit was less than the target of 7.3 percent of gross domestic product, Prime Minister Jose Socrates said yesterday that “Portugal will not request financial aid for the simple reason that it’s not necessary.”

Tomorrow, Spain will auction as much as 3 billion euros of five-year bonds, while Italy will market 6 billion euros of securities maturing in 2026 and 2015.

Rehn said “several alternatives” are under consideration for the European Financial Stability Facility, the 440 billion- euro key weapon in the euro area’s anti-crisis arsenal. The need to set aside collateral to maintain a AAA credit rating limits what it can actually lend to about 250 billion euros.

While Rehn didn’t name the options, the people familiar with the discussions said the focus is on amending the collateral rules to boost the EFSF’s effective lending ceiling, on offering the aid at lower interest rates and allowing it to be used to retire debt.

EU Options

Some EU leaders have suggested the EU’s fund could be used to buy government bonds or to offer shorter-term credits. Asked whether leaders are weighing those ideas, Luxembourg Prime Minister Jean-Claude Juncker said last month that measures under consideration are “exactly those that you mentioned.”

Germany, Europe’s largest economy and the biggest contributor to the aid packages, is tying the more flexible approach to an agreement by EU governments to anchor debt- limitation rules in their constitutions, the people said.

“The policy debate might be evolving toward a more forceful euro-wide response to the crisis,” Jacques Cailloux, a strategist at Royal Bank of Scotland Group Plc in London, wrote in a research note. “European policy makers might be finally starting to grasp the seriousness of the situation as Italy, Belgium and Spain show increasing signs of strains.”

Japan Support

Europe is getting flanking support from Japan, which said yesterday it will buy more than a fifth of bonds to be sold in late January to fund Ireland’s bailout. Japan may buy more in coming months, two Japanese officials said today. China last week pledged to buy more Spanish debt.

A full-blown fiscal crisis in Spain, the euro region’s fourth-largest economy, would strain the system to the breaking point, Nobel Prize-winning economist Christopher Pissarides said.

“If Spain were to collapse then the money needed to rescue it would be so much that I doubt whether the stronger European nations, Germany in particular, would be either able or willing to accumulate all of the funds,” Pissarides, who teaches at the London School of Economics, said at a forum in Beijing today.

--With assistance from Anabela Reis and Joao Lima in Lisbon, Tony Czuczka in Berlin, Jonathan Stearns in Brussels, Toru Fujioka and Kyoko Shimodoi in Tokyo, and Kevin Hamlin in Beijing. Editors: James Hertling, John Fraher

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Spy Anna Chapman to Host ‘Mysteries’ Russian Television Show

Posted: 12 Jan 2011 04:19 AM PST

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By Ilya Arkhipov

Jan. 12 (Bloomberg) -- Russian spy Anna Chapman, expelled from the U.S. last year, will host a television show dedicated to exposing “the biggest secrets in the world,” the Moscow- based network that hired her said.

“Mysteries of the World With Anna Chapman” will debut Jan. 21 and run every Friday, said Marina Volodina, a spokeswoman for Moscow-based REN-TV, by phone today. Volodina declined to say how much Chapman will earn from the program.

Red-haired Chapman has been the most visible of the 10 people who were deported from the U.S. last July for being members of what the Justice Department called a “deep-cover” spy ring. She gave her first television interview in December, after the U.S. edition of Playboy magazine published nude pictures of the 28-year-old agent.

Prime Minister Vladimir Putin, a former KGB officer, told reporters last July that the agents would have “interesting, bright” lives in Russia. He also discussed “life” and sang “patriotic songs” during a meeting with the group, according to the government’s website.

Chapman told viewers of the talk show “Let Them Speak” on state-run Channel One to “keep watching television” to learn the “secrets” she said she would reveal in 2011. She said in that interview that she declined an offer to appear on the Oprah Winfrey show in the U.S. “to support the domestic producer.”

Another female member of the spy ring, Natalia Pereverzeva, who went by the name Patricia Mills, was hired by state-run pipeline operator OAO Transneft as an adviser on international projects to Chief Executive Officer Nikolai Tokarev, the Kommersant newspaper reported today, citing unidentified people familiar with the matter. Igor Dyomin, a Transneft spokesman, said he couldn’t comment on company employees.

Chapman last month was elected an official at Molodaya Gvardiya, or Young Guard, the youth wing of Putin’s United Russia party. She has been working since October as an adviser to Moscow-based Fondservisbank, which invests in aerospace and high-technology industries. A third agent, Andrei Bezrukov, who lived in the U.S. as Donald Heathfield, is working as an adviser to oil-producer OAO Rosneft, according to Kommersant.

--Editors: Brad Cook, Patrick Henry.

To contact the reporter on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net.

First-Time Debt Sales to Double as Yields Tumble: Brazil Credit

Posted: 12 Jan 2011 04:16 AM PST

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By Boris Korby and Camila Russo

Jan. 12 (Bloomberg) -- The lowest corporate borrowing costs in eight months are paving the way for a surge in debut overseas bond sales by Brazilian companies.

The extra yield investors demand to own Brazilian corporate dollar bonds instead of U.S. Treasuries narrowed to 252 last week, the smallest gap since April, according to JPMorgan Chase & Co.’s CEMBI index. The yields compare with benchmark spreads of 307 basis points for Russian companies and 517 for Chinese issuers last week.

The number of Brazilian companies selling dollar debt abroad for the first time may jump to about 15 this year, according to Itau Unibanco Holding SA, the second-largest underwriter of the country’s bonds in 2010 after Banco Santander SA. There were eight first-time offerings last year, according to data compiled by Bloomberg. Brazilian companies sold a record $36.7 billion of dollar bonds in 2010 as near-zero interest rates in the U.S., Japan and Europe fueled demand for the Latin American countries’ higher-yielding assets.

“There’s a lot of appetite for new stories in Brazil and there are very few countries that have this combination of a huge appetite from investors and new companies ready to tap the market,” Joao de Biase, head of debt capital markets at Itau, Unibanco, said in a telephone interview from Sao Paulo.

The new corporate issuers will likely have credit ratings that are junk, or below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s, according to Biase. The median rating on Brazilian corporate dollar debt sold last year was BBB-, the lowest investment grade.

Yield Gap

Grain-trading company Ceagro Agricola Ltda., which is rated B by S&P, sold $100 million of bonds to yield 11 percent in October, according to data compiled by Bloomberg. Property developer BR Properties SA, rated Ba3 by Moody’s, paid a yield of 9 percent on $200 million of notes in September. U.S. corporate junk bonds yield 7.68 percent, according to Bank of America Merrill Lynch’s U.S. High Yield Master II index.

Investors are migrating to corporate debt and taking on more risk as the yield gap with government notes narrows, said Luz Padilla, who helps manage about $6 billion at asset manager Doubleline Capital LP in Los Angeles. Brazil corporate bonds account for about 13 percent of the money Padilla manages, she said.

Brazilian corporate debt yields 74 basis points more than government bonds, down from a difference of 103 in October, according to JPMorgan. Corporate securities returned 11.1 percent in the 12 months through yesterday, compared with a 10.8 percent gain for government notes, data compiled by Bloomberg show. A basis point is 0.01 percentage point.

‘Played Out’

“People are looking at corporate debt and seeing there’s some additional spread pickup for not significantly more risk,” Padilla said in a telephone interview. “The spread attraction in the sovereign space has played out.”

The extra yield investors demand to own Brazilian government bonds instead of U.S. Treasuries narrowed 1 basis point to 168 at 7:05 a.m. New York time, down from 250 in July, according to JPMorgan data.

Itau’s Biase said the bank is working with as many as five companies that are seeking to sell bonds abroad for the first time this year. One of them is a single-B rated agriculture company, he said, without being more specific.

There have been six debut offerings from Brazilian companies since Sept. 30, according to Bloomberg data. There was only one new issuer in 2009.

Brazilian companies with low credit ratings are taking advantage of rising global demand for higher-yielding assets as central banks in developed countries keep interest rates low to bolster economic growth, according to RBC Capital Markets.

‘Lower Grades’

“There’s a lot of liquidity out there because the central banks in much of the developed world are using very loose monetary policy,” said Eduardo Suarez, an emerging-markets strategist at RBC in Toronto. “To get higher returns people started going to lower grades, but those yields compressed so now they’re turning to high yield.”

The cost of protecting Brazilian bonds against default for five years fell three basis points to 109, according to CMA prices. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to comply with debt agreements.

The real strengthened 0.2 percent to 1.6798 per U.S. dollar.

Yields on Brazil’s interbank rate futures contract due in January 2012 were unchanged at 12.23 percent.

‘More Challenging’

Rising U.S. Treasury yields, the benchmark for emerging- market borrowers, may limit Brazilian corporate dollar bond sales in 2011, according to New York-based brokerage MF Global Holdings Ltd. U.S. Treasuries will climb to 3.86 percent by the first quarter of 2012 from 3.34 percent, according to the median forecast of 50 economists surveyed by Bloomberg.

“It will be a good year, but more challenging to increase the volume of 2010 because of rising rates,” Michael Roche, an emerging-market strategist at MF Global, said in a telephone interview. “Corporates will look to frontload issuance during the first half of the year, and then the pace of demand will fall away because of rising rates.”

Debut junk bonds sales from Brazilian companies will account for a bigger share in overall issuance in the coming years, Biase said.

“I don’t think this is a one-year event,” he said. “We will continue to see this in the next couple of years. This is a trend that is going to happen.”

--Editors: Alan Mirabella, Lester Pimentel

To contact the reporters on this story: Boris Korby in New York at bkorby1@bloomberg.net; Camila Russo in New York at crusso15@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net