By Money Morning on April 8, 2009
RBS Will Eliminate up to 9,000 Jobs; Mortgage Delinquencies Rise 7%; Rio Rebuffs Asia Steelmakers Discount Demands; Retail Sales Dive Sans Wal-Mart; Moody’s: More Than Half of Latin American Companies At Risk; CEO Confidence Hits Record Low; MGM in Talks to Refinance Debt; Audi Sales Fall in March
* Royal Bank of Scotland plc (RBS: 7.72 0.00 0.00%) said it may eliminate as many as 9,000 additional jobs to curb costs and repay $3.7 billion in government bailout money over the next three years. The bank said the actual number of losses may be “significantly lower” because of efforts to shift employees to new positions, Bloomberg reported.
* The number of delinquent mortgages rose 7% in February, with 39.8% of subprime borrowers at least 30 days behind on their mortgage payments, Dann Adams, president of U.S. Information Systems for Equifax Inc, told Reuters. “I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said.
* After contract negotiations stalled, Rio Tinto Group PLC (RTP: 126.67 0.00 0.00%) offered Asian steelmakers a 20% discount on its iron ore, well below the 40% to 50% discount Chinese steelmakers demanded, four executives close to the deal told Bloomberg. Some Chinese mills already rejected the offer from Rio, the world’s second-largest iron ore producer.
* Retailers are expected to post a 0.3% drop in same-store sales in March. Excluding Wal-Mart Stores Inc. (WMT: 52.39 0.00 0.00%), that figure would be a 4.7% drop, according to Thomson Reuters data. “We don’t see any signs of significant improvement with the exception of a continued full-fledged flight to value retailers,” said Craig Johnson, president of Customer Growth Partners, a retail research firm.
* The number of Latin American companies whose ratings have negative outlooks or are under review for a downgrade has jumped to 23% from 10% in September and more than half have “high exposure to funding risk,” Moody’s Investors Service (MCO: 22.20 0.00 0.00%) reported yesterday (Tuesday). The region’s companies are struggling to refinance debt as the financial crisis reduces access to credit and slowing economic growth crimps earnings, according to Moody’s, Bloomberg reported.
* A survey of U.S. chief executives released yesterday (Tuesday) showed two-thirds plan additional layoffs and expect sales to decline in the next six months as their confidence in the economy continues to fall, Reuters reported. The Business Roundtable’s quarterly CEO Economic Outlook Index fell to negative 5 - the first negative reading in the survey’s six-year history - and down from a fourth-quarter reading of 16.5. A reading below 50 means CEOs expect contraction rather than growth.
* Private equity firm Colony Capital LLC is in talks with MGM Mirage (MGM: 4.45 0.00 0.00%) to help refinance the casino company’s debt, two people with knowledge of the discussions told Bloomberg. Colony may invest as much as $750 million in corporate debt secured by a lien on one or more of MGM Mirage’s casinos, the anonymous sources said. An investment in CityCenter, MGM Mirage’s unfinished Las Vegas Strip project with Dubai World, is unlikely.
* Worldwide sales at Audi fell 10.7% in March from a year ago, but the German carmaker managed to increase sales in China, Reuters reported Monday. Audi, a Volkswagen AG (VLKAY.PK: 62.40 0.00 0.00%) unit, sold 90,400 cars worldwide in March as sales fell 12.9% in Western Europe but rose 6.6% in China. “The trend is positive: Our monthly results have been continually improving since January,” said Peter Schwarzenbauer, the manager in charge of marketing and sales at Audi.
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