Car company transactions
Another big sale for a struggling car industry this week
Following the collapse of car giant MG Rover, the 'Phoenix Four' have been issued with a ban on running companies by Business Secretary Lord Mandelson. This came as an official report into the collapse said MPs investigating what happened were given "inaccurate and misleading information" by one of the four directors. The report cost some £16 million to produce, and its 850 pages also found evidence of questionable briefings to the press by government officials.
And as stockmarkets gain pace, European companies have issued a record £1.2tn of bonds in 2009 so far. It’s up 38 percent on the total volume in 2008. “Banks are in trouble – they are short of capital and particularly in leverage loans,” said Andrea Cicione, a senior credit analyst at BNP Paribas in London. “To extend credit to non-investment grade companies, they would need to set aside significant amounts of capital, and in this environment that is very difficult to do.” With tightened lending and hard-to-access bank debt, this is no surprise. During 2009’s first half, bonds outperformed stocks – and this was bolstered by retail investors flocking to the bond market.
Other news this week includes General Motors’ decision to sell Opel, its European subsidiary, to Canada’s Magna International and Russia’s Sberbank. German Chancellor Angela Merkel was particularly pleased that this has been announced, as it had threatened to overshadow the elections.
And the Bank of England this week left monetary policy unchanged without explaining its decision; interest rates were held at 0.5 percent and the £175bn quantitative easing programme was not expanded. An extremely positive sign.
Across the globe, the US is also showing signs of recovery as Treasury secretary Tim Geithner revealed a paring back of emergency support for banks and financial markets. It’s the first step in a lengthy recovery for the US, especially in the light of the collapse of Lehman Brothers – the panic that set fear into the wallets of the world.
And in legal news, the Supreme Court opens next month – complete with television cameras. Part of a constitutional revamp, it has for some reason escaped the public gaze. Maybe because the change is seen as cosmetic, but on closer examination it runs far deeper. Cases can be broadcast, and the court justices can even be watched through a glass partition eating a sandwich. The new transparent ideal is described by Lord Philips of Worth Matravers, the court’s new president, as a move to “enhance public understanding of the justice system”. It’s a radical change.
