The week's top news in world financial markets from Maximus Capital

  • 2009-11-25
Home prices in 20 U.S. cities fell in September at probably the slowest pace in almost two years, underscoring improvement in real estate that’s helping the economy emerge from recession, economists said ahead of a private report to be issued this week. According to the median forecast in a Bloomberg News survey the S&P/Case-Shiller home-price index declined 9.1 percent from September 2008 after an 11.3 percent year-over-year decrease a month earlier. Separate reports may show consumer confidence slipped this month on weaker employment prospects, while third-quarter economic growth was slower than first estimated. Rising home sales, aided by government programs and a decline in mortgage rates this year, have helped stem the slump in property values that precipitated the worst recession since the 1930s. Home buying and consumer spending may still be hindered by higher unemployment.

Euro zone
Spanish producer prices fell the least in six months in October as oil prices rose. Prices of goods leaving Spain’s factories, mines and refineries declined 4.2 percent from a year earlier, the National Statistics Institute in Madrid said, after a 5.4 percent drop in September. Prices were unchanged from the prior month. The price of crude oil rose 14 percent in the year to the end of October and traded at $76 last week. Weak demand is still pulling producer prices lower as the Spanish economy contracted for a sixth quarter from July through September even as Germany, France and the euro region expanded. Spanish consumer prices have been falling in annual terms since March, as inflation slows more sharply than in the euro region overall. The International Monetary Fund forecasted in October that the Spanish economy may contract 0.7 next year, while the euro area, the U.S. and the U.K. should post full-year growth.

CIS countries
Russian billionaire Oleg Deripaska, whose United Co. Rusal is seeking to restructure more than $14 billion of debt, is in talks with potential investors in his construction, airport and financial-services businesses. Rusal, the world’s largest aluminum producer, plans an initial public offering in Hong Kong to help repay its borrowings. Deripaska last year gave up stakes in builder Hochtief AG and autoparts maker Magna International Inc. that were held as collateral by lenders as the value of his investments tumbled. He also cut his Rusal stake. Timur Supataev, head of investment at Deripaska’s Basic Element holding company, said last week that they see renewed interest towards some of their assets, including stakes in our businesses, from a growing number of investors from Russia, China, Singapore, the United Arab Emirates and Western Europe. Ukrzaliznytsya, the Ukrainian state rail company that missed a principal payment on a syndicated loan this month, is offering repayment over three years. The company is seeking to swap $440 million of existing debt that pays 2.5 percentage points more than the London interbank offered rate for debt paying annual interest at 8.75 percent. The “preliminary information” is that the company will also make principal payments of $90 million in the first year, $150 million in the second and $200 million in the third. Investor speculation that Ukrzaliznytsya’s missed payment on loans arranged by Barclays Capital might trigger a default on a separate $700 million loan guaranteed by the government spurred declines in emerging-market stocks worldwide on Friday.
Written using the materials by Bloomberg and Reuters