Greenpeace Lost $5
Million on a Currency Bet - (www.time.com) Greenpeace
International issued an apology Monday amid reports the environmental
organization lost 3.8 million euros, or about $5.2 million, on foreign currency
trades. The group said a Greenpeace employee acted “beyond the
limits of their authority and without following proper procedure” when entering
into fixed rate currency exchange contract while the euro was gaining strength.
The organization has since fired the employee responsible and says the employee
did not benefit personally from the mistake. An independent audit of the error
will be conducted. “We offer a full apology to our supporters for the series of
errors that led to the loss,” Greenpeace said in a statement. “We further wish
to reassure people that every possible action is being taken to avoid the
possibility of such a loss ever occurring again in future.”
Argentina
faces new default risk after U.S. Supreme Court says country must pay back as
much as US$15B in debt - (www.financialpost.com) The
U.S. Supreme Court left intact rulings that may force Argentina to pay billions
of dollars to holders of repudiated bonds, rejecting the country’s appeal in a
case that has unsettled its financial markets and triggered threats of a new
default. The justices without comment Monday turned away contentions that lower
court rulings misread Argentina’s bond agreements and violated its sovereign
immunity. The rebuff is a victory for investors, led by a Paul
Singer-controlled hedge fund, who have refused to exchange their defaulted
bonds for about 30 cents on the dollar. The rejection leaves Argentina facing a
court order to pay the holdouts in full before it makes payments on a separate
US$24 billion in restructured debt. The country could try to negotiate a settlement,
a step it so far has refused to take. Argentina says it can’t afford to pay
both sets of bondholders. “Compliance will force the country to face a serious
and imminent risk of default, with grave ramifications for Argentina, the
exchange bondholders, and the capital markets,” the country said in a May 27
court filing.
Fed Mulls Exit
Fees on Bond Funds: FT - (www.barrons.com) The Financial
Times reports Federal Reserve officials have discussed levying
exit fees on bond funds, in hopes of avoiding a potentially damaging run on the
$10 trillion corporate bond market. From the story by Tom
Braithwaite, Tracy Alloway, Michael Mackenzie and Gina Chon: Officials
are concerned that bond-fund investors, as with bank depositors, can withdraw
their money on demand even though the assets held by their funds are long-term
debt and can be hard to sell in a crisis. The Fed discussions have
taken place at a senior level but have not yet developed into formal policy,
according to people familiar with the matter. “So much activity in open-end
corporate bond and loan funds is a little bit bank like,” Jeremy Stein, a
Fed governor from 2012-2014 told the Financial Times last month, just before he
stepped down. “It may be the essence of shadow banking is … giving people a
liquid claim on illiquid assets.” … Exit fees would seek to discourage retail
investors from withdrawing funds, thereby making their claims less liquid and
making a fire sale of the assets more unlikely.
Loans
with few strings attached reach record level - (www.cnbc.com) Bank
lending to companies with few restrictions has surged back since the financial
crisis virtually killed the practice. The record issuance of so-called
covenant-lite loans raises questions over whether a fresh wave of debt defaults
and losses will return—probably not in the short term, according to experts,
but becoming more likely as the trend plays itself out in coming years. U.S.
"cov-lite" loan volume recently hit $83.6 billion over 82 deals in
2014, up 41 percent from the same period in 2013 ($59.4 billion over 68 deals),
according to data tracker Dealogic. That represents the highest year-to-date
volume and deal activity on record. Credit Suisse leads
the U.S. for such loans with a 12.8 percent market share in 2014, according to
Dealogic. The Swiss bank is followed by Citigroup and Deutsche Bank with
11.5 percent and 10.8 percent of loans, respectively.
Ukraine
Says Russia Has 38,000 Troops on Border Amid ‘Invasion’ - (www.bloomberg.com) Russia has amassed as many as 38,000 soldiers on
its borders with Ukraine and continues to supply arms and personnel to rebel
forces in the eastern part of the country, Ukraine’s National Security Council
chief said. Russia has moved about 16,000 troops to Ukraine’s eastern frontier
and has another 22,000 in Crimea, the Black Sea peninsula that President
Vladimir Putin annexed in March, Andriy Parubiy told reporters in the capital
Kiev today. “The military invasion is continuing,” Parubiy said. “We are
dealing with Russian occupiers and weapons and militants are being brought in.”
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