‘Frack now, pay later,’ top services companies
say amid oil crash - (www.reuters.com) Business
is so tough for oilfield giants Schlumberger NV
and Halliburton Co that they have come up with a new sales pitch for crude
producers halting work in the worst downturn in years. It amounts to this:
"frack now and pay later." The moves by the world's No. 1 and No. 2
oil services companies show how they are scrambling to book sales of new
technologies to customers short of cash after a 60 percent slide in crude to
$45 a barrel. In some cases, they are willing to take on the role of
traditional lenders, like banks, which have grown reluctant to lend since the
price drop that began last summer, or act like producers by taking what are
essentially stakes in wells. At Halliburton, some of the capital to finance the
sales will come from $500 million in backing from asset manager BlackRock, part
of a wave of alternative finance pouring into the energy industry that one
Houston lawyer said on Thursday allows companies to "keep the engine
running."
Hedge Fund Losses From Commodity Slump Sparking
Investor Exodus - (www.bloomberg.com)
When even Cargill Inc., the world’s largest grain trader, decides to liquidate
its own hedge fund, that’s a sign that commodity speculators are in trouble. Hedge
funds focused on raw materials lost money on average in the first half, the
Newedge Commodity Trading Index shows. Diminishing investor demand spurred
Cargill's Black River Asset Management unit to shut its commodities fund last
month. Others enduring redemptions include Armajaro Asset Management LLP, which
closed one of its funds, Carlyle Group LP's Vermillion Asset Management and
Krom River Trading AG. While hedge funds are designed to make money in both
bull and bear markets, managers have a bias toward wagering on rising prices
and that’s left them vulnerable in this year’s slump, said Donald Steinbrugge,
managing partner of Agecroft Partners LLC. The Bloomberg Commodity Index
tumbled 29 percent in the past year and 18 of its 22 components are in a bear
market.
Puerto Rico Shows Perils of Muni Bonds Backed by Empty Promises - (www.bloomberg.com) Municipal-bond investors are learning that when cash gets tight, promises are made to be broken. Puerto Rico’s default Monday on bonds sold by its Public Finance Corp. underscored the risks of debt backed only by a legislature’s pledge to repay. Two days later, Chicago’s Metropolitan Pier and Exposition Authority’s rating was cut to near-junk from AAA by Standard & Poor’s because Illinois hasn’t appropriated the money to pay its bonds amid a stalemate over the budget. Unlike with general obligations or debt that has a claim to specific revenue, buyers have little recourse if politicians walk away from appropriation bonds, a $197 billion niche of the municipal market. Vadnais Heights, Minnesota, and Menasha, Wisconsin, havealready done so. In bankrupt San Bernardino, California, investors may recover one cent on the dollar. “Appropriation debt is scarier than people want to think it is,” said Matt Dalton, chief executive officer of Rye Brook, New York-based Belle Haven Investments, which manages $3 billion of munis. He said his firm tends to avoid the securities.
Two Large Puerto Rico Bondholders Demand Full
Payment - (www.nytimes.com) Two mutual fund companies
that hold Puerto Rico’s bonds wrote to senior officials on the island on
Thursday, demanding full payment on bonds that defaulted earlier in the week. “The
path that the current administration has chosen will steer Puerto Rico towards
litigation and create further deterioration in the capital markets’ trust in
Puerto Rico, potentially leading to years of economic turmoil,” the senior vice
presidents of OppenheimerFunds and Franklin Advisers said in a joint letter. They
addressed their demands to the president of the Puerto Rico Public Finance
Corporation, which issued the bonds and failed to
make a $58 million debt payment on
Monday. Copies of the letter were sent to executives and directors of the
corporation’s parent, the Government Development Bank, which served as
financial adviser on the bonds and directs much of the Puerto Rican government’s
financial activity. “We hereby demand that P.F.C. take all actions necessary to
collect,” said the executives, Richard A. Stein of OppenheimerFunds and Sheila
Amoroso of Franklin Advisers.
Muni Funds Lose Most Cash in Five Weeks Amid
Puerto Rico Default - (www.bloomberg.com) Investors yanked the most money in five weeks
from municipal-bond mutual funds after Puerto Rico defaulted on
debt issued by its Public Finance Corp. Individuals pulled $308 million from
muni funds in the week through Wednesday, Lipper US Fund Flows data show.
That’s the largest withdrawal since
the period through July 1, during which Puerto Rico Governor Alejandro Garcia
Padilla said the U.S. commonwealth can’t afford to pay its debts. High-yield
muni funds, which are the most likely to hold Puerto Rico securities, saw about
$58 million of outflows, the most in four weeks. Investors yanked $208 million
from funds holding long-term obligations. Despite the withdrawal, muni prices
were little changed this week, according to Bloomberg benchmark indexes.
Half the Gain Gone in Energy Partnerships Bitten by Rates, Oil - (www.bloomberg.com)
China’s Stock Crash Is Spurring a Shakeout in Shadow Banks - (www.bloomberg.com)
Brazil’s Consumer Prices Climb More Than Forecast in July - (www.bloomberg.com)
Effects of Petrobras Scandal Leave Brazilians Lamenting a Lost Dream - (www.nytimes.com)
Gross Sees Global Economy Dangerously Close to Deflation - (www.bloomberg.com)
Asian shares track Wall Street lower ahead of jobs data - (www.reuters.com)
Ringgit in Biggest Weekly Slide of 2015 as Stock Outflows Mount - (www.bloomberg.com)
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