- ISDA: Greek rollover plan unlikely to be credit event. The International Swaps & Derivatives Association, the final arbiter of what constitutes a credit event, yesterday said proposals from French banks to voluntarily roll over their Greek debt are unlikely to trigger the payout of default insurance. The stance of the ISDA contrasts with that of S&P and Fitch, both of which have indicated a rollover would be a default, while Moody's has yet to comment explicitly. As long as at least one of the agencies doesn't declare default, the ECB will still be able to accept Greek debt as collateral for loans, a senior official has said. This is crucial as Greek banks are dependent on the ECB for funding. Meanwhile, Germany's top court is hearing a lawsuit against the country's contributions to EU bailouts. The court is unlikely to block Germany's participation, but could impose conditions making it harder for the government to provide fresh aid.
- ETE sweetens bid for Southern Union. Energy Transfer Equity (ETE) increased its bid for Southern Union (SUG) to $8.9B, up from its original offer of $7.9B and better than Williams' (WMB) $8.7B bid. Southern's board has approved the new $40/share proposal, which already has the support of shareholders representing 14% of Southern's stock. If successful in its bid, ETE will become the largest natural gas pipeline company in the U.S. SUG closed at $40.37 on Friday.
- NY AG probes life insurers. New York AG Eric Schneiderman issued subpoenas to at least nine life insurers in an investigation into payouts for deceased customers, sources say, as the scrutiny of the industry grows. The insurers include MetLife (MET), Genworth Financial (GNW), Manulife Financial (MFC) and Prudential (PRU). One concern is that insurers use the Social Security death database to cut off retirement-income checks but not to see if they need to make payouts.
- Microsoft, Baidu to cooperate in search. Microsoft (MSFT) signed a deal for Bing to provide Chinese search engine Baidu (BIDU) with English language results. The agreement lets Microsoft boost its minuscule share of the massive Chinese internet market, and may help it succeed where Google (GOOG) has stumbled in the face of censorship. For Baidu, which holds 76% of the Chinese market and handles around 10M English searches a day, the deal could help with overseas expansion. If you can't beat 'em, join 'em.
- Moody's: China's bank ratings threatened on muni debt. Moody's may go negative on its outlook for China's banking system after it identified $540B of loan exposure to local governments beyond the $1.6T discovered by a national audit. As these loans were not covered by the audit, it's likely they "pose the greatest risk of delinquency." Moody's bemoaned the "apparent absence of a clear master plan to deal with this issue," and said the problem loans could end up adding to the direct obligations of the central government.
- Novartis drug helps slow breast cancer. Novartis (NVS) plans to file for approval of its Afinitor treatment after a Phase III study showed the drug helped extend the time women with advanced breast cancer could live without their tumors worsening. Afinitor had been used in combination with Pfizer's (PFE) exemestane, with the trial halted early following positive interim results. Afinitor, which is already approved for other cancers in Europe and the U.S., could become a blockbuster with more than $1B in annual sales if it wins approval in breast cancer.
- OM Group to buy Vacuumschmelze for €700M. Specialty chemicals maker OM Group (OMG) agreed to buy Germany's Vacuumschmelze for €700M ($1B) as it looks to push into Europe and benefit from what it calls 'mega-trends' related to alternative energy. OM expects the acquisition to add to earnings in this fiscal year, to help it mitigate its exposure to volatile raw material prices, and to bolster its R&D.
- Nestle looks to satisfy sweet tooth in China. Nestle (NSRGY.PK) is among the companies in talks to buy Chinese candy and pastry provider Hsu Fu Chi, the latter has confirmed. A deal for Hsu Fu Chi, which has a market cap of $2.6B, would help Nestle in its attempts to expand in emerging markets, but it's unclear whether Chinese authorities would approve the purchase; in 2009, regulators rejected Coca Cola's (KO) bid for juice maker China Huiyuan (OTC:CYUNF).
- EU poised to limit data-roaming fees. Vodafone (VOD) and Telefonica (TEF) are among firms set to be hit by the new caps on data-roaming charges that the European Commission is expected to announce tomorrow. Due to "the underlying lack of competition" in the roaming market, the regulator wants to limit fees in the EU to €0.90 ($1.31) per megabyte by next July and to €0.50 by 2014 compared to as much as €2.60/MB today.
- Regulator had warned Exxon about pipeline. The Pipeline & Hazardous Materials Safety Administration is investigating the weekend leak at Exxon Mobil's (XOM) Silvertip Pipeline in Montana, saying it had warned the company in 2010 about oil leaking from some of the valves on the pipeline. Exxon resolved the issues raised. The latest spill released up to 42,000 gallons of oil into the Yellowstone River and came just weeks after Exxon shut the pipeline because of concerns about rising water levels from rain and runoff.
- Paulson makes $550M on Lehman bonds. John Paulson's hedge fund has made over $550M from a recovery in the value of bonds it bought in Lehman Brothers (LEHMQ.PK) from the day the bank filed for bankruptcy. Paulson's gains are a bright spot in what has been a difficult year for the world's third-largest hedge fund, which has lost money on Chinese forestry company Sino-Forest (SNOFF.PK) and falling U.S bank stocks.
- In Asia, Japan +0.1% to 9972. Hong Kong -0.1% to 22748. China +0.1% to 2816. India -0.4% to 18745.
- In Europe, at midday, London +0.2%. Paris -0.3%. Frankfurt +0.3%.
- Futures at 7:00: Dow +0.25%. S&P +0.1%. Nasdaq +0.4%. Crude +0.7% to $95.58. Gold +1.3% to $1502.40.
Tuesday's Economic Calendar
SA editors contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.