By Yigal Grayeff and the Market Currents team
RBS to sell aviation ops for $7.3B. RBS (RBS) has agreed to sell its aircraft leasing division to Sumitomo Mitsui Financial Group (SMFG) for $7.3B in a deal that's the largest-ever sale of assets in the sector. It's also RBS's largest single disposal since its 2008 bailout. Shares in the bank were +6.8% premarket.
Downgrades shmowngrades - yields fall in EU auctions. Some of the EU's weakest sovereign borrowers secured lower yields in bond auctions today despite S&P's slash-and-burn extravaganza on Friday and its downgrading yesterday of the eurozone's EFSF rescue fund. Spain sold €4.88B of 12-month and 18-month bills after receiving a two-notch cut, while Greece, Belgium and Hungary sold debt as well. A main reason for the successful sales was the ECB's recent liquidity injection.
China's economy slows. China's GDP growth slowed to an annualized 8.9%, the lowest expansion since mid-2009, but ahead of expectations of +8.7%. Not unrelated to GDP, China's urban population surpassed its rural population last year for the first time in the country's 5,000-year history, intensifying the challenge of providing jobs and social services.
Carnival plummets following cruise disaster. Carnival (CCL) shares were -17% premarket following the capsizing of the Costa Concordia cruise ship at the weekend. The company yesterday said the hit on 2012 earnings for the loss of use will be $85-$95M, or $0.11-$0.12 a share, while the firm will also suffer further undetermined costs. The incident occurred during the peak of "wave season," when close to a third of all cruise vacations for the year are normally booked. Royal Caribbean (RCL) was -6.6%.
Pembina to acquire Provident for $3.1B. Pembina Pipeline (OTC:PBNPF) is to buy Provident Energy (PVX) for around C$3.2B ($3.1B) in stock, creating Canada's third-largest energy-infrastructure company. Using Pembina's Friday close, the deal carries a 25% premium over Provident's Canadian close.
AIA mulls offer for ING's $6B Asian ops. AIA Group, which is about 1/3-owned by AIG (AIG), is reportedly considering a bid for ING's (ING) $6B Asian insurance operations and has invited four banks to pitch for advisory roles. The planned sale of the business is expected to draw heavy interest.
Feds step up S&P mortgage ratings probe. Federal prosecutors are pushing forward with their probe of S&P's (MHP) ratings of troubled mortgage securities, sources say, after a delay that led many to believe the investigation had been all but abandoned. At issue is whether S&P ignored its own standards during the ratings process to gain favor with banking clients selling the securities.
Airbus warns of plunge in demand. Airbus (OTCPK:EADSY) has forecast that demand for new aircraft could dive by over 50% in 2012 after the company hit a record 1,419 orders last year. A slowdown in A320neo purchases along with the financial pressures of both airlines and suppliers is expected to contribute to the tailoff.
Eurozone inflation falls; German sentiment improves. The eurozone's annual inflation fell to +2.7% in December from +3% in November, while core CPI steadied at +1.6%. Separately, Germany's ZEW Economic Sentiment Indicator rose a whopping 32.2 points to -21.6. It's still below the historical average of 24.5, but suggests that the next six months will see a stabilization of activity and that Germany will face a "dent" in its economy rather than a full-on recession.
MS capping bonuses at $125K. Morgan Stanley (MS) plans to tell employees this week that it's capping individual cash bonuses at $125,000, reflecting an effort to keep costs down in the face of tightened regulation and after a difficult year for the industry. Some top executives, including CEO James Gorman, will defer their bonuses for the year.
Samsung to spend a record $42B in FY 2012. Samsung (OTC:SSNLF) plans to increase spending by 12% to a record 47.8T won ($41.7B) this year to boost growth in its chip and display businesses. The company will add 26,000 employees to facilitate the push into these rapid-growth areas.
France Telecom close to sale of Austrian stake. France Telecom (FTE) is reportedly close to selling its 35% stake in Orange Austria to Hutchison 3G, a subsidiary of Hong Kong's Hutchison Whampoa (OTCPK:HUWHY). The deal, which could be signed within days, would value Orange Austria at around €1B ($1.3B).
Firms buy back more than they sell. U.S. companies repurchased $397B of stock last year and issued $169B of new equity, marking the first market shrinkage since 2009. "Having that equity base shrink and starting from a relatively pessimistic point usually sets up pretty well in the long term," said money manager Laton Spahr. "It gives you some hope that valuations have perhaps bottomed."
In Asia, Japan +1.1% to 8466.4. Hong Kong +3.2% to 19628. China +4.2% to 2298. India +1.7% to 16466.
In Europe, at midday, London +0.5%. Paris +1.3%. Frankfurt +1.7%.
Futures at 7:00: Dow +0.7%. S&P +0.7%. Nasdaq +0.8%. Crude +2% to $100.67. Gold +2% to $1663.20.
Tuesday's economic calendar:
8:30 Empire State Mfg Survey
Earnings Results: Companies that beat EPS expectations today include Check Point Software (CHKP).
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