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The Morning Ledger: U.S. Companies Offer Higher Yields to Draw Investors |
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Attracting demand for sales of debt from highly rated companies, such as General Electric, isn’t as easy as it once was. PHOTO: CJ GUNTHER/EPA-EFE/REX/SHUTTERSTOCK
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Good day. Finance chiefs at U.S. companies have recently had to offer higher yields to investors in return for their money, a sign that a long run of favorable borrowing conditions for American corporates could be coming to an end, reports The Wall Street Journal.
The upper hand: The widening gap between yields for investment-grade U.S. corporate bonds and U.S. Treasuries comes despite a relative dearth of new bond sales from companies--a sign that investors’ demand has slowed faster than supply. When businesses have sold debt recently, they have often struggled to attract much interest, giving investors more say over interest rates and other key terms. This has also impacted large debt issuers such as General Electric Co.
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Higher spreads: As of Thursday, the average investment-grade corporate bond spread was 1.28 percentage points, up from 0.85 percentage points in February but below the 2.15 level it reached in Feb. 2016, according to Bloomberg Barclays data. The average speculative-grade spread was 4.04 percentage points, compared with 3.03 percentage points in October and 8.39 percentage points in Feb. 2016.
Case in point: Hospital operator LifePoint Health Inc. was forced to make a rash of investor-friendly changes to a nearly $5 billion bond-and-loan package backing its merger with private-equity firm Apollo Global Management-owned RCCH HealthCare Partners.
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Brooks Automation Inc., Intuit Inc. and L Brands Inc. are among the companies slated to report earnings Monday.
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On Tuesday, the U.S. Commerce Department releases data on October housing starts and permits. Economists surveyed by The Wall Street Journal forecast housing starts rose 1.6% in October.
On Wednesday, the U.S. Commerce Department publishes data on October durable goods orders. Economists surveyed by the Journal expect durable-goods orders fell 2.2% in October. The National Association of Realtors releases October data on existing-home sales. Economists surveyed by the Journal forecast home sales increased 0.8% to a 5.19 million annual rate.
Also on Wednesday, the University of Michigan releases November consumer-sentiment data. Economists surveyed by the Journal forecast the consumer-sentiment index clocked in at 98.3 in the final November reading.
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Apple CEO Tim Cook at an Apple store in Milan in October. PHOTO: PIAGGESI/FOTOGRAMMA/ROPI/ZUMA PRESS
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Lower-than-expected demand for Apple Inc.’s new iPhones and the company’s decision to offer more models have created turmoil along its supply chain and made it harder to predict the number of components and handsets it needs, people familiar with the situation say.
General Electric Co. is seeking sales for its struggling power unit, but faces a dilemma with Iraq, according to a consultant’s report prepared for the company. The nation needs multimillion-dollar gas turbines—and poses corruption problems.
J.Crew Group Inc. CEO James Brett is leaving after about 16 months on the job, following disagreements with the company’s longtime leader, Millard Drexler, and board concerns about his spending plans, according to people familiar with the matter.
U.S. money managers are taking steps to rein in everything from pay to jobs to travel as they try to sustain margins in the face of heightened competition.
As Americans gear up for the year-end shopping spree that starts with Black Friday, those who order online will have some tough choices to make.
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PBGC’s Single-Employer Program Records First Surplus Since 2001 |
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The Capitol Building in Washington, D.C. Congress sets the premiums and rates structure of the Pension Benefit Guaranty Corp. PHOTO: EUROPEAN PRESSPHOTO AGENCY
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The U.S. federal pension insurer reported a surplus in its single-employer program for the first time in nearly two decades in fiscal 2018 on the back of higher interest rates, the agency said in its annual report released Friday.
The Pension Benefit Guaranty Corp.’s single-employer program had assets of $109.9 billion and liabilities of $107.5 billion as of Sept. 30, resulting in a net surplus of $2.4 billion. The program insures 23,400 plans that cover 26.2 million people, reports CFO Journal's Tatyana Shumsky.
This is the first surplus since 2001 and came as a result of stronger U.S. economic growth, lower than expected claims and higher interest rates, said PBGC Director Thomas Reeder. “Every year since then we’ve been in deficit because of failures of large plans and changes in the market,” he said.
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Electrolux Expects More Price Increases, if Costs Keep Going Up |
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Electrolux has forecast a $331 million hit to its earnings this year and expects a similar effect in 2019. PHOTO: DENNIS YLIKANGAS/ZUMA PRESS
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Swedish appliance maker Electrolux AB is preparing for another price increase, and warns of more if the cost of raw material keeps rising.
The maker of Zanussi vacuum cleaners and AEG washing machines has raised list prices for products sold in the U.S. at least two times this year. Another price hike takes effect in January, and more could follow, the company. Electrolux also has adjusted its pricing in Latin America, Europe and Australia.
“We are in the midst of negotiations right now” with suppliers, Chief Financial Officer Therese Friberg said in an interview with CFO Journal. “The volatility is high on the materials and on the currency side; the numbers are still moving around.”
The Stockholm-based company’s costs rose this year after the introduction of U.S. tariffs on foreign steel and on imports from China. Currency fluctuations in Latin America also had an impact. The company forecasts a 3 billion-kronor ($331 million) hit to its earnings this year because of higher raw material costs, tariffs and currency gyrations, and expects a similar effect in 2019.
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Nissan said its Chairman Carlos Ghosn has been reporting compensation amounts in securities reports that were less than the actual amount. PHOTO: POOL/REUTERS
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Nissan Motor Co. said it has uncovered numerous significant acts of misconduct by Carlos Ghosn and intends to oust him as chairman. The company released a statement Monday about Mr. Ghosn amid news reports in Japan that he was about to be arrested.
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Howard Wilkinson, the whistleblower who helped reveal a money laundering scandal involving Danske Bank A/S told the Danish parliament on Monday that the bank’s management had not taken his warnings seriously, Reuters reports.
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France is preparing to fine companies that underpay women, a novel attempt to narrow the gender pay gap.
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Thousands of U.S. brokers have scrubbed their records clean of complaints by customers and employers, allowing them to hide information from potential investors, according to a new study. The process is overseen by the Financial Industry Regulatory Authority.
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China's President Xi Jinping during the Asia-Pacific Economic Cooperation forum in Port Moresby on Sunday. PHOTO: MICK TSIKAS/EPA-EFE/REX/SHUTTERSTOCK
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An economic summit of world leaders ended in acrimony on Sunday, as a fight over Chinese trade practices cast doubt over the ability of Washington and Beijing to resolve their trade battle soon.
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Developing-world leaders, spurred by rising mineral prices, are making their toughest demands on Western mining companies in years, squeezing them to pay higher royalties and taxes, process commodities locally and cede control of mines.
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More Americans find themselves housing two generations simultaneously, just when they thought they could kick back and retire. Instead, they face the strain of added expenses, constant caregiving and derailed dreams.
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China’s government has for years squeezed the private sector with policies that support state companies—and is now looking to fix what has become a weak link in a slowing economy.
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