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The Morning Ledger: Bond Markets Freeze Out Junk-Rated Companies |
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Debt-market volatility has complicated the sale of Arconic, whose Alcoa, Tenn., manufacturing facility is shown above. PHOTO: LUKE SHARRETT/BLOOMBERG NEWS
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Good day. No U.S. company rated below investment grade has issued bonds since November—the longest stretch without a high-yield sale in more than two decades—reflecting investors’ concerns about market volatility and the durability of the long-running expansion, The Wall Street Journal reports.
Dry spell: December was the first month since 2008 without a junk-bond sale, according to Dealogic. Thursday would make it 41 days without a deal, the longest stretch since 1995. Volatility in financial markets, uncertainty about the economy and the recent drop in oil prices are discouraging riskier companies from issuing debt and investors from buying it, analysts say.
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Capex impact: The drop-off in borrowing potentially complicates companies’ efforts to invest in plants, equipment or other business infrastructure, a key component of economic growth. Firms borrowing in the high-yield bond market are also among the most sensitive to changes in financial conditions. Significant increases in their borrowing costs, particularly at a time when economic growth is slowing down, could increase their chances of bankruptcy.
This could last: The market standstill could persist in the near term because companies with junk ratings have been able to maintain relatively strong balance sheets and few have urgent needs for cash, with the next big wave of refinancings expected in 2021, analysts said.
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The U.S. jobless claims figures are due out at 8:30 a.m. ET. Economists surveyed by the WSJ predict unemployment claims rose by 230,000 in last week, down from 231,000 a week earlier.
U.S. Federal Reserve Chairman Jerome Powell will take questions Thursday during a lunchtime appearance at the Economic Club of Washington, D.C., the second such public interview of the central bank leader in the past week. The European Central Bank releases minutes of its December policy meeting at 7:30 a.m. ET.
Target Corp., Macy’s Inc. and L Brands Inc. will report December sales figures this morning. Cogeco Inc. and SYNNEX Corp. are among the companies reporting earnings Thursday.
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ABB Bets Simplified Structure Will Cut Costs, Boost Profit |
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Industrial giant ABB Ltd. is putting more power in the hands of its business leaders and reducing head count at its corporate office in a bid to boost its profit margin and cut $500 million a year in costs.
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ABB in December sold its power-grid unit to Japan’s Hitachi Ltd. in a deal that values the unit at $11 billion. ABB also said it would scrap country and regional structures across its remaining business lines—electrification, industrial automation, robotics and discrete automation and motion.
As part of the restructuring, the Swiss conglomerate gave business unit leaders ownership of products, functions, research and technology and territories. By placing control in the hands of business-unit leaders, the thinking goes, decision-making will become more nimble due to minimized corporate interference and the elimination of duplicative functions.
“We’re going towards a fully global entrepreneur model,” Chief Executive Ulrich Spiesshofer told CFO Journal on Wednesday. “That’s really a massive, massive change to the operational DNA of ABB.”
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Mark Wiedman is moving to a new role as the head of BlackRock’s international operations and corporate strategy. PHOTO: CHRISTOPHER GOODNEY/BLOOMBERG NEWS
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BlackRock Inc.’s Mark Wiedman, a potential successor to Chief Executive Laurence Fink, is moving immediately to a role as the head of BlackRock’s international operations and corporate strategy, a new position that gives him broader reach inside the world’s biggest asset manager.
Ford Motor Co. has announced plans for a major shake-up of its operations in the U.K. and Europe, potentially resulting in thousands of job cuts, WSJ reports. Jaguar Land Rover Automotive PLC will reduce its U.K. headcount by up to 5,000, according to the BBC.
Samsung Electronics Co. plans to unveil its 10th anniversary flagship phone lineup and show a fully functional foldable-screen handset at Feb. 20 events in San Francisco and London, according to people familiar with the matter.
AT&T Inc. and other U.S. telecom companies have started slapping the 5G label on a smorgasbord of technologies, sowing confusion as they lay the infrastructure for full-fledged mobile 5G wireless service.
U.S. utilities are accelerating the closure of coal plants, as wind and solar power become more economical alternatives, aided by federal subsidies, and natural gas continues to be a cheap fuel for electricity in the U.S., thanks to the shale-drilling boom.
Airbus SE said Wednesday that it booked fewer airliner orders in 2018 and trailed U.S. rival Boeing Co. for the year, but the European plane maker remained upbeat about global demand for air travel.
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People wait to enter a Google product launch in San Francisco in 2017. PHOTO: ELIJAH NOUVELAGE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Alphabet Inc.'s Google and other search engines shouldn’t be forced to apply the European Union’s “right to be forgotten” beyond the bloc’s borders, an adviser to the EU’s top court argued Thursday. The recommendation—if followed by the EU’s Luxembourg-based Court of Justice—would be a major victory for Google.
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The U.S. Food and Drug Administration has dramatically curtailed inspections of domestic food-processing facilities during the partial government shutdown, though it is now trying to resume work at the most high-risk sites.
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State-sponsored hackers were likely behind a cyberattack that netted the personal details of 1.5 million people in Singapore, including the medical records of Prime Minister Lee Hsien Loong, an inquiry found.
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A shipyard worker works on the hull of a new ship being built in a shipyard in Athens. PHOTO: CHRISTOPHER FURLONG/GETTY IMAGES
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Consumer and producer prices decelerated sharply in China last month, compounding the challenge for Beijing in boosting sluggish demand in a deepening economic downturn.
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Countries watching the U.S.-China trade talks from the sidelines are anxious for the two sides to reach a deal and avert the damage a protracted fight poses to the global economy—even if many see the potential to benefit from the dispute.
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Fitch Ratings Inc. warned on Wednesday it could cut the U.S. triple-A sovereign credit rating later this year if the ongoing government shutdown leads to it hitting its debt ceiling and hampering budget setting, Reuters reports.
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Refunds ahoy! Reversing past policy, the U.S. Internal Revenue Service will pay tax refunds during the federal government shutdown.
Sell first, then move in. AT&T Inc.'s Warner Media hopes to sell its future headquarters before moving in, under a sale-leaseback made more attractive by the 2017 tax overhaul.
Welcome, Mr. Chairman. The new chairman of the U.S. House Ways and Means Committee, Rep. Richard Neal, is likely to focus on retirement-savings policies, health-care and the 2017 tax cuts.
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Destination Maternity Corp., the Moorestown, N.J. maternity apparel retailer, named Dave Helkey as chief financial officer and chief operating officer, effective Jan. 21. He succeeds David Stern, who left on Aug. 10.
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Mr. Helkey most recently served as CFO and COO of Things Remembered, a privately held omni-channel retail company with 440 stores in the U.S. and Canada. Previously, he was the CFO of two health-care companies and worked in the finance department of Limited Brands. Compensation details weren't immediately available.
Target Corp. on Thursday said Cathy Smith plans to retire as executive vice president and chief financial officer. The Minneapolis retailer said it will consider internal and external candidates to succeed Ms. Smith, adding that it has hired a search firm to assist in the process.
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