Italy Sells

Arthi Gupta
26 Aug, 2011
New York City

European indexes declined for the second day in a row on the growing sentiment that Germany and France may lose their highest debt rating. Italy sold

[R]2:00 PM Frankfurt – European indexes declined for the second day in a row on the growing sentiment that Germany and France may lose their highest debt rating. Italy sold €8.5 billion of six-month treasury bills at lower yield. Transocean launched unconditional offer for Aker Drilling.[/R]

Stocks in Europe were on the defensive after German sovereign debt rating was reaffirmed by three rating agencies. The market index melted down more than 4% in fifteen minutes in Frankfurt after rumours swept that the country rating may be lowered.

The nervous investors sold stocks again today on the growing worries that Germany and France will face a downgrade sooner than later as the cost of bailing out peripheral nations keep rising.

The Portuguese Parliament will discuss levying a special tax on high income earners during the next budget debate, a source at the prime minister’s office said on Thursday.

The government aims to bring down its public deficit to 5.9% of GDP in 2011, to 4.5% in 2012, and 3% in 2013.

Finland is in negotiations over the final model for the Greece collateral arrangement that may become a model for future lending in the euro zone.

Furthermore, Greece said that it will not proceed with a bond swap plan if the participation of private bond holders in the second bailout program falls below 90%.

In a letter posted on the Athens Stock Exchange Web site today, the Greek government requested help from finance ministers around the world in compiling information regarding the amount of Greek government bonds held by financial institutions in their countries.

Italy sold €8.5 billion of six-month treasury bills at an average yield of 2.151%, down from 2.269% at the last auction on July 26. The bid-to-cover ratio increased to 1.66 from 1.56.

The Treasury also sold €2 billion of 24-month zero-coupon bonds where the average yield declined to 3.408% from 4.038% and the bid-to-cover ratio rose to 1.94 from 1.66.

Japan’s current Prime Minister, Naoto Kan, confirmed his resignation as leader of the Democratic Party of Japan. A new leader to succeed Kan will be elected on Monday.

In Paris, CAC-40 Index slumped 53.15 to 1.70% to 3,065.85 and in Frankfurt DAX Index edged lower 146.04 or 2.62% to 5,438.10.

For the week, the CAC-40 Index gained 1.62% and the DAX Index declined 0.74%.

French Jobless Rate Up

The number of jobseekers registered at employment offices in France at the end of July was 2.76 million, the highest since February 2000.

Separately, French business managers expect investment in the manufacturing industry to increase this year, according to a survey released by the statistics office Insee today.

Transocean Launches Offer for Aker Drilling

Transocean Services AS, a wholly owned subsidiary of Transocean Ltd. launched its all cash voluntary offer for 100% of the shares of Aker Drilling ASA for NOK 26.50 per share.

The $1.43 billion offer was announced on August 15. The acquisition would contribute around $1.05 billion in firm contract backlog to Transocean and is also expected to be immediately accretive to Transocean''s earnings. Aker Drilling, which is part of the industrial investment firm Aker Group, has net debt of $0.8 billion.

Gainers & Losers

Compagnie Financière Tradition SA dipped 0.12% to Sfr84.90 after the investment broker reported first-half net declined 46.3% to Sfr15.4 million from Sfr 28.7 million in the year ago quarter.

Essilor International SA dropped 0.47% to €52.99 after the French producer of ophthalmic lenses reported first-half revenue increased 6.9% to €2.06 billion from €1.93 billion in the previous year. Profit for the period climbed 30.7% to €258.2 million or 1.25 euros per share from €197.5 million or 0.94 euros per share a year ago.

MDxHealth SA declined 1.44% to €1.37 after the Belgium-based biotech company said net loss for the six months ended June narrowed 24% to €3.81 million from €5.00 million in the prior-year period.

Rosenbauer International AG decreased 0.03% to €32.19 after the Austria-based maker of firefighting and disaster protection vehicles reported first-half revenues declined 14% to €236.7 million. Profit in the period fell 13.4% to €9.14 million or 1.34 euros per share from €10.55 million or 1.55 euros a share last year.