Commonwealth, David Jones Rise

123jump.com Staff
08 May, 2008
New York City

Commonwealth Bank of Australia surged 4% after the bank said it no longer needs additional capital. Recently the bank completed the $15.6 billion of wholesale funding. The news lifted stocks of other banks and helped ASX 200 to close higher. National Australia Bank Ltd, which reports its interim results on Friday, gained 1.6%, ANZ stock shed 0.6% and Westpac rose 3.6%. The troubled mall real estate operator Centro Retail obtained debt extension till the end of the year on additonal guarantees.

[R]3:00AM New York, 7:00PM Sydney- Australian stocks rose after Commonwealth Bank said it has no need of additional capital.

Market Sentiments

ASX 200 index gained 1% or 54.8 to close at 5,723.20.

Market Driver

Commonwealth Bank of Australia shares rose 4.3% after the bank said that it was not seeking any additional capital. CBA asserted that its financial position was strong after the completion of its wholesale funding program for fiscal 2008 in April.

Separately, Commonwealth created a portfolio of $15.6 billion of residential mortgage-backed securities (RMBS) through its Medallion Trust. These RMBS would be held by the Group and if required, the Class A notes can be used for repurchase agreements with the Reserve Bank of Australia to generate up to an additional $12.25 billion of liquidity for the Group.

The assets of the trust comprise fixed and variable interest rate mortgage loans originated from the Group''s home loan portfolio and from the portfolio of Homepath Pty Limited, a wholly owned subsidiary. The deal consists of three tranches class A of $14.97 billion, class B of $103 million and class C of $577.6 million. The Class A notes are expected to be rated AAA.

National Australia Bank Ltd, which reports its interim results on Friday, gained 1.6% and Westpac was up 3.6%. ANZ''s share shed 0.6%.

Gainers and losers

Of the ASX 200 index stocks, Suncorp-Metway led the gainers with a rise of 10.4% followed by increases in Macmahon Holdings of 6%, in West Australia Newspaper of 4.9%, in AGL Energy Ltd of 4.7% and in Sigma Pharmaceuticals of 4.6%.

Of the ASX 200 index stocks, Perilya Ltd led the decliners with a fall of 6.9% followed by losses in Caltex Australia Ltd of 6%, in Murchison Metals of 5.2%, in Pan Australia Res Ltd of 4.5% and in Challenger Finance of 4.4%.

Centro gets more debt relief

Australia''s largest manager of retail property investment syndicates Centro Properties Group today announced that it had been granted temporary relief by its Australian financiers and US private placement note holders. The debt and interest payment are granted extension till December 15, 2008 after the real estate operator offered additional guarantees.

In a statement the group said the facilities comprise a $2.3 billion in aggregate owed to the Australian lending group and US$450 million owed to US private placement note holders.

Centro also owes about $1.2 billion on other funds and syndicates, bringing the total under negotiation to $6.6 billion, it said in a statement May. 1.

David Jones records 3.8% sales growth

Australia''s second- largest department store chain, David Jones Limited today reported a 3.8% increase in total sales growth for the third quarter of the 2008 financial year from 27 January 2008 to 26 April 2008.

Third-quarter sales rose 8.4% in the year earlier. The retailer said its sales revenue amounted to $453.3 million and its same store sales growth rose 2.3%.

David Jones CEO Mark McInnes said, ""Our third quarter sales performance reflects the slowdown in consumer spending that we were anticipating and had started to plan for more than 18 months ago. Our business is in good shape and we are well prepared for the expected continuing environment of softer consumer demand.

All states showed a softening in sales growth with our best performing States being Queensland and Victoria, which are the states where we are taking market share.”

David Jones added two new stores in 2007 and will open another later this year. The company also agreed to open an outlet in the Sunshine Coast tourist region of Queensland state, with the store expected to ``significantly exceed'''' the company''s $40 million annual sales target.

""We continue to be confident of delivering at least 5%-10% PAT growth p.a. over the FY09-FY12 period and attractive dividends for shareholders throughout the life of the Strategic Plan,"" McInnes added.

BHP to sell assets if Rio takeover succeeds

BHP Billiton chief executive Marius Kloppers has hinted that the mining giant could sell more than $53 billion of assets if it acquired Rio Tinto. He told Financial Times that the takeover could create the same scenario that occurred Australia''s BHP merged with Billiton of South Africa in 2001 when 15% of the combined assets had to be sold.

Possible targets for disposal include smaller or non-core assets in aluminium, copper and ferrous metals, which could realize $57.5 billion. A merger between BHP and Rio would form a natural resources company with a combined market value of about $383 billion.

Kloppers said he was confident of securing approval from European Union competition regulators for the takeover, which is opposed by Rio, ‘in the fourth quarter’ of this year.

Rio to resuscitate Panguna copper mine

Rio Tinto Ltd is planning to resuscitate Panguna copper mine in Papua New Guinea, almost 20 years after it was closed on political unrest on the island. The mine would be resuscitated by Rio Tinto subsidiary Bougainville Copper Pty Ltd, at a mining rate of between 20 million and 50 million tons of ore annually.

In 1989, the ore at the mine was estimated at 691 million tons, containing 0.4% copper and 0.47 grams of gold per ton, making it one of the world''s richest lodes.

The company''s chairman, Peter Taylor, told the annual general meeting that it is expected to finish the study in August. Rio Tinto owns 54% of Bougainville Copper. Rio Tinto share was up 0.1%.

North West Shelf venture to replace vessel

Australia''s largest resources project, North West Shelf venture has agreed to replace the production vessel used at the Cossack oil field to extend the life of the operation at a cost of about $855 million.

The partners led by Woodside Petroleum Ltd want to extend oil output to 2025-2030. The investment in the vessel is one of several plans by the venture to ensure growth, including seeking discoveries near existing fields and a $2.6 billion expansion of liquefied natural gas capacity at Karratha, Western Australia.

The Cossack Pioneer vessel was commissioned in 1995 and was expected to be refurbished in late 2009. Other partners in the project include BHP Billiton, BP Plc, Chevron Corp, Royal Dutch Shell Plc and a venture between Mitsubishi Corp. and Mitsui & Co.

BG to keep retail unit

U.K. natural gas supplier BG Group Plc has told the New South Wales government it would not sell its retail unit in Australia. BG is bidding $12.9 billion for Origin Energy Ltd, intends to expand Origin''s business in Australia and supports its sale of power assets.

BG proposed a cash offer of $14.70 a share for Origin as it seeks reserves to gain access to the expansion of liquefied natural gas exports to Asia. Origin share gained 1.6%.