Austraila A$4 B Bailout; Inpex Picks Darwin

123jump.com Staff
26 Sep, 2008
New York City

Australia plans to spend A$4 billion to purchase illiquid mortgage securities and hopes that the move will improve liquidity in the credit markets. Inpex Holdings of Japan picked Darwin for its $20 billion LNG plant after frustration with delays for a location in Western Australia.

[R]3:00AM New York, 7:00PM Sydney - Australia plans to spend A$4 billion on residential mortgage-backed securities to improve liquidity in the credit markets.[/R]

Stocks in Australia fell despite a rally in financial stocks after commodity stocks slumped on fears over the health of the global economy.

Market Sentiment

In Sydney trading ASX 200 fell 0.46% or 22.6 to 4,904.80. Of the 200 ASX 200 stocks 61 rose, 127 declined, and 12 were unchanged. Asciano Group led advancers in the index shares with a rise of 8.29%.

Australia to Spend A$4 billon on RMB Securities

The Australia Office of Financial Management told reporters today that government will spend A$4 billion buying residential mortgage-backed securities to stimulate the debt markets. The investment will be through two separate operation valued at A$2 billion each.

JP Morgan Buys Washington Mutual

Washington Mutual, the 120-years old savings bank was seized by the Federal regulators and its assets and branch network was sold in an auction to JP Morgan Chase.

The bank has lost more than $6 billion in the last three quarters in a row and recently raised $7.2 billion and replaced its longtime chief executive. However, persistent falling home prices and seized credit markets forced WaMu to seek more capital when markets are avoiding investments in banks. Depositors sensing problems at the bank accelerated their account closures in the last ten days forcing the Federal regulators to step in to prevent a bank failure.

Washington Mutual, with $304 billion in assets faced a bank run that started on September 15. In the last ten days depositors withdrew $16.7 billion.

Inpex Picks Darwin for LNG Project

Inpex Holdings Inc, the Japanese energy giant selected Darwin in Northern Australian to build its site for $20 billion LNG plant. The natural gas will be shipped to Japan as utilities powered with natural gas are expected to increase their demand by 20% in the next two decades.

Inpex in partnership with Total SA of France picked the location after it failed to get a permission to build a similar plant at Western Australia location near Kimberly region. The location in the north will require building a pipeline of 800 kilometer at a cost of $750 million and will increase the total project cost by several billion dollars.

Inpex owns 76% and Total owns 24% stake in the joint venture Ichthys joint venture that will be responsible for the project. The first LNG shipment is expected in late 2014 or early 2015.

The statement released by Inpex noted, the reserve volume of the Ichthys Field is estimated to be 12.8 trillion cubic feet of natural gas and 527 million barrels of condensate. Initially the project is expected to produce more than 8 million tons of LNG, 1.6 million tons of LPG per annum and 100,000 barrels of condensate per day. The project is expected to be operational for 40 years.

These forecasted production volumes represent about 50% of current Australian annual LNG production, about 60% of current Australian LPG production and about 20% of current Australian crude oil production respectively.

Gainers & Losers

Asciano Group led advancers in the ASX 200 index shares with a rise of 8.29% followed by increases in Panaust Ltd. of 6.14%, in Sigma Pharmaceutical of 5.88%, in Fosters Group of 5.79%, and ABB Grain Ltd. of 5.77%.

National Australia Bank soared 3.19% and Australia and New Zealand Bank gained 2.59%.

Lynas Corp. led decliners in the ASX 200 index shares with a fall of 11.90% followed by losses in Paperlinx Ltd. of 11.84%, in Sino Gold Mining of 10.21%, Alumina Ltd. of 9.92%, and Acquarius Platinum of 8.28%.

Commodity stocks also fell. Panoramic Resources slipped 5.98%, Centennial Coal shed 7.90% and Oz Minerals.

Macquarie Bank to Sell Investment Lending Business

Macquarie Bank Limited reported on its Web site today that it will sell its investment lending business in Australia in tandem to the decision that was made in March this year to unwind its mortgage business.

Notably, the investment lending business contributes 1% of Macquarie Group profits.