Thai PM confident Bangkok will escape worst of floods
The north, northeast and central plains of Thailand have been worst hit and Bangkok — much of it only two meters (6.5 ft) above sea level — is now in danger as water overflows from reservoirs in the north, swelling the Chao Phraya river.At least 289 people have been killed around the country by heavy monsoon rain, floods and mudslides since late July.”Bangkok may face some problems in areas that are on the outer sides of the irrigation dikes but water levels will not be too high. But inner Bangkok has extremely high defences,” Yingluck told reporters.”In conclusion, Bangkok should still be considered safe,” she said.Run-off water from the north will arrive in the Bangkok area at the weekend at the same time as high estuary tides hamper the river’s flow into the sea. This may also coincide with storms and heavy rain.”During October 15 to 18, it may be a dangerous time because water from the north will be coming in … But I confirm it has not reached a crisis stage as of this moment,” Bangkok Governor Sukhumbhand Paribatra told reporters.He said the level of the Chao Phraya river could rise to 2.20 meters from 2.13 meters over the next few days and some riverside communities should think of evacuating.Embankment walls along the river in much of inner Bangkok are 2.50 meters or higher.Despite the reassurances, residents have stocked up on bottled water and foodstuffs such as instant noodles.The central bank has advised the finance sector to take precautions and told commercial banks to make sure they have enough cash. It said 104 bank branches had closed because of flooding, mainly in the central region.Bangkok accounts for 41 percent of the economy and contains some heavy industry, as well as extensive service, banking and tourist facilities.In comparison, the central region, which has been badly flooded, causing several huge industrial estates to close, accounts for 8 percent of GDP. The eastern region, with its international car plants and refineries, accounts for 16 percent but has barely been affected by the flooding.FALSE ALARMLate on Thursday, residents in an area covering a northern Bangkok suburb received a warning to evacuate from the government’s crisis control center after a sluice gate had supposedly burst, but it turned out to be a false alarm.Kittirat Na Ranong, deputy prime minister in charge of the economy, told reporters on Thursday that the flood damage was estimated at more than 100 billion baht ($3.2 billion), over 1 percent of GDP, and could get worse.He broke into tears as he spoke with workers at the flooded Hi-Tech Industrial Estate in Ayutthaya province.At least three big industrial estates in the province have shut temporarily. A Nikon Corp digital SLR factory and a Honda Motor Co Ltd assembly plant have closed.Consumer confidence fell in September because of the floods and could plunge in October, according to economists at the University of the Thai Chamber of Commerce.Last week, the university cut its forecast for GDP growth this year to 3.6 percent from 4.4 percent but it cut it again on Thursday to 3.0-3.5 percent.The Finance Ministry has cut its growth forecast to 3.7 percent from 4.0 percent.
Hedge or die, bankers tell small oil firms
By Dmitry Zhdannikov and Emma FargeLONDON, Oct 12 (Reuters) - Energy bankers are telling small
oil companies they will soon face a spike in funding costs and
should therefore hedge through selling oil not yet produced to
protect future cash-flows and survive.”We are saying to people: You need to be creative and look
at other sources. The IPO market is not a place where, if you
are a small company, you can find funding,” Morgan Stanley’s
co-head of the oil and gas group, Michael O’Dwyer, told an
annual Oil and Money conference.Banks have been facing a drought of merger and acquisition
activity this year due to severe asset price volatility and are
looking for new ways of doing business — including through
providing hedging services — while they also face a higher
regulatory burden.Banking sources say big clients are not asking for banks’
hedging services but that small companies with production costs
close to the current oil prices are increasingly seeking to
mitigate risks through hedges.O’Dwyer said he has told small companies, “Ultimately you
have to consider selling yourself as a company. If you don’t
have the balance sheet to finance your project, someone else
will.”He said other options included a farmout, in which an oil
company sells a small stake in its assets, or hedging through
selling Brent oil futures.”Oil prices are discounted in share prices far below the
forward (Brent) curve. If the market is not giving you credit
for $100-$110 oil, why not monetise it?”Standard Charter’s managing director for Global Energy, John
Martin, said he was also witnessing a slowdown in merger and
acquisition deals.”One of the hindering factors is commodity prices. At these
price levels, companies aren’t rushing to sell assets.”Robert Maguire, a partner at Perella Weinberg Partners, said
owners of small firms find it difficult to sell because they
still remember their assets being valued higher earlier this
year, when oil prices peaked.BASEL III AND FUNDING COSTSO’Dwyer, Martin and Maguire all warned that the oil industry
will soon face a spike in funding costs.”One should remember that equity markets are closed for
banks … Oil companies don’t understand how those regulations
are changing the (banking) industry,” said Martin.All three bankers said pressure on banks to recapitalise,
partly to meet tougher Basel III capital adequacy rules, will
rebound on the oil industry by constricting banks’ lending
ability.”Smaller companies will face a greater impact of increased
cost of debt,” said Martin.He said the trend was especially worrying at a time that the
oil industry’s combined upstream capital expenditure programmes
are set to exceed $500 billion for the first time ever this
year.The amount is likely to rise further in the years to come as
major investments planned in countries such as Australia and
Brazil stretch infrastructure and industry resources and
continue to drive up costs across the world.Maurizio La Noce, chief of Mubadala Oil and Gas, which
manages $46 billion in assets on behalf of the government of Abu
Dhabi, said cash-rich companies might decide to delay
acquisitions by at least another three to six months to get a
clear view of where financial markets are heading.Hopes that investors from the resource-rich Middle East will
snap up assets are also unfounded, because they have to deal
with problems inside their own countries amid mounting unrest.”(In the Middle East) there is a lot of pressure to build,
rebuild, improve the infrastructure, to expand job creation in
the countries and the local economies, rather than going
outside,” La Noce said.
UPDATE 1-Cincinnati Financial pegs Q3 storm losses at $88-$98 mln
Oct 11 (Reuters) - Property and casualty insurer Cincinnati
Financial Corp expects pre-tax catastrophe losses of
$88-$98 million in the third-quarter as a result of the damage
caused by Hurricane Irene and other storms.Roughly a third of the storm losses were from Hurricane
Irene, the first hurricane to hit the United States since 2008,
while eight other events caused the rest of the losses, Chief
Executive Steven Johnston said in a statement.”Most of our Irene losses stemmed from wind damage to
commercial property we insure in North Carolina and Virginia,
our fifth and sixth largest states in terms of 2010 commercial
lines earned premiums,” he added.The company’s commercial lines insurance segment accounted
for almost two-thirds of the total losses.Cincinnati Financial shares closed at $26.50 on Tuesday on
Nasdaq.
Arbitrage in Bordeaux
New York’s branch of Christie’s is auctioning a collection of 64 bottles of Mouton-Rothschild on Saturday that spans the years 1945-2007. It’s Geneva branch is auctioning a collection of 315 bottles spanning the same 62 vintages, but from all five first growths including Mouton-Rothschild on Tuesday. (See story “Mystery collector to sell rare wines” [ID: nN10231397])
Saturday’s lot is selling for between $100,000 and $150,000, while Tuesday’s is estimated to sell for $696,000 to $929,000. And the price difference presents collectors with an arbitrage opportunity.
Assuming that the wines sell at the upper end of their estimates, buying Saturday’s lot for $150,000 would represent a $35,000 savings. Granted, Tuesday’s lot has one more bottle of Mouton-Rothschild – the chateau produced two labels in 1978 and 1993 – and the Geneva lot has all four, while Saturday’s lot only has three.
And unlike Tuesday’s anonymous French collector, Saturday’s is California attorney Allen Grossman, who has been collecting for 40 years and waxes poetic about Mouton-Rothschild, saying of the top Bordeaux, “I have tasted them all many times. They are all wonderful wines, but I’m just partial to the Mouton.”
$1=0.8608 CHF
