Juncker calls for 'soft restructuring' of Greece's debt

Jean-Claude Juncker, Luxembourg prime minister and Eurogroup chair, called yesterday (17 May) for a "soft restructuring" of Greece's debt provided that the country would put in practice deep reforms and a privatisation "exceeding the imagination".

Greek bonds rose after Luxembourg Prime Minister Jean-Claude Juncker said the Mediterranean nation's debt could be ‘reprofiled' as part of an aid plan, damping concern that bondholders will be forced to take losses.

Portuguese ten-year bonds gained after the decision by European finance chiefs to endorse a €78 billion (Dh406.7 billion) bailout for the Iberian nation. Europe would consider "reprofiling" Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Juncker said.

German bonds fell even as a report showed investor confidence in Europe's largest economy declined this month.

"The impact has been mildly positive," said Peter Schaffrik, head of European fixed-income strategy at RBC Capital Markets in London. "The spreads have been trading well-behaved. The market is well-supported."

Greek two-year yields fell 42 basis points to 24.49 per cent. The 4.6 per cent security due in May 2013 gained 0.495, or €4.95 per 1,000-euro face amount, to 71.19. Ten-year yields declined four basis points to 15.57 per cent.

European governments have thus far ruled out shifting some costs to private bondholders and have instead relied on taxpayer-funded bailouts to stamp out the region's sovereign debt crisis. A "large restructuring" remains taboo, Juncker said. French Finance Minister Christine Lagarde told reporters in Brussels yesterday that a restructuring or reprofiling of Greece's debt is "off the table.

In more general terms, Juncker said that the enlargement and the euro were the EU's most important projects, without which the continent and the Union would have been much more vulnerable.

"We did two things of which I'm proud," he insisted. Thanks to EU enlargement East European countries, many of which were "predestined to oppose each other," had been locked in to safety, Juncker said.

Regarding the euro, he cited figures according to which the common currency had brought down inflation to low levels never attained by the Deutsche Mark. Without the euro, the Nordic currencies would be under-evaluated and vice versa, auguring "pernicious" developments, he argued.

Juncker also spoke out in favour of stronger economic governance and introducing "a minimum of European social rights". Europe is not a government, but the Union's rules make up for the absence of an EU government, he said. Regarding the absence of a social dimension to EU policies, which he lamented, he said he was not calling for equal salaries, but for "a minimum level of rules" in the social area.

Without naming any specific country, Juncker lamented the recent border row between France and Italy and Denmark's plan to reinstate "visible" border controls.

"I'm really upset to see that now, without any debate, and without taking into consideration the points of view of others, countries are reinstating border controls," he said.

Juncker regretted that "national concerns" had become predominant lately in EU affairs.

"If you have the choice between the national and the European avenue, even when in doubt, you should choose the European avenue, because national avenues lead nowhere.

Portuguese ten-year yields fell four basis points to 8.93 per cent after the country become the third member of the 17- nation currency bloc after Greece and Ireland to receive emergency loans from the European Union and the International Monetary Fund. The decision by European finance chiefs to provide assistance to Portugal brought to €256 billion the aid provided to stamp out the Europe's sovereign debt crisis.

German investor confidence declined for a third month in May as faster inflation threatened to curb consumer spending and Europe's sovereign debt crisis worsened. The ZEW Centre for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to 3.1 from 7.6 in April.

Economists expected a drop to 4.5, according to the median of 31 estimates in a Bloomberg News survey.

Upward pressure

The ECB left its benchmark rate unchanged at 1.25 per cent on May 5 though President Jean-Claude Trichet said policymakers continue to see "upward pressure" on inflation.

German two-year note yields were four basis points higher at 1.84 per cent, while ten-year yields climbed three basis points to 3.15 per cent.

German bonds have handed investors a 0.8 per cent loss this year, compared with a 2.1 per cent return for Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.

Pension Corporation wins £400m from Bill Winters' backers

Luxembourg investment fund is in exclusive talks about a deal to invest £400m of new capital in Pension Insurance Corporation.

The specialist investment fund, Reinet, is in exclusive talks with the insurer's parent company, Pension Corporation, about the deal, which could see it take a 30% to 40% stake in PIC.

Pension Corporation is owned by investors including J.P. Morgan, JCFlowers, Istithmar World and Swiss Re.

In its consolidated audited financial results for the year ended 31 March 2011 - published today - Reinet Investments said: "Reinet Fund is in exclusive negotiations with Pension Corporation and its key stakeholders for a transaction involving the re-organisation of its capital structure and an investment by Reinet Fund of approximately £ 400m through which it would become a principal shareholder in the business.

"Completion of any transaction is subject to the successful conclusion of these negotiations and to regulatory and other approvals. Further information regarding the status and details of this potential investment will be communicated to our shareholders at the appropriate time."

Pension Insurance Corporation Holdings chairman Sir Mark Weinberg said: "As a stable long-term investor, we believe that the Reinet proposal will be attractive for the current and future customers of Pension Insurance Corporation.

Earlier this week, the pensions consultancy Hymans Robertson estimated that up to £20bn of these "pensions buyout" deals could be done in the next 18 months. Broadcaster ITV and carmaker Bentley are believed to be investigating the prospects for longevity swaps, a related type of deal that covers pension-funds against the risk their members will live longer than currently predicted.

Truell said the extra money would mean Pension Corporation could start talking seriously with the UK's very biggest pension schemes. He said: "With that amount of capital we would be confident going to talk to a £2bn, £3bn size pension scheme, whereas before a deal with one of those would have pushed us right to the wire."

He also added that none of Pension Corporation's other backers have pulled out, and Reinet is looking to sign up for "the long term". The deal would make the Luxembourg-listed fund one of Pension Corporation's biggest shareholders, alongside others like JC Flowers, Lloyds Banking Group and Swiss Re.

Truell's acquaintance with the wealthy Rupert family goes back to the early 1990s, when he was working for the boutique investment bank Hambros. He worked on splitting their Richemont business, which then held investments in watchmaker Cartier, tobacco group Rothmans and menswear Alfred Dunhill amongst other firms, into two groups, one focused on tobacco and the other on luxury goods.

Johann Rupert, chairman of Richemont and of Reinet, also knows Pension Corporation group chairman Sir Mark Weinberg through business and finance circles in South Africa, from where they both originate.

The €2.7bn Reinet Fund was originally founded to look after the Rupert family's remaining financial interest in Rothmans, and then later in British American Tobacco when the former was merged with it in 1999. Originally holding a 23.3% stake, it has been steadily reducing that in the decade since and diversifying into other investments.

investment would augment our existing capital resources, enabling PIC to maintain a market leading position in what we believe is a rapidly growing market for pension insurance and risk transfer."

The Reinet Fund is a specialised investment fund incorporated in Luxembourg. At 31 March this year, its net asset value was over €2.7bn (£2.3bn).

PIC currently has over £4bn in assets and has insured more than 50,000 pension fund members.

Skype says some users can't sign in

Internet phone service Skype says a small percentage of its 170 million users have been unable to sign in to its service.

Skype said the trouble stemmed from corrupted data affecting computers using Windows, Linux or Macintosh operating systems.

The company, based in Luxembourg, said it had released a new version of Skype for Windows to deal with the issue, along with a version for Mac.

Linux users were told to delete a file manually.

Shots rampage suspect moved

The suspect of a shooting rampage in Tucson, Arizona, has been flown to a prison where mental health experts will rule if he is psycho-logically fit to stand trial.

Jared Loughner (22) will spend up to four months at the jail in Missouri.

Loughner has pleaded not guilty to charges stemming from the shooting that wounded US congresswoman Gabrielle Giffords and 12 others and killed six people.

Linux users were told to delete a file manually.

Skype said individuals using its service on mobile phones, televisions or other non-computer devices were unaffected.

Skype's service, which allows users to make voice or video calls for free or for low rates, has become a popular way to lower calling costs.

Microsoft Corp, the world's biggest software maker, is buying Skype for $US8.5 billion ($8 billion) in a deal expected to close by the end of the year.

Microsoft believes Skype will help it sell more digital advertising and offer more popular conferencing tools to help businesses save money.

Violent storms swept across America's Eastern seaboard, flooding towns from New England to Georgia, knocking out power and killing at least three people in Atlanta.

About 200 people were forced from their homes in Vermont as rivers burst their banks.

There was also flash-flooding in parts of northern New Hampshire.

In eastern Pennsylvania, a tornado that touched down in Schuylkill County was the second twister to hit the area this week. Another tornado hit Franklin County in south-central Pennsylvania.

Gil, Godfather of Rap, is dead

Musician Gil Scott-Heron, known as the Godfather of Rap, has died aged 62.

He helped lay the groundwork for rap, fusing minimalistic percussion, political expression and spoken-word poetry on songs such as The Revolution Will Not Be Televised.

Scott-Heron died at St Luke's Hospital, Manhattan, after becoming sick upon returning from a European trip. He had battled drugs problems in recent years but returned last year with the acclaimed I'm New Here.