EU: Fitch Cuts Greece to B+, Says Maturity Extension Is Default
Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a voluntary extension of its bond maturities being studied by European Union policy makers would be considered a default. Fitch cut its rating to B+, four levels below investment grade, from BB+ and said that the country could face a further reduction in its creditworthiness. The yield on Greek 10-year bonds rose 57 basis points to 16.6%, more than twice the level of a year ago when Greece accepted an EU-led bailout. (Bloomberg)
IMF board aims to pick successor to Strauss-Kahn by June 30
The International Monetary Fund said it will aim to pick a leader to succeed Dominique Strauss-Kahn by the end of June and promised to choose the most-qualified candidate from among front-runners announced by the agency. “The executive board has adopted a procedure that allows the selection of the next managing director to take place in an open, merit-based and transparent manner,” Shakour Shaalan, the senior member of the IMF’s 24-person board, said in a statement yesterday in Washington. (Bloomberg)
US: Treasury two-year notes advance for sixth week on Fed rate view
Treasury two-year notes rose for a sixth week in the longest winning streak since August as manufacturing and housing weakness reinforced bets that the Federal Reserve will keep borrowing costs low. Benchmark 10-year securities advanced as New York Fed President William Dudley said the central bank is falling short of its goals because of the modest pace of the recovery, with unemployment too high and inflation likely to ease. The government will sell USD35bn of two-year notes, the same amount of five-year notes and USD29bn of sevenyear notes next week in three daily consecutive sales starting 24 May. (Bloomberg)
Portugal: IMF board approves EUR26bn loan to Portugal
The International Monetary Fund approved a EUR26bn (USD36.8bn) loan to Portugal as part of a joint bailout with the European Union in the latest effort to stem the region’s sovereign debt crisis. The Washington-based institution will make EUR6.1bn available immediately, the fund said in an e-mailed statement today. The IMF followed European officials, who on May 16 endorsed the EUR78bn (USD110bn) joint package. (Bloomberg)
Italy: Outlook revised to negative by S&P; Ratings affirmed. Italy's credit outlook was revised to negative from stable by Standard & Poor's Ratings Services, which affirmed the country's A+/A-1+ sovereign credit ratings.
Japan: BOJ refrains from adding stimulus even as economy contracts
The Bank of Japan’s policy board unanimously voted to maintain monetary policy even after a report yesterday showed the country slipped into a recession following a record earthquake. Governor Masaaki Shirakawa and his eight colleagues decided to maintain a 30trn yen (USD370bn) credit program and a 10trn yen assetpurchase fund that represent the bank’s main policy tools. Deputy Governor Kiyohiko Nishimura dropped his call made last month to expand asset buys to provide more stimulus. The key overnight rate was kept at zero to 0.1%. (Bloomberg)
India: Inflation may prompt to dump budget goal
Finance Minister Pranab Mukherjee may dump his target of trimming India’s budget deficit, as the fastest inflation among major Asian economies prompts him to spend more on interest payments, salaries and subsidies, according to Nomura Holdings Inc. Inflation is forecast at 9.5% in the year ending 31 March, according to Nomura. The government targets revenue expenditure to rise 4.1% in the same period, the slowest pace in 11 years, assuming lower fuel and fertilizer subsidies. (Bloomberg)
Taiwan: Export orders increased less than estimated in April
Taiwan’s export orders increased less than estimated in April as demand for the island’s electronics products and semiconductors eased in China and the U.S. Orders, an indication of shipments in the next one to three months, rose 10.14% from a year earlier after a 13.37% gain in March, the Ministry of Economic Affairs said in Taipei today. The median of 14 estimates in a Bloomberg News survey was for a 14.65% advance. (Bloomberg)
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