Capital Eyes on the Market – Thursday 7th February 2013

We take a look at some of the recent activity and events taking place in the UK and globally. For a more in-depth insight into how things may impact on your own financial planning priorities, please do get in touch. Enjoy a financial conversation as part of your regular financial planning review at SewellBrydenGunn.

Dyson reinvents the concept of washer-dryer – for hands – using their “Airblade” drying concept in a combined automatic water tap and drying unit – set to give a more energy efficient and cost effective solution for washrooms and other uses, it is reported…..

Questionmark hangs over S&P as US Dept of Justice sues over ratings of mortgage securities it is reported…..

Liberty Global confirms USD$23.3bn offer for Virgin Media it is reported…..

Hedge Fund sector suffered its worst annual performance in more than a decade, according to investors and fund managers, it is reported…..

Mark Carney is the incoming Governer of the Bank of England (BoE) and appears before the UK Treasury Select Committee today – the BoE Monetary Policy Committee (MPC) repo rate currently at 0.5%pc – we expect this to remain unchanged by the MPC monthly meeting…..

LIBOR rate rigging scandal widens to TIBOR and other benchmark rates, it is reported – there appears to have been a lack of sufficiently robust governance – which allowed a culture among some traders to develop which appeared “colour blind to the difference between black and white – right and wrong….” There has been a great deal of reflection on how the force of civil and criminal law will come down on the wrongdoers wherever they are.

However it will be interesting to see how much appetite there is to tackle the bigger question: “who is/are really responsible/accountable for ensuring we have clear and transparent markets, regionally and globally, for which there are systems to prove provenance of assets “right back to origination” whether simple or indeed complex and provenance of market indicators?” and the follow-on question: “what happens next time when they discover failure?” ……

Virgin Media prepares to issue junk bonds to raise its debt burden ahead of its planned acquisition by Liberty Global, it is reported.

As a general comment: junk bonds issued by large well respected companies work well for both “buyer” and “seller” since potentially higher comparative yields are available to the “buyer” – albeit for accepting higher notional risk – and the “seller” can more easily satisfy the “junk” status credit rating criteria on an ongoing basis which in turn is understood to “take some heat off” managing day to day performance measurables – this observation/analysis is not necessarily the case for Virgin Media which may operate financial management differently to this…….

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