MOVES-Barclays appoints lead for its international wealth business
Sept 26 Barclays said it appointed Karen Frank to lead its international wealth business.
Feb 15 - Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) and long-term debt ratings at 'A' for Caterpillar Inc. (CAT), Caterpillar Financial Services Corporation (CFSC), and CFSC's subsidiaries including Caterpillar Financial Services Australia LTD. Fitch has also affirmed the companies' short-term ratings at 'F1'. The Rating Outlook is Stable. A full list of ratings follows at the end of this release. KEY RATING DRIVERS The ratings for CAT, with CFSC on an equity basis, reflect the company's low leverage, solid liquidity, competitive market positions in its global Machinery and Power Systems (M&PS) businesses, diverse customer base, operating discipline, and an established and well capitalized dealer network. Fitch estimates debt/EBITDA at Dec. 31, 2012 was 1.0x on a preliminary basis, roughly flat compared to the previous two years. Credit concerns include CAT's cyclical end markets, a slowdown in mining associated with weak global economic growth, excess industry capacity that could pressure margins until demand improves, competitive pressure in emerging regions, negative free cash flow (FCF) in 2012, and CAT's sizeable net pension obligation. CAT also faces risks related to the development of Tier 4 emissions technology for off-road vehicles, but CAT is on track for on-time compliance. Near term results and credit metrics could be negatively affected by weak demand in the company's construction and mining machinery markets. CAT's backlog declined to approximately $20 billion at the end of 2012 from $30 billion one year earlier as orders for mining equipment began to slow in mid-2012. Capital spending by mining companies could be down well into 2013 or 2014. Global construction activity remains slow, but orders improved in the fourth quarter of 2012 amid indications that the market is stabilizing or beginning to improve, including certain residential and non-residential markets in the U.S. and in China. Segment operating margins improved by approximately 90-100 bps in 2012 but may decline in 2013 due to lower sales and related operating inefficiencies. However, Fitch believes CAT is adjusting effectively to weaker demand through significant inventory reductions, lower capital spending, and the use of its CAT Production System and Lane Strategy. CAT reduced its inventory by $2 billion in the fourth quarter of 2012, and dealers also cut inventory levels. CAT expects dealers to reduce inventory again in 2013 in excess of $1 billion, of which a large portion would be mining equipment. As a result, CAT's financial results could be weak in the first quarter, but these actions should set the stage for better results later in the year. Free cash flow after capital expenditures and dividends (FCF) was negative by more than $800 million in 2012. FCF in 2012 was substantially lower than Fitch's forecast, largely due to lower-than-anticipated sales, higher inventory, and a significant reduction in accounts payable associated with production cuts intended to bring inventory in line with demand. Negative FCF also included the impact of substantial pension contributions and an $800 million increase in capital expenditures. However, actual capital expenditures were approximately $600 million below original plans. In 2013, Fitch estimates FCF will increase materially, potentially to around $2 billion or more, as CAT reduces inventory and as cash requirements for accounts payable stabilize. Also, pension contributions may be lower than the high level in 2012. Fitch believes large acquisitions are unlikely in the near term while CAT continues to integrate acquisitions completed during the past 18 months or so, including Bucyrus, MWM, and the remaining 33% of CAT Japan. CAT bought ERA Mining Machinery Limited for $697 million in May 2012. ERA's operating subsidiary, Siwei, makes hydraulic roof supports for the underground coal mining market in China. In January 2013, CAT announced a $580 million goodwill impairment charge for Siwei related to accounting misconduct that occurred over several years prior to its acquisition by CAT. The charge represents a setback, but CAT remains focused on expanding its presence in China which is important to CAT's growth and competitive position over the long term. Other changes in CAT's operations include the divestiture of Bucyrus' distribution business to various CAT dealers. The value of such divestitures totaled $973 million through the first nine months of 2012, and further divestitures are pending. In addition, CAT sold 65% of its third-party logistics business in July 2012 for $541 million as the business was not strategically important. In 2012, the company planned to contribute $1 billion ($625 million required) to its pension plans, including $570 million to domestic plans and $430 million to international plans. The contribution, together with positive asset returns, should help offset the negative impact of lower discount rates on CAT's pension liabilities. At the end of 2011, CAT's net pension obligations totaled nearly $6.3 billion and were 67% funded. CAT's liquidity (excluding CFSC) at Dec. 31, 2012, as calculated by Fitch, totaled $4.3 billion, including cash of $3.3 billion and credit facility availability of $2.75 billion, offset by $1.7 billion of short term debt and long term debt maturities. The $2.75 billion of credit facility availability is the internal allocation to M&PS of CAT's consolidated $10 billion facilities. CAT can revise the allocation of these facilities between CFSC and its manufacturing businesses at any time. The facilities consist of a $3 billion 364-day facility that expires in September 2013, a $2.6 billion facility that expires in September 2015, and a $4.4 billion facility that expires in September 2017. CAT has $796 million of other committed and uncommitted lines, not including facilities available to CFSC. Under inter-company agreements as of Sept. 30, 2012, CAT may borrow up to $1.66 billion from CFSC ($372 million outstanding) and CFSC may borrow up to $2.45 billion from CAT ($209 million outstanding) on a short-term basis. In addition, CFSC provides a $2 billion committed credit facility to CAT which expires in 2019. CFSC also purchases, at discount, dealer and customer receivables from CAT. Outstanding receivables balances purchased by CFSC totaled nearly $3.0 billion at Sept. 30, 2012 compared to $3.2 billion at the end of 2011. Fitch classifies changes in these amounts as financing cash flows at CAT's manufacturing business. CATERPILLAR FINANCIAL SERVICES CORPORATION At CFSC, operating performance has benefited from improved financing volume and a reduction in credit costs. Retail originations increased 23% in 2012 and net income was up 14%. Fitch expects originations to continue to rebound from recent lows driven primarily by growth in its international markets and in the Caterpillar Power Finance and Mining operating segments. Asset quality performance has improved and is trending below historical averages, with delinquencies (30+ days) declining to 2.26% of receivables at Dec. 31, 2012, compared to 2.89% a year ago. This compares favorably to peak year-end delinquencies of 5.54% in 2009 and a five-year average of 3.69%. Fitch believes some additional improvement in asset quality is possible, but expects relative stability in the near term. CFSC's capitalization is consistent with similarly rated peers. CFSC's debt to tangible equity ratio was 8.13x at Sept. 30, 2012, up from 7.35x at Dec. 31, 2011 following a 9.5% increase in finance receivables. With the increase over the last few years, CFSC's leverage is at the high end of the historical range of 7.0x - 8.0x. While Fitch does not anticipate any significant changes in CFSC's overall capital structure, should the company's funding requirements increase unexpectedly, Fitch believes CAT would inject additional capital as necessary to manage CFSC's overall leverage. CFSC relies on a number of global debt capital markets and funding programs to provide liquidity for its operations, as well as support from CAT in the form of funding agreements. The company's ability to access the global capital markets demonstrates the strength of CAT's brand and franchise. Fitch believes CFSC's comprehensive funding platform, in combination with the financial strength of its parent, is consistent with its existing ratings. Fitch views CFSC as core to CAT's overall franchise and as such CFSC's ratings are linked to those of CAT. The financial relationship between CFSC and CAT is governed and defined by a Support Agreement which requires CAT to maintain 100% ownership of CFSC, maintain CFSC's net worth at not less than $20 million, and maintain CFSC's fixed-charge coverage at not less than 1.15x or higher on an annual basis. RATING SENSITIVITIES A positive rating action is unlikely in the near term due to risks associated with cyclicality in CAT's end markets. However, potential developments that could lead to a positive rating action over the long term include a reduced impact from cyclicality on financial results if CAT increases its geographic and product diversification or increases the proportion of more-stable services revenue. Other positive factors could include market share growth in emerging markets, lower peak financial leverage during downcycles, and effective product development, including successful introductions of new emissions technology. Positive rating momentum for CFSC will be limited by Fitch's view of CAT's credit profile, as CFSC ratings and Outlook are linked to that of its parent. Fitch cannot envision a scenario where the captive would be rated higher than its parent. The ratings or outlook could be negatively affected if financial results are substantially impaired by weak demand in CAT's machinery end markets, poor execution of the company's operating strategies, a material decline in the company's market share in key product lines or geographic regions, or aggressive cash deployment that results in higher leverage. Negative rating action for CFSC could be driven by a change in the perceived relationship between CAT and CFSC, such as if Fitch believed that CFSC has become less core to CAT's strategic operations or adequate financial support was not provided in a time of crisis. Additionally, a change in profitability leading to operating losses, material change in balance sheet leverage, and/or deterioration in the company's liquidity profile could also lead to negative rating action. The ratings cover approximately $10 billion of debt at CAT as of Dec. 31, 2012 on a preliminary basis, and more than $29 billion of unsecured debt at CFSC as of Sept. 30, 2012. Fitch has affirmed the ratings as follows: Caterpillar Inc. (CAT) --IDR at 'A'; --Senior unsecured notes at 'A'; --Short-term IDR at 'F1'; --Commercial paper (CP) at 'F1'. Caterpillar Financial Services Corporation (CFSC) --IDR at 'A'; --Senior unsecured notes at 'A'; --Short-term IDR at 'F1'; --CP at 'F1'. Caterpillar Financial Services Australia --Short-term IDR at 'F1'; --CP at 'F1'. Additional information is available at www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research: --'Corporate Rating Methodology' (Aug. 8, 2012); --'Parent and Subsidiary Rating Linkage' (Aug. 8, 2012); --'Finance and Leasing Companies Criteria' (Dec. 11, 2012); --'Global Financial Institutions Rating Criteria' (Aug. 15, 2012). Applicable Criteria and Related Research: Corporate Rating Methodology Parent and Subsidiary Rating Linkage Global Financial Institutions Rating Criteria Finance and Leasing Companies Criteria
Sept 26 Barclays said it appointed Karen Frank to lead its international wealth business.
RIGA, Sept 26 Greece has had to go through tougher austerity than it would have otherwise been necessary, because of the populist stance of the left-wing government of Alexis Tsipras in 2015, European Commission Vice-President Valdis Dombrovskis said on Monday.
* Canadian dollar at C$1.3152, or 76.03 U.S. cents * Bond prices higher across flatter yield curve TORONTO, Sept 26 The Canadian dollar strengthened against its U.S. counterpart on Monday as oil prices rebounded, but gains were restrained as investors turned cautious ahead of the first U.S. presidential debate. Modest gains for the loonie followed losses on Friday as oil tumbled and domestic inflation and retail sales data disappointed. Canada's annual inflation