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(Alliance News) - Boeing's dramatic change of leadership on Monday will have no immediate effect on the company's ratings, Moody's Investors Service said, though the jet airliner maker's problems are hurting the global aerospace industry as a whole.
Moody's already had, however, last week downgraded Boeing to an A3 senior unsecured debt rating due to the problems surrounding its 737 MAX jet, which remains grounded after two fatal accidents.
The short-term debt rating was cut, to Prime-2 from Prime-1, but the outlook was raised to stable from negative.
Boeing on Monday said Chief Executive Dennis Muilenberg had departed with immediate effect, to be replaced by Chair David Calhoun. The firm said the move was necessary to restore confidence in Boeing amid the 737 MAX issue, which has seen it accused of prioritising production speed and profit ahead of safety.
Moody's, in a separate release Monday, also lowered the 2020 outlook for the aerospace and defence industry globally due to Boeing's suspension of the 737 MAX programme. It has been changed to stable from positive.
Last Tuesday, Boeing said it was halting production of the aircraft due to continue delays in being allowed to return to the skies.
"Suspended production of the 737 MAX will have far-reaching adverse consequences for the broad aerospace and defence supply chain, including an expectation of shrinking revenue, earnings and cash flows, and a slowdown of the operating profit growth we had previously anticipated for 2020," said Martin Hallmark, a Moody's senior vice president.
Here is what you need to know ahead of London's abbreviated trading session on Tuesday:
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MARKETS
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FTSE 100: called down 0.59 point at 7,623.00
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Hang Seng: down 0.2% at 27,864.21
Nikkei 225: closed marginally higher at 23,830.58
DJIA: closed up 96.44 points, 0.3%, at 28,551.53
S&P 500: closed up 0.1% at 3,224.01
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GBP: flat at USD1.2931 (USD1.2925)
EUR: flat at USD1.1082 (USD1.1089)
Gold: firm at USD1,489.93 per ounce (USD1,483.60)
Oil (Brent): up at USD66.52 a barrel (USD66.00)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
Financial markets closed for Christmas Eve:
Germany
Italy
Switzerland
Financial markets closing early for Christmas Eve:
Canada
France
Ireland
Spain
South Africa - 1200 SAT
UK - 1230 GMT
US - 1300 EST
0830 EST US advance report on durable goods
0855 EST US Johnson Redbook retail sales index
0745 EST US Retail Economist/Goldman Sachs weekly chain store sales index
1630 EST US API weekly statistical bulletin
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The Bank of Japan is to continue a path of monetary easing "for a fairly long period of time", minutes from October's policy-making meeting showed. The BoJ noted a recovery in overseas economies is likely to not happen as soon as the central bank had expected. "It is necessary for the time being to continue to pay close attention to the possibility the momentum toward achieving the price stability target would be lost," said the BoJ. "On this basis, members said it is appropriate for the bank to consider revising the current forward guidance at this meeting, taking into account what had been confirmed: the bank needed to maintain a policy stance that was tilted toward monetary accommodation for a fairly long period of time." Policy Board members agreed Japan's economy is on a moderately expansive trend, though noted exports, production, and overall business sentiment are being dampened by sluggish growth overseas. However, they noted domestic demand remains solid.
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The Italian government won a final parliamentary vote of confidence on its 2020 budget, clearing the way for its definitive approval. The Chamber of Deputies backed the executive in a 334-232 vote, with four abstentions. The result was expected since the ruling coalition has a comfortable majority in the lower house. After the vote, lawmakers were expected to give their final approval to the budget bill, worth some EUR32 billion. It is the result of difficult negotiations within the ruling coalition, an uneasy alliance between the populist Five Star Movement and the centre-left Democratic Party created in August.
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BROKER RATING CHANGES
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CREDIT SUISSE RAISES NEXT PRICE TARGET TO 6800 (6000) PENCE - 'NEUTRAL' (Monday)
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COMPANIES - FTSE 250
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TP ICAP said it will buy Louis Capital Markets and MidCap Partners for an initial USD21 million. Midcap Partners is a tied agent of Louis Capital Markets, and together they are a private brokerage group specialising in equities and fixed income, primarily based in Europe. In addition to the initial consideration, TP ICAP said there is a deferred non-contingent consideration of USD6 million that will be paid over two years and a further USD17 million that may be payable depending on the performance of the business over three to five years. Finally, there is potential additional consideration via a profit share, again dependent upon the performance of the business. These subsequent payments will be satisfied in cash, TP ICAP said. The transaction is expected to complete in the first quarter of 2020 subject to regulatory approval in both the UK and the US. "Louis Capital's strong brand and breadth of equity, equity derivatives and fixed income products complement our existing offering and strengthen TP ICAP's position in continental Europe," said TP ICAP Chief Executive Nicolas Breteau.
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Bodycote said it has agreed to acquire North America-based Ellison Surface Technologies. Bodycote will be paying a gross consideration of USD200 million, worth around GBP154 million. The deal will be "highly complementary" to Bodycote's existing Surface Technology business, the company said. It will be integrated into Bodycote's surface technology and aerospace business, "which itself has seen strong structural growth in recent years", the FTSE 250 constituent commented.
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John Laing Group said it has agreed to invest AUD51.5 million, or around GBP28 million, in the East Rockingham resource recovery facility in Perth, Australia. When operational, the waste-to-energy centre will process around 300,000 tonnes of residual waste per year, the equivalent of taking 70,000 cars off the road, John Laing said. The centre is expected to be operational by 2023. This will take the company's total investment commitment in 2019 to around GBP185 million.
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COMPANIES - OTHER MAIN MARKET AND AIM
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Pendragon said it has sold its Jaguar Land Rover motor vehicle dealership in Newport Beach, California for GBP31.1 million. The transaction is in line with the company's strategy of disposing of its US motor business, the car seller said, and work on the remaining disposals continues.
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COMPANIES - INTERNATIONAL
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Johannesburg-listed Bidvest Group announced the ZAR9.11 billion acquisition of a UK-based hygiene services provider. Bidvest is buying PHS Group from Anchorage Capital LLC and funds managed by M&G Investments, with the rand price equivalent to GBP495 million approximately. PHS is "the number one" hygiene services provider in the UK, Bidvest said, with the company also having positions in Ireland and Spain. It was founded in 1963, and has over 120,000 customers. Bidvest said the deal is part of a plan to expand into "nice, asset-light" business outside of South Africa. The company is buying PHS on a debt and cash-free basis, and Bidvest expects the deal to complete in the middle of 2020.
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A Canadian lithium firm backed by Japan's SoftBank Group is seeking bankruptcy protection, the Financial Times reported. Nemaska Lithium has been struggling to get financing for the development of Whabouchi, a lithium mine in Quebec, amid a steep fall in the price of the metal, which is crucial for electric car battery production. Nemaska, the FT said, is seeking protection from creditors to give it time to refinance.
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Tuesday's Shareholder Meetings
no events scheduled
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By Tom Waite; thomaslwaite@alliancenews.com
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