Financial Times Europe - 12.03.2020

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Briefing

i audis raise stakes in Russian oil battleS

Riyadh has instructed audi Aramco toS lift its

maximum production capacity to 13m barrels a

day, marking a fresh salvo in the battle with

Moscow.— PAGE 4; TANKERS, PAGE 11; MARKETS, PAGE 17

i olus falls victim to risky assets routS

Solus Alternative Asset Management, one of the

best known specialists in distressed investments, is

shutting its flagship fund after a combination of

heavy redemptions and poor performance.— PAGE 11

i ormer premier challenges ErdoganF

Ali Babacan has hit out at Turkey’s “misguided and

populist” economic management as he launched a

new party aimed at challenging President Recep

Tayyip Erdogan’s grip on power.— PAGE 4

i didas warns of Asia sales collapseA

The world’s second-biggest

sportswear maker has warned

of a €550m hit to its operating

profit in the first quarter, as the

coronavirus outbreak takes it

toll on the continent.— PAGE 12

i epsiCo buys Rockstar for $3.9bnP

The US drinks group has unveiled a $3.85bn deal for

Rockstar Energy Beverages as it seeks to boost its

presence in asector which is forecast to grow to

more than $80bn over the next five years.— PAGE 11

i nergy group bonds fall into distressE

Nearly $110bn of bonds sold by US energy groups

have fallen into distressed territory following the oil

price plunge. WTI crude traded at less than $34 a

barrel yesterday, half its January highs.— PAGE 17

i edge funds reap rewards from turmoilH

A handful of funds betting on bonds or volatility

have reaped profits from recent market turbulence,

with Roy Niederhoffer’s computer-driven operation

among the big winners.— PAGE 14

Datawatch

World trade still rules

This is a global crisis, not a crisis of

globalisation— OPINION, PAGE 9

THURSDAY12 MARCH 2020 WORLD BUSINESS NEWSPAPER EUROPE

World Markets

STOCK MARKETS

Mar 11 prev %chg

S&P 500 2777.08 2882.23 -3.

Nasdaq Composite 8056.86 8344.25 -3.

Dow Jones Ind 24002.89 25018.16 -4.

FTSEurofirst 300 1300.82 1310.38 -0.

Euro Stoxx 50 2897.89 2910.02 -0.

FTSE 100 5876.52 5960.23 -1.

FTSE All-Share 3287.07 3332.98 -1.

CAC 40 4610.25 4636.61 -0.

Xetra Dax 10438.68 10475.49 -0.

Nikkei 19416.06 19867.12 -2.

Hang Seng 25231.61 25392.51 -0.

MSCI World $ 2051.96 1995.22 2.

MSCI EM $ 964.55 947.92 1.

MSCI ACWI $ 491.46 478.50 2.

CURRENCIES

Mar 11 prev

$ per € 1.128 1.

$ per £ 1.289 1.

£ per € 0.875 0.

¥ per $ 104.845 103.

¥ per £ 135.092 134.

SFr per € 1.058 1.

€ per $ 0.887 0.

Mar 11 prev

£ per $ 0.776 0.

€ per £ 1.143 1.

¥ per € 118.239 117.

£ index 78.845 79.

SFr per £ 1.209 1.

COMMODITIES

Mar 11 prev %chg

Oil WTI $ 33.33 34.36 -3.

Oil Brent $ 36.15 37.22 -2.

Gold $ 1655.70 1672.50 -1.

INTEREST RATES

price yield chg

US Gov 10 yr 0.84 0.

UK Gov 10 yr 0.29 0.

Ger Gov 10 yr 108.03 -0.74 0.

Jpn Gov 10 yr -0.07 -0.

US Gov 30 yr 133.52 1.29 0.

Ger Gov 2 yr 106.25 -0.96 0.

price prev chg

Fed Funds Eff 1.58 1.55 0.

US 3m Bills 0.44 0.33 0.

Euro Libor 3m -0.51 -0.53 0.

UK 3m 0.53 0.47 0.

Prices are latest for edition Data provided by Morningstar

C L A I R E B U S H E Y A N D

J O E R E N N I S O N— LONDON

E R I C P L AT T— NEW YORK

Shares inBoeing ell sharply yesterdayf

as the US aircraft manufacturer

took measures to preserve cash in the

face of a coronavirus pandemic that

has caused turmoil in the aviation

industry.

The company, already dealing with the

costs of the grounding of its 737 Max air-

craft, has tapped the full amount of a

$13.8bn loan arrangedin January,

according to people familiar with the

arrangement.

Boeing has also imposed a hiring

freeze and limited overtime for all

employees except for those working to

return the Max to service and on “other

key efforts” to support customers,

according to a memo from Boeing’s top

two executives. In addition, the com-

pany has restricted travel and discre-

tionary spending to activities critical to

the business.

The plane maker’s stock fell by as

much as 15 per cent yesterday by lunch-

time in New York, falling below $200 for

the first time since July 2017. It has now

more than halved since the day in

March 2019 when the Max suffered its

second deadly crash, triggering a world-

wide ban on its use.

Boeing’s stock had already dropped

sharply as the coronavirus inflicted

financialpain on its airline customers.

“The year ahead is shaping up to be as

challenging for our business as any in

the recent past,” chief executiveDavid

Calhoun nd chief financial officer Grega

Smith wrote in a message to employees.

“On top of the work of safely return-

ing the 737 Max to service and the finan-

cial impact of the pause in Max produc-

tion, we’re now facing a global economic

disruption generated by ovid-19C .”

Boeing arranged a $12bn loanin Janu-

ary to help deal with the escalating costs

of the Max crisis. It has put the bill at

$18.6bn rom compensation to airlinesf

that have been disrupted by the ground-

ing, greater expense over the jet’s pro-

duction life cycle, and the cost of contin-

uing to pay workers during a production

shutdown. The figure does not include

any legal costs related tothe deaths of

346 people.

The loan, offered by a syndicate of

more than a dozen banks including

Bank of America, Citigroup, JPMorgan

Chase, Wells Fargo and Morgan Stanley,

has now been increased to $13.8bn and

drawn down in full. One person familiar

with the decision said it was made “out

of an abundance of caution”.

Boeing stock tumbles after embattled

plane maker reaches $13.8bn loan limit

© THE FINANCIAL TIMES LTD 2020
No: 40,346★†

Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha

ReportsiPAGES 2 & 3

Differing approaches raise

fears over testing accuracy

Austria €3.90 Malta €3.
Bahrain Din1.8 Morocco Dh
Belgium €3.90 Netherlands €3.
Bulgaria Lev7.50 Norway NKr
Croatia Kn29 Oman OR1.
Cyprus €3.70 Pakistan Rupee
Czech Rep Kc105 Poland Zl 20
Denmark DKr38 Portugal €3.
Egypt E£45 Qatar QR
Finland €4.70 Romania Ron
France €3.90 Russia €5.
Germany €3.90 Serbia NewD
Gibraltar £2.90 Slovak Rep €3.
Greece €3.70 Slovenia €3.
Hungary Ft1200 Spain €3.
India Rup220 Sweden SKr
Italy €3.70 Switzerland SFr6.
Latvia €6.99 Tunisia Din7.
Lithuania €4.30 Turkey TL
Luxembourg €3.90 UAE Dh20.
North Macedonia Den

Greece and

Portugal are

two of the most

tourist-dependent

advanced

economies. The

sector contributes

more than 7 per

cent of economic

output. As travel

curbs increase to

stem the spread of

coronavirus, they

could be hit hard

Travel setbacks

Advanced economies dependent

on tourism ( of GDP)

    

Greece

Austria

Portugal

New Zealand

Italy

Spain

Hong Kong

Singapore

France

UK

Only includes countries with GDP greater

than bn Source: WTTC, 

Caught in a net

Illegal fishing is rife along west

Africa’s coast— BIG READ, PAGE 7

Biden’s comeback

Democratic primaries in the age of

coronavirus—GLOBAL INSIGHT, PAGE 4

TO B I A S B U C K A N D
G U Y C H A Z A N— BERLIN
C L I V E C O O KS O N— LONDON

The World Health Organization has
declared the coronavirus outbreak a
pandemic as the UK and Germany
stepped up efforts to limit the fallout
from disease.
Angela Merkel vowed to do “whatever
is necessary” and signalled that Berlin
was ready to show flexibility on its long-
standing commitment to balanced
budgets. “We will not ask ourselves
every day what this means for our defi-
cit. This is an extraordinary situation,”
Ms Merkel said.
Economists have warned that the eco-
nomic shock ofcoronaviruscould be
similar to the 2008 financial meltdown
and the subsequent eurozone crisis.

The UK government unveiled a £12bn

fiscal stimulusas the Bank of England

made an emergency cut to interest rates

and gave banks incentives to lend more

in a wider package of measures. The BoE

reduced its main rate by half a percent-

age point to 0.25 per cent.

The move underlined the intent of the

BoE and thegovernment to fight het

outbreak “in concert” with “timely and

powerful” measures, said Mark Carney,

the outgoing bank governor.

Forecasters have warned that the

spread of the virus could drive the euro-

zone into a recession but there is grow-

ing frustration in some quarters that the

ECB isbeing leftto shield the bloc from

an economic and financial crisis. peak-S

ing on a video call withEU leaders no

Tuesday night, Christine Lagarde, the

bank’s president, sought to shake them

out of what shesaw as a complacent atti-

tude to the disease, according to a per-

son briefed on her comments.

TheECB willmeet tomorrow to con-

sider its monetary policy response.

Markets are bettingthe central bank

will announce a further cut in its deposit

rate to minus 0.6 per cent — following

the BoE cutand last week’scut by the

Federal Reserve — and an expansion of

bond purchases.

The death toll from coronavirus con-

tinues to climb. In Italy, the number of

deaths rose by almost a third to 827,

while thenumber ofcases of the virus in

the country increased to 12,462.

“We are deeply concerned both by the

alarming levels of spread and severity,

and by the alarming levels of inaction,”

saidTedros Adhanom Ghebreyesus, the

WHO director-general.

The impact of classifying thevirus as a

pandemic will be psychological rather

than making a legal difference.

Butexperts expect it to have an effect.

“The characterisation.. as a pandemic.

may mean that countries feel incentiv-

ised to implement further, larger inter-

ventions, such as banning of public

gatherings, sooner thanthey were oth-

erwise planning to,” said Michael Head,

aresearcher at the University of

Southampton.

Additional reporting by Ben Hall in

London and Martin Arnold in Frankfurt

Reports ages 2 & 3p

Opinion age 9p

Cathay braced age 14p

Markets ages 19 & 20p

Coronavirus declared a pandemic

as fears of economic crisis mount

3 Merkel to do ‘whatever necessary’ 3 Lagarde urges EU action 3 UK unveils £12bn stimulus

Justice served

Weinstein

given 23 years

Gloria Allred, a prominent women’s
rights attorney in the US, holds up a
banner outsideManhattan criminal
courthouse following the sentencing of
disgraced Hollywood producer Harvey
Weinsteinyesterday in New York.
Weinstein was sentenced to 23 years
in prison, two weeks after he was con-
victed of rape and sexual assault.
Judge James Burke ignored the pleas
of Weinstein’s defence team to give their
client the minimum of five years behind
bars which, they said, would be a “de
facto life sentence”. Weinstein, 67, was
found guilty of a criminal sexual act in
the first degree and rape in the third
degree last month in a verdict hailed by
the #MeToo movement.
Report age 4p
Bryan R. Smith/AFP

The ECB will

meet tomorrow

under president

Christine

Lagarde to

consider its

monetary policy

response

MARCH 12 2020 Section:FrontBack Time: 11/3/2020- 18:58 User:julian.summers Page Name:1FRONT USA-0003, Part,Page,Edition:EUR, 1, 1