Nationwide tests interest for first sterling Additional Tier 1 bond

By Aimee Donnellan

Tue Mar 4, 2014 3:12am EST

LONDON, March 4 (IFR) - Nationwide Building Society is testing interest for the first sterling-denominated Additional Tier 1 bond at 7.25%-7.5%, according to a lead.

The benchmark-sized deal is perpetual but will be callable for the first time on 20th June 2019, and will be triggered if Nationwide's fully-phased Common Equity Tier 1 ratio falls below 7%. In the case of such an event, the securities will be converted in full into CCDS.

The bond is expected to be priced later today via joint lead managers Citigroup, Deutsche Bank, RBS and UBS.

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PRESS DIGEST - Wall Street Journal - March 4

March 4 Tue Mar 4, 2014 12:54am EST

March 4 (Reuters) - The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy.

* As Russia's military secured the Crimean peninsula, its currency hit a record low and its stock market plunged in the face of U.S. and European warnings of sanctions over the incursion into Ukraine. ()

* North Dakota's oil producers are choosing the greater flexibility of railroads to move crude to thirsty markets in the east and west, stranding two pipeline projects before they could begin. ()

* After months of ill-fated deals, the bankrupt city of Detroit has settled with two large banks for about 30 cents on the dollar in the city's only agreement so far with major creditors, according to court filings Monday. ()

* Standard Chartered PLC is nearing deals to sell roughly a half-dozen units in Europe, Asia and the Middle East, as part of an effort to combat an emerging-markets slowdown and worries about the bank's financial health, according to people familiar with the deals. ()

* Citigroup Inc said on Monday it received subpoenas from the Federal Deposit Insurance Corp and U.S. prosecutors, three days after the bank disclosed it had found allegedly fraudulent billings at its Mexico unit that cost it up to $400 million. ()

* Winter storms chilled U.S. auto demand in February as overall sales were flat on big gains at Fiat Chrysler Automobiles and Nissan Motor Co .

Single-digit percentage declines at General Motors Co , Ford Motor Co, Toyota Motor Corp and several others kept sales at 1.19 million cars and light trucks last month, off slightly from a year earlier, said researcher Autodata Corp. ()

* PNC Financial Services Group Inc has received a subpoena from the U.S. Department of Justice concerning its relationships with merchants for payment-processing services, the Pittsburgh-based bank disclosed in a regulatory filing Monday. ()

* Roche Holding AG will have more flexibility to pursue acquisitions in the coming year as the Swiss drug maker pays off the bulk of debt from its $47 billion buyout of Genentech. ()

* Dish Network Corp has agreed to curtail the use of a controversial ad-skipping feature on its latest digital video recorders for ABC shows, as part of a new long-term programming deal with ABC owner Walt Disney Co, the companies confirmed late Monday. ()

* The U.S. Supreme Court on Monday agreed to decide whether workers should be paid for time spent going through theft-deterrence screenings at the end of their shifts, taking up a case brought by Amazon.com Inc warehouse employees. ()

* A federal appeals court rejected BP Plc's effort to stop Gulf Coast businesses from collecting payouts from the Deepwater Horizon settlement fund, even when they can't directly trace their losses to the 2010 oil spill. ()

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Nationwide attracts over GBP4bn of orders for first sterling AT1 bond

By Aimee Donnellan

Tue Mar 4, 2014 3:41am EST

LONDON, March 4 (IFR) - Nationwide Building Society has attracted over GBP4bn of orders for the first ever sterling Additional Tier 1 bond, according to a market source.

The deal, which is expected to be benchmark in size, continues to be marketed at 7.25-7.5%, and will price later on Tuesday via Citi, Deutsche, RBS and UBS.

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UPDATE 3-Mt. Gox files for bankruptcy, hit with lawsuit

Fri Feb 28, 2014 2:15pm EST

* Bitcoin exchange files for Ch. 11-type bankruptcy protection in Japan

* Says lost 750,000 bitcoins held by users, 100,000 of its own

* Blames hacking attacks on its system

* Investor lawsuit filed in Chicago seeking to recoup losses

By Yoshifumi Takemoto and Sophie Knight

TOKYO, Feb 28 (Reuters) - Mt. Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.

The collapse caps a tumultuous few weeks in which the company has remained virtually silent after halting trades of the crypto-currency, shaking the nascent but burgeoning bitcoin community.

Wearing a suit instead of his customary T-shirt, Mt. Gox's French CEO Mark Karpeles bowed in contrition and apologised in Japanese at a news conference at the Tokyo District Court, blaming his firm's collapse on a "weakness in our system", but predicting that bitcoin would continue to grow.

"First of all, I'm very sorry," he said. "The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point."

Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulated Tokyo-based exchange.

Gregory Greene, who estimated his bitcoin stake at $25,000, filed a lawsuit in the U.S. District Court in Chicago late on Thursday, saying Mt. Gox had failed "to provide its users with the level of security protection for which they paid."

Baker & McKenzie, a Chicago-based law firm that represents Mt. Gox, declined to comment. It is not yet clear if the firm is representing the exchange in this lawsuit.

Mt. Gox said the exchange, used overwhelmingly by foreigners, had lost 750,000 of its users' bitcoins and 100,000 of its own. At the current bitcoin price of about $565, that would total some $480 million - representing about 7 percent of the estimated global total of bitcoins.

"This may be telling for the level of traceability of the transactions. Bitcoin has been telling us that it is more traceable than cash. The question is, how much more and is there the potential for real recourse in the case of theft," said Moshe Cohen, assistant professor at Columbia Business School in New York.

Mt. Gox said there was a discrepancy of 2.8 billion yen ($27.4 million) in its bank accounts when it checked on Monday. Junko Suetomi, a lawyer with Baker & MacKenzie, said she could not comment on the balances of foreign bank accounts held by the company.

PROBLEM WITH EXCHANGE, NOT BITCOIN

Many bitcoin market participants have said Mt. Gox's problems were specific to the company and were caused by what they said was a lax attitude by Karpeles, while bitcoin itself - free of any central bank control - was still a noble venture.

"If we could agree on legal regulation, we should let (bitcoin and regulators) co-exist," said Keiichi Hida, a bitcoin investor and member of the Japan Digital Money Association. He lost about 100,000 yen worth of bitcoins, but seemed unconcerned as he became interested in the virtual currency as a form of "study".

"We should make it a national project to have bitcoin used nationwide at the time of the 2020 Tokyo Olympics," he said.

Mt. Gox shut its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties.

The exchange had liabilities of 6.5 billion yen ($63.67 million), dwarfing its total assets of 3.84 billion yen, the company said. It had 127,000 creditors in bankruptcy, just over 1,000 of whom are Japanese.

The company and Karpeles have said little in the days before Friday's court filing, which is similar to Chapter 11 bankruptcy in the United States, except that they were working with others to resolve their problems.

Another lawyer, Akio Shinomiya at Yodoyabashi and Yamagami, said Mt. Gox wanted to file a criminal complaint against what he said was a hacking attack, but had no specific means of doing so.

"Bitcoin has always been volatile and speculative, said bitcoin user Ken Shishido, who had about a tenth of his bitcoin holdings at Mt. Gox, but has seen the rest of his bitcoins soar tenfold since he began trading 18 months ago.

"It's too bad that this happened, but we have to let it go. And then we'll buy more."

Fortress Investment Group became one of the first big investors to say it had lost money investing in bitcoin. In a regulatory filing with the U.S. Securities and Exchange Commission, the company said it incurred $3.7 million in unrealized losses in 2013.

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Fitch drops Detroit water, sewer debt to junk

NEW YORK Fri Feb 28, 2014 6:04pm EST

NEW YORK Feb 28(Reuters) - Analysts at Fitch Ratings on Friday cut some $4 billion worth of bonds issued on behalf of the Water and Sewerage Department of Detroit to junk, citing the weak finances and outlook for the system run by the bankrupt city.

The Wall Street agency dropped $1.1 billion of senior lien water bonds and $1.6 billion of senior lien sewer bonds one notch to BB+ from BBB. About $1.35 billion of second lien water and sewer bonds were cut one notch further to BB.

"Fitch believes financial improvement over the near term is unlikely given recent disclosure regarding the full scope of customer delinquencies," analysts said in a statement. "Fitch's concerns about delinquencies are further exacerbated by the city's status as a bankrupt entity."

Saddled with some $18 billion in debt, Detroit declared bankruptcy last July, the biggest municipal bankruptcy filing in U.S. history. A court-appointed emergency manger released a blueprint last week detailing how the city will restructure its debt and ultimately emerge from bankruptcy.

Unlike many general obligation bonds, debt secured by the city's water and sewer revenues are considered secured, meaning holders are expected to recover 100 percent of their principal.

Fitch said uncertainty remains about attempts by the emergency manger to impair creditors through changes to certain terms, including the removal of call protections that would allow Detroit to refinance the debt.

"Fitch believes that there is no legal basis to compel bondholders to accept such impairment as proposed in the plan of adjustment," the ratings agency said.

The rating agency said the water and sewer authority's ability to increase rates while improving collections from residents will be important in maintaining the rating.

If the authority cannot break even on its operations, it would be vulnerable to further downgrades, Fitch added.

The bonds remain on ratings watch negative, and Fitch noted that the authority's debt load would likely remain high for the foreseeable future.

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Detroit creditors want more time to vet city's bankruptcy plan

By Karen Pierog

Fri Feb 28, 2014 9:18pm EST

Feb 28 (Reuters) - Detroit faces a long legal fight over its valuable art collection and other key matters in its historic bankruptcy case that make it imperative to push back the start of a trial on the city's debt adjustment plan, a bond insurer argued on Friday.

In a filing in U.S. Bankruptcy Court, Syncora Guarantee Inc warned that lawsuits will be filed over the Detroit Institute of Arts' collection, which the city is not selling at this point to help pay its $18 billion in debt.

Syncora, which guaranteed payments on some of Detroit's bonds, and other creditors have pushed for the sale of art works to raise more cash for the city to spread among its thousands of creditors, who face steep losses in the largest municipal bankruptcy in U.S. history.

In an effort to prevent a fire sale of art, a group of philanthropic foundations, the art museum and Michigan Governor Rick Snyder have pledged about $815 million to ease pension cuts for city retirees.

Prior to those pledges, auction house Christie's in December appraised the value of Detroit-owned works at the institute at $454 million to $867 million. But critics of Christie's work suggested that the appraisal of only a small slice of Detroit's collection undervalued the art collection as a potential asset in helping to resolve Detroit's bankruptcy.

"Given the city's odd decision to value just 5 percent of the entire collection and its repeated failure to provide ownership information, there will be litigation surrounding the art and it will be time consuming," Syncora said in its objection.

Syncora was among several creditors that requested a delay on Friday, the deadline Judge Steven Rhodes set for objections to his schedule that called for a trial to start on June 16.

The plan Detroit filed with the U.S. Bankruptcy Court a week ago would result in cuts to city worker pensions and even deeper cuts to holders of certain Detroit bonds that were lumped into the city's nearly $12 billion pile of unsecured debt.

Retirees and pension funds argued the proposed cuts were too deep, while bond insurers complained that bondholders were being treated unfairly.

Some of the creditors contended the schedule did not allow enough time to fully vet the plan, which they said was not complete.

Syncora also noted that Detroit has yet to make headway on the formation of a regional water and sewer authority that would have a material effect on creditor recoveries and that litigation is also likely over the disputed size of the city's liabilities for pensions and retiree healthcare.

The bond insurer proposed moving the trial date on Detroit's plan to Sept. 8.

Another group of creditors, including the city's two pension funds, public safety unions and other bond insurers, suggested a trial date of July 14 on the plan. The city itself proposed moving the date to June 23.

In an unrelated action on Friday, Judge Rhodes granted Detroit's motion to disband a committee of unsecured creditors, citing the committee's unwillingness to participate in mediation and the millions of dollars in professional fees the committee would cost the city. The committee, created in December by the U.S. Trustee, includes bond insurer Financial Guaranty Insurance Co and the city's two pension systems, which are its biggest unsecured creditors.

At a Feb. 19 hearing, Detroit's attorneys argued the committee was unnecessary because all of the city's major unsecured creditors have already participated in the case, including mediation, and have legal representation.

A separate committee formed at the city's request earlier in the bankruptcy case to represent retired city workers cost Detroit nearly $2 million in fees and $61,500 in expenses between July and September, according to a report released this month by a court-appointed fee examiner.

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UPDATE 3-Mt. Gox files for bankruptcy, hit with lawsuit

Fri Feb 28, 2014 2:15pm EST

* Bitcoin exchange files for Ch. 11-type bankruptcy protection in Japan

* Says lost 750,000 bitcoins held by users, 100,000 of its own

* Blames hacking attacks on its system

* Investor lawsuit filed in Chicago seeking to recoup losses

By Yoshifumi Takemoto and Sophie Knight

TOKYO, Feb 28 (Reuters) - Mt. Gox, once the world's biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.

The collapse caps a tumultuous few weeks in which the company has remained virtually silent after halting trades of the crypto-currency, shaking the nascent but burgeoning bitcoin community.

Wearing a suit instead of his customary T-shirt, Mt. Gox's French CEO Mark Karpeles bowed in contrition and apologised in Japanese at a news conference at the Tokyo District Court, blaming his firm's collapse on a "weakness in our system", but predicting that bitcoin would continue to grow.

"First of all, I'm very sorry," he said. "The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point."

Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulated Tokyo-based exchange.

Gregory Greene, who estimated his bitcoin stake at $25,000, filed a lawsuit in the U.S. District Court in Chicago late on Thursday, saying Mt. Gox had failed "to provide its users with the level of security protection for which they paid."

Baker & McKenzie, a Chicago-based law firm that represents Mt. Gox, declined to comment. It is not yet clear if the firm is representing the exchange in this lawsuit.

Mt. Gox said the exchange, used overwhelmingly by foreigners, had lost 750,000 of its users' bitcoins and 100,000 of its own. At the current bitcoin price of about $565, that would total some $480 million - representing about 7 percent of the estimated global total of bitcoins.

"This may be telling for the level of traceability of the transactions. Bitcoin has been telling us that it is more traceable than cash. The question is, how much more and is there the potential for real recourse in the case of theft," said Moshe Cohen, assistant professor at Columbia Business School in New York.

Mt. Gox said there was a discrepancy of 2.8 billion yen ($27.4 million) in its bank accounts when it checked on Monday. Junko Suetomi, a lawyer with Baker & MacKenzie, said she could not comment on the balances of foreign bank accounts held by the company.

PROBLEM WITH EXCHANGE, NOT BITCOIN

Many bitcoin market participants have said Mt. Gox's problems were specific to the company and were caused by what they said was a lax attitude by Karpeles, while bitcoin itself - free of any central bank control - was still a noble venture.

"If we could agree on legal regulation, we should let (bitcoin and regulators) co-exist," said Keiichi Hida, a bitcoin investor and member of the Japan Digital Money Association. He lost about 100,000 yen worth of bitcoins, but seemed unconcerned as he became interested in the virtual currency as a form of "study".

"We should make it a national project to have bitcoin used nationwide at the time of the 2020 Tokyo Olympics," he said.

Mt. Gox shut its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties.

The exchange had liabilities of 6.5 billion yen ($63.67 million), dwarfing its total assets of 3.84 billion yen, the company said. It had 127,000 creditors in bankruptcy, just over 1,000 of whom are Japanese.

The company and Karpeles have said little in the days before Friday's court filing, which is similar to Chapter 11 bankruptcy in the United States, except that they were working with others to resolve their problems.

Another lawyer, Akio Shinomiya at Yodoyabashi and Yamagami, said Mt. Gox wanted to file a criminal complaint against what he said was a hacking attack, but had no specific means of doing so.

"Bitcoin has always been volatile and speculative, said bitcoin user Ken Shishido, who had about a tenth of his bitcoin holdings at Mt. Gox, but has seen the rest of his bitcoins soar tenfold since he began trading 18 months ago.

"It's too bad that this happened, but we have to let it go. And then we'll buy more."

Fortress Investment Group became one of the first big investors to say it had lost money investing in bitcoin. In a regulatory filing with the U.S. Securities and Exchange Commission, the company said it incurred $3.7 million in unrealized losses in 2013.

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Fitch drops Detroit water, sewer debt to junk

NEW YORK Fri Feb 28, 2014 6:04pm EST

NEW YORK Feb 28(Reuters) - Analysts at Fitch Ratings on Friday cut some $4 billion worth of bonds issued on behalf of the Water and Sewerage Department of Detroit to junk, citing the weak finances and outlook for the system run by the bankrupt city.

The Wall Street agency dropped $1.1 billion of senior lien water bonds and $1.6 billion of senior lien sewer bonds one notch to BB+ from BBB. About $1.35 billion of second lien water and sewer bonds were cut one notch further to BB.

"Fitch believes financial improvement over the near term is unlikely given recent disclosure regarding the full scope of customer delinquencies," analysts said in a statement. "Fitch's concerns about delinquencies are further exacerbated by the city's status as a bankrupt entity."

Saddled with some $18 billion in debt, Detroit declared bankruptcy last July, the biggest municipal bankruptcy filing in U.S. history. A court-appointed emergency manger released a blueprint last week detailing how the city will restructure its debt and ultimately emerge from bankruptcy.

Unlike many general obligation bonds, debt secured by the city's water and sewer revenues are considered secured, meaning holders are expected to recover 100 percent of their principal.

Fitch said uncertainty remains about attempts by the emergency manger to impair creditors through changes to certain terms, including the removal of call protections that would allow Detroit to refinance the debt.

"Fitch believes that there is no legal basis to compel bondholders to accept such impairment as proposed in the plan of adjustment," the ratings agency said.

The rating agency said the water and sewer authority's ability to increase rates while improving collections from residents will be important in maintaining the rating.

If the authority cannot break even on its operations, it would be vulnerable to further downgrades, Fitch added.

The bonds remain on ratings watch negative, and Fitch noted that the authority's debt load would likely remain high for the foreseeable future.

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Detroit creditors want more time to vet city's bankruptcy plan

By Karen Pierog

Fri Feb 28, 2014 9:18pm EST

Feb 28 (Reuters) - Detroit faces a long legal fight over its valuable art collection and other key matters in its historic bankruptcy case that make it imperative to push back the start of a trial on the city's debt adjustment plan, a bond insurer argued on Friday.

In a filing in U.S. Bankruptcy Court, Syncora Guarantee Inc warned that lawsuits will be filed over the Detroit Institute of Arts' collection, which the city is not selling at this point to help pay its $18 billion in debt.

Syncora, which guaranteed payments on some of Detroit's bonds, and other creditors have pushed for the sale of art works to raise more cash for the city to spread among its thousands of creditors, who face steep losses in the largest municipal bankruptcy in U.S. history.

In an effort to prevent a fire sale of art, a group of philanthropic foundations, the art museum and Michigan Governor Rick Snyder have pledged about $815 million to ease pension cuts for city retirees.

Prior to those pledges, auction house Christie's in December appraised the value of Detroit-owned works at the institute at $454 million to $867 million. But critics of Christie's work suggested that the appraisal of only a small slice of Detroit's collection undervalued the art collection as a potential asset in helping to resolve Detroit's bankruptcy.

"Given the city's odd decision to value just 5 percent of the entire collection and its repeated failure to provide ownership information, there will be litigation surrounding the art and it will be time consuming," Syncora said in its objection.

Syncora was among several creditors that requested a delay on Friday, the deadline Judge Steven Rhodes set for objections to his schedule that called for a trial to start on June 16.

The plan Detroit filed with the U.S. Bankruptcy Court a week ago would result in cuts to city worker pensions and even deeper cuts to holders of certain Detroit bonds that were lumped into the city's nearly $12 billion pile of unsecured debt.

Retirees and pension funds argued the proposed cuts were too deep, while bond insurers complained that bondholders were being treated unfairly.

Some of the creditors contended the schedule did not allow enough time to fully vet the plan, which they said was not complete.

Syncora also noted that Detroit has yet to make headway on the formation of a regional water and sewer authority that would have a material effect on creditor recoveries and that litigation is also likely over the disputed size of the city's liabilities for pensions and retiree healthcare.

The bond insurer proposed moving the trial date on Detroit's plan to Sept. 8.

Another group of creditors, including the city's two pension funds, public safety unions and other bond insurers, suggested a trial date of July 14 on the plan. The city itself proposed moving the date to June 23.

In an unrelated action on Friday, Judge Rhodes granted Detroit's motion to disband a committee of unsecured creditors, citing the committee's unwillingness to participate in mediation and the millions of dollars in professional fees the committee would cost the city. The committee, created in December by the U.S. Trustee, includes bond insurer Financial Guaranty Insurance Co and the city's two pension systems, which are its biggest unsecured creditors.

At a Feb. 19 hearing, Detroit's attorneys argued the committee was unnecessary because all of the city's major unsecured creditors have already participated in the case, including mediation, and have legal representation.

A separate committee formed at the city's request earlier in the bankruptcy case to represent retired city workers cost Detroit nearly $2 million in fees and $61,500 in expenses between July and September, according to a report released this month by a court-appointed fee examiner.

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Danske Bank to sell Denmark's first Additional Tier 1 bond

By Aimee Donnellan

Wed Feb 26, 2014 10:35am EST

LONDON, Feb 26 (IFR) - Danske Bank is preparing to sell Denmark's first Additional Tier 1 bond and has hired Bank of America Merrill Lynch, BNP Paribas, Danske Bank, Goldman Sachs, HSBC and JP Morgan to act as lead managers.

The Danish lender will meet with investors starting Monday March 3rd to discuss the euro-denominated bond, which will be perpetual but callable after six years. The loss-absorbing offering will temporarily write-down if the bank's Common Equity Tier 1 ratio falls below 7%.

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