Today's Headlines
RBA backs Rudd in rates row
A research paper released yesterday by the Reserve Bank of Australia has contradicted recent claims by the banking sector of a need to raise interest rates on home lending due to increased wholesale borrowing costs. The RBA paper found that the difference between the banks’ cost of borrowing and their lending rates had returned to a level similar to the one prior to the financial crisis. ‘The banks will struggle to convince Canberra and the RBA that any mortgage rate top-ups would be justified,’ said Macquarie Group analyst Rory Robertson. Page 1. The Australian Financial Review.
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Super sector faces hefty fee shock
The head of a review into the superannuation sector, Jeremy Cooper, has called for widespread changes in the way super investors are charged, saying that ‘everything is on the table.’ The super industry has signalled it will phase out upfront and trailing commissions on its products from next year. However, Mr Cooper said yesterday that ‘there are too many layers, too many moving parts and too many people clipping the ticket’ in the super industry. Page 3. The Australian Financial Review.
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Tax deductions survive failed schemes
Investors in failed managed investment schemes will still be allowed to claim tax deductions, according to Australian Taxation Office deputy commissioner Stephanie Martin. The ATO announcement follows the recent high profile collapse of two managed agribusiness investment companies, Great Southern and Timbercorp, which has left around 60,000 people owed $2.9 billion. ‘If the deductions were properly allowable, and then the scheme is wound up, none of that changes,’ Ms Martin said. Page 4. The Australian Financial Review.
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Plan to win private funds for projects
Tighter credit markets and increased bidding costs are putting public private partnerships in Australia under increasing pressure, according to a new report by accounting firm KPMG. The report advises that federal and state governments shoulder some of the associated risks by providing PPPs with debt finance on projects worth over $1 billion and allocating grants to projects costing between $500 million and $1 billion. However, KPMG’s Graham Brooke maintains that there is a ‘very strong future’ for PPPs despite the current difficulties. Page 1. The Australian Financial Review.
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Solar industry fears job losses as bill stalls
The Senate’s deferment of the Rudd government’s renewable energy target legislation will result in job losses across Australia’s solar panel industry, according to Clean Energy Council chief executive Matthew Warren. The bill has been referred to a Senate committee, forcing the solar panel sector to wait at least two month’s before getting clarification on the Government’s new solar credit scheme which is to replace the recently axed $8000 solar panel rebate. Page 4. The Australian Financial Review.
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Business Today
Santos clinches $40bn contract
Oil and gas company Santos yesterday announced that Malaysian company Petronas has agreed to purchase 2 million tonnes a year of liquefied natural gas from the company for the next 20 years. The gas will come from Santos’s Gladstone project in Queensland, in which Petronas has a 40 percent stake. Analysts say the deal, estimated to be worth over $40 billion, is a positive for the coal seam gas sector as a whole, after concerns that producers would have difficulty attracting buyers. Page 47. The Australian Financial Review.
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Macarthur’s $190m to fund expansion
Mining company Macarthur Coal yesterday launched a $190 million capital raising, with the institutional placement priced at $6 a share, a 9 percent discount to the stock’s last traded price. The raising is seen as a positive move, as the funds are to be used for expansion of Macarthur’s Middlemount project rather than solely for debt reduction. Chief executive Nicole Hollows indicated that the placement had been well subscribed, despite two major shareholders declining to take up their entitlements. Page 47. The Australian Financial Review.
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Caltex blames rampant Aussie for tighter margins
Oil refining company Caltex Australia yesterday said that the increasing strength of the Australian dollar against the United States dollar would put pressure on the company’s margins in the second half of this year. Chief financial officer Simon Hepworth said ‘we are confident about the elements of our business we control,’ but warned that the outlook for the refining sector in the region is unclear. Caltex recently announced it is to buy 302 retail petrol outlets in Australia from ExxonMobil for $300 million. Page 47. The Australian Financial Review.
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CSR split raises debt questions
A planned demerger of conglomerate CSR is being queried by investors and analysts, who have raised concerns about the amount of debt the building materials division would be left with once the company’s sugar and ethanol business is spun-off. The company currently has around $1.2 billion of debt, but is yet to give details of the demerger. Analysts say the sugar business may be given only a relatively small proportion of that debt, as it would need lower debt levels to survive the more volatile soft commodity market. Page 48. The Australian Financial Review.
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Warwick, Hannans in Pilbara alliance
Mining company Atlas Iron is expected to today announce that iron ore miner Warwick Resources, in which Atlas has a 20.88 percent stake, has reached a deal with rival Hannans Reward to consolidate the two companies iron ore projects in the Pilbara. Analysts say Warwick is likely to acquire the rights to Hannan’s Jigalong Project iron ore rights, while Hannan will become a major shareholder in Warwick. Atlas is thought to see its stake in Warwick as a way of increasing the company’s influence in the West Australian iron ore sector. Page 17. The Australian.
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