World Business Quick Take


Sun, Feb 23, 2014 - Page 15


Moody’s lifts Spain’s rating

Moody’s raised Spain’s sovereign credit rating by one notch on Friday, citing progress in reforms to put the economy on a more sustainable track. Moody’s Investors Service upgraded the rating to “Baa2” from “Baa3” and gave the country a “positive outlook,” suggesting the potential of a further upgrade. Spain has made faster-than-expected progress in rebalancing its economy away from real-estate investment — where a 2008 price bubble crash sent the economy reeling — toward exports, the ratings firm said. Moody’s highlighted Spanish authorities’ progress in implementing broad structural reforms. Spain’s economy shrank by 1.2 percent over the whole of last year, but exited recession in the third quarter with 0.1 percent growth.


Fannie Mae plans payment

US mortgage-finance giant Fannie Mae said on Friday it plans to pay the US Treasury US$7.2 billion in dividends in March, reimbursing in full its 2008 taxpayer-funded bailout. Fannie Mae reported net income of US$6.5 billion in the fourth quarter, its eighth consecutive quarterly profit, and a net profit of US$84 billion for all of last year, nearly four times that of the previous year. With the March dividend payment, Fannie Mae will have paid US$121.1 billion in dividends, eclipsing the US$116.1 billion in funding it has drawn since 2008. The company benefited from a large number of settlements related to the subprime mortgage crisis, including an US$11.6 billion payment from Bank of America over bad loans it sold to Fannie. The company said it expects to remain profitable in the foreseeable future, though income levels are expected to be “substantially lower” than last year.


Detroit’s exit plan misfires

Detroit’s plan to end its US$18 billion bankruptcy assumes bondholders offered US$0.20 on the US dollar will eventually swallow a deal that guarantees city police and firefighters collect 90 percent of their pensions. The city’s debt-adjustment plan, filed on Friday in the US Bankruptcy Court in Detroit, is built on US$820 million in contributions from private foundations and the state. Those groups say no money will flow without a settlement that protects the city’s valuable art collection from liquidation by bondholders and other creditors. Within hours of the plan being filed, the creditors that city officials must win over rejected the proposal. Unions and bond insurers also registered their displeasure.


Singapore to spend S$9bn

Singapore said it will spend S$9 billion (US$7.1 billion) on healthcare and other benefits for the elderly, while providing companies with more funds to increase efficiency as the economy adjusts to a tighter labor supply. Foreign-worker growth has slowed “significantly” in the past two years, and curbs on the inflow of overseas labor have prompted companies to improve the way they do business, Singaporean Minister of Finance Tharman Shanmugaratnam said in his budget speech in Parliament yesterday. “Without good productivity growth, if we try to push wages up, we will end up with either higher consumer prices or squeezed profit margins that hurt both businesses and ultimately jobs,” Shanmugaratnam said.