Puerto Rico's Power Authority Makes Debt Payment
PR's power utility has made a $415 million debt payment after reaching a deal with borrow more money with its bond insurers. The repayment marks the first step to the commonwealth's approach for restructuring its debt. Puerto Rican governor Alejandro Garcia Padilla is seeking a restructuring to the island's $72 billion debt after his government determined that the loan could not be repaid. However, negotiations for revamping the debt of Prepa, the power utility, has been taking place for over a year. Prepa announced it will finance its principal and interest payment with $153 million in cash, with the rest from its debt-service reserve accounts. Meanwhile, the newly issued bonds are due on Dec, 15th of this year.
ETF Flows Set New Record for Midyear
ETF net inflows totaled a record $101 billion, while U.S.-listed ETF assets numbered at $2.118 trillion at the end of June, 14% higher than a year ago. International equities and currency-hedged strategies dominated ETF inflows for the large part, with the most popular ETF being the eurozone-focused WisdomTree Europe Hedged Equity Fund. HEDJ has pulled in nearly $14 billion in this year so far. However, due to the strength of the dollar, funds without a currency hedge is vastly underperforming; the SPDR S&P 500 ETF is barely above 0 through June.
U.S. Stocks Rise Amid Uncertainty on Greek Debt Crisis
U.S. stock markets closed higher than yesterday, but the energy sector fell as Greece's debt showdown continues with no resolutions as of yet. The S&P 500's energy sector were impacted by the largest slide in oil prices since April, due to a report that U.S. crude stockpiles unexpectedly rose for the first time in over 2 months. However, U.S. private employers added 237,000 jobs in June, the biggest gain since December 2014, and construction spending increased in May to its highest point in over 6 years. The Dow Jones industrial average rose 138.4 points (0.79%) while the S&P 500 advanced 14.31 (0.69%).
Ace Agrees to Acquire Chubb Corporation
The Swiss insurance company Ace has agreed to buy property insurer Chubb Corporation for $28.3 billion in cash and shares. The deal will merge 2 large providers of property and casualty insurance, which services both businesses and individuals. It is also a reflection of the reinsurance industry's moves to increase scale and product diversity. Earlier this year, PartnerRe and Axis Capital Holdings had also agreed to merge as equals. As for today's deal, Chubb shareholders will receive cash and shares equivalent to $124.13 a share, which translates to 30% premium of Chubb's 6/30 closing price. In addition, the combined firm will operate under the Chubb name and will hold assets of $150 billion.
Drop In Value of Mexican Pesos
The Mexican currency fell to its lowest valuation against the dollar since 1993, at 15.81 pesos per dollar. This reflects the broader sell-off in emerging-market currencies. In Mexico's case, the dive is due to strong U.S. economic data coupled with weak Mexican manufacturing data. The peso has weakened by 7% against the dollar since the start of the year. Nevertheless, the peso is an attractive currency for funding carry trades, as Mexico's benchmark interest rate is also at a record low 3%. As the Federal Reserve looks to raise rates before year-end, analysts expect the peso could weaken further, and become more liquid for investors.
Sources:
http://www.etf.com/sections/fund-flows/midyear-etf-flows-set-new-record-101b
http://www.marketwatch.com/story/the-mexican-peso-cant-catch-a-break-2015-07-01
http://www.nytimes.com/2015/07/02/business/dealbook/ace-to-buy-chubb-for-28-3-billion.html
http://www.nytimes.com/2015/07/02/business/dealbook/puerto-rico-power-utility-makes-debt-payment.html
http://www.reuters.com/article/2015/07/01/us-markets-stocks-idUSKCN0PB4J520150701
