Deutsche Telekom yesterday completed its long-awaited bond sale, raising €5 billion despite blows to its credit standing which had stalled the deal and pushed its shares and bonds to all-time lows. Postponed from Thursday, when rating agency Moody's cut the firm's outlook to negative from stable, the sale was dealt another blow when Fitch Ratings downgraded it.
The ratings cut prompted the third revision of pricing on the deal in as many days, forcing Deutsche Telekom to add five basis points to the euro and dollar bonds' already hefty yields in order to keep investors on board. Orders for the three-part sale had reached an estimated €15 billion by Thursday.
Fitch cut the German giant, Europe's largest telecoms company, to BBB+, three notches above "junk" grade and in line with its Baa1 rating from Moody's. Like Moody's, it cited weaker earnings at the firm's cash-cow T-Com fixed-line business. The rating moves, which followed disappointing first-quarter results reported on Wednesday, highlighted the company's reliance on earnings growth as well as asset sales to reduce its massive debt burden.
By yesterday afternoon, the shares were at €11.98, off 1.72 per cent on the day. - (Reuters)
Microsoft moves to accommodate rivals
Microsoft is amending its Windows XP operating system to allow the installation of rival software to comply with a proposed antitrust settlement signed last year with the Justice Department, the Wall Street Journal reported yesterday. The changes will be released as part of a free update pack later this year. They will permit computer makers and consumers to install non-Microsoft products for tasks such as internet Web browsing, sending e-mail and playing digital music online, the firm said.
But the settlement with the federal government, which is supported by some state attorneys general, still has not been formally approved. Microsoft also faces the possibility of new sanctions sought by nine states still suing the company. - (AFP)
Ormonde Mining raises €306,000
Exploration group Ormonde Mining has raised €306,000 after placing 5.1 million new shares at six cents each. The proceeds of the placing will be used to fund the group's exploration projects in Morocco and Spain.
Patents ruling hits Glaxo shares
Shares at GlaxoSmithKline hit a two-year low yesterday after a US court quashed patents for its top-selling antibiotic, paving the way for cheap, copycat versions to steal sales as early as July. Europe's biggest drugmaker plans to appeal the ruling by the Virginia court but warned that if generic versions of the drug, Augmentin, entered the market before the case was resolved then earnings growth would slow significantly this year and next. - (Reuters)
Nasdaq toughens member guidelines
The Nasdaq Stock Market issued tougher corporate governance guidelines yesterday for its 4,000-plus member companies, including clarifying that a company can get delisted for misrepresenting information.
"This is part of a process that is far from over," said Mr Wick Simmons, Nasdaq chairman and chief executive officer, in a statement. The new rules also require firms to tell the public if an audit report questions its ability to continue as a going concern. The rule "requires that a going concern qualification should be brought to the attention of investors and potential investors through a press release", the statement said.
The announcement follows countless reports in recent months of US firms being investigated for dubious accounting and other practices. - (AFP)
German inflation slows in May
Inflation in Germany, the biggest economy in the 12-country euro zone, slowed sharply in May, but largely as a result of statistical base effects, the Federal Statistics Office said yesterday. The pan-German consumer price index (CPI) rose by a preliminary 1.2 per cent on a 12-month basis in May, the office calculated in a statement.
That was much slower than the 1.6 per cent recorded in April and comfortably below the 2.0 per cent threshold seen by the European Central Bank as the maximum tolerable level of inflation.
"The low rate of change is attributable among other things to a so-called basis effect following the high price increases recorded in May 2001," the statisticians explained.
