Aurelia Butler

WASHINGTON (Reuters) – The World Bank will launch its first ever debt-for-development swap within weeks, its Vice President and Treasurer Jorge Familiar told Reuters, as the Washington-based lender expands its toolkit to help economies facing liquidity challenges.World Bank President Ajay Banga announced in the run-up to the IMF and World Bank annual meetings underway in Washington that the lender was working with several countries on potential ways to re-profile debt to reduce servicing costs and help governments funnel funds into development, life and education projects. “We are very close,” Familiar said on the sidelines of the annual meetings, declining to say which countries would benefit from the operation. Debt swaps have become increasingly popular in recent years, especially those where funds saved are used for environmental projects, so-called debt-for-nature swaps. They generate those savings by buying up existing bonds or loans of a country which are then replaced with cheaper debt, usually with the help of a development bank. While other development banks, such as the Inter-American Development Bank, have started getting involved in such transactions, the World Bank has so far stayed on the sidelines. Familiar said the initiative was aimed at countries that faced a liquidity rather than a solvency crisis, and that had taken a series of measures towards debt sustainability but were still facing challenges. “It can certainly be debt-for-nature, but it can also be debt-for-social-development, debt-for-education, debt for a series of relevant topics and relevant issues related to development,” he said. The World Bank role is two-fold – facilitating raising financing at lower costs through guarantees, for example, but also keeping tabs on how the funds are being used.”We will have an operation with World Bank supervision that will ensure that the savings are also going to that sector and are being used in the way intended,” he said. More

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 0.5% last month after an unrevised 0.3% gain in August, the Commerce Department’s Census Bureau said on Friday.Economists polled by Reuters had forecast these so-called core capital goods orders edging up 0.1% after a previously reported 0.3% rise in August. Core capital goods shipments fell 0.3% after dipping 0.1% in the prior month.Higher borrowing costs have been a constraint on business investment, though a loosening of financial conditions as the Federal Reserve prepared to cut interest rates boosted spending on equipment in the second quarter.Non-defense capital goods orders dropped 4.5% after declining 4.4% in August. Shipments of these goods dropped 3.6% after falling 2.0% in the prior month. These shipments go into the calculation of the business spending on equipment component in the gross domestic product report. Business investment in equipment rose at a brisk 9.8% annualized rate in the second quarter, contributing to the economy’s 3.0% growth pace.Growth estimates for the July-September quarter are currently as high as a 3.4% rate. The government will publish its advance estimate of third-quarter GDP next week. More

(Reuters) -Mercedes-Benz will step up cost cuts after earnings halved in the third quarter hit by tepid demand and fierce competition in China, it said on Friday.The luxury carmaker cut its full-year profit margin target twice during the third quarter, joining a growing number of European rivals blaming a weakening Chinese car market for falling profits and margins.Union Investment, which according to LSEG is among the 30 top investors in Mercedes, called on the management to amend its strategy as it sees no market for 2 million luxury cars any longer. “We are clearly in favour of adjusting the strategy and adapting it to the new market conditions and the new competition from China,” said portfolio manager Moritz Kronenberger. Mercedes refuses to participate in the price war in China and prefers to stick to its “value over volume” strategy, hoping that a massive new model rollout will help to revive sales next year. The “value over volume” approach can be successful if demand and capacity are roughly equal, Kronenberger said, adding that currently this is not the case for the automaker. “Chinese demand is currently focused on affordable electric cars. And Mercedes has nothing to offer here,” he said. Mercedes shares were down 1.6% at 1246 GMT, dragging down peers BMW (ETR:BMWG) and Volkswagen (ETR:VOWG_p). The stock has lost around 8% year to date, underperforming Germany’s benchmark DAX index but still faring better than Volkswagen, BMW, and Porsche AG.The pan-European autos index is down 10% year-to-date, the worst-performing sector in Europe this year. PROFITABILITY DROPS Mercedes’ car division’s adjusted return on sales fell to 4.7% in the third quarter from 12.4% last year, its worst profitability since the pandemic, while earnings in the unit more than halved, worse than expected by analysts. “The Q3 results do not meet our ambitions,” CFO Harald Wilhelm said in a statement, adding that the group will step up cost cuts.Wilhelm declined to provide more details about the cost cuts, but warned that “it will be tighter and tougher for sure”.Europe’s biggest automaker, Volkswagen is considering plant closures in Germany for the first time.Stifel analyst Daniel Schwarz noted substantial progress already made by Mercedes in reducing fixed costs since 2019 but there were “fewer low-hanging fruits”, especially when compared to Volkswagen. In 2020, Mercedes launched a plan to reduce costs by 20% between 2019 and 2025, 15-16% of which was already achieved, according to the finance chief. The July-September earnings were hit as Chinese consumers continued to cut back on luxury goods in a weakening economy, which has in particular weighed on Mercedes’s lucrative high-end S-Class model sales in the country. Model revamp costs added to the pressure, especially for new versions of the G-Class SUV, which will hit the market in the next quarter, Mercedes added.In 2024, the company sees car sales slightly below the previous year, and fourth-quarter sales in line with the third quarter. When asked about a potential sale of Mercedes’s 35% stake in Daimler Truck, Wilhelm said he prefers not to rush with it as he sees “great potential” in the truckmaker that should materialise later.The comments boosted Daimler Truck shares by 4%, to the top of Germany’s DAX stock index. CHINA WOES Mercedes-Benz (OTC:MBGAF) CEO Ola Kaellenius has warned that Chinese consumers are extremely cautious about making big purchases, as long-standing economic weakness and a real estate crisis have created considerable uncertainty for consumers.Stifel’s Schwarz said a substantial part of the problem is also waning Chinese preference for German luxury cars in general. Talks between Brussels and Beijing continue over looming tariffs on imports of Chinese EVs into Europe, a major headache for Europe’s China-dependent car heavyweights due to the fears of potential retaliation.Mercedes-Benz, which counts China’s Beijing Automotive Group Co Ltd and Geely Chair Li Shufu as its two top shareholders, has called the tariffs a “mistake”, urging the European Commission to delay their implementation to allow further talks on a deal. ($1 = 0.9240 euros) More

(Reuters) – Centene (NYSE:CNC) beat Wall Street estimates for third-quarter earnings on strength in its commercial health insurance plans and maintained its annual profit forecast, easing investor fears after dour targets from rivals last week. Shares of the health insurer jumped more than 12% to $69.32 in premarket trading on Friday. They fell 16% since last week after rivals Elevance and UnitedHealth (NYSE:UNH) warned of high costs in government-backed insurance plans. Costs for insurers providing Medicaid plans have been elevated after a federal policy that required insurers to keep low-income Americans enrolled in health plans during the COVID-19 pandemic ended last year, and left the insurers with more sick patients. The quarter was “much better than expected”, said Baird analyst Michael Ha, adding that it was a “surprise” after peers reported “unprecedented levels” of Medicaid pressure last week.Costs related to Medicare plans for those aged 65 and older have also been higher, due to an increase in demand for healthcare services as older people catch up on procedures delayed during the pandemic. Centene reported a medical loss ratio — the percentage of premiums spent on medical care — of 89.2% for the quarter ended Sept. 30, compared with analysts’ estimate of 88.03%, according to data compiled by LSEG.For the full year, it expects the ratio, a key metric to track medical costs, between 88.3% and 88.5%. Analysts expect a ratio of 87.93%.Despite estimated higher costs, the company maintained its annual profit forecast of greater than $6.80 per share, compared with analysts’ expectation of $6.73.Investors had been preparing for a potential cut to Centene forecast, said Stephens analyst Scott Fidel. On an adjusted basis, the health insurer earned $1.62 per share in the third quarter, compared with analysts’ average estimate of $1.33. More

A judge ruled that investors who only relied on Barclays share value or listed status could not continue with their claims, and said he hoped this would improve the chances of an early settlement ahead of a planned trial in October 2025.Barclays declined to comment on the ruling.Hundreds of institutional investors are suing after more than 2 billion pounds was wiped off Barclays’ value in 2014, when New York’s attorney general filed a complaint against the lender over a trading system known as “Barclays LX”.The investors say Barclays misled its clients about Barclays LX – a “dark pool” trading venue where orders are not visible to other traders until they are executed – and that the bank did not publish relevant information to shareholders.Barclays settled the New York case in 2016, agreeing to pay a $70 million fine, admit violating securities laws, and to install an independent monitor.Barclays applied in July for more than half of the case – representing some 330 million pounds of its total value – to be thrown out, which Judge Thomas Leech allowed on Friday.The bank’s lawyer Helen Davies argued that it was essential in a shareholder lawsuit that claimants had relied on information published by a listed company.This meant, she argued, that claims by investors who said they relied only on Barclays’ share value or listed status could not continue.Signature Litigation, the law firm representing the claimants, said in a statement: “In our view it is not appropriate for Barclays to seek to shut out such investors from the statutory remedy and it is likely we will be seeking to appeal it (the ruling).” More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to receive the newsletter every weekday. Explore all of our newsletters hereGood morning. In your final FirstFT of the week, we’re covering:Large investment funds offload shares to avoid tax troubleThe extreme ads targeting swing votersAnd why peak population maybe coming sooner than you thinkBut we start with partner pay at some of the US’s biggest law firms, which has hit record highs, according to a leading survey.Researchers at recruitment specialists Major, Lindsey & Africa, who surveyed top lawyers at the country’s leading 200 firms, found that partner pay had risen 26 per cent over the past two years to an average of $1.4mn.The boom in pay comes amid the early signs of a revival in mergers and acquisitions activity — including several so-called megadeals — and a sharp increase in litigation.But the MLA survey found that the high rewards were not distributed fairly between male and female partners. Top male lawyers earned almost 30 per cent more than their female counterparts on average, at nearly $1.7mn.While still a significant divide, the gender pay gap has narrowed from 47 per cent reported in MLA’s survey four years ago. The study said the discrepancy was driven in part by the fact that men “significantly outpace women in originations”, meaning they bring more business to their respective firms, and a difference in billing rates. Read more of the survey’s results, including geographical differences in pay.Here’s what else I’m keeping tabs on today and over the weekend:Companies: Consumer brands including Colgate-Palmolive and Sharpie pen maker Newell Brands report earnings. Economic data: Durable goods orders and the University of Michigan’s consumer sentiment index are published. Campaign events: Vice-president Kamala Harris will hold a rally in Houston, Texas, where global pop star Beyoncé is expected to appear. Meanwhile, former president Donald Trump will stage a rally in the swing state of Michigan. Israel-Hamas war: CIA chief Bill Burns and his Mossad counterpart David Barnea renew talks over a potential Gaza peace deal in Doha this weekend. Elections: Georgia holds parliamentary polls tomorrow that could decide whether it tilts towards Russia or the west. Bulgaria, Japan, Lithuania, Uruguay and Uzbekistan also have elections on Sunday.Five more top stories1. Large investment funds run by groups such as Fidelity and T Rowe Price are being forced to offload shares to avoid getting into trouble with US tax authorities. This year’s lopsided stock market rally has pushed them up against strict limits requiring them to maintain diversified portfolios. The stock market rally has driven the S&P 500 and other indices to near-record levels of concentration.2. The European economy is set to fall further behind the US’s by the end of the decade, the IMF warned yesterday. The fund estimated Europe’s annual GDP growth rate for the 10 years until 2029 would fall to just 1.45 per cent, while the US’s is estimated at 2.29 per cent for the same period. Here’s why. 3. The US has approved a huge new lithium mine as part of its strategy to break China’s dominance over the supply chains of critical minerals. The project in Nevada is the first such mine approved by the Biden administration, which has also offered a $700mn loan to help build the project. Read the full story.4. Vladimir Putin appeared to confirm yesterday that North Korean soldiers had been sent to fight in Russia as Ukrainian intelligence officials said troops had arrived in the Kursk region. Their presence has been an open secret since South Korea’s intelligence service released footage of North Korean troops training in Russia’s far east. More details on the Russian president’s remarks.China’s reaction: The troop deployment threatens to destabilise the delicate balance of power on the Korean peninsula, upsetting China.5. Justin Trudeau has announced big cuts to Canada’s immigration programme in response to a growing public backlash over the impact of migration on the cost of living and housing affordability. Trudeau, who trails opposition Conservative party leader Pierre Poilievre by 13 points in the polls, blamed companies for abusing a temporary work scheme for rising housing unaffordability and youth unemployment. How well did you keep up with the news this week? Take our quiz.Today’s big read© FT montage/Erik S Lesser/EPA/ShutterstockThe US election will come down to seven key battleground states, and voters who live in them are being inundated with some of the most sophisticated and targeted advertising in political history. As Kamala Harris and Donald Trump try to win over undecided voters in a tight race, political ads in the swing states — from billboards to text messages — are everywhere, all the time.We’re also reading . . . Climate change: The world is on course for a “catastrophic” temperature rise of more than 3C above pre-industrial levels, according to a new UN report. ‘Bespoke’ banking: Ultra-wealthy clients who can pay for customised care in investments, tax and family governance may not get everything they need. Italian tomatoes: A tomato sauce magnate tells the FT that cheap imports from China’s Xinjiang region have damaged the “dignity” of Italy’s staple red fruit.Israel’s dead fathers: Since last October, families of fallen Israeli soldiers have been offered post-mortem sperm retrieval. FT Magazine explores the process — and its implications.Chart of the dayMethods for predicting the world’s population growth vary and as a result so do the outputs. But, one after another, the projections keep missing — repeatedly underestimating the pace and duration of falls in birth rates. And new research challenges the conventional wisdom of a U-shaped recovery trend, writes chief data reporter John Burn-Murdoch. Take a break from the newsAspen is mostly known as a glamorous ski resort. The exceptional and reliable snow conditions and the challenging and varied terrain guarantee its continued winter-destination appeal; but this is only part of Aspen’s identity, writes Josh Hickey, in this weekend’s HTSI autumn travel special.Prayer flags at the edge of the winter ski area on Aspen Mountain in Colorado More