Wednesday 22nd May 2013
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The FTSE 100 rallied to a 13-year high yesterday as investors pushed the index up to close at 6,755.63 points - its highest closing level since September 2000 - BlackRock is set to double the amount of money it has invested in real estate after reaching a deal to buy independently managed real-estate advisory business MGPA - Russian broker BCS Financial Group has bolstered its international sales and research teams with two new hires - JPMorgan will end its transition management operations in the US, Europe, Middle East and Africa - Emirates Islamic Financial Brokerage (EIFB), a major Shariah-compliant broker in the UAE, has become a member of Nasdaq Dubai, the region's international exchange. EIFB will focus on opportunities for trading Shariah-compliant shares listed on Nasdaq- Moody's Investors Service confirmed the ratings of Elan Corporation, plc ("Elan") including the Ba3 Corporate Family Rating and the Ba2-PD Probability of Default Rating. This concludes the rating review for downgrade initiated on May 13, 2013. At the same time, Moody's assigned a Ba3 rating to the new senior unsecured note offering of Elan Finance plc, guaranteed by Elan. The rating outlook is stable – According to data released by the National Bureau of Statistics(NBS) last Saturday, China's housing inflation accelerated to its fastest pace in April in two years, driven by a jump in prices in Beijing and Shanghai, complicating the task of policymakers trying to cool the property sector while supporting economic expansion. Average new home prices rose 4.9% last month from a year ago, after a year-on-year increase of 3.6%. The rise was the sharpest since April 2011 – S&P reiterated its negative outlook on India’s credit rating last Friday, despite a previous attempt by government officials to push for an upgrade in light of their actions to put India’s finances in order. India’s credit rating is BBB-, one notch above “junk” – JP Morgan Asset Management is to launch an investment company investing in convertible securities from a range of sectors, targeting income and the potential for long-term capital growth. Domiciled in Guernsey, the JPMorgan Global Convertibles Income Fund will be managed by the convertible bond team headed by Antony Vallee -ABS deals currently in the pipeline include: €800m Bavarian Sky German Auto Loans 1; $238m CarFinance Auto Receivables Trust 2013-1; $599.7m Edsouth Indenture No.4 Series 2013-1; and €300m Volta Electricity Receivables Securitisation – RMBS deals in hand include Firstmac Series 1E-2013 and £420.6m Kenrick No.2; $425m HLSS Servicer Advance Receivables Trust series 2013-T2 and $425m 2013-T3 – CMBS deals underway include the $510m JPMCC 2013-JWRZ and $1.47bn WFRBS 2013-C14 -

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By Partners at BDO

Could the answer to our troubles lie in a shale oil revolution

Friday, 16 December 2011 Written by 
Could the answer to our troubles lie in a shale oil revolutionBlame for the deteriorating economic position of Europe, including the UK, has been placed by commentators very much at the door of the sovereign debt crisis. Whilst this has no doubt affected confidence, it is hard to believe that a resolution within the eurozone will not be achieved one way or another. After all, so much political capital has been invested in the euro. In the end surely Germany, having held the feet of Italy and Greece to the fire so that they push through reforms to their economies, would not let the euro fail?http://www.ftseglobalmarkets.com/

Blame for the deteriorating economic position of Europe, including the UK, has been placed by commentators very much at the door of the sovereign debt crisis. Whilst this has no doubt affected confidence, it is hard to believe that a resolution within the eurozone will not be achieved one way or another. After all, so much political capital has been invested in the euro. In the end surely Germany, having held the feet of Italy and Greece to the fire so that they push through reforms to their economies, would not let the euro fail?

Whilst it may be convenient to point the finger of blame at the sovereign debt crisis on our current and continuing economic woes, what appears to have been ignored is the effect of increasing commodity prices, particularly oil. As I write, the price of a barrel of Brent crude is just below $105 per barrel. High oil prices have a twofold effect on our economy. Firstly they act as a tax on consumers, reducing spending power, and secondly they increase inflation, which then reduces spending power further. Most commentators believe high oil prices are here to stay, given increasing demand from the developing world. But I wonder.  

Remember only a few years ago, there was a consensus in the US that the country would soon be forced to rely on imported natural gas. Faced with this challenge a number of liquid natural gas terminals and facilities were built in order to handle these imports. Then, almost overnight, vast amounts of shale gas were found and produced, as a result of which the use gas price collapsed and, now, apparently 90% of these LNG facilities are lying idle.  

Now in the US the techniques used to produce shale gas are being used to produce shale oil, leading to increasing US oil production in recent years. So could a shale oil revolution be on the horizon?  If the answer is yes, the collapse in the oil price which result may well ride to the rescue of the world economy.  An interesting thought to get us through these harsh economic times.

Chris Searle

Chris Searle is a partner in the Capital Markets team at BDO where he specialises in advising companies seeking to list on the Main Market or AIM and in undertaking pre-acquisition due diligence on M&A transactions. He also leads the firm's corporate finance technical and prospectus committees and is chairman of the technical committee of the ICAEW's Corporate Finance Faculty.

Website: www.bdo.co.uk

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