Standard & Poor’s (S&P) on Thursday cut its credit ratings on NYSE Euronext and warned of more downgrades after the world’s largest stock exchange moved to end business with a major clearing house.
S&P said in a statement that it lowered its long-term ratings on New York-based NYSE Euronext and its Dutch subsidiary, Euronext, to “AA-minus” from “AA,” and put both firms on credit watch “with negative implications.”
The ratings agency cited Euronext’s announcement on Wednesday that it would sever business with British clearing house LCH.Clearnet and take European clearing operations in-house by late 2012.
“The rating actions follow NYSE Euronext’s announcement that it has served notice to terminate its existing clearing arrangements with LCH.Clearnet Ltd and LCH.Clearnet SA and to build two new clearinghouses in London and Paris by year-end 2012,” S&P credit analyst Charles Rauch said in the statement.
“The building of two clearinghouses in Europe changes the company’s risk profile, introducing a degree of credit and financial risk,” S&P said in taking away the firm’s “A” rating, its third-highest.
S&P said the rating actions also reflected its view that NYSE Euronext “has not made sufficient progress to improve its financial profile” and remained overly indebted.
The agency highlighted that its actions “are not a response” to the market events of last Thursday, when the Dow Jones Industrial Average briefly plunged almost 1,000 points, sending global markets reeling.
“We believe the New York Stock Exchange followed its rules in instituting liquidity replenishment points, and there is no evidence of trading systems failure,” the agency said.
In other news, the euro hovered near 14-month lows in Asian trade yesterday on persistent concerns at Europe’s economic woes, with a US$1 trillion rescue package from the EU and IMF failing to calm markets.
A negative lead from Wall Street also hit sentiment, after US shares fell as investors were spooked by news of a bomb blast outside a prison in Greece and the specter of criminal charges against a group of US banks.
The euro remained depressed in Asian trade, buying US$1.2537 after falling as low as US$1.2517, the lowest since March last year despite efforts by eurozone countries to cut spending and grapple with the region’s debt problem.
“Four days on from Monday’s mega European bailout package the market finds itself pondering the medium-term impact of Europe’s massive debt burden,” said David Croy, strategist at ANZ bank in Wellington.
“The bailout can address liquidity concerns, but austerity is needed to get debt levels back under control. And fiscal austerity implies slower growth, which in turn suggests monetary policy will be looser for longer, with low interest rates adding more downward pressure on the euro,” he said.
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
SILICON VALLEY HUB: The office would showcase Taiwan’s strengths in semiconductors and artificial intelligence, and help Taiwanese start-ups connect with global opportunities Taiwan has established an office in Palo Alto, one of the principal cities of Silicon Valley in California, aimed at helping Taiwanese technology start-ups gain global visibility, the National Development Council said yesterday. The “Startup Island Taiwan Silicon Valley hub” at No. 299 California Avenue is focused on “supporting start-ups and innovators by providing professional consulting, co-working spaces, and community platforms,” the council said in a post on its Web site. The office is the second overseas start-up hub established by the council, after a similar site was set up in Tokyo in September last year. Representatives from Taiwanese start-ups, local businesses and
‘DETERRENT’: US national security adviser-designate Mike Waltz said that he wants to speed up deliveries of weapons purchased by Taiwan to deter threats from China US president-elect Donald Trump’s nominee for US secretary of defense, Pete Hegseth, affirmed his commitment to peace in the Taiwan Strait during his confirmation hearing in Washington on Tuesday. Hegseth called China “the most comprehensive and serious challenge to US national security” and said that he would aim to limit Beijing’s expansion in the Indo-Pacific region, Voice of America reported. He would also adhere to long-standing policies to prevent miscalculations, Hegseth added. The US Senate Armed Services Committee hearing was the first for a nominee of Trump’s incoming Cabinet, and questions mostly focused on whether he was fit for the
RSS