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.
Taiwan aims to open 18 representative offices and seven Taiwan Tourism Information Centers worldwide by next year to attract international visitors, the Tourism Administration said on Saturday. The agency has so far opened three representative offices abroad this year and would open two more before the end of the year, it said. It has also already opened information centers in Jakarta, Mumbai and Paris, and is to open one in Vancouver next month and in Manila in December, it said. Next year, it would also open offices in Amsterdam, Dubai and Sydney, it added. While the Cabinet did not mention international tourists in its
EYES AT SEA: Many marine enthusiasts have expressed interest in volunteering for coastal patrols, which would help identify stowaways and illegal fishing, the CGA said Six thousand coastal patrol volunteers are to be recruited for 159 inspection offices to enhance the nation’s response to “gray zone” conflicts, Coast Guard Administration (CGA) sources said yesterday. Volunteer teams would be established to increase the resilience of coastal defense systems in the wake of two unlawful entries attempted by Chinese over the past three months, Ocean Affairs Council Minister Kuan Bi-ling (管碧玲) said. A former Chinese navy captain drove a motorboat into the Tamsui River (淡水河) in Taipei on the eve of the Dragon Boat Festival in June, while another Chinese man sailed in a rubber boat into the Houkeng
NEXT LEVEL: The defense ministry confirmed that a video released last month featured personnel piloting new FPV drone systems being developed by the Armaments Bureau Taipei and Washington are pushing for their drone companies to work together to establish a China-free supply chain, the Financial Times reported on Friday. A delegation of high-level executives and US government officials were yesterday to arrive in Taipei to discuss with their Taiwanese counterparts collaboration on drone technology procurement and development, the report said. The executives represent 26 US manufacturers of drone and counter-drone systems, while the officials are from the US Department of Commerce and the US Department of Defense’s Defense Innovation Unit, along with Dev Shenoy, principal director for microelectronics in the Office of the Under Secretary of Defense
‘ANONYMOUS 64’: A national security official said that it is an attempt by China to increase domestic anti-Taiwanese sentiment and inflame cross-strait tensions The Ministry of National Defense’s (MND) Information, Communications and Electronic Force Command (ICEFCOM) yesterday denied accusations by China that it had undermined regional security by carrying out cyberattacks against targets in China, adding instead that Beijing was responsible for raising tensions and undermining regional peace. The Chinese Ministry of State Security on WeChat accused a hacker group called “Anonymous 64” of targeting China, Hong Kong and Macau starting earlier this year through frequent cyberattacks. The group carried out cyberattacks to seize control of Web sites, outdoor electronic billboards and video-on-demand platforms in China, Hong Kong and Macau, it said, adding the hackers’