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Money markets us commercial paper market grows on the week

market expanded in the latest week, suggesting an increase in corporate borrowing despite worries about a global economic slowdown, Federal Reserve data showed on Thursday. The size of the U.S. commercial paper market grew by $600 million to $982.5 billion in the week ended July 18 on a seasonally adjusted basis, according to the latest Fed data. The market had expanded by $9.4 billion the previous week. The market size without seasonal adjustments also rose, by $5 billion to about $1 trillion. Foreign banks' commercial paper outstanding increased $1.5 billion in the latest week to $195.3 billion on a non-seasonally adjusted basis, the latest Fed data showed. Separately, the interest rate on U.S. repurchase agreements, a key source of short-term funding for Wall Street, fell on Thursday on speculation the Federal Reserve may eventually cut the interest rate it pays on excess reserves to banks.

That interest rate is currently at 0.25 percent. The Fed may be mulling such a move in an effort to make it less profitable for banks to keep assets with the central bank and motivate them to lend and invest in growth-oriented assets. Fed Chairman Ben Bernanke, in speaking to Congress this week, listed such a move as one of the options available to the central bank in efforts to prop up the economy.

The rate on repos secured by Treasuries was last quoted at 17 basis points, the lowest since late April and down from 0.21 percent late Wednesday. Speculation the Fed could cut the interest on excess reserves was sparked after the European Central Bank on July 5 cut to zero the deposit rate it pays banks for parking money with it overnight. Euro zone bank-to-bank lending rates plumbed new depths on Thursday, driven by record low ECB interest rates and the central bank's move to stop paying banks the interest on their overnight deposits.

The ECB's overnight deposit rate acts as a floor for money market rates as banks only lend to one another if they are able to earn a better rate of interest than at the ECB. Traders said the intended effect of the ECB move may not materialize. JPMorgan Chase & Co, BlackRock Inc - the world's largest money manager - and Goldman Sachs Group Inc have already restricted investor access to European money market funds and hedge funds are also unlikely to lend at negative yields, market players said. Although some money market analysts say the cut could backfire and kill off parts of the market, the move, plus a growing belief the ECB could cut rates further, has had an immediate impact on bank-to-bank rates. Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, hit a new low of 0.458 percent on Thursday, falling from Wednesday's 0 . 464 percent.

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Money markets us money rates firm before fomc minutes

* Repo rates elevated on worries about sterilized Fed program* Fed funds rate jumps despite Treasury debt settlement* Three-month dollar Libor edges up but Euribor dips* Strong bids for 1-month T-bills, cool demand for 1-year billsBy Richard LeongNEW YORK, April 3 The overnight costs for banks and Wall Street firms to borrow U.S. dollars stayed elevated on Tuesday before the release of the minutes on the Federal Reserve's March policy meeting where policy-makers upgraded their outlook on the U.S. economy. Overnight interest rates in federal funds and repurchase agreement markets hovered at their highest levels since last summer on worries that the record of the last Federal Open Market Committee meeting might show discussions on "sterilized" bond programs as an option to hold down long-term borrowing costs, analysts said. Moreover, they reckoned the loans to fund the purchases of the U.S. Treasury Department's combined $99 billion in coupon bond supply have not been fully unwound.

Back on March 7, the Wall Street Journal reported, citing people familiar with the matter, that should the Fed decide to buy more bonds to boost growth, it could borrow back the money it used to buy those bonds for short periods of time at low interest rates. Doing so would take that money out of circulation, or "sterilize" it, exerting upward pressure on short-term interest rates. Six days later, the FOMC signaled no immediate plans to embark on a third round of bond purchase, dubbed QE3, while it repeated its commitment to leave short-term rates near zero until at least late 2014."There's still latent nervousness about it," Mary Beth Fisher, an interest rate strategist at BNP Paribas in New York said of a Fed sterilized bond program. "That could put more pressure on the front end and would force dealers to hold more collateral."

However, Fisher and other analysts see it is a remote possibility that the March FOMC minutes, which are set for release at 2:00 p.m. (1800 GMT), would feature references to sterilized bond purchases. In repo trading, what banks and bond dealers charge each other for overnight loans secured by Treasuries was last quoted at 0.23 percent mid-market, down from 0.26 percent on Monday but up from about 0.05 percent at the end of 2011. In the Fed funds market, whose rates the Fed monitors closely, the cost for banks to borrow excess reserves from each other overnight was last bid at 0.25 percent, up from 0.09 percent late on Monday. In unsecured dollar sector, the benchmark London interbank offered rate for three-month dollars edged up to 0.46915 percent from Monday's fixing of 0.46815 percent.

But for the dollar Euribor which debut on Monday , the three-month rate in that index series increased to 0.95643 percent from 0.95714 percent. At Tuesday's Treasury bill auctions, data showed strong demand for the latest one-month supply but reduced appetite for this month's one-year offering. The bid-to-cover ratio at the $30 billion sale of one-month bill issue came in at 4.75, which was the highest since the auction held on Jan. 24. The Treasury sold the latest one-month bills at an interest rate of 0.055 percent, the lowest level since the ones sold on Jan. 31. On the other hand, the bid-to-cover at the $26 billion one-year bill auction was 4.31, the lowest since the auction conducted in August 2011. The drop off in appetite for one-year bills resulted in a rise in the clearing rate on them. They were sold at 0.185 percent, up from 0.170 percent at the March auction and the highest since July 2011.

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Pemex taps alternative funding source in kkr loan

NEW YORK, Feb 12 (IFR) - A US$1.35bn loan to finance KKR's purchase of Pemex assets could be the first of several such transactions as the Mexican state-owned oil company seeks to tap alternative funding sources. The senior secured credit facility, expected to be launched at bank meetings in Mexico City next week, will consist of five-year tranches (a term loan and a revolver) as well as 10 and 12-year term loans. Proceeds will go to fund the US private equity shop's sale-leaseback agreement to invest in 15 separate infrastructure assets, according to a source.

The assets are 11 pipelines, one set of subsea cables, 2 non-drilling platforms and one gas compression facility. The transaction is seen as a way to quickly monetize Pemex's assets and may set a precedent for other private equity firms that have been looking to invest in Mexico following the passage of historic energy reforms in 2014.

Apart from KKR, BlackRock, First Reserve and Swiss-based private equity firm Partners Group have all announced investments in Mexico's energy sector, according to Reuters. Under the agreement, Pemex sells the assets to KKR while continuing to operate and maintain them.

The oil company will effectively make lease payments to KKR during the 15-year life of the agreement, after which time it will buy back the assets. The transaction is expected to carry features of straight corporate loans such as Pemex's guarantee on the leases, as well as project finance features such as a collateral account. Credit Agricole, the sole bookrunner for the loans, will hold bank meetings in Mexico City on February 17 and New York on February 23, according to a source.

Press digest australian business news jan 30

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)Tonight there will be a focus on the US$20 billion-plus Olympic Dam project as the board of Australian resources giant BHP Billiton (BHP) with chairman Jac Nasser leading, dines privately with the Premier of South Australia, Jay Weatherill, and the Deputy Opposition Leader Mitch Williams. BHP chief executive Marius Kloppers commented last month that the company had experienced "a great relationship with the SA government over the six-year period we've owned the mine." Page 1.- - - - Kerry Stokes, chairman of Australian diversified operating and investment group Seven Group, may have taken a small loss as subsidiary company Seven (WAN) Pty Ltd no longer owns shares in Ten Network Holdings that were purchased at A92.5 cents each late last year. On Friday, Ten shares closed at A89 cents. High-profile shareholders James Packer and Lachlan Murdoch paid about A$1.50 per share for their investment in Ten in late 2010. Page 12.- - - - Touring car racing company V8 Supercars Australia has been instructed by major owner Archer Capital to reduce costs by 10 percent with some jobs to be lost, according to informed industry observers. "V8 Supercars  has been on a strong growth trajectory to ensure that continues  a comprehensive business review in 2011  led to a restructure that involves a small number of job cuts," said a spokesman for the sport yesterday. Page 12.- - - - Mining magnate Nathan Tinkler said in a statement on Saturday that "the decision by the O'Farrell government [to reject the Hunter Ports proposal for a A$2.5 billion coal export terminal to be constructed in Newcastle] is condemning Newcastle to a future as Old Sydney Town despite it being the lifeblood of the New South Wales economy." There is a competing A$5 billion proposal from Port Waratah Coal Services, a company backed by miners including Xstrata and Rio Tinto, to expand the export facilities of Kooragang Island that is waiting on a decision from the government. Page 13.- - - - THE AUSTRALIAN (this site)Brand equity is the driving force behind GUD Holdings GUD. AX>, said its managing director, Ian Campbell, as the company philosophy is to operate with branded products. "Sunbeam owns the kitchen in Masterchef," Mr Campbell said, and whenever a Sunbeam product, such as a stick mixer, featured "the phone would ring off the hook the following day with calls asking where they could get one of those things." Page 19.- - - -

The growth in regulatory requirements imposed on the banking industry is increasing compliance costs for banks - some of which will be passed on to customers, Australian Bankers Association chief executive Steven Munchenberg said yesterday. Banks in Australia are more apprehensive than banks overseas as they look into the future, research from the Centre for the Study of Financial Innovation and PwC to be released today shows. Page 19.- - - - Paul O'Sullivan, chief executive of Australia's second largest telecommunications company Optus, yesterday said the decision in 2006 to counter the aggressive strategy of rival Telstra with a A$2 billion capital expenditure program for its mobile phone network demonstrated the spirit that has built the company into the success it now is. Founding chief executive Robert Mansfield said that in the beginning Optus "was up against an incumbent with 100 percent market share  but the plan was to  obtain consistent market share from a growing industry." Page 19.- - - - As this year's grape harvest begins, winemakers are expecting production quality to be outstanding while production volumes should be lower than last year. Robert Hill-Smith, managing director of Yalumba, said that for 2012 the combination of rainfall and sunshine made the company "very positive about the quality of the vineyards." Orlando Wines chief winemaker Bernard Hickin said the warm weather without excessive rain or damaging heatwaves meant "we're very excited about the quality of the 2012 vintage." Page 21.- - - -

THE SYDNEY MORNING HERALD (this site)The big banks in Australia are being forced into more expensive deals for long-term funding. In recent weeks, Westpac Banking Corporation and Commonwealth Bank of Australia have paid a premium to raise A$6.6 billion from Australian investors. Earlier this month, Australia and New Zealand Banking Group experienced the most expensive raising of funds as it raised A$1.2 billion from European investors. Smaller banks "may now find it difficult to lend profitably" said Scott Haslem, executive director and the chief economist for Australasia at UBS, yesterday. Page B1.- - - - A decision on whether or not to call an extraordinary general meeting with the aim of removing the directors of contract cleaner Spotless will be made by Simon Marais, the managing director of Orbis, and Simon Conn, a senior portfolio manager at Investors Mutual. This follows the refusal of the directors to engage with private equity company Pacific Equity Partners (PEP) over the A$711 million offer PEP has made to acquire Spotless. There have been no announcements over the issue following the Spotless board meeting held last Friday. Page B3.- - - - For Australian bankers, the debt crisis in the euro zone and political interference are the two major threats to the banking system, according to a survey conducted by the Centre for the Study of Financial Innovation in London and PricewaterhouseCoopers. The survey covered banks globally, where the debt crisis also ranked highest overall, while political interference was fifth overall, behind liquidity and funding, excessive regulation and the risks of increased credit losses. Page B3.- - - -

Telecommunications giants Optus and Telstra are in conflict over the Optus service TV Now that allows Optus customers to watch free-to-air television over the internet. The sporting codes Australian Football League and National Rugby League are claiming TV Now violates exclusive internet distribution deals with Telstra. The decision of Justice Steven Rares is due on Wednesday, with Telstra claiming it will rescind its current deals if the decision is in favour of Optus. Page B4.- - - - THE AGE (this site)Nomura Group interest rate strategist Martin Whetton has noted that the central banks of Australia and Israel have a trend of moving interest rates in a similar manner with the Reserve Bank of Australia (RBA) following the lead of the Bank of Israel on 16 of the last 19 times the Australian bank has changed its rates. Another similarity is that both banks have senior officials educated at the Massachusetts Institute of Technology. In Israel the central bank has just reduced rates and the RBA meets on Tuesday next week for its next decision. Page B17.- - - - Annelott Gerandt, a 77-year-old widow, is mounting a court case supported pro bono by law firm Maurice Blackburn to prevent dubious business practitioner David Tweed's company Direct Share Purchasing Corporation from enforcing a contract by which Ms Gerandt was to receive about half the face value of units she held in the Colonial First State Mortgage Income Fund. The behaviour of law firm EC Legal, over some of their work for Mr Tweed described as "of unsavoury nature" by a solicitor acting for Ms Gerandt, has been referred to both the Australian Securities and Investments Commission and lawyer watchdog, the Legal Services Commission. Page B17.- - - - Mobil has announced there will be a "technical study" aimed at improving the supply of power to its aging Altona refinery situated in the west of Melbourne. On Christmas Day, lightning strikes caused a shutdown at ExxonMobil's Altona refinery situated in the west of Melbourne. Since the incident there have been discussions between Mobil and Powercor, the supplier of electricity to Altona. In July, the Clyde refinery in Sydney was closed by Shell with the pressures of international competition cited as the basis for the decision. Page B18.- - - - QBE Insurance has experienced large costs arising from the floods in Thailand that it will find difficult to cover as most of its income is from insurance written outside Australia where there has been no general rise in premiums. Premiums within Australia have risen following the catastrophes of last year. The strategy of QBE Group chief executive officer and managing director Frank O'Halloran has been to use acquisitions to grow and QBE is currently involved in a potential purchase of the non-life insurance component of HSBC. Page B20.- - - -