BUSINESS LIVE: UK GDP grows 0.1%; Petrofac debt restructuring talks; FCA Motor Funding Investigation Warning

Petrofac could swap a “significant proportion” of its debt for equity as part of a rescue package, the oil services group said on Friday.

The London-listed company is in talks with lenders and investors about ways to restructure its debt and welcome more investment, while negotiating with potential buyers to dispose of non-core assets.

Peak season for pension withdrawals has arrived, with older people likely to withdraw record sums from their retirement funds after two years of rising family bills.

Spring is popular because people have a new set of allowances at the start of the tax year, and many over-55s choose this period to access their pensions for the first time.

While an alarming number of household British names have fallen victim to languishing consumer confidence, one Chinese retailer has quietly built a presence in the UK.

While other Chinese retailers like Shein have revolutionized the fast fashion e-commerce model, Miniso has jumped into retail stores here.

Next week is expected to see the first Bitcoin halving event in four years and will begin a new chapter for the world’s largest cryptocurrency and the scale at which it is mined.

London markets opened strongly this morning, led by a jump in precious metals miners and broader strength across the board, while data shows the British economy grew in February.

Precious metals miners lead sector gains with a 3.9 percent rise as gold prices hit another all-time high.

Industrial metals miners followed with a 2.2 percent rally, as aluminum prices in Shanghai hit two-year highs as funds pumped money into commodities, including metals, to protect against rising demand. inflation.

BP has gained 2.2 percent after the United Arab Emirates state oil company recently considered buying the energy giant, but deliberations did not progress beyond preliminary discussions.

The City watchdog has asked British lenders to ensure they are adequately prepared to deal with the potential costs of customer complaints arising from its review of the car finance sector.

The regulator began investigating possible overcharging in the industry in January, amid growing tensions between thousands of consumers and lenders over fee arrangements.

In a letter sent to bank bosses on Friday, the Financial Conduct Authority said lenders should assess their ability to meet potential future obligations resulting from any increase in customer complaints.

The watchdog said it planned to set out its next steps in September, but said some companies were struggling to provide the data they needed and it was prepared to expand its review if necessary.

A judicial review brought by Barclays against an Ombudsman’s decision on a car finance complaint had also created uncertainty and could affect the timing of the review, the FCA added.

Marks & Spencer won a vote of confidence when JP Morgan said “the ship has turned”.

It has fared better than its rivals in gaining market share since the pandemic, a bullish bank note said.

James Smith, developed markets economist at ING:

‘Assuming we get another slight pick-up in activity during March, we think the UK economy is set to grow by 0.3% for the first quarter as a whole. That would mark the end of a very modest technical recession, although the aggregate figures masked steeper declines in per capita output.

‘We shouldn’t read too much into any given month’s data and it’s worth remembering that the fall in overall GDP in the fourth quarter was partly due to the volatility of this data.

“October manufacturing data, for example, was unusually weak and weighed on overall quarterly activity, but has since followed a strong recovery that includes a 1.2% increase in February alone.”

Oilfield services provider Petrofac still faces challenges in obtaining new performance guarantees and remains in talks with lenders about restructuring its debt.

Petrofac told shareholders this morning: ‘The company has entered into and remains in discussions with its lenders to restructure its debt, which would result in a significant proportion of the debt being exchanged for shares in the business.

‘It also continues to be in discussions with potential investors and certain significant shareholders in relation to possible future investments in the Company and continues to be in negotiations with potential buyers in respect of the sale of non-core assets, as set out in recent announcements. All options remain under consideration.

“Management and the Board are focused on managing the Group’s payment obligations and delivering a solution that supports the provision of collateral required for its recent contract awards, and that ensures that Petrofac has the appropriate capital structure and liquidity to support the strength of its $8 billion reserve.

“While the Company continues to face challenges in obtaining new performance guarantees, it is advancing discussions with credit providers and customers to find solutions regarding the guarantees required for its recent contract awards.”

Thomas Pugh, British economist at RSM UK:

“The wettest February on record, at least in the south of the country, slowed construction activity (-1.9%), but this was offset by a strong performance by the manufacturing industry, which continues to recover after contracting for a long time. part of the last two years.

‘It has been a difficult start to the year for the hotel sector, which has contracted almost 2.5% since the beginning of the year. But this was offset by the recovery in transportation after strikes reduced production in that sector and another strong performance by the recreation sector, as consumers continue to value activities such as concerts.

‘There are good reasons to expect those weaker sectors to recover in the coming months. Higher consumer spending and confidence will directly benefit the hospitality sector and better weather will allow construction activity to recover.

‘Overall, today’s data reinforces our view that the fourth quarter of last year will represent the nadir of a particularly painful period of stagnation for the UK economy. But now we find ourselves at a turning point. Interest rate cuts are likely to come in the summer and growth should gradually improve in the first half of this year and recover further after the summer and into 2025.