March 31 (Bloomberg) -- Citic Securities Co., China’s biggest brokerage by market value, said 2009 profit rose 23 percent as a stock market rally drove a recovery in trading.
Net income rose to 8.98 billion yuan ($1.3 billion), or 1.35 yuan a share, from 7.3 billion yuan, or 1.10 yuan a year earlier, the Beijing-based company said in a Shanghai Stock Exchange filing today.
China’s investors doubled stock trading to a daily average of 20.5 billion shares last year as the benchmark Shanghai Composite Index surged, boosting trading commissions for brokers. Citic Securities, which also benefited from the lifting of a moratorium on share sales, may be poised to win more business as regulators allow margin trading.
The company said on March 24 that it has started accepting margin trading applications from investors after gaining approval from the China Securities Regulatory Commission five days earlier.
Margin trading will allow brokerages to lend cash and shares to investors at an interest rate higher than the benchmark lending rate and profit from the interest margin. The Shanghai and Shenzhen Stock exchanges will begin trials for margin trading today.
Citic Securities earned 10.9 billion yuan from trading commissions, or about half of its total revenue, compared with 7.46 billion yuan a year earlier. It made 3.48 billion yuan from investments including proprietary trading in the period, down from 6.45 billion yuan. Revenue for 2009 rose 24 percent to 22 billion yuan.
The company’s shares rose as much as 2.3 percent and traded at 28.61 yuan as of 9:57 a.m. local time. The stock has declined 10 percent this year.
--Zhao Yidi and Luo Jun. Editors: James Gunsalus, Philip Lagerkranser
Tuesday, March 30, 2010
Corporate Bonds Extend Longest Streak Since ’04: Credit Markets
March 31 (Bloomberg) -- Corporate bonds are rallying for the fourth straight quarter, the longest streak since 2004, extending a record advance as 72 percent of companies beat analysts’ earnings expectations.
The securities returned 2.6 percent this quarter through March 30, following a 16.3 percent gain in 2009, according to a Bank of America Merrill Lynch index. The extra yield, or spread, investors demand to own corporate bonds fell 0.26 percentage point since year-end relative to benchmarks to 1.5 percentage points as of yesterday, the narrowest since November 2007.
Company debt rallied on signs the global economy is improving, with U.S. consumer confidence gaining in March and corporate defaults declining from record levels. Borrowing costs declined to the lowest since 2005, spurring $730 billion of bond issuance globally this quarter, a 25 percent increase from the final period of last year.
“We’ve certainly had a very good ride over the last 12 to 15 months, but there still is good value in corporate bonds today in select areas such as banking,” Mark Kiesel, global head of corporate bond portfolio management at Pacific Investment Management Co. in Newport Beach, California, said in a Bloomberg Television interview.
Debt ranging from leveraged loans to high-yield bonds to commercial mortgage-backed securities climbed in the quarter as the Federal Reserve’s zero-interest-rate policy prompted investors to seek riskier assets.
“Investors initially were only concerned about protecting their principal,” said Matt Freund, a money manager for fixed- income investments at San Antonio-based USAA Investment Management Co., who helps oversee $44 billion of assets. “Now that they’ve been reassured, they want spread product.”
Citigroup Prices CLO
Elsewhere in credit markets, the aircraft-leasing unit of American International Group Inc. sold $750 million of notes in a two-part reopening. Citigroup Inc. priced a $525 million collateralized loan obligation, the first new issue backed by widely syndicated debt in the CLO market since last March. Lyondell Chemical Co.’s $500 million term loan to help finance its exit from bankruptcy rose during initial trading.
International Lease Finance Corp., the Los Angeles-based AIG unit, sold $500 million of 8.75 percent notes due in 2017 and $250 million of 8.625 percent debt maturing in 2015, according to data compiled by Bloomberg.
The Citigroup deal, managed by WCAS Fraser Sullivan Investment Management LLC, was boosted from a planned $500 million, said a person familiar with the transaction who declined to be identified because terms aren’t public. The CLO refinances an existing fund, COA CLO Financing Ltd., and increases its size by more than 50 percent.
Lyondell Loans
Houston-based Lyondell’s loan, sold at a discount of 99 cents on the dollar, climbed as high as 100.75 cents, according to people familiar with the trades who declined to be identified because the transactions are private. It initially broke at 100.25 cents, the people said.
UBS AG arranged the term loan due in 2016 with an interest rate 4 percentage points more than the London interbank offered rate, with a 1.5 percent Libor floor, the people said. Three- month Libor, the rate banks charge to lend to each other, is 0.29 percent.
The cost to protect against defaults on corporate bonds in the U.S. rose for the first time in four days.
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 1.1 basis point to a mid-price of 86.3 basis points as of 5:18 p.m. in New York, according to Markit Group Ltd. The index typically increases as investor confidence deteriorates.
European iTraxx
In London, the Markit iTraxx Europe Index on 125 investment-grade companies was unchanged at 77.5 basis points, according to JPMorgan Chase & Co.
Greece led an increase in the cost of credit-default swaps on sovereign debt after the country’s new seven-year bond offering fell in trading, deepening concern that Europe’s most indebted nations may struggle to fund their budget deficits.
Contracts on Greek government debt rose 20 basis points to 335.5 in London, the highest in more than a week, according to CMA DataVision. Swaps on Spain, Portugal, Italy and Ireland also climbed and the Markit iTraxx SovX Western Europe Index of contracts on 15 governments rose 3.5 basis points to 82, the highest level in a month.
Bondholder Protection
The Markit iTraxx Australia index rose 2 basis points to 85.5 basis points, according to Citigroup, while the Markit iTraxx Japan index increased 0.5 basis point to 114 in Tokyo, Morgan Stanley prices show.
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan increased 1.5 basis point to 96.5, according to Royal Bank of Scotland Group Plc prices.
Credit swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent. A basis point is 0.01 percentage point and equals $1,000 annually on a contract protecting $10 million of debt for five years. Worldwide corporate bond sales for the first three months compare with $583 billion in the fourth quarter of 2009 and $1 trillion in the same period last year, Bloomberg data show.
Warren Buffett’s Berkshire Hathaway Inc. and Kraft Foods Inc. the maker of Oreos that’s buying Cadbury Plc, led the busiest day of the quarter in the U.S., as issuance reached $18.85 billion on Feb. 4.
Junk Bonds
Junk bond sales reached a record $38.9 billion in March, passing the previous high of $36 billion in November 2006, Bloomberg data show. Speculative-grade securities are rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s. The debt returned 5.61 percent through March 30, after gaining 60.6 percent last year, according to the Bank of America Merrill Lynch Global High Yield Index.
The bonds rallied as the percentage of speculative-grade companies defaulting in the prior 12 months fell to 11.6 percent in February, from a peak of 12.9 percent in November, Moody’s said March 4. The rate will fall to 2.9 percent by the end of this year, Moody’s said.
The S&P/LSTA US Leveraged Loan 100 Index gained 4.16 percent this year as companies sold junk bonds to repay their bank loans. That extended the record 52.2 percent gain in 2009.
Commercial mortgage-backed securities advanced 7.1 percent this quarter, according to a Bank of America Merrill Lynch CMBS index, after returning 27.9 percent in 2009.
Earnings Surprises
Bond returns are justified by corporate earnings, USAA’s Freund said. Companies in the S&P 500 Index beat analyst estimates 72 percent of the time in the quarter, the second- highest percentage for positive earnings surprises on record, Bloomberg data show.
Consumers in the U.S. gained confidence in March as the gloom over job prospects began to lift, indicating employment will be central to preserving the recent acceleration in spending.
The Conference Board’s confidence index rose to 52.5, exceeding the median forecast of economists surveyed by Bloomberg News, from 46.4 in February, according to figures from the New York research group.
“With signs of improvement in the labor market, confidence is more likely to be up than down in the next few months,” said James O’Sullivan, chief economist at MF Global Ltd. in New York, who forecast sentiment would pick up. “It’s still a low level of confidence.”
Rally Waning?
The rally in credit may be waning as expectations grow that the Fed will raise interest rates, undermining returns in fixed- income markets and prompting investors to shift money into equity funds, Bank of America Corp. strategists said in a March 26 note to investors.
“Such a shift in liquidity may well persist as yield levels in fixed income no longer provide for the equity-like return potential that debt once offered,” strategists led by Jeffrey Rosenberg in New York wrote in the report. That would leave “a less robust liquidity environment for debt.”
Corporate bonds offer opportunities for additional gains, even as economic growth may be hampered by governments withdrawing stimulus programs, Pimco’s Kiesel said. He recommends investors buy financial and emerging-market debt.
“You can still get 5 to 6 percent returns, which still look very attractive relative to other fixed income alternatives,” Kiesel said.
The securities returned 2.6 percent this quarter through March 30, following a 16.3 percent gain in 2009, according to a Bank of America Merrill Lynch index. The extra yield, or spread, investors demand to own corporate bonds fell 0.26 percentage point since year-end relative to benchmarks to 1.5 percentage points as of yesterday, the narrowest since November 2007.
Company debt rallied on signs the global economy is improving, with U.S. consumer confidence gaining in March and corporate defaults declining from record levels. Borrowing costs declined to the lowest since 2005, spurring $730 billion of bond issuance globally this quarter, a 25 percent increase from the final period of last year.
“We’ve certainly had a very good ride over the last 12 to 15 months, but there still is good value in corporate bonds today in select areas such as banking,” Mark Kiesel, global head of corporate bond portfolio management at Pacific Investment Management Co. in Newport Beach, California, said in a Bloomberg Television interview.
Debt ranging from leveraged loans to high-yield bonds to commercial mortgage-backed securities climbed in the quarter as the Federal Reserve’s zero-interest-rate policy prompted investors to seek riskier assets.
“Investors initially were only concerned about protecting their principal,” said Matt Freund, a money manager for fixed- income investments at San Antonio-based USAA Investment Management Co., who helps oversee $44 billion of assets. “Now that they’ve been reassured, they want spread product.”
Citigroup Prices CLO
Elsewhere in credit markets, the aircraft-leasing unit of American International Group Inc. sold $750 million of notes in a two-part reopening. Citigroup Inc. priced a $525 million collateralized loan obligation, the first new issue backed by widely syndicated debt in the CLO market since last March. Lyondell Chemical Co.’s $500 million term loan to help finance its exit from bankruptcy rose during initial trading.
International Lease Finance Corp., the Los Angeles-based AIG unit, sold $500 million of 8.75 percent notes due in 2017 and $250 million of 8.625 percent debt maturing in 2015, according to data compiled by Bloomberg.
The Citigroup deal, managed by WCAS Fraser Sullivan Investment Management LLC, was boosted from a planned $500 million, said a person familiar with the transaction who declined to be identified because terms aren’t public. The CLO refinances an existing fund, COA CLO Financing Ltd., and increases its size by more than 50 percent.
Lyondell Loans
Houston-based Lyondell’s loan, sold at a discount of 99 cents on the dollar, climbed as high as 100.75 cents, according to people familiar with the trades who declined to be identified because the transactions are private. It initially broke at 100.25 cents, the people said.
UBS AG arranged the term loan due in 2016 with an interest rate 4 percentage points more than the London interbank offered rate, with a 1.5 percent Libor floor, the people said. Three- month Libor, the rate banks charge to lend to each other, is 0.29 percent.
The cost to protect against defaults on corporate bonds in the U.S. rose for the first time in four days.
The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 1.1 basis point to a mid-price of 86.3 basis points as of 5:18 p.m. in New York, according to Markit Group Ltd. The index typically increases as investor confidence deteriorates.
European iTraxx
In London, the Markit iTraxx Europe Index on 125 investment-grade companies was unchanged at 77.5 basis points, according to JPMorgan Chase & Co.
Greece led an increase in the cost of credit-default swaps on sovereign debt after the country’s new seven-year bond offering fell in trading, deepening concern that Europe’s most indebted nations may struggle to fund their budget deficits.
Contracts on Greek government debt rose 20 basis points to 335.5 in London, the highest in more than a week, according to CMA DataVision. Swaps on Spain, Portugal, Italy and Ireland also climbed and the Markit iTraxx SovX Western Europe Index of contracts on 15 governments rose 3.5 basis points to 82, the highest level in a month.
Bondholder Protection
The Markit iTraxx Australia index rose 2 basis points to 85.5 basis points, according to Citigroup, while the Markit iTraxx Japan index increased 0.5 basis point to 114 in Tokyo, Morgan Stanley prices show.
The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan increased 1.5 basis point to 96.5, according to Royal Bank of Scotland Group Plc prices.
Credit swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent. A basis point is 0.01 percentage point and equals $1,000 annually on a contract protecting $10 million of debt for five years. Worldwide corporate bond sales for the first three months compare with $583 billion in the fourth quarter of 2009 and $1 trillion in the same period last year, Bloomberg data show.
Warren Buffett’s Berkshire Hathaway Inc. and Kraft Foods Inc. the maker of Oreos that’s buying Cadbury Plc, led the busiest day of the quarter in the U.S., as issuance reached $18.85 billion on Feb. 4.
Junk Bonds
Junk bond sales reached a record $38.9 billion in March, passing the previous high of $36 billion in November 2006, Bloomberg data show. Speculative-grade securities are rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s. The debt returned 5.61 percent through March 30, after gaining 60.6 percent last year, according to the Bank of America Merrill Lynch Global High Yield Index.
The bonds rallied as the percentage of speculative-grade companies defaulting in the prior 12 months fell to 11.6 percent in February, from a peak of 12.9 percent in November, Moody’s said March 4. The rate will fall to 2.9 percent by the end of this year, Moody’s said.
The S&P/LSTA US Leveraged Loan 100 Index gained 4.16 percent this year as companies sold junk bonds to repay their bank loans. That extended the record 52.2 percent gain in 2009.
Commercial mortgage-backed securities advanced 7.1 percent this quarter, according to a Bank of America Merrill Lynch CMBS index, after returning 27.9 percent in 2009.
Earnings Surprises
Bond returns are justified by corporate earnings, USAA’s Freund said. Companies in the S&P 500 Index beat analyst estimates 72 percent of the time in the quarter, the second- highest percentage for positive earnings surprises on record, Bloomberg data show.
Consumers in the U.S. gained confidence in March as the gloom over job prospects began to lift, indicating employment will be central to preserving the recent acceleration in spending.
The Conference Board’s confidence index rose to 52.5, exceeding the median forecast of economists surveyed by Bloomberg News, from 46.4 in February, according to figures from the New York research group.
“With signs of improvement in the labor market, confidence is more likely to be up than down in the next few months,” said James O’Sullivan, chief economist at MF Global Ltd. in New York, who forecast sentiment would pick up. “It’s still a low level of confidence.”
Rally Waning?
The rally in credit may be waning as expectations grow that the Fed will raise interest rates, undermining returns in fixed- income markets and prompting investors to shift money into equity funds, Bank of America Corp. strategists said in a March 26 note to investors.
“Such a shift in liquidity may well persist as yield levels in fixed income no longer provide for the equity-like return potential that debt once offered,” strategists led by Jeffrey Rosenberg in New York wrote in the report. That would leave “a less robust liquidity environment for debt.”
Corporate bonds offer opportunities for additional gains, even as economic growth may be hampered by governments withdrawing stimulus programs, Pimco’s Kiesel said. He recommends investors buy financial and emerging-market debt.
“You can still get 5 to 6 percent returns, which still look very attractive relative to other fixed income alternatives,” Kiesel said.
Monday, March 29, 2010
Japan’s Industrial Production Falls, Unemployment Stays at 4.9%
March 30 (Bloomberg) -- Japan’s industrial production fell in February and the unemployment rate held at the lowest level since March 2009, underscoring an uneven economic recovery that has yet to end deflation.
The 0.9 percent drop in factoryoutput from a month earlier snapped 11 straight gains and followed a 2.7 percent increase in January, the Trade Ministry said in Tokyo. The jobless rate stayed at 4.9 percent after two monthly declines.
The reports highlight the challenges for Bank of Japan policy makers, who have said economic growth has matched or exceeded their projections even as consumer prices keep falling. Without clearer evidence that the recovery is faltering, the central bank may next week hold off on any further expansion in its liquidity injections, said Junko Nishioka.
“Exports have been very robust for a surprisingly long time, despite the yen’s strength, and as long as this trend continues, there is little concern that the production recovery will reverse course,” said Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “If there is any chance for the central bank to act, it would do so at its second April meeting at the end of the month,” when board members publish their twice-annual outlook for the economy and prices, she said.
Separate government reports today showed household spending slipped 0.5 percent in February, the first decline in seven months, while the ratio of jobs available to applicants improved for a second month.
The yen traded at 92.31 per dollar at 11:11 a.m. in Tokyo from 92.52 before the figures were published. The Nikkei 225 Stock Average climbed 0.5 percent, taking its gains this month to 9 percent.
Lunar New Year
Production fell more than the 0.5 percent median decline projected in a Bloomberg News survey of economists. The decline was a reaction to January’s gain, which was the biggest in eight months, said Katsuya Shimura, director of economic analysis at the Trade Ministry. China’s Lunar New Year holiday was also a contributing factor because it took place in February, slowing exports to Japan’s biggest market, he said.
Companies surveyed by the Trade Ministry expect to increase production by 1.4 percent in March before trimming output 0.1 percent in April. The government left unchanged its assessment that production is picking up.
Output surged 31.3 percent from a year earlier, when the country bore the brunt of a collapse in world commerce amid the financial crisis, today’s report also showed. More than $2 trillion in stimulus spending worldwide helped Japanese exports surge the most in 30 years in February from a year ago.
‘Recovery Will Continue’
“We may see the economy slow somewhat next fiscal year, but the recovery will continue,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo, adding that the drop in production was “temporary.”
Improvements in the jobless rate from a postwar high of 5.6 percent in July have yet to eradicate deflation, providing a headache for policy makers. The Bank of Japan doubled a lending program for commercial banks to 20 trillion yen ($217 billion) following government calls for it to do more to spur consumer prices that fell for a 12th month in February.
The policy board will also have the latest reading on business sentiment when they meet on April 6-7. The Bank of Japan’s Tankan index of confidence among large manufacturers will climb for a fourth quarter, according to the median forecast of economists surveyed ahead of the report due April 1.
Brighter global prospects are encouraging companies from Honda Motor Co. to Showa Denko K.K. to boost manufacturing.
Showa Denko
Showa Denko, the world’s second biggest hard-disk maker, will increase output of magnetic disks three months earlier than planned because of stronger-than-expected demand for personal computers in China and other emerging markets, Chief Financial Officer Ichiro Nomura said this month.
Honda, Japan’s second-largest carmaker, increased global output 49 percent in February from a year earlier as demand from Asia surged and the U.S. economy recovered. The Tokyo- based company raised domestic production 52 percent.
Toyota Motor Corp., the world’s biggest automaker, boosted manufacturing 83 percent, even as its American sales slumped because of millions of vehicle recalls for problems including unintended acceleration.
“We don’t need to be overly pessimistic about the impact from the Toyota recall problem on overall production,” said Susumu Kato, chief economist for Japan in Tokyo at Credit Agricole CIB and CLSA.
The absence of change in the unemployment rate masked a drop in jobs in February. The economy lost a seasonally adjusted 250,000 jobs after adding 540,000 the previous month, the most in more than three decades, the statistics bureau said.
The government sector led the drop, according to month-on- month breakdowns. Medical and welfare firms added workers.
“January’s results were a little too good to be true” because companies still carry too many workers, said Maruyama at Itochu. “But we are starting to see a gradual upturn in job advertisements, and we’re starting to see some hiring, too.”
The 0.9 percent drop in factoryoutput from a month earlier snapped 11 straight gains and followed a 2.7 percent increase in January, the Trade Ministry said in Tokyo. The jobless rate stayed at 4.9 percent after two monthly declines.
The reports highlight the challenges for Bank of Japan policy makers, who have said economic growth has matched or exceeded their projections even as consumer prices keep falling. Without clearer evidence that the recovery is faltering, the central bank may next week hold off on any further expansion in its liquidity injections, said Junko Nishioka.
“Exports have been very robust for a surprisingly long time, despite the yen’s strength, and as long as this trend continues, there is little concern that the production recovery will reverse course,” said Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “If there is any chance for the central bank to act, it would do so at its second April meeting at the end of the month,” when board members publish their twice-annual outlook for the economy and prices, she said.
Separate government reports today showed household spending slipped 0.5 percent in February, the first decline in seven months, while the ratio of jobs available to applicants improved for a second month.
The yen traded at 92.31 per dollar at 11:11 a.m. in Tokyo from 92.52 before the figures were published. The Nikkei 225 Stock Average climbed 0.5 percent, taking its gains this month to 9 percent.
Lunar New Year
Production fell more than the 0.5 percent median decline projected in a Bloomberg News survey of economists. The decline was a reaction to January’s gain, which was the biggest in eight months, said Katsuya Shimura, director of economic analysis at the Trade Ministry. China’s Lunar New Year holiday was also a contributing factor because it took place in February, slowing exports to Japan’s biggest market, he said.
Companies surveyed by the Trade Ministry expect to increase production by 1.4 percent in March before trimming output 0.1 percent in April. The government left unchanged its assessment that production is picking up.
Output surged 31.3 percent from a year earlier, when the country bore the brunt of a collapse in world commerce amid the financial crisis, today’s report also showed. More than $2 trillion in stimulus spending worldwide helped Japanese exports surge the most in 30 years in February from a year ago.
‘Recovery Will Continue’
“We may see the economy slow somewhat next fiscal year, but the recovery will continue,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo, adding that the drop in production was “temporary.”
Improvements in the jobless rate from a postwar high of 5.6 percent in July have yet to eradicate deflation, providing a headache for policy makers. The Bank of Japan doubled a lending program for commercial banks to 20 trillion yen ($217 billion) following government calls for it to do more to spur consumer prices that fell for a 12th month in February.
The policy board will also have the latest reading on business sentiment when they meet on April 6-7. The Bank of Japan’s Tankan index of confidence among large manufacturers will climb for a fourth quarter, according to the median forecast of economists surveyed ahead of the report due April 1.
Brighter global prospects are encouraging companies from Honda Motor Co. to Showa Denko K.K. to boost manufacturing.
Showa Denko
Showa Denko, the world’s second biggest hard-disk maker, will increase output of magnetic disks three months earlier than planned because of stronger-than-expected demand for personal computers in China and other emerging markets, Chief Financial Officer Ichiro Nomura said this month.
Honda, Japan’s second-largest carmaker, increased global output 49 percent in February from a year earlier as demand from Asia surged and the U.S. economy recovered. The Tokyo- based company raised domestic production 52 percent.
Toyota Motor Corp., the world’s biggest automaker, boosted manufacturing 83 percent, even as its American sales slumped because of millions of vehicle recalls for problems including unintended acceleration.
“We don’t need to be overly pessimistic about the impact from the Toyota recall problem on overall production,” said Susumu Kato, chief economist for Japan in Tokyo at Credit Agricole CIB and CLSA.
The absence of change in the unemployment rate masked a drop in jobs in February. The economy lost a seasonally adjusted 250,000 jobs after adding 540,000 the previous month, the most in more than three decades, the statistics bureau said.
The government sector led the drop, according to month-on- month breakdowns. Medical and welfare firms added workers.
“January’s results were a little too good to be true” because companies still carry too many workers, said Maruyama at Itochu. “But we are starting to see a gradual upturn in job advertisements, and we’re starting to see some hiring, too.”
RBA Says Mortgage Rates Taken Into Account in Policy
March 30 (Bloomberg) -- Australia’s central bank said its policy actions took into account that home-loan rates have risen more than its benchmark interest rate, suggesting fewer increases are needed to return borrowing costs to normal levels.
“While interest rates on mortgages have increased relative to the cash rate, the Reserve Bank is able to take account of those changes in its policy deliberations,” Assistant Governor Guy Debelle said in Sydney today. “The cash rate determined by the Reserve Bank is still the major determinant of the interest rate structure in Australia, including that of mortgage rates.”
Commercial lenders have raised mortgage rates by more than the central bank’s increases in its benchmark since October, prompting criticism from Prime Minister Kevin Rudd’s government. Governor Glenn Stevens said before this month’s boost in the policy rate to 4 percent from 3.75 percent that borrowing costs are about 50 to 100 basis points below normal.
“A rate hike next week is looking increasingly like a done deal,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Calyon, the investment banking unit of France’s Credit Agricole SA.
Traders are betting there is a 56 percent chance of a quarter-point rate increase when the central bank next meets on April 6, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 10:18 a.m.
The Australian dollar traded at 91.67 U.S. cents as of 10:54 a.m. in Sydney from 91.69 cents before Debelle’s speech.
Funding Costs
Debelle said the “competitive state” of Australia’s mortgage market “is reflected in the fact that home lending rates have not risen as much as funding costs.”
Relative to the cash rate, the average rate on variable- rate housing loans has increased by around 110 basis points since the middle of 2007, he told the Mortgage Innovation Conference. That is below the estimated 130 to 140 basis point rise in banks’ overall funding costs over the same period.
Debelle, who heads the central bank’s financial markets division, also said the securitization market is starting to recover, and the cost of long-term and short-term wholesale funding has decreased since the middle of 2009.
“Already, the improvement in securitization has encouraged some of the smaller lenders back into the market and encouraged some brokers to again look to increase their own mortgage lending,” he said, adding that the “housing loan market remains contestable.”
Historical Average
Mortgage rates in Australia are currently around 50 basis points below their historical average after this month’s increase in the Reserve Bank’s policy rate, the fourth move in five meetings, central bank official Philip Lowe said last week.
Australia’s policy makers, the first among Group of 20 nations to raise borrowing costs this year, are acting on the basis of the central bank’s so-called “central scenario,” which sees countries in Asia growing “reasonably solidly,” as advanced economies experience “only a subdued recovery,” said Lowe, who is also an assistant governor.
Treasurer Wayne Swan in December said commercial lenders “can expect a very severe backlash” after Westpac Banking Corp. raised its mortgage rate almost twice as much as the Reserve Bank’s increase that month.
“Westpac and any other bank that follows Westpac’s lead can expect a very severe backlash from their customers and from the community generally,” Swan told reporters on Dec. 1.
Westpac, which stayed profitable throughout the worldwide slowdown, said at the time that it was raising home-loan costs at a faster pace than the central bank due to higher wholesale funding costs.
Australia’s four major banks all raised variable home-loan rates by 25 basis points earlier this month, matching the central bank’s March 2 increase in its key policy rate.
“While interest rates on mortgages have increased relative to the cash rate, the Reserve Bank is able to take account of those changes in its policy deliberations,” Assistant Governor Guy Debelle said in Sydney today. “The cash rate determined by the Reserve Bank is still the major determinant of the interest rate structure in Australia, including that of mortgage rates.”
Commercial lenders have raised mortgage rates by more than the central bank’s increases in its benchmark since October, prompting criticism from Prime Minister Kevin Rudd’s government. Governor Glenn Stevens said before this month’s boost in the policy rate to 4 percent from 3.75 percent that borrowing costs are about 50 to 100 basis points below normal.
“A rate hike next week is looking increasingly like a done deal,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Calyon, the investment banking unit of France’s Credit Agricole SA.
Traders are betting there is a 56 percent chance of a quarter-point rate increase when the central bank next meets on April 6, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 10:18 a.m.
The Australian dollar traded at 91.67 U.S. cents as of 10:54 a.m. in Sydney from 91.69 cents before Debelle’s speech.
Funding Costs
Debelle said the “competitive state” of Australia’s mortgage market “is reflected in the fact that home lending rates have not risen as much as funding costs.”
Relative to the cash rate, the average rate on variable- rate housing loans has increased by around 110 basis points since the middle of 2007, he told the Mortgage Innovation Conference. That is below the estimated 130 to 140 basis point rise in banks’ overall funding costs over the same period.
Debelle, who heads the central bank’s financial markets division, also said the securitization market is starting to recover, and the cost of long-term and short-term wholesale funding has decreased since the middle of 2009.
“Already, the improvement in securitization has encouraged some of the smaller lenders back into the market and encouraged some brokers to again look to increase their own mortgage lending,” he said, adding that the “housing loan market remains contestable.”
Historical Average
Mortgage rates in Australia are currently around 50 basis points below their historical average after this month’s increase in the Reserve Bank’s policy rate, the fourth move in five meetings, central bank official Philip Lowe said last week.
Australia’s policy makers, the first among Group of 20 nations to raise borrowing costs this year, are acting on the basis of the central bank’s so-called “central scenario,” which sees countries in Asia growing “reasonably solidly,” as advanced economies experience “only a subdued recovery,” said Lowe, who is also an assistant governor.
Treasurer Wayne Swan in December said commercial lenders “can expect a very severe backlash” after Westpac Banking Corp. raised its mortgage rate almost twice as much as the Reserve Bank’s increase that month.
“Westpac and any other bank that follows Westpac’s lead can expect a very severe backlash from their customers and from the community generally,” Swan told reporters on Dec. 1.
Westpac, which stayed profitable throughout the worldwide slowdown, said at the time that it was raising home-loan costs at a faster pace than the central bank due to higher wholesale funding costs.
Australia’s four major banks all raised variable home-loan rates by 25 basis points earlier this month, matching the central bank’s March 2 increase in its key policy rate.
Sunday, March 28, 2010
Softbank to Raise Capital Spending as Smartphones Boost Traffic
March 29 (Bloomberg) -- Softbank Corp., Japan’s third- largest wireless carrier, will increase its capital spending 54 percent next fiscal year to handle the higher network traffic its smartphones are forecast to generate.
Softbank will introduce in April its first smartphone based on the Android operating system of Google Inc., Chief Executive Officer Masayoshi Son told reporters in Tokyo yesterday.
The company will invest 400 billion yen ($4.3 billion) in the 12 months starting April 1, compared with 260 billion yen planned this fiscal year, Son said. Softbank spokesman Katsumasa Tochihara said the number of base stations will rise to 120,000 from 6,000 to cope with rising network traffic.
The company, Apple Inc.’s exclusive provider of the iPhone in Japan, is adding the Android model to expand its lineup of smartphones, devices that can surf the Web and download music, video and applications to counter similar moves by rivals.
NTT DoCoMo Inc., Japan’s largest mobile-phone operator, plans to sell its second Android handset next month and KDDI Corp., the country’s second-biggest, will introduce its first model in June.
Android, a newcomer to the smartphone operating-system market, will see its handset base jump to 68 million units by 2013, from 690,000 in 2008, researcher IDC Corp. said in January. Google software will outpace Apple’s and Microsoft’s platforms to be second only to Symbian, used by Nokia Oyj.
Softbank will introduce in April its first smartphone based on the Android operating system of Google Inc., Chief Executive Officer Masayoshi Son told reporters in Tokyo yesterday.
The company will invest 400 billion yen ($4.3 billion) in the 12 months starting April 1, compared with 260 billion yen planned this fiscal year, Son said. Softbank spokesman Katsumasa Tochihara said the number of base stations will rise to 120,000 from 6,000 to cope with rising network traffic.
The company, Apple Inc.’s exclusive provider of the iPhone in Japan, is adding the Android model to expand its lineup of smartphones, devices that can surf the Web and download music, video and applications to counter similar moves by rivals.
NTT DoCoMo Inc., Japan’s largest mobile-phone operator, plans to sell its second Android handset next month and KDDI Corp., the country’s second-biggest, will introduce its first model in June.
Android, a newcomer to the smartphone operating-system market, will see its handset base jump to 68 million units by 2013, from 690,000 in 2008, researcher IDC Corp. said in January. Google software will outpace Apple’s and Microsoft’s platforms to be second only to Symbian, used by Nokia Oyj.
Obama, in Kabul, Presses Karzai to Root Out Government Corruption
March 29 (Bloomberg) -- President Barack Obama made an unannounced visit to Afghanistan to press Afghan President Hamid Karzai on rooting out corruption and improving government functions so the U.S. can begin handing over security.
While saying he’s “encouraged by the progress that’s been made” in Afghanistan, Obama said in Kabul that more must be done to make progress on benchmarks set as terms for U.S. support.
“All of us want to see a day when Afghanistan is going to be able to provide for its own security,” the president said after meeting with Karzai at the presidential palace.
Speaking later to U.S. troops at Bagram Airfield, Obama said the eight-year-old war in Afghanistan is “essential” to U.S. security because if the region slides into chaos, al-Qaeda and the Taliban will have a haven from which to attack.
“If I thought for a minute that America’s vital interests were not served I would order you home right away,” Obama told a crowd of soldiers, sailors, Marines and Air Force personnel. “You will have the support to get the job done and I am confident that you can get the job done.”
Obama went to Afghanistan as the U.S. role there is growing with an escalation of forces that he ordered last December, and as allied troops are engaged in an offensive against the Taliban in southern Afghanistan.
Obama’s brief visit, his first to Afghanistan since becoming president, was intended to emphasize to Karzai that his government must crack down on corruption, fight the drug trafficking that helps fund the insurgency and institute merit- based systems for government appointments, according to James Jones, Obama’s national security adviser.
Attention to Governing
“There are going to be certain things he has to do as the president of his country that have not been paid attention to almost since day one,” Jones told reporters.
“We have to have the strategic rapport with President Karzai and his cabinet to understand how we are going to succeed this year in reversing the momentum the Taliban and the opposition forces have been able to establish since 2006,” he said.
Obama invited Karzai for talks in Washington in May.
“I want to send a strong message that partnership between the United States and Pakistan is going to continue,” Obama said. “We have seen already progress with respect to the military campaign against extremism, but we also want to continue to make progress on the civilian side.”
Karzai said he wanted the U.S. partnership to continue “toward a stable, strong, peaceful Afghanistan” and he thanked the U.S. for its help in rebuilding.
While in Afghanistan, the president also got briefings from the commander he installed last June, General Stanley McChrystal, and Ambassador Karl Eikenberry, said press secretary Robert Gibbs.
Nighttime Landing
Landing in darkness at Bagram, Obama travelled the 50 miles to Kabul by helicopter to meet with Karzai at the presidential palace. He had a separate session with Karzai’s cabinet.
The trip, kept secret because of security concerns, capped a week in which the president won a major domestic victory with passage of a sweeping overhaul of the U.S. health-care system and announced completion of a nuclear arms reduction treaty with Russia.
Obama campaigned for office on a pledge to shift U.S. military resources to Afghanistan from Iraq. A year ago he ordered 17,000 combat troops and 4,000 trainers to the country ahead of Afghanistan’s elections. In December, Obama ordered another 30,000 forces be sent to the country, which ultimately will expand the number of military personnel to 100,000. At the same time he asked North Atlantic Treaty Organization countries to contribute more resources to the conflict.
Battling the Taliban
The escalation is intended to reverse Taliban gains and train Afghans to take control of their country so American forces can begin withdrawing in July 2011.
The U.S. is leading a drive against the Taliban in southern Afghanistan. A 30-day offensive by 15,000 Afghan and NATO troops, including U.S. Marines and British forces, culminated earlier this month with allies taking control of the town of Marjah.
It was the biggest operation against the Taliban since the 2001 U.S.-led invasion of Afghanistan following the Sept. 11 attacks by al-Qaeda. Officials have said they are making plans for an even bigger assault on the Taliban heartland city of Kandahar.
The increased tempo of the U.S. military campaign has brought higher casualties. In the first two months of the year, 54 U.S. personnel were killed in action in Afghanistan, compared with 27 in the first two months of 2009, according to Defense Department figures. In all, 1,018 U.S. troops have died in Afghanistan, 742 of them as a result of combat, the Pentagon data show.
Regional Cooperation
As part of the Obama administration’s strategy, the U.S. also has strengthened its relationship with the government of neighboring Pakistan, whose army has been fighting a rise in terrorism after the Taliban and remnants of al-Qaeda fled Afghanistan and thousands of tribesmen joined their ranks.
Jones and Deputy National Security Adviser Douglas Lute emphasized the importance of a regional approach to Afghanistan’s stability and said the administration is encouraged by the role Pakistan is playing.
In 30 days, Karzai will convene a peace council with Afghan tribal and regional leaders, Lute said. Then in early May he hopes to host a foreign ministers conference in Kabul.
The effort has resulted in the capture of some top Taliban leaders in both countries and increased pressure on remnants of al-Qaeda hiding in tribal areas along the border with Pakistan.
The U.S. is still deploying the 30,000 additional troops that Obama authorized. The U.S. will have 98,000 troops there by Sept. 30 for a total of almost 150,000 from all 34 countries in the NATO-led coalition that aims to reverse Taliban gains and train Afghan security forces to begin taking over by July 2011.
Defense Secretary Robert Gates, testifying to the Senate Appropriations Committee on March 25 said the Afghan army is making “real strides” and that changes are being made to improve training of Afghan police officers.
While saying he’s “encouraged by the progress that’s been made” in Afghanistan, Obama said in Kabul that more must be done to make progress on benchmarks set as terms for U.S. support.
“All of us want to see a day when Afghanistan is going to be able to provide for its own security,” the president said after meeting with Karzai at the presidential palace.
Speaking later to U.S. troops at Bagram Airfield, Obama said the eight-year-old war in Afghanistan is “essential” to U.S. security because if the region slides into chaos, al-Qaeda and the Taliban will have a haven from which to attack.
“If I thought for a minute that America’s vital interests were not served I would order you home right away,” Obama told a crowd of soldiers, sailors, Marines and Air Force personnel. “You will have the support to get the job done and I am confident that you can get the job done.”
Obama went to Afghanistan as the U.S. role there is growing with an escalation of forces that he ordered last December, and as allied troops are engaged in an offensive against the Taliban in southern Afghanistan.
Obama’s brief visit, his first to Afghanistan since becoming president, was intended to emphasize to Karzai that his government must crack down on corruption, fight the drug trafficking that helps fund the insurgency and institute merit- based systems for government appointments, according to James Jones, Obama’s national security adviser.
Attention to Governing
“There are going to be certain things he has to do as the president of his country that have not been paid attention to almost since day one,” Jones told reporters.
“We have to have the strategic rapport with President Karzai and his cabinet to understand how we are going to succeed this year in reversing the momentum the Taliban and the opposition forces have been able to establish since 2006,” he said.
Obama invited Karzai for talks in Washington in May.
“I want to send a strong message that partnership between the United States and Pakistan is going to continue,” Obama said. “We have seen already progress with respect to the military campaign against extremism, but we also want to continue to make progress on the civilian side.”
Karzai said he wanted the U.S. partnership to continue “toward a stable, strong, peaceful Afghanistan” and he thanked the U.S. for its help in rebuilding.
While in Afghanistan, the president also got briefings from the commander he installed last June, General Stanley McChrystal, and Ambassador Karl Eikenberry, said press secretary Robert Gibbs.
Nighttime Landing
Landing in darkness at Bagram, Obama travelled the 50 miles to Kabul by helicopter to meet with Karzai at the presidential palace. He had a separate session with Karzai’s cabinet.
The trip, kept secret because of security concerns, capped a week in which the president won a major domestic victory with passage of a sweeping overhaul of the U.S. health-care system and announced completion of a nuclear arms reduction treaty with Russia.
Obama campaigned for office on a pledge to shift U.S. military resources to Afghanistan from Iraq. A year ago he ordered 17,000 combat troops and 4,000 trainers to the country ahead of Afghanistan’s elections. In December, Obama ordered another 30,000 forces be sent to the country, which ultimately will expand the number of military personnel to 100,000. At the same time he asked North Atlantic Treaty Organization countries to contribute more resources to the conflict.
Battling the Taliban
The escalation is intended to reverse Taliban gains and train Afghans to take control of their country so American forces can begin withdrawing in July 2011.
The U.S. is leading a drive against the Taliban in southern Afghanistan. A 30-day offensive by 15,000 Afghan and NATO troops, including U.S. Marines and British forces, culminated earlier this month with allies taking control of the town of Marjah.
It was the biggest operation against the Taliban since the 2001 U.S.-led invasion of Afghanistan following the Sept. 11 attacks by al-Qaeda. Officials have said they are making plans for an even bigger assault on the Taliban heartland city of Kandahar.
The increased tempo of the U.S. military campaign has brought higher casualties. In the first two months of the year, 54 U.S. personnel were killed in action in Afghanistan, compared with 27 in the first two months of 2009, according to Defense Department figures. In all, 1,018 U.S. troops have died in Afghanistan, 742 of them as a result of combat, the Pentagon data show.
Regional Cooperation
As part of the Obama administration’s strategy, the U.S. also has strengthened its relationship with the government of neighboring Pakistan, whose army has been fighting a rise in terrorism after the Taliban and remnants of al-Qaeda fled Afghanistan and thousands of tribesmen joined their ranks.
Jones and Deputy National Security Adviser Douglas Lute emphasized the importance of a regional approach to Afghanistan’s stability and said the administration is encouraged by the role Pakistan is playing.
In 30 days, Karzai will convene a peace council with Afghan tribal and regional leaders, Lute said. Then in early May he hopes to host a foreign ministers conference in Kabul.
The effort has resulted in the capture of some top Taliban leaders in both countries and increased pressure on remnants of al-Qaeda hiding in tribal areas along the border with Pakistan.
The U.S. is still deploying the 30,000 additional troops that Obama authorized. The U.S. will have 98,000 troops there by Sept. 30 for a total of almost 150,000 from all 34 countries in the NATO-led coalition that aims to reverse Taliban gains and train Afghan security forces to begin taking over by July 2011.
Defense Secretary Robert Gates, testifying to the Senate Appropriations Committee on March 25 said the Afghan army is making “real strides” and that changes are being made to improve training of Afghan police officers.
Saturday, March 27, 2010
Agencies Suspect Iran Is Planning New Atomic Sites
WASHINGTON — Six months after the revelation of a secret nuclear enrichment site in Iran, international inspectors and Western intelligence agencies say they suspect that Tehran is preparing to build more sites in defiance of United Nations demands.
Atta Kenare/Agence France-Presse — Getty Images
Ali Akbar Salehi
Multimedia
Map
Primary Iranian Nuclear Facilities
Related
*
Imagining an Israeli Strike on Iran (March 28, 2010)
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* Post a Comment »
* Read All Comments (89) »
The United Nations inspectors assigned to monitor Iran’s nuclear program are now searching for evidence of two such sites, prompted by recent comments by a top Iranian official that drew little attention in the West, and are looking into a mystery about the whereabouts of recently manufactured uranium enrichment equipment.
In an interview with the Iranian Student News Agency, the official, Ali Akbar Salehi, head of Iran’s Atomic Energy Organization, said President Mahmoud Ahmadinejad had ordered work to begin soon on two new plants. The plants, he said, “will be built inside mountains,” presumably to protect them from attacks.
“God willing,” Mr. Salehi was quoted as saying, “we may start the construction of two new enrichment sites” in the Iranian new year, which began March 21.
The revelation that inspectors from the International Atomic Energy Agency, the United Nations’ nuclear watchdog, now believe that there may be two new sites comes at a crucial moment in the White House’s attempts to impose tough new sanctions against Iran.
When President Obama publicly revealed the evidence of the hidden site at Qum last September, his aides had hoped the announcement would make it easier to win international support for a fourth round of economic sanctions, particularly from a reluctant China and Russia. Since then, however, the White House has been struggling to persuade those countries to go along with the toughest sanctions and the administration is now being forced to scale back its proposed list of sanctions.
The United Nations inspectors operate separately from the diplomats who are developing sanctions. Still, the disclosures may be intended, at least in part, to underscore the belief of Western officials that the Iranian efforts are speeding ahead, and the assertions could aid in efforts to press Iran to open up locations long closed to inspectors.
This article was based on interviews with officials of several governments and international agencies deeply involved in the hunt for additional nuclear sites in Iran, and familiar with the work of the I.A.E.A., the only organization with regular access to Iran’s known nuclear facilities. All the officials insisted on anonymity because the search involves not only satellite surveillance, but also intelligence gleaned from highly classified operations.
American officials say they share the I.A.E.A.’s suspicions and are examining satellite evidence about a number of suspected sites. But they have found no solid clues yet that Iran intends to use them to produce nuclear fuel, and they are less certain about the number of sites Iran may be planning.
In any case, no new processing site would pose an immediate threat or change the American estimates that it will still take Iran one to four years to obtain the capability to build a nuclear weapon. Given the complexity of building and opening new plants, it would probably take several years for the country to enrich uranium at any of the new sites.
One European official noted that “while we have some evidence,” Iran’s heavy restrictions on where inspectors can travel and the existence of numerous tunneling projects were making the detection of any new enrichment plants especially difficult.
Iran boasted several months ago, after the disclosure of the Qum site, that it would build 10 more enrichment plants in coming years. That number was dismissed by American officials and others as a fantasy, far beyond Iran’s abilities, or its budget.
But I.A.E.A. inspectors in Vienna now believe that Mr. Salehi was probably accurate when he referred to two sites.
According to American officials, in recent weeks Israel — which uncovered some of the evidence about Qum — has pressed the case with their American counterparts that evidence points to what one senior administration official called “Qum look-alikes.”
The most compelling circumstantial evidence, people familiar with the inspectors’ view say, is that while Iran appears to be making new equipment to enrich uranium, that equipment is not showing up in the main plant that inspectors visit regularly. Nor is it at the Natanz site in the desert, or the new facility at Qum, which inspectors now visit periodically.
That has heightened suspicions that the equipment, produced in small factories around Iran, is being held in a clandestine storage area for later shipment or installed elsewhere.
Atta Kenare/Agence France-Presse — Getty Images
Ali Akbar Salehi
Multimedia
Map
Primary Iranian Nuclear Facilities
Related
*
Imagining an Israeli Strike on Iran (March 28, 2010)
Readers' Comments
Share your thoughts.
* Post a Comment »
* Read All Comments (89) »
The United Nations inspectors assigned to monitor Iran’s nuclear program are now searching for evidence of two such sites, prompted by recent comments by a top Iranian official that drew little attention in the West, and are looking into a mystery about the whereabouts of recently manufactured uranium enrichment equipment.
In an interview with the Iranian Student News Agency, the official, Ali Akbar Salehi, head of Iran’s Atomic Energy Organization, said President Mahmoud Ahmadinejad had ordered work to begin soon on two new plants. The plants, he said, “will be built inside mountains,” presumably to protect them from attacks.
“God willing,” Mr. Salehi was quoted as saying, “we may start the construction of two new enrichment sites” in the Iranian new year, which began March 21.
The revelation that inspectors from the International Atomic Energy Agency, the United Nations’ nuclear watchdog, now believe that there may be two new sites comes at a crucial moment in the White House’s attempts to impose tough new sanctions against Iran.
When President Obama publicly revealed the evidence of the hidden site at Qum last September, his aides had hoped the announcement would make it easier to win international support for a fourth round of economic sanctions, particularly from a reluctant China and Russia. Since then, however, the White House has been struggling to persuade those countries to go along with the toughest sanctions and the administration is now being forced to scale back its proposed list of sanctions.
The United Nations inspectors operate separately from the diplomats who are developing sanctions. Still, the disclosures may be intended, at least in part, to underscore the belief of Western officials that the Iranian efforts are speeding ahead, and the assertions could aid in efforts to press Iran to open up locations long closed to inspectors.
This article was based on interviews with officials of several governments and international agencies deeply involved in the hunt for additional nuclear sites in Iran, and familiar with the work of the I.A.E.A., the only organization with regular access to Iran’s known nuclear facilities. All the officials insisted on anonymity because the search involves not only satellite surveillance, but also intelligence gleaned from highly classified operations.
American officials say they share the I.A.E.A.’s suspicions and are examining satellite evidence about a number of suspected sites. But they have found no solid clues yet that Iran intends to use them to produce nuclear fuel, and they are less certain about the number of sites Iran may be planning.
In any case, no new processing site would pose an immediate threat or change the American estimates that it will still take Iran one to four years to obtain the capability to build a nuclear weapon. Given the complexity of building and opening new plants, it would probably take several years for the country to enrich uranium at any of the new sites.
One European official noted that “while we have some evidence,” Iran’s heavy restrictions on where inspectors can travel and the existence of numerous tunneling projects were making the detection of any new enrichment plants especially difficult.
Iran boasted several months ago, after the disclosure of the Qum site, that it would build 10 more enrichment plants in coming years. That number was dismissed by American officials and others as a fantasy, far beyond Iran’s abilities, or its budget.
But I.A.E.A. inspectors in Vienna now believe that Mr. Salehi was probably accurate when he referred to two sites.
According to American officials, in recent weeks Israel — which uncovered some of the evidence about Qum — has pressed the case with their American counterparts that evidence points to what one senior administration official called “Qum look-alikes.”
The most compelling circumstantial evidence, people familiar with the inspectors’ view say, is that while Iran appears to be making new equipment to enrich uranium, that equipment is not showing up in the main plant that inspectors visit regularly. Nor is it at the Natanz site in the desert, or the new facility at Qum, which inspectors now visit periodically.
That has heightened suspicions that the equipment, produced in small factories around Iran, is being held in a clandestine storage area for later shipment or installed elsewhere.
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