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Detroit Eligible for Bankruptcy Protection – Public Pension Shockwave

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pensionlandshockwavePromised by elected politicians and city leaders on the stability of their pensions over decades, public employees across the United States may be in for a surprise. The big news in Pensionland is that on December 3rd, Judge Steven Rhodes of the United States Bankruptcy Court, denied Detroit’s pension funds and unions an attempt to have the bankruptcy action thrown out. Essentially, the city of Detroit is eligible for bankruptcy protection. The judge’s ruling opens the door for public pension cuts for troubled cities and municipalities in the U.S. – giving bondholders a level of protection for cities plagued with excessive long-term liabilities.

Detroit is faced with high crime rates, virulent blight and lack of public services – the victors of the ruling are happy to give Detroit a fresh start.

Over a 90-minute summary of his ruling, the judge concluded that specific criteria were met in order for Detroit to receive protection from its creditors. Former industrial powerhouse, Detroit on December 3rd, became the largest municipality in the history of the United States to enter Chapter 9 bankruptcy. Chapter 9 bankruptcies are extremely rare and usually large cities like New York and Pittsburgh are able to find alternative solutions. To add to the financial headache, bankruptcies will likely increase borrowing costs for the city of Detroit.

After the ruling, lawyers on the city workers’ side argued they will appeal any verdict that cuts benefits – mentioning they are protected under the state of Michigan’s constitution.

Calculated by Detroit Emergency Manager, Kevin Orr, the city of Detroit has tried to tackle an estimated US$ 18 billion in debt and long-term liabilities. To put this into perspective, the last city bankruptcy was Alabama’s Jefferson County with debt over US$ 3.1 billion. Detroit is faced with high crime rates, virulent blight and lack of public services – the victors of the ruling are happy to give Detroit a fresh start. The judge mentioned in his ruling that, “As of April 2013, about 48 percent of the city’s street lights were not working.” He continued, “In 2012 the average police response time was 30 minutes; in 2013, 58 minutes; and the national average is 11 minutes.”

Last, one of Detroit’s former mayors, Kwame Kilpatrick, is serving 28 years in federal prison on corruption charges.

GIC Buys Large Stake in Nordic Aviation Capital

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Singapore’s GIC Private Limited, a yield-hungry sovereign investor, invested in Denmark-based Nordic Aviation Capital A/S, becoming a significant minority shareholder. Other shareholders in Nordic Aviation Capital include EQT VI Limited fund, KIRKBI Invest (wealth origins tied to Legos), and Martin Møller, the founder of Nordic Aviation Capital. EQT VI will remain the largest shareholder of Nordic Aviation Capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Trump Wants Pharma Companies to Disclose Drug Prices in Advertisements

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U.S. President Trump is progressing on plans to mandate pharmaceutical companies to reveal their prices in drug advertisements. “The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Health and Human Services Secretary Alex Azar said in a statement. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further.”

The U.S. Health and Human Services Department would require pharmaceutical companies to include drugs’ sticker prices in their video advertisements. This would be similar to how drug companies disclose the laundry list of side effects.

Increasingly, sovereign funds like Temasek Holdings have backed mid-stage pharmaceutical companies and other therapies, while market investors like Norway’s GPFG have large holdings in listed pharmaceutical companies.

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Kazatomprom Treads Closer to IPO

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Kazatomprom is the world’s biggest uranium producer, accounting for around 20% of production market share. The company is moving forward on floating up to a 25% company stake for its planned initial public offering in London and Astana, Kazakhstan. Kazatomprom’s IPO plans are subject to market conditions. The global market price of uranium generated significant price gains year-to-date through almost three quarters. So far, during 2018, the uranium spot price has moved from US$ 20 per pound to US$ 27 per pound.

Kazatomprom’s sole shareholder is Samruk-Kazyna. Samruk-Kazyna would retain at least a 75% stake in the company.

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Credit Suisse and JPMorgan are joint global coordinators and joint bookrunners for the share offering. China International Capital Corporation, Halyk Finance, and Mizuho International plc were joint bookrunners.

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