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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.

Mergermarket Gets Ready to be Sold

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Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.

Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.

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Why Japan Post Sees Promise in Aflac

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Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.

In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.

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RDIF and Development Agency of Serbia Agree to Explore Joint Investments

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The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.

In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.

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