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Money market us fed funds rate falls for 1st time in a month


NEW YORK, Sept 28 A key short-term U.S. interest rate fell for the first time in nearly a month on Friday as investors put more cash into the banking system in advance of the end of the third quarter. The federal funds rate, or the overnight cost for banks' to borrow each other's excess reserves, averaged 0.13 percent on Friday, down from 0.14 percent on Thursday, according to Federal Reserve data released on Monday. The fed funds rate, which the Fed targets to achieve its interest rate policy, had averaged 0.14 percent since Sept. 1. Banks tend to build up their cash holdings near quarter-end to meet capital requirements, while mutual funds often hold more cash in anticipation of a pickup in redemptions. Not all quarter-end cash sits in bank accounts. Some ends up in money market funds, which invest some of the money in Treasury bills and repurchase agreements. In the $5 trillion repo market, the overnight interest rate was last bid at 0.08 percent, the lowest in two weeks and down from 0.18 percent on Friday, according to ICAP. Interest rates on ultra short-term T-bills remained in negative territory on the open market, suggesting investors were willing to pay a premium to own these securities.

Interest rates on T-bills that will mature on Thursday through Nov. 5 were quoted at -0.0075 to -0.0275 percent, Tradeweb data showed. Worries about the global economy have intensified the demand for low-risk, cash-equivalent investments. Wall Street stumbled on Monday with the Standard & Poor's 500 index losing 2.4 percent in U.S. afternoon trading.

Money markets us seasonally adjusted cp grows in week


* US seasonally adjusted CP rises $6.7 bln on the week * Europe's interbank lending rates regularly hitting record lows By Chris Reese and Ana Nicolaci da Costa NEW YORK/LONDON, Aug 16 U.S. seasonally adjusted commercial paper outstanding rose $6.7 billion to $1.020 trillion in the week ended Aug. 15, the Federal Reserve said on Thursday, suggesting some increased use of the market for corporate borrowing. Without seasonal adjustments, U.S. commercial paper outstanding fell $12.5 billion to $989.5 billion. While seasonal adjustments typically smooth volatility, analysts think the gyrations that occurred during the financial crisis - which figure into the seasonal adjustment - actually make the seasonally adjusted commercial paper data appear more volatile than the figures look without the seasonal adjustments. U.S. non-seasonally adjusted foreign bank commercial paper outstanding fell $6.1 billion to $191.9 billion in the same week. Meanwhile, euro zone interbank lending rates have fallen far below their U.S. equivalent on expectations the European Central Bank will ease monetary policy further, drawing closer to the Federal Reserve's near-zero rate policy. Three-month Euribor rates have hit record lows on a regular basis since the last monetary policy meeting when ECB chief Mario Draghi said the bank's policymakers discussed the possibility of cutting rates at their August meeting but had decided it was not the time. Given U.S. rates are already near zero, further monetary easing in the world's largest economy should come in the form of non-standard measures - probably more "quantitative easing" through central bank bond-buying - explaining the growing difference between euro and dollar interbank rates, analysts said. "The divergence between the two ... is mainly due to different monetary policy expectations between the euro zone and the U.S., with markets still pricing the possibility of further policy rate cuts in the euro zone," Giuseppe Maraffino, fixed income strategist at Barclays in London said. "The market is now pricing a high probability of a refi rate cut in the euro zone and also some chance of a deposit facility (rate) in negative territory." Three month euro Libor rates were little changed on Thursday at 21 basis points, half their dollar equivalent at 43 basis points. The three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, eased to 0.339 percent from 0.341 percent on Wednesday. The ECB is expected to cut its refinancing rate by another 25 basis points to 0.5 percent in September, according to a Reuters poll of economists. Eonia forwards suggested the market expected overnight rates to fall further from current levels, to a trough of 0.068-0.018 percent in November from 0.11 percent currently. Given the deposit rate - currently at zero - serves as a floor for overnight Eonia rates, analysts said this suggested the market was pricing in some possibility of negative deposit rates.

Pakistan steps up islamic finance in infrastructure deals


Pakistan is stepping up its use of sharia-compliant financing to fund infrastructure deals, which could help to promote the use of longer-term transactions in Islamic finance. Islamic deals are backed by specific assets, which makes them convenient for infrastructure projects. But traditionally, Islamic bonds and loans have shorter tenors - often around five years - than their conventional equivalents. This is partly because Islamic markets are generally not as deep and liquid, and products are not as standardised. Also, Islamic banks mostly hold short-term deposits on their books. This month, however, Pakistani banks arranged 100 billion rupees ($955 million) worth of 10-year Islamic bonds (sukuk) for a hydropower plant, the largest infrastructure deal to use Islamic financing in the country. Opportunities for similar deals are growing with $45 billion worth of domestic infrastructure projects planned by Pakistan's government under an initiative dubbed the China-Pakistan Economic Corridor (CPEC), agreed between the states in 2014.

Islamic banks have become increasingly willing to manage any mismatch between their short-term deposit bases and such long-term projects, said Abdullah Ghaffar, head of investment banking at Al Baraka Bank Pakistan."Excess liquidity with Islamic banks is pushing them towards each and every opportunity emanating from the CPEC," Ghaffar said.

The government is providing encouragement; in November, Finance Minister Ishaq Dar said predominantly Muslim Pakistan wanted to make sharia-compliant financing its first choice for infrastructure and long-term financing needs. The government plans to shift between 20 and 40 percent of its debt financing to Islamic sources from conventional ones, Dar said without specifying a timeframe. Islamic finance is being used in deals involving foreign lenders, including large Chinese banks keen to revive ancient "Silk Road" trade links with Pakistan through CPEC projects.

The first CPEC transaction, a $1.95 billion loan syndication signed off in January to finance a coal mining project and associated power plant in Sindh province, was financed mostly by large Chinese banks. But the deal featured two sharia-compliant tranches worth a combined 16 billion rupees extended by Faysal Bank, Meezan Bank and Habib Bank."Given the diversity of the Silk Road I think we will see more structures like this," said Andrew Compton, Hong Kong-based counsel at law firm Linklaters, which advised on the deal. The transaction used a lease-based structure known as ijara, a common sharia-compliant contract. "This model is now out there, so this process could be replicated with some success."The law firm said it was working on other infrastructure transactions across Asia, including a hydropower plant and a wind farm in Pakistan and a coal power plant in Indonesia.

Press digest sunday british business march 16


LONDON, March 16 British newspapers reported the following business stories on Sunday. Reuters has not independently verified these media reports and does not vouch for their accuracy. The Sunday TimesJIMMY CHOO, ALDERMORE EYE STOCK MARKET FLOATS Labelux, the owners of Jimmy Choo, have held a round of meetings with investment bankers in recent weeks to discuss floating a minority stake in the luxury shoe retailer in a deal that could value it at 1 billion pounds ($1.66 billion). Private equity group Anacap have hired Credit Suisse and Deutsche Bank to prepare new British bank Aldermore for an autumn listing which could value it between 800-900 million pounds. INVESTORS PUT PRESSURE ON TESCO TO CUT BACK ON PRICES Several of Tesco's top investors are pressuring the grocer to retaliate against the price war launched by rival Morrisons last week. BHP READIES BUYBACK BONANZA BHP Billiton , the world's biggest mining company, is preparing to launch a multi billion-pound share buy back programme as soon as this summer.

SERCO FINANCE CHIEF TO LEAVE Outsourcer Serco's finance chief Andrew Jenner has told chairman Alastair Lyons that he plans to leave the company after 12 years as finance boss. The Sunday TelegraphSUPERMARKET MARGINS FORECAST TO HIT RECORD LOW

The largest institutional investors in Britain's grocers are readying themselves for profit margins to hit as low as 1 percent after Morrisons declared a price war to try to stop a decline in sales. ANNE SUMMERS SEEKS BUYER FOR KNICKERBOX Lingerie and adult toys retailer Ann Summers has hired KPMG to run a sale process for its underwear brand Knickerbox. LLOYDS TO LEND AN EXTRA 1 BLN STG TO SMES Lloyds Bank has pledged to lend an additional 1 billion pounds to small and medium-sized enterprises over the coming year.

IFRS ACCOUNTING REGULATOR UNDER FIRE FROM EUROPE POLITICIANS European politicians are questioning whether the International Financial Reporting Standards Foundation, which helps to govern global accounting rules, is "best suited" to the position. Mail on SundayCO-OP HIRES PRIVATE EYES TO INVESTIGATE BOARDROOM LEAKS The Co-operative Group has hired private investigators Kroll to investigate a series of boardroom leaks that triggered the sudden resignation of the company's chief executive Euan Sutherland last week. Financial Times WeekendRUSSIAN COMPANIES PULL BILLIONS FROM WEST OVER THREAT OF UKRAINE SANCTIONS Fears that U.S. sanctions over the Crimean crisis could lead to a painful asset freeze are prompting Russians firms such as former state-owned banks Sberbank and VTB, as well as energy group Lukoil, to pull billions of dollars out of Western banks.