QUOTE OF THE DAY
“We’re definitely moving in the right direction. If we can get back to 330,000 or lower, that’s going to be an early sign that the economy is accelerating into the second half of the year.”
Carl Riccadonna, U.S. economist at Deutsche Bank Securities Inc., on the number of applications last week for unemployment benefits Article, 1D
Freddie Mac securitizing modified loans
Freddie Mac, the government-controlled mortgage financier, said Thursday that it has begun packaging modified home loans into bonds that it guarantees, with $1 billion of securitizations already completed.
The “vast majority” of the mortgages reworked to help homeowners had previously been contained in its bonds and were bought out after delinquencies, the McLean, Va.-based company said Thursday in a statement. Since November 2011, the firm, formally called the Federal Home Loan Mortgage Corp., has been repackaging into bonds those loans that were once delinquent and began performing again without modifications, it said.
“Securitizing loans that have been modified and are now performing will allow Freddie Mac to better manage its mortgage-related investments portfolio,” Adama Kah, a vice president of distressed assets management, said in the statement. “We are taking another important step that creates liquidity and taxpayer value.”
15-, 30-year mortgage rates edge higher
WASHINGTON - Average rates on fixed mortgages rose for the third-straight week, hitting their highest levels since mid-March. Still, mortgage rates remained close to historic lows, a trend that should help sustain the housing recovery.
Mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp., said the average rate for the 30-year loan increased to 3.59 percent this week. That’s up from 3.51 percent last week and above the rate of 3.31 percent reached in November, the lowest on records dating to 1971.
The average on the 15-year loan jumped to 2.77 percent. That’s up from 2.69 percent last week. The record low of 2.56 percent was hit on May 2.
Cheaper mortgages are a key reason home sales have increased this year. That’s helped boost home prices and construction, too.
EU OKs airlines’ trans-Atlantic venture
Deutsche Lufthansa AG and United Continental Holdings Inc. reached a settlement with European Union regulators, ceding sufficient slots for a single daily flight between Frankfurt and New York in exchange for approval of their trans-Atlantic venture also involving Air Canada.
The European Commission said the Star Alliance members also committed to reach agreements with competitors on ticketing and flight connections, resolving concerns that the venture would drive up prices for trans-Atlantic passengers. The decision allows the venture to go ahead without the risk of European Union fines.
“Thanks to the commitments offered by the three airlines, passengers on the Frankfurt-New York route will benefit from stronger competition,” Joaquin Almunia, the European Union’s antitrust commissioner, said in a statement on the regulator’s website.
Carriers are increasingly seeking accords on scheduling and sales to cut costs and increase revenue. According to the agreement announced Thursday, Lufthansa will surrender a single daily slot to be used by a rival carrier for Frankfurt-New York flights. While the German company may need to modify its timetable to accommodate the change, it will retain a service of three flights per day between the cities.
- Bloomberg News
$1 billion buyout to take Rue21 private
NEW YORK - Clothing and accessories company Rue21 has agreed to be taken private in a nearly $1 billion deal with private-equity firm Apax Partners.
Shares hit an all-time high Thursday.
Apax will pay $42 per share, a 23 percent premium to Rue21 Inc.’s Wednesday closing price of $34.12. The companies put the deal’s total value at $1.1 billion.
Rue21 has about 23.7 million outstanding shares, according to FactSet.
The company’s stock jumped $7.84, or 23 percent, to close Thursday at $41.96. The shares touched the offer price of $42 earlier in the session.
Rue21’s board approved the transaction based on a unanimous recommendation by a special committee made up of three independent directors.
Rue21, which has 932 stores in 47 states, will report its full first-quarter results on June 5.
- The Associated Press
P&G names new CEO
NEW YORK - Procter & Gamble has placed former Chief Executive Officer A.G. Lafley, a 33-year industry veteran, back in the top post as the world’s largest consumer-products maker tries to improve its results globally.
Lafley, 65, replaces CEO Bob McDonald, effective immediately. McDonald, who will retire June 30 after a transition period, has served as CEO since 2009. Lafley, who also is taking the president and chairman titles, previously led the company from 2000 to 2009.
The change at the helm comes as the 175-year-old company - whose Tide detergent, Crest toothpaste and other products can be found in 98 percent of American households - struggles to grow under increased competition and global economic challenges.
Lafley helped right an ailing Procter & Gamble in June 2000, emphasizing innovation and a “consumer is boss” focus.
He also pulled off the $57 million acquisition of the Gillette Co. in 2005, expanding the company’s reach into male-oriented products with Gillette’s shavers and razors.
Growth for the company has slowed in developed markets like North America and Europe. In order to spur growth, the company has rolled out new products and implemented a cost-cutting plan aimed at saving $10 billion by 2016.
The company also has been expanding into rapidly developing emerging markets such as Latin America, India and Russia.
Shares rose 42 cents to $79.12 in aftermarket trading Thursday.
-The Associated Press
Business, Pages 28 on 05/24/2013