UPDATE 1-Honeywell borrows $6 bln to boost liquidity in coronavirus fight

(Adds details on loan, background)

March 31 (Reuters) – Honeywell International Inc said on Tuesday it had entered into a $6 billion loan agreement to bolster liquidity as the fast-spreading coronavirus pandemic wreaks havoc on the global economy.

The industrial conglomerate said it entered the two-year delayed draw term loan agreement to maximize financial flexibility in the event that current economic conditions persist or worsen.

“The term loan we announced today will further strengthen our resilience in uncertain times,” Chief Executive Officer Darius Adamczyk said.

The loan agreement was signed with Citibank, Bank of America, JPMorgan Chase and Wells Fargo, Honeywell said.

The company, which makes everything from aircraft engine parts to warehouse automation equipment, had $10 billion in cash at the end of 2019, with its pension liability overfunded, it said in a statement.

Honeywell said last month there was a surge in demand for its protective face masks in North America, Europe, India and China, following the coronavirus outbreak.

The company reaffirmed its first-quarter and full-year forecasts earlier this month.

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GLOBAL MARKETS-Asia shares edge up, China factories show flicker of life

* Asian stock markets : tmsnrt.rs/2zpUAr4

* Asia shares supported by month-end demand, calmer mood

* China factory survey beats forecasts, PMI rises to 52.0

* Oil prices steady for now after steep drop

By Wayne Cole

SYDNEY, March 31 (Reuters) – Asian shares managed a tentative rally on Tuesday as factory data from China held out the hope of a rebound in activity even as other countries across the globe all but shut down.

China’s official manufacturing purchasing managers’ index (PMI) bounced to 52.0 in March, up from a record-low 35.7 in February and topping forecasts of 45.0.

Analysts cautioned the index could overstate the true improvement as it measures the net balance of firms reporting an expansion or contraction in activity.

If a company merely resumed working after a forced stoppage, it would read as an expansion without saying much about the overall level of activity.

Still, the headline number was a relief and helped MSCI’s broadest index of Asia-Pacific shares outside Japan rise 1.1%.

Japan’s Nikkei firmed 1.0% after a jittery start, while South Korea added 2%.

E-Mini futures for the S&P 500 added another 0.6%, supported by talk of book-keeping demand.

“It’s month-end rebalancing, whereby balanced funds now underweight equities versus fixed income given this month’s valuation destruction, need to buy stocks to get back into balance,” analysts at NAB said.

Healthcare had led Wall Street higher, with the Dow ending Monday up 3.19%, while the S&P 500 gained 3.35% and the Nasdaq 3.62%.

News on the coronavirus remained grim but radical stimulus steps by governments and central banks have at least provided some comfort to economies.

Infections in hard-hit Italy slowed a little, but the government still extended its lockdown to mid-April. California reported a steep rise in people being hospitalised, while Washington state told people to stay at home.

Trade ministers from the Group of 20 major economies agreed on Monday to keep their markets open and ensure the flow of vital medical supplies.

OIL PRICES OVERWHELMED

Portfolio management also played a part in the forex market where many fund managers found themselves over-hedged on their U.S. equity holdings given the sharp fall in values seen this month, leading them to buy back dollars.

That saw the euro ease back to $1.1020, from a top of $1.143 on Monday, while the dollar index bounced to 99.330, from a trough of 98.330.

Month-end demand for dollars from Japanese funds saw the dollar inch up to 108.45 yen, though it remained some way from last week’s peak at 111.71.

Oil prices plunged to the lowest in almost 18 years on Monday as lockdowns for the virus squeezed demand even as Saudi Arabia and Russia vied to pump more product.

In a new twist, U.S. President Donald Trump and Russian President Vladimir Putin agreed during a phone call on Monday to have their top energy officials meet to discuss slumping prices.

“However, the reality is that the level damage to demand is likely to overwhelm any production cut agreement between major producers,” wrote analysts at ANZ in a note.

“The lockdown of cities around the world and the shutdown of the aviation industry will cause a fall in demand the industry has never seen before.”

Prices did at least try and steady early Tuesday, with U.S. crude up 56 cents to $20.64. Brent crude futures gained 19 cents to $22.95 a barrel.

In the gold market all the talk has been of a rush of demand for the physical product amid shortages in coins and small bars. Flows into gold-backed ETFs have ballooned by $13 billion so far this year, the most since 2004.

The metal was holding at $1,615 an ounce, well up from a low of $1,450 touched early in the month.

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Britain says need for global 'lessons learned' inquiry into pandemic

LONDON, March 30 (Reuters) – Britain said on Monday that there should be a ‘lessons learned’ inquiry led by the World Health Organization into the coronavirus pandemic, responding to reports that the government was angry with China over the origins of the outbreak.

Foreign minister Dominic Raab was asked about media reports that some in government feel China should face a ‘reckoning’ for the virus, which was first recorded in the country.

“Obviously, after the crisis has abated I think the time will be right to conduct a kind of ‘lessons learned’ and I’m sure the World Health Organization will be at the forefront of that,” Raab said at a news conference. (Reporting by William James, Editing by Kylie MacLellan)

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Coffee importers stockpiling on fears over coronavirus lockdowns

NEW YORK (REUTERS) – Coffee importers in some of the largest consuming countries are stockpiling, bringing forward orders by up to a month to avoid shortages if supply chains are disrupted by coronavirus lockdowns.

The global pandemic has prompted governments around the world to impose severe restrictions on movement in a bid to stem the spread of the virus. Supply chains are backing up as air freight capacity plunges and companies struggle to find enough truck drivers and shipping crews.

In contrast to sharp price declines in many commodities, coffee prices are higher on strong demand and expectations that supplies, which were tight even before the virus spread, will tighten further. Growers in major exporters Brazil and Colombia, among other countries, have seen prices rise.

“Everyone is trying to speed things up,” said Carlos de Valdenebro, Colombia country director for specialty exporter Caravela Coffee. While Colombia is currently between harvests, he said he was concerned about requests for faster shipments as most exporters that still have stocks in the country have temporarily cut operational capacity.

A major US coffee importer who would not comment on the record said US roasters were acting to speed up deliveries from other origins as well, such as Central America.

“We had requests from buyers in all major countries, US, Japan, Germany,” said the head of one of the largest coffee exporters in Brazil, the world’s leading producer, asking not to be named because he did not want to discuss the matter publicly. “Basically all the largest roasters in the world. They want to have the beans there quicker, just in case.”

Benchmark ICE arabica coffee futures are positive so far in March. That stands in contrast to a 50 per cent fall in benchmark international crude oil futures and a 15 per cent plunge in the Dow Jones stock index.

Europe and the United States are short tens of thousands of freight containers, having received only a trickle from China during its coronavirus shutdown, while shippers are also struggling with quarantines at ports and crew shortages.

“Roasters and traders are stocking up because they anticipate supply disruption,” said a London-based coffee trader, who said big roasters are buying spot cargoes. “There are some (orders) I can’t fulfill.”

DEMAND FOR COFFEE

Prices in Brazil are close to record levels in local terms as well, nearing 550 reais per 60-kg bag. Farmers there tend to sell when prices go above 500 reais per bag.

Brazilian coffee exporters association Cecafe said shipments are normal for now, but said shipping lines have advised that container shortages might occur in the coming months, when Brazil could harvest its biggest crop ever, around 70 million bags according to independent analysts.

Adding to roasters’ concerns are reports that the virus could cause labor shortages that would hamper coffee harvesting in key regions such as Central and South America, where many coffee farms are yet to be mechanized.

“The harvest will start at the end of April, beginning of May, and what we have to be prepared for is the high probability that this confinement is extended beyond the 13th,” said Roberto Velez, the head of Colombia’s growers’ federation.

The Andean country started a 19-day national quarantine last week. Though farmers and their employers are exempt from quarantine measures, moving and housing some 150,000 workers in sanitary conditions will be difficult, he said. So will ensuring beans are being processed and shipped, he added.

“We have maybe one of the best prices in history,” said Velez. “But with that price we’re facing logistical problems, coronavirus, fear.”

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Oklahoma energy producer Chaparral seeks debt advice – sources

March 27 (Reuters) – Chaparral Energy Inc is working with debt restructuring advisers as it looks to shore up its cash position at a time of financial distress for U.S. oil and gas producers, people familiar with the matter said on Friday.

The economic fallout of the coronavirus pandemic and an oil price war between Russia and Saudi Arabia have led to the price of crude oil dropping by half since the beginning of March. This is putting pressure on debt-laden energy companies such as Chaparral, which is focused on producing oil and gas in shale plays in Oklahoma.

Chaparral has hired financial advisers for advice on how to improve its balance sheet, the sources said, adding that no debt restructuring move is imminent.

Chaparral did not immediately respond to a request for comment.

The Oklahoma City-based company has around $421 million of debt outstanding, with its 8.75% bonds due in July 2023 currently trading at 25 cents on the dollar with a presumptive yield of 68.9%, indicating investor concerns about repayment, according to Refinitiv Eikon data.

In December, the company appointed Charles Duginski as chief executive and announced an agreement with Strategic Value Partners, which allowed the hedge fund to nominate two directors to Chaparral’s board. Strategic Value Partners owned 30% of Chaparral as of December.

Chaparral went through a bankruptcy process during the last oil price slump in 2014-16, emerging from Chapter 11 protection in March 2017.

A number of companies, including Chesapeake Energy Corp and Gulfport Energy Corp, have brought in restructuring professionals. (Reporting by Jessica DiNapoli, Mike Spector and David French in New York Editing by Sonya Hepinstall)

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UK top scientist working closely with Johnson says has no coronavirus symptoms

LONDON, March 27 (Reuters) – Britain’s Chief Scientific Adviser Patrick Vallance has no symptoms of Covid-19 and has not been tested for the novel coronavirus, he said on Thursday after Prime Minister Boris Johnson said he had tested positive for the virus.

Vallance, who is part of the core high-level government team managing the response to the coronavirus crisis, has been appearing with Johnson at news conferences at Downing Street. The pair were last seen together there on Wednesday evening, when their lecterns were widely spaced apart.

“I have no #COVID19 symptoms so I have not been tested. I will continue following guidelines including social distancing and hand washing,” Vallance said on Twitter. (Reporting by Guy Faulconbridge, writing by Estelle Shirbon; editing by Kate Holton)

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UPDATE 2-Brazil's Treasury to issue more short-term bills as risk aversion rises

(Recasts, adds Treasury official quotes)

By Marcela Ayres and Jamie McGeever

BRASILIA, March 25 (Reuters) – Brazil will issue more short-term bills to meet demand from increasingly risk-averse investors, and has put any plans to issue a 20-year bond this year on the back burner due to global market volatility, a senior Treasury official said on Wednesday.

The Treasury may also redraw its 2020 Annual Financing Plan due to the market and economic crisis sparked by the coronavirus outbreak, although this does not necessarily mean it will issue more debt this year.

Speaking to reporters in Brasilia after publication of February’s update of the country’s debt securities market, Luis Felipe Vital, public debt manager at the Treasury, also said the Treasury’s auction process could be changed to a single price from a multiple price system.

“In order to meet the market’s preferences for shorter-dated paper, the Treasury will start to operate from tomorrow (Thursday) with two LFT maturities. One for September 22 (this year) and the other for March 26 (next year),” Vital said.

LFT notes are floating rate bills. Amid the surge in volatility in recent weeks that has pushed rates at the long end of the interest rates futures curve close to 10%, Vital said investors are now clamoring for shorter maturities.

In a summary accompanying February’s update of the country’s debt securities market, the Treasury said “extreme” market volatility this month has hampered price discovery and normal trading activity.

The Treasury said it will continue intervening in the bond market to counter high volatility and ensure the market operates smoothly. It could also alter the date of scheduled debt auctions and announce unscheduled auctions.

“The Treasury will continue carrying out its government bonds repurchase program, acting whenever it sees dysfunctional markets, with the aim of mitigating adverse effects on this and related markets,” it said in its latest monthly report on the debt market.

“During periods of high financial market volatility, the Treasury may hold extraordinary repurchase auctions of government securities to support the smooth functioning of the market,” it added.

The Treasury canceled bond auctions this month due to adverse market conditions and announced it would intervene in the market to provide liquidity and reduce volatility in conjunction with the central bank.

Brazil’s federal public debt rose to 4.281 trillion reais ($856 billion) and the stock of domestic public debt securities rose to 4.057 trillion reais, the Treasury said on Wednesday. (Reporting by Jamie McGeever and Marcela Ayres; Editing by Sandra Maler, Alistair Bell and Diane Craft)

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UPDATE 1-Eurozone yields steady as U.S. fiscal boost soothes nerves

* Italy/Germany bond yield gap well off highs

* U.S., European fiscal stimulus give heart to investors

* But lock downs could severely hurt global economy

* Eurozone periphery bond yields tmsnrt.rs/2ii2Bqr (Adds Coronabond comments from ECB’s Lagarde, quote, updates prices)

By Abhinav Ramnarayan

LONDON, March 25 (Reuters) – Eurozone government bonds steadied on Wednesday after policymakers in Europe and the United States approved extraordinary measures to lessen the impact of the coronavirus crisis, although stock markets suffered some losses.

The closely-watched spread between Italian and German 10-year yields was a few basis points tighter at 185 basis points, well off last week’s 14-month highs of 319 bps.

“That spread volatility should continue to stabilise from the highs we have seen recently after quite swift responses from the U.S.,” said DZ Bank rates strategist Christian Lenk.

U.S. senators and officials in President Donald Trump’s administration agreed on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak.

Meanwhile, European Central Bank (ECB) head Christine Lagarde asked euro zone finance ministers on Tuesday to seriously consider a one-off joint debt issue of “coronabonds” to help fight the epidemic, two officials said.

Germany’s 10-year government bond, the benchmark for the region, saw its yield edge a basis points higher to -0.31%, a move mirrored by other high-grade government bonds. ,

Italian 10-year borrowing costs were unchanged at 1.59%; nearly half last week’s high of 3.01%.

Other government bond markets referred to as peripheral, such as Spain, saw a pick-up in demand and were 4-6 bps lower across the curve.,

“Risk assets bounced yesterday in the aftermath of positive noises for the U.S. fiscal deal’s progress and the Fed’s commitment to buy unlimited U.S. Treasuries and MBS,” Mizuho analysts said in a note.

However, analysts said the relative calm depended on the success of the battle to contain the spread of the coronavirus, and also on how long lockdowns continue and the potential impact on supply chains and industry.

“Even the boldest measures announced are likely to do no more than put the economy on ice,” Richard McGuire, a strategist at Rabobank, said.

Surveys this week showed business activity collapsed from Australia, Japan and Western Europe to the United States at a record pace in March as measures to contain the coronavirus pandemic hammered the world economy. (Reporting by Abhinav Ramnarayan; editing by Barbara Lewis and Alexander Smith)

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US retailers plan to stop paying rent to offset coronavirus hit

NEW YORK (BLOOMBERG) – Major US retail and restaurant chains, including Mattress Firm and Subway, are telling landlords they will withhold or slash rent in the coming months after closing stores to slow the coronavirus, according to people familiar with the situation.

In a brewing fight, chains are calling for rent reductions through lease amendments and other measures starting in April, said the people, who asked not to be named because the discussions are private.

These moves mark the next phase in virus fallout: What happens to billions in rent owed for businesses that have been closed? The stakes are high. Retail has a slew of big chains in turnaround mode. And if they do withhold payments, there would be a ripple effect. Landlords can’t afford to stop collecting rent for long, with many property owners sitting on loads of debt.

The situation is likely to get messier. The US relief packages being considered don’t directly address rents. But the Federal Reserve’s actions may give banks the leeway to defer mortgage payments, allowing property owners to delay rent. It’s also unclear if retailers can declare a so-called “force majeure,” a contract clause that covers highly unusual events, and if landlords could then make the same case to insurers.

“The court system is just going to get flooded with a million of these disputes between tenants and landlords,” said Vince Tibone, an analyst at Green Street Advisors. “If the government doesn’t step in in any form or fashion, it could get ugly. They need to respond quickly.”

‘MORE DRASTIC’

Mattress Firm, with about 2,400 stores, sent landlords a letter last week saying it would cut rent in exchange for longer leases and offering two options to do so. This week, it sent a more urgent note revoking its earlier offer.

“The decline in revenue and forced store closures across the nation are more drastic, compressed and immediate than we originally anticipated,” the company wrote in a letter reviewed by Bloomberg. “Our need is now more severe,” the firm said, invoking the virus as a force majeure event that “will prevent or prohibit us” from paying rent.

After being contacted by Bloomberg, Mattress Firm confirmed that it has requested a temporary suspension of rent.

“We appreciate our landlord partners, and the responses have been encouraging so far,” Randy Carlin, chief real estate officer for Mattress Firm, said in a statement. “We will continue to do everything we can to maintain business continuity and to ensure there are jobs available for our people to return to when this crisis ends.”

Hennes & Mauritz AB said it’s also reaching out to landlords in areas hit by the virus.

“Negotiations of rents is an ongoing part of our business, but due to the current effect on the economy, we have and will approach our landlords in the affected markets,” a spokesperson said. The Swedish retailer has shuttered about two-thirds of its more than 5,000 stores around the world and on Tuesday warned it may need to lay off a significant portion of its staff because of the virus.

Subway Restaurants, which has more than 20,000 US locations, sent out a letter to landlords last week saying that it might cut or postpone rental payments due to the virus, according a person with knowledge of the situation. The Real Deal, a real estate trade publication, reported on the communication earlier.

SOME HELP

In a statement, Subway said it was looking at ways to help franchises mitigate the virus fallout.

Some landlords have recognized they need to help smaller tenants. Irvine Company Retail Properties, based in Irvine, California, is allowing rent to be deferred for 90 days and then paid back with no interest over a year starting in January, according to a document reviewed by Bloomberg. The firm confirmed the practice without further comment.

Bedrock, a Detroit developer, said it will waive rent and other fees for three months for its smaller retail and restaurant tenants.

Retail real estate investment trusts may need to provide leeway on rent, Bank of America said this week after downgrading several Reits. The bank sees store closings lasting through May and the possibility of some locations going away as more fragile retailers are forced into bankruptcy.

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UPDATE 1-Britain seeking 250,000 volunteers to help health service

(Adds detail, tasks and Hancock quote)

LONDON, March 24 (Reuters) – Britain is looking for 250,000 volunteers to help the National Health Service (NHS) and vulnerable people hit by the coronavirus crisis, health minister Matt Hancock said on Tuesday.

“We are seeking a quarter of a million volunteers, people in good health, to help the NHS, for shopping, for delivery of medicines and to support those who are shielded to protect their own health,” Hancock told reporters.

The volunteers will be asked to help with tasks like delivering medicines from pharmacies, driving patients to and from hospital appointments and phoning people isolating at home to check up on them.

The system aims to reach up to 1.5 million people who are “shielding” – keeping themselves at home for 12 weeks under government advice to protect those with serious health conditions.

“If you are well and able to do so safely, I would urge you to sign up today to help the most vulnerable people in our communities as an NHS Volunteer Responder,” Hancock said later in a statement. (Reporting by William James; editing by Stephen Addison)

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