Short overview of 5 things on December 8

Twitter Debt

Elon Musk’s bankers are considering providing the billionaire with new margin loans backed by Tesla stock to replace some of the high-interest debt he layered on Twitter, according to people with knowledge of the matter. The margin loans are one of several options the Morgan Stanley-led bank group and Musk’s advisers have discussed to soften the burden of the $13 billion of debt Twitter took on as part of Musk’s $44 billion acquisition. Banks have been forced to fund the entire debt package with their own cash after a deterioration in credit markets and a tumultuous start to Musk’s reign at Twitter made the debt difficult to syndicate to institutional investors. The company is estimated to face annual interest costs of about $1.2 billion if the current debt structure remains in place.

China Tech Curbs

Dutch officials are planning new controls on exports of chipmaking equipment to China, according to people familiar with the matter, potentially aligning their trade rules with US efforts to restrict Beijing’s access to high-end technology. An agreement on the Dutch curbs could come as soon as next month. Negotiations are ongoing and no final decision has been made. The Dutch move, which would essentially codify and potentially expand its unofficial ban on some technology sales to China, is a step toward bulking up US efforts to limit Beijing’s chipmaking and military ambitions. 

Russia Sanctions

The European Union’s executive arm has proposed sanctioning Russia’s access to drones, three banks and the alleged abduction of children from Ukraine to Russia as part of a ninth package of sanctions targeting Moscow over its invasion of Ukraine. The proposals also target three banks, including the Russian Regional Development Bank, four media outlets, export restrictions on chemicals and technologies used for military purposes. Separately, the UK will announce a new sanctions package Friday. Geopolitical tensions are on the rise after Russian President Vladimir Putin called its nuclear arsenal a “deterrent factor” in conflicts, stopping short of pledging not to be the first to use them.

Back to Coal

The UK approved opening its first deep coal mine in more than 30 years, risking backlash from activists portraying the project as a backward step in meeting ambitious climate goals. The Woodhouse Colliery project in Whitehaven, northern England, can go ahead, the Department for Levelling Up, Housing and Communities said in a statement on Wednesday. West Cumbria Mining plans to sell coal from the mine primarily to overseas buyers for making steel. The decision, made after two years of consideration by successive governments, is a blow to the momentum of British activists and comes just a day after a climb down by Prime Minister Rishi Sunak on onshore wind in England.

Coming Up…

European shares are set to decline as mounting recession risks continue to rattle markets. ECB President Christine Lagarde speaks. The European Defence Agency holds its annual conference in Brussels. The remote Faroe Islands, part of the Kingdom of Denmark, hold a general election. Expected data include Ireland inflation numbers. DS Smith, Costco and Broadcom deliver results.


(Source: Bloomberg, Dec. 8-2022)

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