World financial news

Energy prices dropped Thursday after the government said oil and natural gas supplies fell less than expected last week.

Benchmark crude for February delivery lost $1.28 to settle at $89.84 per barrel. It was the first time in more than a week that oil settled below $90.

Oil has surged for most of December as U.S. petroleum consumption ticked higher and traders looked forward to 2011, when oil is expected to touch $100 per barrel and perhaps go higher.

Rising oil prices have pushed gasoline pump prices higher. They were up again on Thursday. The national average for a gallon of regular hit $3.07, about six cents higher than a week ago and 45 cents more than a year ago. Drivers across the country pay a range of prices at the pump. In California you’ll pay about $3.32 a gallon. In New York gas goes for around $3.30 a gallon. The average is $2.91 in Texas and $2.82 in Colorado.

Some analysts think the national average will hit $3.75 by spring.

The price of benchmark crude tumbled Thursday after the Energy Department’s Energy Information Administration weekly supply report. The EIA said oil supplies declined by 1.3 million barrels last week. A drop in supplies often supports higher prices, but analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., thought the drop would be bigger _ around 3.2 million barrels.

Investors worried that the report showed demand for energy was not continuing to pick up, despite positive economic news. The Labor Department on Thursday said the number of people applying for unemployment benefits fell to 388,000, the lowest level in almost two and a half years.

Meanwhile, Freddie Mac said a fixed-rate 30-year mortgage rose to 4.86 percent, the highest since May. That raised concerns about whether higher mortgage rates would slow the recovery of the housing market.

The EIA also released its weekly report on the nation’s natural gas supplies, which showed they shrank by 136 billion cubic feet. That’s less than analysts expected and a relatively small dent in total supplies of more than 3.2 trillion cubic feet, eight percent above the five-year average. Milder weather across most of the country over the next 10 days should reduce heating demand and keep a lid on natural gas prices.

On the Nymex, natural gas rose 5.1 cents to settle at $4.338 per 1,000 cubic feet. In other energy trading, heating oil gave up 3.61 cents to settle at $2.4854 per gallon. Gasoline gained 0.14 cent to settle at $2.3918 per gallon.

In London, Brent crude fell $1.05 to settle at $93.09 per barrel on the ICE Futures exchange.

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A small St. Louis start-up company has been riding high since Best Buy included its products in a national rollout of health and fitness products to the big box retailer’s stores.

Yurbuds’ earphones are now being sold in 560 Best Buy stores alongside somewhat well-known brands in the fitness world such as Gaiam, GoFit and Polar.

“It’s a big step forward for the venture,” said Seth Burgett, the chief executive of Yurbuds. “It is very exciting for us.”

The company’s “Ironman Series” earphones, which retail for $49.99, have a large 4-foot by 5-foot display in many Best Buy stores that proclaims: “Earphones that won’t fall out cash advance in one hour.”

Yurbuds, a business that is a little more than a year old, has 12 employees and is housed at the Center for Emerging Technologies, a business incubator in midtown.

When the Post-Dispatch first profiled the firm in February, Yurbuds was making custom-fitted, rubber-tipped caps that go over earphones, which also are called earbuds. The $20 earbud attachments were designed for comfort and so they would not fall out.

Since then, Yurbuds has expanded into complete earphone sets. Burgett said he realized that consumers wanted a complete solution

With the financial challenges of 2010, even CEO’s weren’t safe in their job. The Star’s Emily Mathieu looks at the top 10 CEO shuffles and firings of the year.

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Russian news reports say that a judge has found former oil tycoon Mikhail Khodorkovsky guilty in his second trial, a verdict that would likely keep Russia’s former richest man behind bars for several more years.

The Interfax and ITAR-Tass news agencies report that the judge said Monday in the opening pages of his verdict that Khodorkovsky has been found guilty.

Khodorkovsky is nearing the end of his eight-year sentence after being convicted of tax fraud in a case seen as punishment for challenging the Kremlin power.

The conviction on charges of stealing oil from his company and laundering the proceeds could keep him behind bars until 2017.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

A Russian judge has started delivering the verdict in the second trial of jailed oil tycoon Mikhail Khodorkovsky, once Russia’s richest man whose case is seen as punishment for challenging the Kremlin best payday advance.

Khodorkovsky, who once headed Russia’s biggest oil producer, is nearing the end of his eight-year sentence after being convicted of tax fraud.

But he can be kept behind bars at least until 2017 if the judge convicts him on charges of stealing all the oil from his company and laundering the proceeds.

Vladimir Putin, who was president during Khodorkovsky’s first trial and is now prime minister, has shown no sign of softening his attitude, and hopes for an acquittal are low.

The reading of the verdict began Monday but may take days to complete.

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Despite a decade of mergers and acquisitions, the entrepreneurial spirit is alive and well in the Canadian mutual-fund industry. It

For the first time in at least 13 years, Tokyo Electric Power Co. may sell dollar bonds as falling demand cuts the size of yen-denominated offerings.

Demand for notes of Asia’s largest power company has fallen as the central bank’s policy of near-zero interest rates drove the average yield on five-year AA rated utility debt below that of benchmark government notes for the first time in at least five years. Bond sales by Tokyo Electric, or Tepco, have fallen to an average of about 30 billion yen ($359 million) each this year, from 50 billion yen in 2007 and 2008.

“We want to utilize foreign bond sales as a tool for raising funds,” Chief Financial Officer Masaru Takei said in a Dec. 7 interview in Tokyo. “We like to consider markets such as these because large bond sales are possible.”

Sales of yen-denominated debt by international companies taking advantage of the world’s lowest borrowing costs rose 34 percent this year to 1.74 trillion yen, according to data compiled by Bloomberg. That sent the discount to transfer dollar loans into yen through cross-currency interest-rate swaps to 57 basis points, the biggest advantage in developed markets, and spurred a fourfold gain in dollar bond sales by Japanese companies to $17.6 billion, the data show.

Tepco’s last dollar bond sale was in June 1997, when it raised $500 million of 10-year 7.125 percent eurobonds at a yield 26 basis points more than U.S. Treasuries of similar maturity. A new sale would be the first in the U.S. currency by a non-financial company from Japan since 2007, according to data compiled by Bloomberg.

Narrower Spreads

The yield spread for Tepco’s debt versus Japanese government bonds narrowed in the last year, giving investors less incentive to buy new securities. Ten-year notes Tepco sold this year were priced at 7 to 9 basis points more than government notes, down from as much as 13 basis points in 2009.

The average yield on five-year AA utility debt fell to 9 basis points above benchmark debt on Dec. 22, from 17 at the start of this year, after declining to 0.1 basis point below government yields on Nov. 15, according to Bloomberg data.

Companies raised less money this year even as they increased the number of sales to 457, the most since Bloomberg started keeping records in 1999. Bond sales dropped 16 percent to 9.6 trillion yen from last year’s record 11.4 trillion yen as slumping confidence prompted the 1,664 companies in the Topix Index to cut capital spending in the final three months of 2010, according to data compiled by Bloomberg.

Smaller Sales

Gross domestic product will shrink 1.9 percent this quarter as Prime Minister Naoto Kan’s stimulus spending fades, the government-affiliated Economic Planning Association said this month, citing forecasts from economists. The world’s second- largest economy is struggling to end deflation, an extended decline in prices that deters investment by crimping sales revenue and profit margins.

Tepco, rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s, sold 30 billion yen of 10-year bonds in September priced to yield 7 basis points more than government securities. The company, which supplies power to 28.6 million customers, raised 235 billion yen in eight domestic sales this year, an average 29 billion yen per issue, the smallest since at least 1999, data compiled by Bloomberg show no credit check payday loans. The average size has declined each year since 2007 when it raised 650 billion yen in 12 offerings, or 54 billion yen per issue.

“The spread on utility bonds is at a historic low,” said Yasunobu Katsuki, Mizuho Securities Co.’s chief credit analyst. “There isn’t as much liquidity with respect to utility debt as there used to be.”

Prepared to Pay

Tepco sold 300 million Swiss francs ($313 million) of 2.125 percent notes due in 2017 in March, its first foreign currency bond since the collapse of Lehman Brothers Holdings Inc. in September 2008. They were priced to yield about 14 basis points more than the Swiss swap rate, according to Tepco. The securities have returned 0.8 percent, while the company’s 1.73 percent 2017 yen notes gained 1.9 percent.

Tepco, which has 732 billion yen of debt due next year and 675 billion yen in 2012, is prepared to pay higher rates on overseas debt to raise its profile in global bonds markets, Takei said. “We would like to sell foreign-currency bonds once a year,” he said.

Third-Highest Rating

The company may also turn to bank loans, Takei said. It sold 407 billion yen of new shares in October to fund a 10-year management plan that includes building a new nuclear power station.

The cost to protect the company’s debt from default for five years rose to 42 basis points on Dec. 22 from 34 at the end of last year, after reaching an 11-month high of 58 on Feb. 11. The Markit iTraxx Japan index of default swaps on 50 investment- grade borrowers declined 32 basis points this year to 102. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to meet its obligations.

Tepco forecasts profit will fall 40 percent to 80 billion yen in the year to March 2011, while revenue will rise 7.4 percent to 5 trillion yen.

Weaker Yen

The company may return to dollar markets at a costly time as analysts forecast the yen will weaken 12 percent next year, according to a Bloomberg survey of 37 strategists. Japan’s currency has depreciated 3.6 percent to 83.16 yen yesterday since it reached a 15-year high of 80.22 in November as the yield advantage offered by Treasuries expanded.

Ten-year Treasuries rose 55 basis points, or 0.55 percent, this month to 3.35 percent yesterday, while Japanese government bonds of similar maturity were at 1.135 percent on Dec. 22, a five-basis-point decline. Japanese financial markets were closed yesterday for a public holiday.

Sales of so-called Samurai bonds, yen-denominated debt by borrowers outside Japan, jumped to 1.74 trillion yen this year from 1.33 trillion yen in 2009, the biggest increase since 2007, according to data compiled by Bloomberg.

The increase in Samurai sales helped cut the five-year yen basis swap to minus 63 basis points on Dec. 1, the widest since March 2009. A negative rate means borrowers swapping dollar debt into yen receive a discount. Borrowers typically use cross- currency basis swaps to exchange floating-rate payments in one currency to another.

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China’s biggest electricity provider, State Grid, says it has invested $989 million to acquire seven Brazilian power companies and their transmission facilities.

A notice by State Grid on the website of the government agency that manages state assets says the investment includes a 30-year concession to operate the Brazilian power grids that can be renewed in 20-year contracts once it expires payday loan lenders.

The deal marks a further expansion of State Grid into overseas markets following a similar investment in the Philippines.

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OTTAWA

The number of Americans filing for their first week of unemployment benefits unexpectedly fell for a second straight week last week, according to a government report released Thursday.

The number of initial claims fell to 420,000 in the week ending Dec. 11, down 3,000 from 423,000 claims filed the week before, the Labor Department said. It was the second lowest level of the year.

Economists surveyed by Briefing.com were expecting 425,000 new claims.

The 4-week moving average of initial claims — a number that tries to smooth out week-to-week volatility — was 422,750, down 5,250 from the previous week.

The weekly figure has been stuck between 400,000 and 500,000 for more than a year, but during the last month, claims have started to drift toward the lower end of the range, pointing to a slight improvement in the job market.

Still, economists say that weekly initial claims need to drop below 400,000 to signal a sustained recovery in the job market, and before the unemployment rate — which rose to 9.8% — can drop significantly.

But the current downward trajectory is "very encouraging," said Stuart Hoffman, chief economist with PNC Financial Services.

"If you couple [the drop in jobless claims] with various indicators that speak to an improved outlook for hiring, it suggests that we could see an increase in the number of people working," Hoffman said.

He added that the uptick in the November unemployment rate could have been a "head fake," and will likely reverse course over the next couple of months low fee pay day loans.

"There’s no shortage of reasons of why businesses have been dragging their feet when it comes to hiring, but the key is that those hurdles are either going away or have been reduced, so we will see more hiring, fewer layoffs, and a lower unemployment rate soon."

Continuing claims: The government said 4,135,000 people filed unemployment claims for their second week or more, during the week ended Dec. 4, the most recent data available. That’s up 22,000 from the week before.

Economists were expecting 4,078,000 people to file ongoing claims.

But overall, the 4-week moving average for ongoing claims fell by 47,250 to 4,185,500.

Continuing claims reflect people who file each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, or people who have exhausted their benefits but are still out of a job.

State-by-state: Claims fell by more than 1,000 in only two states. Iowa had the largest reduction, by 2,146, due to fewer layoffs in the construction and manufacturing industries.

But in 22 states, claims jumped by more than 1,000. Florida topped the list with 6,337 initial claims, mostly due to layoffs in the construction, trade, service, manufacturing and agriculture industries. 

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After an auction to buy virtually all the assets of helmet maker Schutt Sports went into overtime Wednesday, Platinum Equity emerged the victor in a 19-hour bidding war with Town & Country-based Rawlings.

The winning bid from Platinum Equity, a private equity firm based in Los Angeles, was $33.1 million.

Schutt Sports, which is based in Litchfield, Ill., 55 miles northeast of St. Louis and has more than 400 employees, filed for bankruptcy in September. Schutt makes football, softball and baseball helmets and other protective gear.

An affiliate of Platinum, Kranos Intermediate Holding Corp., made a stalking horse offer to buy Schutt Sports in November in the U.S. Bankruptcy Court in Wilmington, Del., which led to the auction.

The auction started just before 11 a.m. on Tuesday morning, but didn’t conclude until after 6 a.m. Wednesday. Platinum and Rawlings duked it out until John Stark, managing director of Oppenheimer & Co., the financial adviser who oversaw the auction, selected Platinum’s bid.

Platinum’s bid included the provision that it could close on the acquisition on Dec. 15, and it agreed to keep Schutt Sports’ employees in Litchfield and Salem, Ill., for 12 months, and Schutt Sports’ employees in Pennsylvania for three months.

Rawlings, who was not revealed as a potential bidder until Wednesday in court documents, filed an objection to the auction after it concluded, alleging proper procedures were not followed, but the bankruptcy court finalized the sale in a hearing late Wednesday faxless cash advances.

Rawlings’ highest offer before the auction concluded was $36 million. Rawlings said it could close on the acquisition on Dec. 24.

According to Rawlings’ objection, Stark was pressured for a quick decision by Platinum Equity’s representative, Jacob Kotzubei, in the final minutes of the auction. Judge Kevin J. Carey ruled on Wednesday night that the auction process was fair.

Rawlings stopped making football helmets two decades ago but re-entered the market in July with the launch of its Neuro Responsive Gear football helmet series. Some high school, college and professional athletes are already wearing Rawlings’ helmets, which will be available for sale early next year.

Schutt Sports filed for bankruptcy Sept. 6 after losing a $29 million patent infringement lawsuit filed by a competitor, Riddell Inc., which is based in suburban Chicago.

Bloomberg News contributed to this report.

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