Direct Line shines on trading debut

 Investors in Direct Line, who voiced over-valuation fears ahead of its London listing this week, have seen the insurer deliver the biggest pop for a UK company of its size in over a decade.

Direct Line's £787.5m initial public offering on the London Stock Exchange yesterday was notable for a number of reasons: it was the largest European IPO since Dutch cable firm Ziggo listed in March for $1.2bn; it was the largest London-listed IPO since acquisition vehicle Vallares' $2.1bn float in June 2011; and it was the largest listing of a UK corporate since the £2.4bn IPO of financial group Standard Life in 2006.

Trade of the Week: Winter sets gas investors all aglow

The price of US natural gas spiked sharply this week, after American energy agencies forecast household spending on heating will rise 15% this year to combat a colder winter. The predictions set off a swarm of speculators anxious for a profit and sent hedgers scrambling to cover their exposure.

On Tuesday, the price of natural gas contracts traded on CME Group’s Nymex jumped 4.78% in a matter of hours. Prices for the benchmark Henry Hub natural gas futures for delivery next month rose to an intraday high of $3.51 per million British thermal units in early afternoon trading, from a midday low of $3.35.

A trader buying 1,000 contracts at $3.35 and selling at $3.51, before the rally cooled slightly, could have made a notional gain of $1.6m. A contract is equivalent of 10,000 million British thermal units.

How the EU could spend its Nobel Peace Prize winnings

The European Union would need to win the Nobel Peace Prize for 541,495 years in a row in order to finance its flagship bailout fund with the prize money.

The 27-nation bloc was the unlikely recipient on Friday of the annual gong and the Nkr8m, or €923,368, prize.

The Norwegian Nobel Committee, which awards the prize, picked the EU and its forerunners for having “over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe.”

However, the prize money is a small drop in the ocean when compared to the EU’s €500bn European Stability Mechanism bailout fund.

M&A bankers rue $500m in missed fees

It is not a good time to be a mergers and acquisitions banker as they contend with eurozone volatility, reduced corporate confidence and depressed levels of activity. With the collapse of the BAE Systems-EADS tie-up this week, they now face another loss of mega-fees.

The two defence firms confirmed on Wednesday they were terminating talks over the proposed merger following weeks of speculation and tense negotiations with government stakeholders over the terms of a deal.

The 11 banks advising on the deal, which include Goldman Sachs, Evercore, Gleacher Shacklock, Lazard and Perella Weinberg, stand to forfeit $120m to $150m in fees, according to Thomson Reuters and Freeman Consulting. They will now share an estimated $15m pool.

Fixed income helps JP Morgan move on from Whalegate

A strong third-quarter performance in fixed income trading – which led to a 33% jump in underlying revenues compared to a year ago – has helped JP Morgan move on from what has been a tumultuous period for the US bank.

JP Morgan also said in its third quarter results, which were published today, that its Chief Investment Office had “effectively closed out” positions held from its infamous “London Whale” trade, which came to light in May.

The bank said the CIO had experienced $449m of losses in the third quarter from principal transactions on the portfolio of index credit derivative positions it was left with after transferring a synthetic credit portfolio to JP Morgan's investment bank in July.

Three-quarters of companies 'will need longer to pay off pension deficits'

Three-quarters of UK companies with pension deficits say they will take longer to pay them off than they were planning, thanks to the economic downturn and the Bank of England's policy of quantitative easing, according to analysis by the government's Pensions Regulator.

 

The regulator said earlier this year that it would treat companies with more flexibility over their pensions bills, given the prevailing economic environment. Chief executive Bill Galvin said in April that it was "prepared to tolerate longer recovery plans".

While the authority is at frequent pains to point out it has never insisted companies pay off their deficits in any particular period, for many years it treated a recovery period longer than 10 years as a "trigger" to take a closer look at a firm.

Pimco's Gross buys Italian and Spanish bonds

Bill Gross put money where his mouth is, warming up to Spain and Italy while pulling back from the US.

Gross, manager of the world's biggest bond fund at Pimco, cut holdings of Treasury bonds in September for a third month, bolstered by his worries that the US fiscal woes and highly accommodative monetary policy would erode investors' confidence in the world's go-to safe haven asset.

At the same time, he boosted non-dollar bonds sold by developed nations. The move confirmed his comments in an interview Friday with Dow Jones Newswires that he has bought Spanish and Italian government bonds in recent weeks after staying out of the debt market from troubled euro zone economies since the start of the year.