Squaring circles: EU and Britain plot next Brexit chapter

People pass a Union flag flying on the Houses of Parliament in London. Britain and the EU have reached a historic deal on Brexit divorce terms, but Brussels swiftly warned that even harder talks lie ahead on a future relationship after the split. (AFP)
Updated 10 December 2017
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Squaring circles: EU and Britain plot next Brexit chapter

BRUSSELS: The European Commission and the British government let out an audible sigh of relief on reaching Friday’s historic Brexit divorce terms deal.
Yet numerous questions remain on the future trade relationship between the EU 27 and the bloc’s departing member as the discussions now move on to a new phase at a Dec. 14-15 Brussels summit.
The EU’s chief Brexit negotiator Michel Barnier warned “there is still work to be done” to “consolidate” the progress made to date.
The preamble to the 15-page divorce deal published after British Prime Minister Theresa May’s morning dash for talks with European Commission President Jean-Claude Juncker illustrates the still precarious nature of the deal.
“Under the caveat that nothing is agreed until everything is agreed, the joint commitments set out below in this joint report shall be reflected in the Withdrawal Agreement in full detail,” said the introduction to the text.
The conclusion notes that the deal is conditional on “an overall agreement under Article 50 on the UK’s withdrawal, taking into account the framework for the future relationship, including an agreement as early as possible in 2018 on transitional arrangements.”
Even Friday’s deal itself leaves elements open to question surrounding the thorny issue of the Irish border post-Brexit, along with the size of Britain’s divorce bill and the protection of expats’ rights.
The deal is clear on guaranteeing the post-Brexit rights of Britons already living in the bloc and of their EU counterparts based in Britain with family members able to claim residence.
But there is no mention, for example, of future spouses.
“We demand before we can give green light to the withdrawal agreement, that ... the future free movement and residence of UK citizens will also be guaranteed and this in all 27 Member States,” said Guy Verhofstadt, leader of the liberals group in the European Parliament.
It is not yet clear if British expats will be able to retain their full current rights when they move to another EU country.
Regarding citizens rights, the divorce bill text indicates Britain will bring forward a bill to incorporate them into UK law.
On adoption, the bill’s provisions in relation to citizens’ rights “will prevail over inconsistent or incompatible legislation, unless Parliament expressly repeals this Act in future.”
But it is not clear what will happen if Westminster actually one day repeals the bill.
“Any change by UK parliament to citizens’ rights will be very visible and can only happen via express repeal of treaty,” was how Stefaan de Rynck, a member of the EU negotiating team, commented on Twitter.
There are also elements of ambiguity as to the exact size of the divorce bill, despite the methodology having been agreed to determine how deep Britain must delve into its pockets.
“We cannot calculate exactly the sums in question — all these figures will fluctuate,” said Barnier, although unofficial EU estimations are in the order of €60 billion ($70 billion).
Britain puts the sum at between €40 and €45 billion, though that does not include items such as an EU-guaranteed loan for Ukraine, which could generate costs for all current EU members — Britain included.
Then there is the issue of the border between Northern Ireland and the Republic of Ireland, which almost scuppered the deal over concerns in the North that Britain was headed for a deal entailing a “hard” border separating the former from the rest of the UK.
In the agreement, the UK said it “remains committed to protecting North-South cooperation and to its guarantee of avoiding a hard border” between the two.
Britain said if that was not possible, it would propose “specific solutions to address the unique circumstances of the island of Ireland,” including alignment with the Internal Market and the Customs Union rules, while respecting the terms of the Northern Ireland peace agreement.
EU President Donald Tusk has already warned that “the most difficult challenge is still ahead.”
And Jonathan Powell, chief of staff to former British prime minister Tony Blair, suggests squaring the circle may prove a tall order.
“The language on ‘full alignment’ means different things to different people,” Powell told the Financial Times.
“A series of contradictory undertakings have been given and a new separate strand of negotiation on Ireland opened in the next stage.”
— Reuters


SABIC prepares to meet investors to offer bond

Updated 25 September 2018
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SABIC prepares to meet investors to offer bond

  • The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25
  • SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale

LONDON: Saudi Basic Industries Corp. (SABIC) is preparing to offer its dollar-denominated unsecured bond to the global market with investor meetings due to start this week.
The Kingdom’s petrochemical giant will be meeting investors in London, New York, Los Angeles and Boston from Sept. 25, according to a filing on the Saudi stock exchange on Tuesday.
The Saudi company is likely to be keen to tap into the heightened international interest in the Kingdom’s financial markets following the lifting of some restrictions on foreign investors’ activities at the start of the year.
SABIC has also confirmed the appointment of BNP Paribas and Citigroup as global coordinators on the sale, alongside HSBC Bank, Mitsubishi UFG Securities EMEA and Standard Chartered Bank acting as joint lead managers, in its Tadawul note.
The proposed issuance has been well-received so far by analysts with ratings agency Moody’s Investor Service assigning an ‘A1’ rating to the proposed senior unsecured notes to be issued by the financial vehicle, referred to as SABIC Capital II, and guaranteed by SABIC itself.
“SABIC’s A1 rating reflects its strong business position in the chemical sector and its ability to weather industry volatility, particularly given its healthy operational cash flows and conservative liquidity profile,” said Rehan Akbar, a senior analyst at Moody’s, in a note on Monday.

 

The bond is anticipated to be used in part to refinance an existing SR11.3 billion ($3 billion) one-year bridge loan raised in January this year to fund the company’s 24.99 percent stake in the Swiss chemical company Clariant, according to the Moody’s note. All regulatory requirements were completed on this acquisition earlier this month.
Cash proceeds from the bond may also be used to repay a $1 billion bond due on Oct. 3, according to Moody’s.
On Tuesday SABIC confirmed that the bond will be used mainly to refinance “outstanding financial obligations” of the company and its subsidiaries.
Analysts at rating agency S&P Global were also upbeat about SABIC’s outlook, with research published on Monday stating that the company has “strong profitability” via its KSA operations and a “strong” liquidity position.
“The debt issuance is helpful for the credit profile in the sense that it extends the company’s debt maturity profile and strengthens its liquidity position,” said Tommy Trask, corporate and infrastructure credit analyst at S&P Global.
The agency currently assigns the petrochemical firm an ‘A Minus’ rating, with a “stable outlook,” which it said reflects its “view on the sovereign as well as its expectations that SABIC will maintain high profitability under current benign industry conditions.”
S&P Global’s report said margins in the global chemical industry will “largely stabilize in 2018 following several years of improvement, attributable to the increase in commodity chemical capacity.”
However, it also warned that a key risk to credit quality is
the trend for mergers and acquisitions within the sector and the “potential negative impact on credit metrics from funding them with debt.”

FACTOID

SABIC operates in more than 50 countries across the world.