The BAA flotation

Article Abstract:

The British government's privatization of the former British Airports Authority (BAA) took place in Jul 1987. The BAA offer differed from earlier government privatizations in that 50 percent of BAA was sold at a fixed price of 245p, 25 percent was placed with institutions, and 25 percent was a tender offer. It had been anticipated that the tender portion of the offer would appeal mainly to sophisticated buyers, but the response was surprisingly strong, and there were over 88,000 applications for a total of 759.2 million shares. The fixed price part of the offer received 2.47 million applications for a total of 2.1 billion shares. The price for BAA was set at 245p, above the 240p level analysts had selected, but below the 270p level recommended by government analysts.

Economic policy, Privatization, Privatization (Business), Flotation, United Kingdom. British Airports Authority

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Banks review Third World debt

Article Abstract:

British clearing banks are reacting to Citicorp's recent writedown of Argentinian debt by bolstering their own reserves. Natwest was the first UK bank to do so, increasing its provisioning to 28% of its exposure to third world bad debt. Other British banks followed suit, if for no other reason than to ensure confidence in the national banking system. Switzerland and Germany had taken such action even before the US. The effects of increasing reserves has had a negative influence on capital ratios. One way to ease the capital ratio impact would be to change tax treatment of loan provisioning. British clearing banks must now look to growth from overseas sources, such as the US and Europe.

Banking industry, International aspects, Developing countries, International relations, Argentina, Debt, British foreign relations, Debt equity conversion, Citicorp, Sovereign debt market

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What happened?

Article Abstract:

The week ending Oct 23, 1987 saw steep drops in stock market indices around the world. The crash was precipitated by investor concerns about US budget and trade deficits. Investor confidence was further eroded by a rise in interest rates. One factor that contributed to driving the market down was the widespread use of screen-based trading systems, which allow markets to react quickly to any mark-down in share prices. The governments of the US and the UK moved quickly to restore investor confidence by lowering interest rates.

Analysis, Evaluation, Stock-exchange, Stock exchanges, Stock Market Crash, 1987

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