China’s Li Urges More Pro-Growth Policy as Economy Sputters

Bloomberg News
Tue, 16 August 2022


(Bloomberg) -- China’s Premier Li Keqiang asked local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures after data for July showed consumption and output grew slower than expectations due to Covid lockdowns and the ongoing property slump.

Li told officials at a meeting to take the lead in helping boost consumption and offer more fiscal support via government bond issuance for investments, state television CCTV reported Tuesday evening. He also vowed to “reasonably” step up policy support to stabilize employment, prices and ensure economic growth.

“Only when the main entities of the market are stable can the economy and employment be stable,” Li was cited as saying at the meeting in a front-page report carried in the People’s Daily, the flagship newspaper of the Communist Party.

The meeting came after Monday’s surprise interest-rate cut did little to allay concern over the property and Covid Zero-led slowdown. Economists have warned of even weaker growth and have called for additional stimulus, such as further cuts in policy rates and bank reserve ratios and more fiscal spending.

Li acknowledged the greater-than-expected downward pressure from Covid lockdowns in the second quarter and asked the local officials to strike a balance between Covid control measures and the need to lift the economy. “Only by development shall we solve all problems,” Li said, according to the broadcaster.

Indicating China may resort to more local debt issuance to pump-prime the economy, Li said “the balance of local special bonds has not reached the debt limit” and the country should “activate the debt limit space according to law,” according to the People’s Daily report.

Read more: China’s Politburo Ignites Talk About $220 Billion More in Debt

Based on the government budget, local authorities may be able to issue an estimated 1.5 trillion yuan ($221 billion) of extra debt and bonds this year to support infrastructure spending, after top leaders urged better use of the existing debt ceiling limit in a key July Politburo meeting. The arrangement could be approved in August, according to some analysts.

China’s 10-year government yield rose for the first time this week, up one basis point to 2.64% from the lowest in more than two years.

Li urged local governments to accelerate the construction of projects with sound fundamentals in the third quarter to drive investment, the report said, and also asked officials to expand domestic consumption of big-ticket items such as automobiles and support housing demand.

He also stressed the importance of opening up the domestic market to foreign investors, noting that the six major provinces -- Guangdong, Jiangsu, Zhejiang, Henan, Sichuan and Shandong -- account for nearly 60% of the country’s total foreign trade and foreign investment.

“Opening up is the only way to make full use of the two markets and resources and improve international competitiveness,” Li was cited as saying.

Li’s appearance suggests state leaders have completed their annual two-week policy retreat in resort area of Beidaihe.

‘Too Little, Too Late’ China Rate Cut Spurs Call for More Moves

Bloomberg News
Mon, August 15, 2022 


(Bloomberg) -- China’s surprise interest-rate cut has done little to allay concern over the property and Covid Zero-led slowdown, with economists and state media calling for additional stimulus.

In a front-page report Tuesday, the central-bank backed Financial News said Beijing should introduce new pro-growth policies at the appropriate time to keep growth within a reasonable range, citing Wen Bin, chief economist at China Minsheng Bank. The Securities Times said in a separate report the People’s Bank of China’s surprise rate cut may be the first in a series of policies to stabilize growth.

Nomura Holdings Inc.’s Lu Ting, who described Monday’s 10-basis point reduction as “too little, too late,” says even a likely cut next week in the loan prime rate, the de facto benchmark lending rate, won’t do much to boost credit demand. Economists from Standard Chartered Plc to UBS AG now see a greater chance of policy support in coming months, including more interest rate cuts, a pickup in the PBOC’s re-lending program and a further fiscal push.

“Given the lingering Covid restrictions and fragile economic recovery, we expect the government to continue increasing policy support in the rest of 2022,” Wang Tao, UBS’s chief China economist, said in a note. “The path of economic recovery in the second half will be bumpy and uncertain, depending on Covid and related policies, developments in the property market, and strength of external growth.”

Traders are betting that the next easing move could come as soon as Monday, with a reduction in banks’ loan prime rates. Interest-rate swaps on the nation’s one-year LPR declined after the PBOC’s surprise move on Monday, with the curve now implying a cut of about 10 basis points from the current 3.7% level, according to Xing Zhaopeng, a senior strategist at Australian & New Zealand Banking Group Ltd.

Unlike many advanced economies right now, China’s core inflation -- which excludes volatile energy and food prices -- is pretty tame, slowing to 0.8% in July as domestic demand remained weak. That gives the PBOC room to take action to fulfill its objectives, which include maintaining a stable currency, supporting growth and preventing financial risks.

At the same time, the central bank has been cautious about being too aggressive with easing, which could damage the economy in the long term given its already elevated debt levels.

Here’s a rundown of what policy action to watch out for:

PBOC Rates

Some analysts see the PBOC’s surprise move raising the possibility of more interest rate cuts in coming months while inflation and currency depreciation concerns are not as urgent. Bloomberg Economics expects a cut in the medium-term lending facility rate again in the fourth quarter. Standard Chartered Plc’s Ding Shuang also forecasts more easing, predicting a 10-point cut to policy interest rates by the end of October. However, others like Nomura’s Lu, say the room for further reductions is limited due to the narrowing profit margin for banks and the tightening monetary policy in the US and elsewhere.

Lending Rates

Banks are likely to trim loan prime rates on Monday. The LPRs are based on interest rates that 18 banks offer their best customers and are provided as a spread over the PBOC’s one-year policy rate.

Zheshang Securities’ economist Li Chao forecasts a 10 basis-point decline in the one-year LPR and a 25 basis-point fall in the five-year LPR, a reference for long-term loans including mortgages. Lenders last reduced the five-year rate by a record 15 basis points in May.

RRR Cut

More economists are expecting the PBOC to lower the reserve requirement ratio, or the amount of cash banks must put in reserve, to help reduce lenders’ funding costs. Unlike policy loans, liquidity from a RRR cut will come at no cost to banks. Ping An Securities forecasts the PBOC may cut the RRR by 25-50 basis points between September and December to replace maturing MLF funds, while Shenwan Hongyuan Group’s Qin Tai sees a 50 basis-point cut between September and November for the same reason.

Structural Tools

The PBOC has placed a greater focus since 2020 on structural tools aimed at helping targeted sectors of the economy, such as small businesses, and it may continue to step up that effort. Ping An Securities says the PBOC could expand the relending program and reduce the interest rate for those funds to help banks provide more loans.

Fiscal Policy

Many economists expect fiscal policy to play a greater role in boosting the economy in the rest of this year, since Covid restrictions and the property slowdown have blunted the effect of monetary stimulus. The government could bring forward next year’s special local government bond quota to this year, use leftover special bond quota from previous years, and relax the financing rules for local government financing vehicles modestly, according to Wang of UBS. That’ll help underpin infrastructure investment growth of 10%-12% in the second half of the year, she said in a note.

Property Support

Some large Chinese developers surged in the stock and bond markets Tuesday following a report that regulators plan to have state-owned firms guarantee the sale of new onshore notes. Several stressed developers were notified at closed-door meetings early last week that regulators plan to provide liquidity support via new yuan bonds guaranteed and underwritten by state-owned firms, REDD reported, citing unidentified people.

(Updates with additional details.)

Chinese Builders Rally on Plans for State-Guaranteed Bond Deals

Bloomberg News
Tue, August 16, 2022



(Bloomberg) -- China’s embattled developers surged in the stock and bond markets Tuesday on news that authorities are planning to help some raise fresh financing, adding to signs of official support for an industry grappling with a debt crisis and slumping home sales.

Notes from Country Garden Holdings Co., CIFI Holdings Group Co. and Longfor Group Holdings Ltd. soared at least 11 cents on the dollar Tuesday, according to Bloomberg-compiled prices, set for the biggest gains since March. Their shares surged more than 9% in Hong Kong and a Bloomberg Intelligence gauge of the sector gained 2.4%, the most in three weeks.

Chinese authorities have told several property developers that state-owned credit support provider China Bond Insurance Co. will give full guarantees for some of their upcoming onshore bond offerings, according to people familiar with the matter. The first batch of private developers to be included in the plan include Longfor, Seazen Group Ltd., CIFI, Country Garden and Gemdale Corp., the people said, asking not to be identified because the matter is private.

Investors applauded the possibility of more help for the industry, even though it wouldn’t be the large-scale support that many have clamored for as officials signal that homeowners are the priority of property-sector stabilization efforts, not builders. Developers are suffering from a liquidity crunch, sparked by government efforts to curb leverage, that’s caused record levels of defaults and prompted concern about debt repayment from even the largest companies.

“The mooted state-supported onshore bond issuances are undoubtedly a positive for these developers and the broader sector and signal the government’s continued willingness to evolve policy,” said Owen Gallimore, head of APAC credit analysis at Deutsche Bank AG. “But we have had similar regulatory efforts over the past year and the market will judge this on the execution and scale of the supported bond issuance.”

In response to China’s deepening economic slowdown, The People’s Bank of China unexpectedly cut interest rates Monday. That move has done little to allay concerns, with economists and state media calling for additional stimulus.

China Bond Insurance will provide unconditional and irrevocable guarantees in full amount for the batch of bond sales in the interbank market by these developers, according to the people familiar with the matter. Regulators will likely arrange policy banks and state-owned lenders to subscribe to these bonds, to make sure they can be fully sold, the people said. Proceeds raised will be more flexibly used, including to be used offshore.

“The government may have realized it is easier and cheaper to support property developers by helping them issuing bonds than to deal with their unfinished projects after they default in order to preserve social stability,” said Bloomberg Intelligence analyst Dan Wang. “Yuan bonds of some of these higher-quality developers, especially Gemdale and Longfor, have been dropping in the past few weeks -- which signal risks that they could lose access to the onshore bond market.”

A Longfor unit plans to issue 1 billion to 1.7 billion yuan ($147 million to $250 million) of medium-term notes in China’s interbank market on Aug. 24, according to people familiar with the matter. The funds will be used for purposes including project construction and offshore bond repayment and buybacks.

Longfor said regulators plan to offer positive support, and the detailed plan is being discussed. Country Garden, Seazen, CIFI and Sino-Ocean didn’t immediately respond to requests for comments. Gemdale declined to comment. Calls to the front desk of China Bond Insurance went answered. There was also no immediate response from the National Association of Financial Market Institutional Investors, China’s interbank market watchdog, to requests for comment.

Firms including Country Garden and Longfor announced onshore bond offerings in May as regulators planned to help some builders sell debt at a time issuance was at multiyear lows. Still, their dollar notes fell to record lows last month as worries about the debt-laden property sector mounted.

That earlier debt-sales effort “was relatively small to make a difference, said Agnes Wong, head of APAC credit strategy at BNP Paribas. Still, the latest reports are an “indication that the policy risk has seen its bottom and we are getting closer to a tipping point.”

Onshore, the credit market is flooded with cheap money, but a growing number of weaker borrowers are struggling to obtain it.

“We believe investors will likely remain skeptical until further proof that these few private developers will enjoy continual funding support from government,” JPMorgan analysts including Karl Chan wrote in a research note.

The bursting housing bubble has erased about $90 billion of equity and dollar-bond market value this year.

Reuters and REDD reported on the bond guarantee plans earlier.


©2022 Bloomberg L.P.

China supports several private developers with bond guarantee -sources

Mon, August 15, 2022 

Residential buildings under construction in Shanghai

HONG KONG (Reuters) - Chinese regulators have instructed state-owned China Bond Insurance Co. Ltd. to provide guarantees for onshore bond issuance by a few private property developers including Longfor Group and CIFI Holdings, according to four sources with knowledge of the matter.

The support from the state comes amid mounting concerns that a deepening debt crisis and defaults in the sector could impact property developers that have been regarded as financially sound.

Property developers' shares surged on Tuesday following the news, with Longfor, CIFI and top developer Country Garden all jumping over 15%. The Hang Seng Mainland Properties Index firmed 9.2%, versus a 0.6% gain in the main Hang Seng Index.

China Bond Insurance Co, which provides financial guarantee services, will provide "full amount, unconditional and irrevocable joint liability guarantee" to these medium-term notes, the sources said. The guarantee provides more protection than credit risk management tools, they said.

Two of the sources said Longfor has already sold 3-year and 5-year medium term notes totalling up to 1.5 billion yuan with a guarantee from China Bond Insurance Co.

Financial information provider REDD first reported the plan to provide a guarantee for issuers on Monday evening. Its report said policymakers had drawn up a list of half a dozen developers regarded as financially stronger, including Gemdale Corporation and Country Garden Holdings, whose bond issues would receive guarantees.

REDD also said policymakers were considering asking state investors to subscribe for new notes issued by developers. The issuers would have to provide collateral for the state guarantee but the use of proceeds would be flexible, it said.

CIFI, Country Garden and Longfor declined to comment. China Bond Insurance Co. Ltd and Gemdale were unavailable for comment.

Reuters reported authorities had also helped some financially sound developers to boost liquidity in May, when it encouraged Country Garden, Longfor and Midea Real Estate to issue bonds, while also requesting securities firms to provide credit risk management tools for potential investors in the bonds.

(Reporting by Kevin Huang and Shuyan Wang in Beijing, Clare Jim in Hong Kong; Editing by Simon Cameron-Moore)

Ford’s green bond sees $5 billion in demand as Biden signs climate bill

Joy Wiltermuth - Yesterday

Investors swarmed over Ford Motor Co.’s new $1.75 billion green-bond deal on Tuesday to help boost its development of more electric vehicles.


© Bill Pugliano/Getty

Related video: The energy transition and the fight over green funding

Duration 6:57 View on Watch

Order books for Ford’s speculative-grade debt deal reached more than $5 billion, according to a portfolio manager and Informa Global Markets, which helped the auto giant achieve cheaper funding than initially expected.

The bond deal came the same day President Joe Biden signed the Inflation Reduction Act into law, a smaller version of the earlier Build Back Better proposal, which includes an up to $7,500 credit for qualifying electric vehicles if the assembly is finalized in North America.

Ford said in a public filing Tuesday that proceeds from the bond financing will aim to fund clean-transportation projects, including the design, development and manufacturing of electric vehicles in North America. This includes next-generation electric F-150 pickups, future Lincoln vehicles and other vehicles that have yet to be announced.

Ford didn’t immediately respond to a request for comment.

Its single 10-year class of green bonds, rated Ba2 by Moody’s Investors Service and BB+ by S&P Global, fetched 6.1%, according to Informa. Initial talk was in the 6.375% range, CreditSights said.

That compares with the yield on the ICE BofA US High Yield Index narrowing to about 7.2% this week from a peak of 8.8% in July, after the junk-bond market staged a record rally in recent weeks.EV tax credit

In conjunction with the act’s signing, the U.S. Treasury Department on Tuesday released a two-page fact sheet and related guidance on how the law can make electric vehicles more affordable for households, including for model 2022 and 2023 EVs.

Read: Here’s how the Inflation Reduction Act’s rebates and tax credits for heat pumps and solar can lower your energy bill

Like a wave of other companies in the early part of the COVID crisis, Ford lost its coveted investment-grade credit rating in 2020 after it was downgraded to speculative, or “junk,” status.

In late July, Ford reported second-quarter earnings that blew past Wall Street expectations, despite continued supply-chain issues and concerns about the U.S. economy. Total revenue rose 50% to $40.2 billion, from $26.8 billion a year ago, including a 57% increase in automotive revenue. The “popularity” of Ford’s lineup drove the “solid” results, the company said.

In recent years, investors have been pouring funds into strategies that aim to produce better environmental, social and governance outcomes. Global green-bond issuance has remained robust in 2022, totaling $136 billion in the year’s first half, according to Moody’s Investors Service.

Green bonds were expected to account for about half of Moody’s $1 trillion forecast for sustainable bond issuance this year, a category that includes green, social, sustainability and sustainability-linked bonds.

Shares of Ford were up 0.7% Tuesday, while the S&P 500 index and Dow Jones Industrial Average finished 0.2% and 0.7% higher, respectively, to extend a powerful summer rally.

Read: Tesla and Ford attract new investments from George Soros’s fund

Ford Taps Green Bond Market to Fund EV Development

Olivia Raimonde and Teresa Xie
Tue, August 16, 2022



(Bloomberg) -- Ford Motor Co. is taking advantage of a credit-market rally to sell green bonds.

The vehicle maker sold $1.75 billion of debt expected to mature in 10 years, according to a person familiar with the matter. The security will yield 6.1% after early pricing discussions of around 6.375%, the person said. That compares to an average yield of 5.97% for debt in the BB tier.

Fitch Ratings assigned the bond a preliminary BB+ rating with a positive outlook. Although the ratings firm expects supply chain and inflationary pressures to continue for the rest of the year, the company’s profitability is still on the path to improvement, as it “benefits from ongoing redesign activities, as well as execution on its Ford+ plan,” according to the note.

The Dearborn, Michigan-based company will use the proceeds to help finance new existing green projects, the person said. Ford expects to allocate the net proceeds from this offering exclusively to clean transportation projects and specifically to the design, development and manufacture of its battery electric vehicle portfolio. The company expects to fully allocate the net proceeds of this offering by the end of 2023, said the person.

This is the first junk-rated green sale since June 1 and Ford’s first green issuance since its $2.5 billion debut green bond last year, according to data compiled by Bloomberg. The deal was led by Barclays Plc.

Ford’s new debt sale is part of the company’s overall green strategy, which includes spending $50 billion to build two million electric vehicles a year by 2026. The company said it is the first US automaker to commit to a sustainable financing strategy for both its auto and lending unit, Ford Credit.

Ford may tap the bond market before its next round of debt maturities in June, which could be a near-term consideration for bond spreads, according to Bloomberg Intelligence credit analyst Joel Levington. There has been somewhat of a revival in junk-bond markets this week as a market-rally pushes yields lower, drawing issuers off the sidelines to sell debt.

In November 2021, Ford repurchased $5 billion in junk-rated debt to bolster its balance sheet after shutting down factories at the onset of the pandemic in April 2020.

“Ford’s credit ratings are on an upward trajectory with a potential to cross back into investment grade in 2023,” Levington said. “Credit rating agencies are looking for more consistent free cash flows and manufacturing operations, as well as considering where economic conditions will be next year.” At the end of the second quarter, Ford reported $2.9 billion in operating cash flow and $40.2 billion in revenue.

US Steel, Equinor & Shell Join Forces For Clean Energy Hub - What's The Benefit?

Akanksha Bakshi
Tue, August 16, 2022

United States Steel Corp (NYSE: X), Equinor ASA (NYSE: EQNR), and Shell PLC's (NYSE: SHEL) Shell US Gas & Power LLC have entered into a non-exclusive Cooperation Agreement to advance a collaborative clean energy hub in the Ohio, West Virginia, Pennsylvania region.

The hub would focus on decarbonization opportunities that feature carbon capture utilization and storage (CCUS) and hydrogen production and utilization.

The hub would generate new jobs, stimulate economic growth, and reduce carbon emissions.

The regional CCUS and hydrogen hub aligns with the U.S. and project partners' ambitions to realize net-zero carbon emissions by 2050.

Equinor and Shell will jointly apply for U.S. Department of Energy funding designated for creating regional clean energy hubs.

U. S. Steel is evaluating its role in the hub, including as a potential funding participant, customer, supplier, or partner.

The parties will engage the local industry, labor, educational institutions, communities, and others, to realize the true potential of a working hub.

Price Action: X shares are trading higher by 2.21% at $24.95, EQNR shares are trading higher by 0.71% at $37.40, and SHEL lower by 0.98% at $52.52 on the last check Tuesday.

WIN/WIN

Clean Energy Or Fossil Fuels? Wall Street Is Betting On Both


Editor OilPrice.com
Tue, August 16, 2022 

The U.S. clean energy sector has been soaring so far in the aftermath of the Senate’s passage of a historic climate and energy bill that experts have hailed as the largest investment in fighting climate change ever made by the country. Dubbed the Inflation Reduction Act, the bill allocates $369 billion to renewable energy with the American Clean Power Association estimating it could more than triple clean energy production, cut emissions by 40% by 2030, and create 550,000 clean energy jobs.

The Inflation Reduction Act will extend a number of tax credits already available for renewable energy and also create new incentives for investment in clean energy technology or energy generation. For the first time ever, would-be investors in clean energy have assurances in the form of a decade of subsidies from the federal government.

But make no mistake about it: hundreds of billions of dollars continue flowing into fossil fuels every year, with no signs of the trend changing any time soon.

The latest climate report endorsed by 505 organizations from 51 countries around the world reveals that the world’s 60 largest banks have reached a staggering $4.6 trillion in the six years since the adoption of the Paris Agreement in 2015, with $742 billion going into fossil fuel financing in 2021 alone. The report says that even though net-zero commitments have been all the rage, the financial sector has continued its business-as-usual driving of climate chaos.

Related: Barclays Slashes Oil Price Forecast To $103 Per Barrel

Dubbed Banking On Climate Chaos, the report says that overall, JPMorgan Chase, Citi, Wells Fargo, and Bank of America are the world’s leading fossil fuel financiers, together accounting for one quarter of all fossil fuel financing over the last six years. RBC is Canada’s worst banker of fossil fuels, with Barclays the worst in Europe and MUFG the leading financier in Japan. The report laments the fact that these banks continue to tout their commitments to helping their clients transition, and yet the 60 banks profiled in the report funneled $185.5 billion in 2021 into the 100 companies doing the most to expand the fossil fuel sector, such as Saudi Aramco and ExxonMobil (NYSE: XOM)--even when carbon budgets make clear that we cannot afford any new coal, gas, or oil supply or infrastructure.

Here are some key highlights from the report, extracting only the data (without the politics):

Oil sands: Alarmingly, oil sands saw a 51% increase in financing from 2020–2021, to $23.3 billion, with the biggest jump coming from Canadian banks RBC and TD.

Arctic oil and gas: JPMorgan Chase, SMBC Group, and Intesa Sanpaolo were the top bankers of Arctic oil and gas last year. The sector saw $8.2 billion in funding in 2021, underscoring that policies restricting direct financing for projects don’t go far enough.

Offshore oil and gas: Big banks funneled $52.9 billion into offshore oil and gas last year, with U.S. banks Citi and JPMorgan Chase providing the most financing in 2021. BNP Paribas was the biggest banker of offshore oil and gas over the six year period since the Paris Agreement.

Fracked oil and gas: Fracking saw $62.1 billion in financing last year, dominated by North American banks with Wells Fargo at the top, funding producers like Diamondback Energy and pipeline companies like Kinder Morgan.

Liquefied natural gas (LNG): Morgan Stanley, RBC, and Goldman Sachs were 2021’s worst bankers of LNG, a sector that is looking to banks to help push through a slate of enormous infrastructure projects.

Coal mining: The Chinese lead the financing of coal mining, with China Everbright Bank and China CITIC Bank at the top of the list as of last year, and with big banks providing $17.4 billion to the sector last year overall.

Coal power: Despite the fact that coal is supposed to be targeted for phase-out, this segment has remained largely flat over the past three years in terms of financing, with some $44 billion in financing, again led by Chinese banks.

All-In Energy Policy

Wall Street marches on in the energy sector, straddling oil and gas financing and the increasingly attractive clean energy prospects. According to Dealogic, the amount of money raised through bonds and loans for green projects and by oil-and-gas companies was nearly identical at about $570 billion in 2021. Fundraising may have slowed a bit, but that’s largely because of market volatility rather than dirty-vs-clean energy. Dealogic says that the ratio of green-to-fossil-fuel financing has stayed roughly similar.

Many investors say that it’s next to impossible to fully forego fossil-fuel investments, because oil, gas and coal still account for about 80% of the world’s energy. Energy and food shortages driven by the war in Ukraine have hammered home this reality while highlighting the risks of hasty or haphazard shifts away from fossil fuels in many European countries.

The IRA bill passed last Friday by the House of Representatives appears to take a similar tack, with principal backer Sen. Joe Manchin (D., W.Va.) and others dubbing it an “all-in energy policy."

“The answer is not either-or, it’s all of the above," Megan Starr, global head of impact at private-equity firm Carlyle Group Inc., has told the Wall Street Journal. It’s true that some in the oil industry have taken issue with the Biden administration’s new regulations, such as higher taxes for methane leaks and other aspects of the IRA; however, plenty of others view it as a major opportunity for the energy section–and not just the clean segment.

By Alex Kimani for Oilprice.com

A Major Change Is Coming to Wall Street and Corporate America

President Biden is set to sign a measure that will displease investors and financiers. But the bill also addresses a practice that's been severely criticized.

• LUC OLINGA
• 11 HOURS AGO

It's a masterstroke that went almost unnoticed on Main Street. 

But it has not escaped the attention of Wall Street, which will not be pleased with this move by the Democrats.

In President Joe Biden's bill addressing climate change and health care, the Inflation Reduction Act, companies for the first time face a tax on stock buybacks.  

Companies will pay a 1% excise tax on purchases of their own shares, a kind of financial penalty for this move, which is intended to return cash to shareholders and boost share prices. For example, a company buying shares valued at $1 billion will pay $10 million of taxes. 

The goal is to encourage companies to increase the wages of their employees and to invest in the companies themselves rather than favoring shareholders -- and more particularly activist shareholders in search of quick returns.

Biden will is set to sign the overall bill on Aug. 16, and the buyback tax will be effective beginning Jan. 1. The excise tax is projected to bring the government an additional $74 billion in revenue over 10 years.

Share-Buyback Frenzy

Democrats hope this new tax will be the catalyst for a major change in corporate behavior. 

Companies in the benchmark S&P 500 index bought a record $881.7 billion of their shares in 2021, up 70% from $519.8 billion in 2020, according to a recent report from S&P Dow Jones Indices.

The previous record was $804.6 billion in 2018.

"Current indications are that companies have maintained their buybacks through the recent downturn, which means they'll be getting more shares for their expenditures and reducing share count even further, resulting in higher [earnings per share]," said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

He added: "Given the strong base buying, expected earnings, even with a potential consumer slowdown and lower margins, buybacks could set another record in 2022."

Big Tech is one of the most popular sectors for share buybacks. It is followed by companies in the financial, energy and communication services sectors. 

Bill Gates and the secret push to save Biden's climate bill

The billionaire philanthropist was among those quietly lobbying Joe Manchin, starting before Biden took the White House. A look at the influencers who secured a rare climate win.

Akshat Rathi and Jennifer A Dlouhy
Publishing date: Aug 16, 2022 

Joe Manchin and Chuck Schumer at in the Eisenhower Executive Office Building in March. 

PHOTO BY CHIP SOMODEVILLA 

LONG READ

(Bloomberg) — It was the middle of July — with temperatures surging through one of the hottest summers in US history, half of the country in drought — and the Senate’s all-important member, Joe Manchin of West Virginia, had slammed the brakes on legislation to combat global warming. Again.

That’s when billionaire philanthropist and clean-energy investor Bill Gates got on the phone with Senate Majority Leader Chuck Schumer, whose job it was to hold together the Democrats’ no-vote-to-spare majority.

One of the world’s richest men felt he had to give one of the nation’s most powerful lawmakers a little pep talk. “[Schumer] said to me on one call that he’d shown infinite patience,” Gates recounted in an interview last week, describing for the first time his personal effort to keep climate legislation alive.

“You’re right,” Gates told Schumer. “And all you need to do is show infinite plus one patience.”

Gates was banking on more than just his trademark optimism about addressing climate change and other seemingly intractable problems that have been his focus since stepping down as Microsoft’s chief executive two decades ago. As he revealed to Bloomberg Green, he has quietly lobbied Manchin and other senators, starting before President Joe Biden had won the White House, in anticipation of a rare moment in which heavy federal spending might be secured for the clean-energy transition.

Those discussions gave him reason to believe the senator from West Virginia would come through for the climate — and he was willing to continue pressing the case himself until the very end. “The last month people felt like, OK, we tried, we’re done, it failed,” Gates said. “I believed it was a unique opportunity.” So he tapped into a relationship with Manchin that he’d cultivated for at least three years. “We were able to talk even at a time when he felt people weren’t listening.”

Few had any idea at this time that talks remained open at all. In addition to Gates, an ad hoc group of quiet Manchin influencers sprang into action just when climate legislation seemed out of reach. Schumer’s office credited the bill’s passage to persistence and otherwise declined to comment.

Collin O’Mara, chief executive officer of the National Wildlife Federation, recruited economists to assuage Manchin’s concerns — including representatives from the University of Chicago and the Wharton School of the University of Pennsylvania. Senator Chris Coons of Delaware brought in a heavyweight: former Treasury Secretary Lawrence Summers, who has spent decades advising Democrats.

The economists were able to “send this signal that [the bill’s] going to help with the deficit,” O’Mara said. “It’s going to be slightly deflationary and it’s going to spur growth and investment in all these areas.” Through this subtle alchemy, clean-energy investments could be reframed for Manchin as a hedge against future spikes in oil and gas prices and a way to potentially export more energy to Europe.

That additional patience and pushing helped send a history-making climate bill through Congress. The Inflation Reduction Act, sponsored by Manchin and Schumer, includes $374 billion in new spending to speed up clean-energy deployment, incentivize consumer purchases of electric cars, and boost other green priorities (alongside expanded federal mandates for oil and gas development).

Now Biden has signed it into law. “I am confident this bill will endure as one of the greatest legislative feats in decades,” said Schumer at the signing on Tuesday. Doing so secures a landmark victory for Democrats, who acted in unison without a single Republican vote, and delivers on the climate agenda that formed a part of the president’s campaign promises.

It’s by far the biggest financial commitment the US government has ever made to fight climate change. The emissions reductions that will result from this law will be roughly the same as eliminating the annual planet-warming pollution of France and Germany combined, or about 2.5% of the total global greenhouse gas output, according to researchers who specialize in climate modeling. It might be just about enough to revive the virtually left-for-dead goal of limiting warming to 1.5° Celsius, as enshrined in the Paris Agreement.

But this turning point almost didn’t happen. Perhaps more than any previous moment in the effort to reverse rising temperatures, this one hinged on a handful of personalities and interpersonal relationships. This is the story of how quiet back-channeling helped shape the climate policies in the new law.

The Bill Behind the Bill

Gates started wooing Manchin and other senators who might prove pivotal for clean-energy policy in 2019 over a meal in Washington DC. “My dialogue with Joe has been going on for quite a while,” Gates said. “Almost everyone on the energy committee” — of which Manchin was then the senior-most Democrat — “came over and spent a few hours with me over dinner.”

With President Donald Trump in the White House, there was little prospect the dinner would turn into sweeping policy. Still, the evening was organized around a very Bill Gates theme: “The role of innovation in climate,” he recalled of the discussion. “How the US was really the only country, given how quickly this needs to get done, that has that innovation power in our universities, our national labs, our risk-taking ability.”

Gates asserted to the senators that the world needed American innovation unleashed if there was any hope of halting climate change, and it needed to start with leadership in Washington DC. “We’ve seen in industry after industry how that matters.”

But innovations that start in university labs often need even more government support to reach mass adoption, according to the way Gates sees things. Take a startup making carbon-free cement — success means bringing to market a product that’s as much as three times as expensive as normal cement.

This is no hypothetical for Gates. His investments through Breakthrough Energy, the Gates organization that does climate work, has sunk at least tens of millions into green cement startups such as Ecocem, Chement and Brimstone. None have yet reached commercial scale. He saw the bankruptcy filing of a battery startup he backed, Aquion, that might have had a fighting chance if energy-storage tax credits were available.

While a carbon tax could level the playing field, the US failed spectacularly when it tried to enact that policy under President Barack Obama. Manchin at the time released a campaign ad in which he shot a bullet into a copy of the cap-and-trade bill favored by many lawmakers in his party.

Tax credits are the other way governments can help overcome what Gates calls the “green premium,” easing the path to commercial adoption. New climate-friendly technologies such as hydrogen, advanced nuclear reactors, carbon capture and sustainable aviation fuel need this kind of support right now. The sum that can be brought to bear by the US government would be “far greater than any individual’s fortune,” said Gates.

This fits with the billionaire’s two general approaches to solving problems: sponsor the necessary innovations himself, and find more money from elsewhere that will multiply the effect of whatever funding he puts up. For example, the Bill and Melinda Gates Foundation seeded the Global Fund to Fight AIDS, Tuberculosis and Malaria with a little over $3 billion — a fraction of the $55 billion spent by the fund from government grants and other philanthropies.

On climate, the Gates playbook has been much the same. He made the case in 2015 that governments spent too little on research and development for energy technologies. In the shadow of that year’s Paris Agreement, Gates won a smaller pact among the US and 20 other countries to double funding for clean-energy research within five years.

Gates knew he would need to ensure green innovations reach scale, so in 2015 he also moved to launch Breakthrough Energy. Alongside the venture arm, the operation also includes a science arm that produces reports as well as a lobbying arm that pushes for government policies. Gates has committed to give away “virtually all” of his $123 billion wealth to his foundation, and any money he makes on startup investments will also be ploughed back into his climate work.

Breakthrough was up and running when Biden took the White House. Within months, the president had unveiled two big bills: the Infrastructure Investment and Jobs Act, and the Build Back Better Act. The infrastructure bill, with at least $80 billion in energy-transition spending, passed with relative ease in the Senate; 19 Republican senators voted in favor. It later passed the House after months of progressives holding it hostage to pressure Manchin on social spending.

But most of the climate spending — initially as much as $555 billion — was in a draft of BBB that attracted zero Republican support. That made Manchin’s vote absolutely necessary.

What happened next has become rather infamous for anyone who has followed the legislative politics of Washington over the past 18 months. As the crucial 50th vote for the Senate’s bare Democratic majority, Manchin held unmatched sway over negotiations that dragged on and on as progressives tried to force his to accept a $2.2 trillion version of the agenda. And then everything crashed to a halt.

On December 19, Manchin appeared on Fox News to announce that he wasn’t willing to support BBB because of his concerns over national debt, inflation, the Omicron variant of the Covid-19 pandemic, and geopolitical uncertainty with China and Russia. It emerged that he had months earlier signed a secret document with Schumer setting out his conditions: smaller spending, anti-inflation actions from the Fed, no “handouts” to low-income individuals.

In January, a few weeks later, Gates said he had lunch with the senator and his wife, Gayle Conelly Manchin, in a Washington DC restaurant. The trio talked about the needs of West Virginia, the center of the US coal industry. Gates suggested that, if coal power plants and mining jobs are eliminated, perhaps those workers can build new small nuclear power plants, including ones from a company he founded called TerraPower. (Representatives for Manchin did not respond to requests for comment.)

“I kept trying because I just didn’t see another chance,” Gates said. “That tax credit piece wasn’t going to show up. Except in this one path.”

In the background, somewhat obscured by the loud protests of activists who kayaked up to Manchin’s house boat in D.C. or visited him in West Virginia, envoys from Biden and manufacturing interests pursued a different tactic: presenting carefully picked demonstrations of how clean-energy spending could be a boon for his coal-and-gas state. In March, for instance, two cabinet officials descended on the West Virginia Regional Technology Park in South Charleston to herald plans by startup Sparkz Inc. to build batteries there. Steel of West Virginia Inc. and FerroGlobe PLC made news about solar manufacturing in the state.

But fast-spreading worries about inflation had Manchin’s attention, and on Feb. 1 he declared that Build Back Better was “dead.” Any attempts to pass a climate bill would have to start from scratch. Most observers focused on the end of what had been an enormous chunk of Biden’s agenda.

A sense of bitterness set into public discussions of the climate bill, another example of political gridlock. “I wouldn’t have wanted to be in his position,” Gates said. “The last six months have been challenging, even just getting in his car and trying to live a normal life.” But the billionaire didn’t believe it was over quite yet.

Five months later, Schumer and Manchin had in fact found a way to make progress on an all-new bill. On July 7, Manchin was spotted at the Sun Valley media conference that draws power brokers to Idaho each year. Gates also attended and met with the senator again. “We had a talk about what was missing, what needed to be done,” Gates recalled. “And then after that it was a lot of phone calls.”

Although Democrats still had a few months under congressional budget rules to ram legislation through the Senate with only 50 votes, lawmakers were preparing to leave for a month-long recess. And Democratic leaders were relying on the same bill — with or without clean energy tax credits — to extend Obamacare health insurance subsidies before they lapsed. If the legislation didn’t get done before the August break, the opportunity could close for good, especially if Republicans take control of the House or Senate in the November midterm elections.

That pressure drove Schumer to insist on moving quickly, Manchin pushed back, and once again talks collapsed on July 14. Machin told a local radio host in West Virginia that he was wary of adding to inflation that was running at record highs, including a 9.1% spike in the price of gas, groceries and goods in June. So he ruled out passing tax and climate provisions before the August recess.

There was widespread dismay — even tears — among climate activists and hardened energy lobbyists alike. It had seemed that a shrunken-down version of the bill was close at hand, and then the climate provisions were dead once more. One lobbyist who’d been working on renewable tax credits called it a “gut punch.”

Without the Senate, Biden vowed to take executive action. White House officials drew up plans for him to declare a climate emergency that would unlock presidential powers to spur clean energy without help from Congress. Senator Martin Heinrich, a Democrat from New Mexico, questioned why Manchin still had his gavel as chair of the influential energy committee.

“Joe Manchin was allowed to feel the whole breadth of the blowback that had really been held back up until that point,” said Christy Goldfuss, senior vice president of energy and environment policy with the Center for American Progress and a former adviser to Obama. “Everyone really unleashed the rage.”

It was a moment of reckoning. “Everybody had to kind of look into that abyss together to get their head around the fact that something is better than nothing,” said Heather Zichal, another former Obama climate adviser who now leads the American Clean Power Association.

Several loose coalitions of environmental groups, labor unions and clean-energy interests huddled on strategy and enlisted West Virginia interests to once again highlight the economic potential for Manchin. Some labor and environmental leaders pushed Schumer away from complacency by arguing that unilateral action by Biden was no substitute for hundreds of billions in clean-energy tax credits.

Fredd Krupp of the Environmental Defense Fund cautioned the White House against acting alone. “I had concerns that declaring that would push Manchin away,” he said.

Lobbying Blitz Gave Climate Bill New Life

Of course, it wasn’t just Bill Gates who had put in long months courting Manchin. The BlueGreen Alliance coalition of environmental and labor groups had spent 18 months building a reservoir of trust they could tap now. “We came to a judgment that Manchin legitimately wanted to get something done but he had serious concerns, and those concerns needed to be addressed,” said Jason Walsh, executive director of the alliance. “We believed he was still negotiating in good faith.”

Gates took the same view. “You know, people say Joe likes coal or something like that,” he said, referring to the millions of dollars the senator earned from a company supplying coal. “That’s really not fair. Joe wanted a climate bill.”

Several senators also refused to give up. Senator Ron Wyden, a Democrat from Oregon who heads the tax-writing finance committee, went into salvage mode to reclaim bits of defunct drafts that could be reused. “Every time I would talk to people I would say: ‘We’re going to stay at it until this happens. It’s too important. You don’t get this kind of opportunity all the time.’”

A small club of senators — Wyden called them the “never-say-die caucus,” including Coons and Senator John Hickenlooper of Colorado — worked together to reassure Manchin. “I was listening to every single thing that Joe said that he had a real problem with, and I was trying to address it,” Hickenlooper said.

Two labor groups, the West Virginia AFL-CIO and United Mine Workers of America, drove home the chance to fund black lung health benefits for miners who are legion in Manchin’s home state. They also emphasized provisions that boost tax credits for projects that use American-made materials, pay prevailing wages or are located in the shadow of former coal plants and mines.

Two weeks of throw-everything-at-the-wall lobbying paid off. On July 27, Schumer and Manchin unveiled more than $37 billion in annual spending over the next decade on climate and energy. The tax provisions and drug-pricing reform would contribute to the government’s purse, estimated to reduce the national deficit by $300 billion before 2030.

“If you look at the whole arc — from when he went on Fox News in December to the blow-up in July — the fact that we’re here in this moment is nothing short of remarkable,” Walsh said. “That’s a testament to the persistence of a lot of folks — most importantly, Senator Schumer and Senator Manchin.”

The final law expands tax credits that Gates and others sought to support that reach beyond renewable power and batteries to also encompass nuclear plants, carbon capture technology, sustainable aviation fuels, hydrogen, and upgrading the grid. It includes a tax credit for advanced manufacturing pushed by renewable and auto interests as a way to nurture a domestic production of solar modules and electric vehicles.

“I don’t want to take credit for what went on,” Gates said.

In a win for advanced energy manufacturing, hydrogen and carbon capture, tax credits to support those technologies are made refundable so that developers can collect them as direct payments instead of seeking tax-equity financing from investors. That could help many climate startups access government support, even if they don’t have a tax liability.

But not every would-be influencer found fulfillment in the new climate law. In a blow to solar and wind developers, Manchin resisted entreaties to make the direct pay option widely available, insisting the focus should be on innovative projects and not more established clean-energy technology.

The final bill also contains just a fraction of the green spending originally envisioned in the far larger climate-and-social spending bill passed by the House. Progressive activists, including Evergreen Action, lost their bid to hasten the retirement of coal plants by having the government pay utilities to boost their carbon-free power generation and fine those that fall short.

The law includes requirements — some created by Manchin himself — that would further oil and gas development on federal lands and waters. New renewable power projects on federal lands are contingent on oil and gas leasing over the next decade, and there are mandates to sell drilling rights in the Gulf of Mexico and Alaska’s Cook Inlet. Still, climate researchers project the law would cut 24 tons of carbon emissions for every ton it adds through more oil and gas.

“We need hydrocarbons in the meantime,” Gates said of the boost for fossil fuel.

Also at Manchin’s insistence, automakers also will see new strings attached to electric vehicle tax incentives so they will have to be made in North America and, by 2024, can’t use batteries sourced from China. Labor leaders bemoaned that the final package doesn’t contain much support for workers who lose their jobs in the green transition.

Gates looks back at the new law with satisfaction. He achieved what he set out to do. “I will say that it’s one of the happier moments of my climate work,” Gates said. “I have two things that excite me about climate work. One is when policy gets done well, and this is by far the biggest moment like that.” His other pleasure comes from interviewing people at climate and clean-tech startups: “I hear about this amazing new way to make steel, cement and chemicals.”

There’s been such whiplash from 2016 when, as Gates puts it, green spending from the US government “had dropped to near zero.” Six years later, American climate finance has been “reinvigorated,” and Gates now sees innovation “going way faster than I expected. That’s why I’m optimistic that we will solve this thing.”

Norway's wealth fund loses $174 billion in first half of 2022

A general view of the Norwegian central bank, where Norway's sovereign wealth fund is situated, in Oslo


By Victoria Klesty

Wed, August 17, 2022 

OSLO (Reuters) - Norway's sovereign wealth fund, the world's largest, made a loss of 1.68 trillion Norwegian crowns ($174 billion) in the first half of 2022, it said on Wednesday, as stocks and bonds were hit by global recession fears and rampant price inflation.

The $1.3 trillion fund's return on investment was a negative 14.4% for the January-June period, although that was 1.14 percentage points ahead of the return on its benchmark index.

"The market has been characterised by rising interest rates, high inflation, and war in Europe," said Chief Executive Nicolai Tangen of Norges Bank Investment Management, which operates the fund, in a statement.

"Technology stocks have done particularly poorly with a return of minus 28%," he said.

Founded in 1996, the fund invests revenue from Norway's oil and gas sector and holds stakes in more than 9,300 companies globally, owning 1.3% of all listed stocks.

Its $1.3 trillion valuation approximately equates to the size of the Mexican economy, the world's 16th largest, according to some measures.

All sectors in which the fund invests recorded negative returns in the first half, apart from energy, where returns were 13% as prices soared following Russia's invasion of Ukraine.

Central banks have hiked interest rates aggressively this year to combat inflation, leading to increased borrowing costs and lowered profit margins for corporations.

The tech-heavy Nasdaq Composite and the broader S&P 500 index saw their biggest January-June declines since the financial crisis, while U.S. and European government bond markets had their worst start to any year in decades.

In total, 68.5% of the fund was invested in equities at the end of June, with 28.3% in fixed income, 3.0% in unlisted real estate and 0.1% in unlisted renewable energy infrastructure.

($1 = 9.6716 Norwegian crowns)

(Reporting by Victoria Klesty; Editing by Terje Solsvik and Mark Potter)

U.S. big company oil reserves up 13% since 2017, deals drive recent growth -study

Wed, August 17, 2022

The Bryan Mound Strategic Petroleum Reserve is seen in an aerial photograph over Freeport, Texas


NEW YORK (Reuters) - U.S. oil reserves held by 50 large companies rose by 13% over the five years ended in December, according to an Ernst & Young report released on Wednesday, with mergers and acquisitions contributing most of the recent gain.

Oil reserve estimates, which signal the direction of crude output, climbed to 31.8 billion barrels at the end of last year after plummeting in 2020 as the COVID-19 pandemic forced energy companies to curtail activity.

U.S. reserves were still lower than 2019 levels of 32.5 billion barrels, according to the analysis, which used estimates from 50 publicly traded companies holding the largest U.S. oil and gas reserves.

The upswing in reserves last year was primarily due to larger independent oil and gas companies buying private energy companies and acquiring other reserves. The studied group of companies spent $94 billion to acquire proved and unproved properties.

"That significantly exceeds any other year in the study," said Herb Listen, partner at Ernst & Young. Spending last year on exploration, at about $8 billion, was among the lowest in the studied years.

ConocoPhillips, Chevron Corp, Exxon Mobil Corp, EOG Resources and Occidental Petroleum Corp had the biggest U.S. reserves in 2021.

Oil trading near $90 a barrel is likely to spur interest in new production. But pressure on companies to limit spending, return capital to investors, and address climate concerns will challenge any big push for growth, Listen said.

Companies might reallocate funds towards U.S. oil activity following Russia's invasion of Ukraine, which led Exxon and others to exit Russia, said David Johnston, who leads EY's Strategy and Transactions practice in energy.

Over the five-year period, oil production grew 27% to 3 billion barrels, or the highest output during the study period. Output from large independent producers jumped about 70% and integrated producers output rose by 33%. Small independents dropped by 35% over the same period.

The largest U.S. producers in 2021 were Chevron, ConocoPhillips, Occidental, EOG and Exxon, respectively.

 CRIMINAL CAPITALI$M

N.J. Developer NRIA Told to Expect Charges by SEC, Lawyer Says

By Jacob Adelman
BARRONS
Aug. 16, 2022

The Securities and Exchange Commission has told developer National Realty Investment Advisors that it intends to file charges against the firm, according to an attorney representing the company in its bankruptcy proceedings.

Attorney S. Jason Teele said during a hearing for creditors Tuesday in NRIA’s Chapter 11 bankruptcy case that the New Jersey-based developer received a Wells notice about two months ago. The SEC sends such notices to people or companies ahead of planned enforcement actions to give them an opportunity to argue against charges being filed.

SEC Investigates National Realty Investment Advisors (NRIA) For $630 Million Fraud

July 21, 2022 / By Investment Fraud Lawyers


A cease and desist has been issued against the National Realty Investment Advisors (NRIA) by the New Jersey Bureau of Securities after the determination of a securities fraud from 2018 through 2022, amounting to approximately $630 million.

The NRIA Fund has 1,800 investors from around the country, 380 of them being from New Jersey, as revealed in the cease and desist order summary. The alleged fraud is said to involve selling membership units in the fund in the form of securities.

An investigation into the affairs of NRIA has been launched by Haselkorn & Thibaut, P.A., an investment fraud law firm. Our law firm has over 50 years of experience and represents investors across the country to recover investment losses due to broker fraud and bad investments.

People impacted by the fraud or who need advice on investment loss recovery from NRIA can call our experienced investment fraud lawyers at 1-888-902-6872 for a free consultation.
National Realty Investment Advisors is a bank


ContentsNational Realty Investment Advisors is a bank
It is under investigation by the FBI
It has acquired and developed more than 3,100 luxury residential units
It used investors’ money to pay off other investors

Acting Attorney General Matthew J. Platkin announced a cease and desist order against Secaucus-based National Realty Investment Advisors, LLC. The firm fraudulently sold $630 million worth of securities from 2018 to 2022 to at least 1,800 investors, with 380 of those coming from New Jersey. Arthur Scutaro, an executive vice president, and project manager of NRIA, is one of the company’s executives.

Despite the recent bankruptcy filing, it is unclear exactly how much money NRIA has lost on its projects. The developer, which has projects in Florida, Philadelphia, and New Jersey, has been under investigation by various federal agencies. Founder Brian Casey of The Casey Group, an independent real estate financial advisory firm, is overseeing the chapter 11 case for NRIA. If National Realty doesn’t reorganize soon, it will likely take years to repay investors.

The company acts as a middleman for real estate flippers. In exchange for its services, National Realty receives commissions from the sale of the land, loan spreads, construction fees, and maintenance fees. National Realty also charges a 3.5% fee on the equity of the project and charges monthly property-management fees of $7,500. So the average investor’s income would be a little under $1 million a year.

NRIA, a real estate investment management firm with more than $1.25 billion in AUM, filed a voluntary petition in bankruptcy court in New Jersey on June 7th. National Realty has a large portfolio of 30 completed, 3 near-completion, and 16 projects in planning stages. The total value of NRIA’s properties is $225 million, and future stabilized values are $1 billion. In other words, NRIA’s assets were worth billions when they were completed.
It is under investigation by the FBI

Investors have lost a combined $630 million since the Secaucus. New Jersey-based company started selling investment membership units to the public, promising large returns of up to 20%. However, the firm has now been under investigation by the FBI and the New Jersey Bureau of Securities. According to the Bureau, the company illegally sold $630 million in securities to investors – mainly small investors – and funneled the money to its executives and their families.

The FBI has uncovered a series of illegal activities at the bankrupt firm, which focused on townhome, condo, and multifamily development. As of March 2020, the company had more than $1.25 billion in assets under management. The private company’s website lists more than a dozen projects in Brooklyn and numerous developments outside the city. The FBI has charged one of the company’s portfolio managers, Thomas Nicholas Salzano, also known as Nick Salzano, with aggravated identity theft and wire fraud.

The company’s troubles started on Tuesday when it filed for chapter 11 protection in Newark. As of October 2016, it listed assets between $50 million and $100 million and liabilities ranging from $500 million to $1 billion. The company is also under investigation by the SEC. The investigation follows the revelation that the company misrepresented the properties to investors. The company also failed to pay investors as promised. According to HCV, Minkow recorded an 11-minute telephone conversation with NRIA’s senior project manager Brian Harrington, confirming that he was being paid with funds from new investors.

Although Salzano is the only employee charged in the scandal, the investigation has spread to the entire organization, which is a huge setback for the firm’s reputation. According to Bloomberg, the firm has lost $1.6 billion since 2015. Thankfully, the FBI is not actively investigating the NRIA leadership, but it has begun to investigate all of them. While it’s never easy to work with the FBI, the company’s leadership is now being investigated, and the scandals could cause further harm to the company.
It has acquired and developed more than 3,100 luxury residential units

Since its founding in 2006, National Realty Investment Advisors has delivered exceptional results in supply-constrained and high-barrier-to-entry urban markets. The firm has acquired and developed more than 3,100 luxury residential units and managed more than 2.30 million square feet, totaling $1.125 billion. The firm continues to deliver exceptional results, particularly in the urban market. For this reason, NRIA is consistently ranked among the top investment managers in the country.

The firm’s CEO, Brian Natwick, has over 25 years of experience in the real estate investment and development industry. During that time, he worked at the international accounting firm Ernst & Young. He grew the company from a single building with 2,700 units to a multibillion-dollar portfolio with more than 34,000 units. He is also a certified public accountant.
It used investors’ money to pay off other investors

An investor rights law firm based in Chicago is investigating claims against the New Jersey-based company National Realty Investment Advisors LLC. The company allegedly used investors’ money to pay off other investors and executives. The company is allegedly guilty of fraud, investment loss, and unsuitability. The firm has since filed for bankruptcy. Investors who purchased securities from the company should consider the risks involved before making a decision.

The Securities and Exchange Commission (SEC) has filed a complaint against the company’s principals for a Ponzi scheme. The company’s officers diverted millions of dollars from investors to lavish payments. They also hired family-owned and controlled companies to perform their work. Salzano’s son served as the company’s Chief Financial Officer. Salzano’s wife received a salary for a “no-show” job. He hired family members to work for his company as construction contractors.

Securities and Exchange Commission v. Thomas Nicholas Salzano, 2:21-cv-12189 (D.N.J. filed June 7, 2021)

The Securities and Exchange Commission today charged Thomas Nicholas Salzano, of Secaucus, New Jersey, with using a sham loan document containing a forged signature in a fraudulent attempt to entice a $150,000 investment in a real estate joint venture located in New Jersey.

The FBI raided the Secaucus home of Nick Salzano, the firm’s portfolio manager. The FBI questioned him, and he eventually surrendered. He is now facing multiple federal investigations and is accused of trying to defraud investors by forging a multimillion-dollar loan guarantee from a Silicon Valley woman. During the investigation, the company’s other principals, including Brian Casey, have been placed under the microscope.

According to the complaint, NRIA used the money of nearly 2,000 investors to create shell companies and fund no-show jobs for its corporate leaders. The company did not disclose to investors how their money would be used, and investors were duped into believing that they would earn a return on their investment by investing in a real estate development firm. The company billed investors for development fees and used fake buyers to increase interest in the projects.

About The Author


Investment Fraud Lawyers
Haselkorn and Thibaut, InvestmentFraudLawyers.com, specialize in fighting for investors nationwide and have offices in Florida, New York, Arizona, and Texas. We have over 50 years of experience and a 95% success rate. Call us now for a free consultation at 1-888-614-9356 or email us at case@htattorneys.com No Recovery, no fee.