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S/P MAY UPGRADE WAINOCO OIL <WOL>

Standard and Poor's Corp said it may upgrade Wainoco Oil Corp's 25 mln dlrs of C-rated subordinated debentures due 1998. S and P cited the company's proposed offering of two mln units of common stock and warrants, which would raise 25 mln to 30 mln dlrs that would be used to retire bank debt. The offering would also result in a significant strengthening of the company's capital structure, S and P pointed out. However, the agency said it would also consider depressed industry conditions and Wainoco's ability to operate in that environment. Its implied senior debt rating is CCC. Reuter 

U.S. BUDGET DIRECTOR WARNS AGAINST TAX INCREASE

The director of the Office of Management and Budget James Miller warned that a tax increase would jeapordise real U.S. economic growth. "It's a bad idea. We don't need more money to balance the budget. We need to reduce spending and avoid things that would halt economic expansion," Miller told students at the University of Pennsylvania's Wharton School. "I think economic growth could be threatened mightily if we have a tax increase or by the perception that we're giving up on deficit reduction," he said. Miller criticised a proposal by House speaker Jim Wright to put a one pct tax on securities transactions. He said the tax would probably be ineffective because people would avoid by holding their portfolios in other instruments, like real estate, or simply by not trading as often. Miller said he doubted this proposal would pass. "I think it is frankly all but political suicide to advocate a tax increase unless the president championed it as well," he said. "And he's not going to do it, in fact he would veto a tax increase," Miller added. Reuter 

BALDRIGE SEES U.S. TRADE GAP DROPPING SOON

Commerce Secretary Malcolm Baldrige said the U.S. trade deficit should start to decline soon, possibly in the figures for February or March. "We could see the trade deficit start down in February or March," Baldrige said in an appearance before the Senate Governmental Affairs Committee. He predicted the trade deficit, which was 170 billion dlrs in 1986, would decline by 30 to 40 billion dlrs in 1987 and in 1988. Baldrige said he was making his prediction without having seen the February trade figures, but he said that the volume of imports has dropped beginning with the fourth quarter of 1986 and will continue to drop in this quarter. The eventual turnaround in the monthly trade figures will reflect the impact of the decline in the dollar, Baldrige said. Ealier, Treasury Secretary James Baker told the committee that the trade deficit had levelled off, but Baldrige said he was more optimistic, adding, "I think we turned the corner in February." Reuter 

NORMAL WORK RESUMES AT NEW ZEALAND PORTS

Normal work has resumed at New Zealand ports as negotiations between harbour board workers and employers continue. Wellington Harbour Board Workers' Union secretary Ross Wilson told reporters talks late yesterday ended with agreement to take unresolved issues before an industrial conciliator. Wilson said the only remaining issue is the length of the union award. The dispute originally was about wage rates and the form of industry negotiations. Cook Strait ferry sailings resumed after Marlborough Harbour Board workers returned to work this morning, ending their industrial action a day early. The Waterside Workers' Federation, which struck for most of last week and held more than one mln tonnes of shipping in ports, meets on Monday and Tuesday in conciliation with the Waterfront Employers' Association. Union Secretary Sam Jennings said: "We've got two days of talks. If it's not all cleaned up by then ... I don't know what will happen." Reuter 

VARITY CORP <VAT> 4TH QTR JAN 31 LOSS

Shr loss 13 cts vs loss one ct Net loss 18,600,000 vs profit 3,300,000 Revs 394.0 mln vs 351.0 mln YEAR Shr loss 21 cts vs loss 16 cts Net loss 23,300,000 vs profit 3,900,000 Revs 1.36 billion vs 1.29 billion Note: Current yr loss includes reorganization charge of 15.2 mln dlrs vs yr-ago reorganization charge of 17.6 mln dlrs. Shr after preferred divs. U.S. dlrs. Reuter 

INDIANA FEDERAL <IFSL> 4TH QTR NET

Net 492,000 vs 677,000 Year Net 2,650,000 vs 2,566,000 NOTE: Company's full name is Indiana Federal Savings and Loan Association. Per share information not available. Bank went public on February 11, 1987. Reuter 

LEAR-SIEGLER HOLDING TO DIVEST AEROSPACE UNIT

Forstmann Little and Co said Lear Siegler Holding Corp plans to divest its aerospace group subsidiary, comprised of the Defense Electronics Group and the Components Group. Divestitures had been expected since Lear-Siegler, a diversified conglomerate, was acquired last December in a 2.1- billion-dlr-leveraged buyout by the Wall Street firm of Forstmann Little. Lear's aerospace group revenues for fiscal 1987 are expected to be about 700 mln dlrs, said Forstmann. The Defense Electronics Group designs and manufactures weapons, management systems, flight control systems, remotely piloted vehicles and reference and navigation systems, mainly for military markets. The Defense Group subsidiaries are Astronics Corp, which is based in Santa Monica, Calif., and employs 1,076 people; Instrument and Avionic Systems Corp, based in Grand Rapids, Mich., and employs 3,479 people; International Corp, based in Stamford, Conn., and employs 266 people; and Development Sciences Corp, based in Ontario, Calif., and employs 237 people. The Components Group manufactures pumps, bearings, and other industrial components as well as nuclear control drive rod mechanisms and valves. The Group's subsidiaries include Power Equipment Corp, based in Cleveland, which employs 880 people; Energy Products Corp, based in Santa Ana, Calif., which employs 755 people; Romek Corp, based in Elyria, Ohio, which employs 262 people; and Transport Dynamics in Santa Ana, which employs 254 people. Overall, Lear's Aerospace Group's eight subsidiaries employs 7,200 people. Lear Siegler said it plans to retain Management Services Corp, engaged in aircraft maintenance modification for various Department of Defense agencies. Morgan Stanley and Co will act as financial advsiors for the group's divestitures. Last month, Lear Siegler said it planned to sell its Smith and Wesson handgun business, Starcraft Recreational Products Ltd, the Peerless truck trailer operations, and other units, as part of its restructuring plans. Lear apparently will retain its Piper Aircraft unit. Reuter 

RUBBERMAID <RBD> COMPLETES ACQUISITIONS

Rubbermaid Inc said it completed the previously announced acquisitions of Viking Brush Ltd, a Canadian maker of brushes, brooms and other cleaning aids, and the Little Tikes' manufacturing licensee in Ireland. Terms were not disclosed. The acquisition of the Tikes' licensee is part of the expansion of Little Tikes in the European toy market. Reuter 

KANSAS POWER AND LIGHT <KAN> CHAIRMAN LEAVING

Kansas Power and Light Co said it will name a successor on or before May 5 to its outgoing chairman and chief executive officer William Wall. Wall, who will assume the position of chairman and chief executive officer at Asbestos Claims Facility, will fill the positions which have been vacant for several months, the company said. Reuter 

CRYSTAL OIL CO <COR> 4TH QTR LOSS

Oper shr loss 16 cts vs loss 44 cts Oper net loss 8,926,000 vs loss 14.4 mln Revs 9,920,000 vs 21.2 mln Year Oper shr loss 4.30 dlrs vs loss 2.24 dlrs Oper net loss 221.8 mln vs loss 53.7 mln Revs 51.4 mln vs 94.4 mln Note: Oper net excludes losses from discontinued operations of 228,000 dlrs vs 4,253,000 dlrs for qtr and 10.4 mln dlrs vs 14.2 mln dlrs for year. Reuter 

CHEMFIX TECHNOLOGIES <CFIX> 2ND QTR FEB 28 NET

Shr profit one ct vs loss four cts Net profit 53,040 vs loss 255,568 Rev 2,252,246 vs 755,605 Six months Shr profit three cts vs loss eight cts Net profit 217,884 vs loss 517,538 Rev 4.9 mln vs 1.6 mln NOTE: Company's full name is Chemfix Technologies Inc. Reuter 

FEDERAL-MOGUL CORP <FMO> SETS REGULAR DIVIDEND

Qtly div 40 cts vs 40 cts prior Pay June 10 Record May 27 Reuter 

IOWA RESOURCES INC <IOR> DECLARES QTLY DIVIDEND

Qtly div 41 cts vs 41 cts prior Pay May 1 Record April 8 Reuter 

EIA SAYS DISTILLATE STOCKS OFF 3.2 MLN BBLS, GASOLINE UP 2.2 MLN, CRUDE UP 7.5 MLN

U.S. HOME RESALES UP IN FEBRUARY, REALTORS SAY

The National Association of Realtors said sales of previously owned homes rose six pct during February from January levels to a seasonally adjusted annual rate of 3.69 mln units. The realtors' group said the sales rise was apparent across the country and reflected lower mortgage interest rates as well as more housing demand. Actual resales of homes during February totaled 241,000, up 11.6 pct from the January total of 216,000, the association said. Reuter 

EL PASO ELECTRIC <ELPA> TO BUY BACK BONDS

El Paso Electric Co said it plans to redeem its 40 mln dlrs of 16.35 pct first mortgage bonds of 1991 and 60 mln dlrs of 16.20 pct first mortgage bonds of 2012. It will buy back at par plus accrued interest the 16.35 pct issue in May and the 16.20 pct bonds after August one. El Paso Electric will use proceeds of about 684.4 mln dlrs from sales and leasebacks, completed in 1986, of its entire ownership interest in Palo Verde nuclear generating station Unit 2 to redeem the double-digit debt. Reuter 

LOWER U.S. SOYBEAN LOAN IDEA SHARPLY CRITICIZED

U.S. soybean lobbyists and congressional aides criticized a proposal from a senior Agriculture Department official that Congress allow the U.S. soybean loan level to be officially lowered to 4.56 dlrs per bushel next year. "I don't know who in Congress would propose that happening. Politically it would be totally unacceptable," an aide to a senior farm-state senator said. USDA undersecretary Daniel Amstutz said this week that Congress should give USDA authority to keep the soybean loan at its current effective rate of 4.56 dlrs per bushel rather than increasing it to its minimum allowed level of 4.77 dlrs. "I'm convinced that Congress will not go along with this," American Soybean Association President Dave Haggard said. Amstutz told reporters following a senate hearing that if the soybean loan rate were 4.56 dlrs, USDA could then consider ways to make U.S. soybeans more competitive. His comments were seen as possibly indicating what the the administration's position is in the debate over what should be done to make soybeans competitive and at the same time protect soybean farmers' income. Using soybean specific certificates to further buydown the loan rate or implementation of a marketing loan have been pointed to as the most effective ways to get soybean prices competitive. USDA secretary Richard Lyng, however, continues to maintain his opposition to a marketing loan, saying such a move would be too costly. "There will be alot of other options that will be considered before Congress looks at that one (the Amstutz proposal," said Bill O'Conner, aide to Rep. Edward Madigan (R-Ill), ranking minority leader of the Agriculture Committee. "Anybody representing large groups of soybean producers would not be very excited about supporting a lower soybean loan," O'Conner said. Congress may very likely look at the soybean loan and decide that they cannot increase it from its current 5.02 dlr basic rate, but that there has to be something mandated to increase soybean's competitiveness, David Graves, aide to Sen. Thad Cochran (R-Miss) said. Cochran, a staunch supporter of a soybean marketing loan, would support a soybean loan of 5.02 or 4.77 dlrs with a certificate buydown, Graves said. Reuter 

FIDUCIARY TRUST CO IN FIVE-FOR-ONE STOCK SPLIT

<Fiduciary Trust Co International> said its shareholders at the annual meeting approved a five-for-one stock split effective May 15, 1987, to holders of record on April 15, 1987. The company said the split would increase the number of authorized common shares from 440,000 to 2,200,000 shares issued. In addition, the company said it authorized another 800,000 shares, but would not issue them at this time. The company also changed the stock's par value from 10 dlrs a share to 2.50 dlrs a share. It explained it transferred 1,100,000 dlrs from its undivided profits account to its capital account in order to raise the new par value from two dlrs, under the five-for-one split, to 2.50 dlrs. Reuter 

MODULAIRE <MODX> BUYS BOISE HOMES PROPERTY

Modulaire Industries said it acquired the design library and manufacturing rights of privately-owned Boise Homes for an undisclosed amount of cash. Boise Homes sold commercial and residential prefabricated structures, Modulaire said. Reuter 

U.S. HOUSE PANEL ADOPTS BILL THAT COULD BAR JAPANESE PRIMARY DEALERS

LITTLE SUPPORT FOR MANDATORY ACREAGE CUTS - LYNG

U.S. Agriculture Secretary Richard Lyng said he believes proposed legislation calling for mandatory acreage reductions has little support in Congress and voiced Reagan administration opposition to it. "The administration would be very much opposed to that legislation," he told a Virginia Farm Bureau lunch. "But fortunately I don't detect a strong interest in that legislation." He added, "I doubt there will be (enough) support to get it out." The controversial bill, supported by Representative Richard Gephardt, a Missouri Democrat, calls for a national referendum to be conducted that could result in mandatory unpaid acreage cuts of up to 35 pct, paid land diversion beyond that level if necessary and a marketing quota. Reuter 

UAL <UAL> UNIT LINKS RESERVATION SERVICE

UAL Inc, which on May 1 becomes Allegis Corp, said it established a direct communications link between its Apollo Services reservations system and Budget Rent a Car, Hilton Hotels and Hilton International Hotels. Under the new system, all Budget, Hilton and Hilton International hotel reservations made through Apollo, which is owned by UAL's Covia Corp, will pass the ARINC system and speed up time it takes to complete a traveler's reservation, the company said. Reuter 

DANA CORP <DCN> DEBT LOWERED BY S/P

Standard and Poor's Corp said it downgraded Dana Corp's 900 mln dlrs of debt securities. Cut were Dana's senior debentures, industrial revenue bonds and medium-term notes to A-minus from A, and commercial paper of Dana and its unit Dana Credit Corp to A-2 from A-1. S and P said Dana's management plans an aggressive stock repuchase which would result in a significantly more leveraged capital structure. The combination of higher debt levels and ongoing stock repurchases, about 12 mln shares in the past two years financed mainly with debt, bring debt leverage to 48 pct as of December 31, 1986 from 30 pct the year earlier. Reuter 

MINNESOTA POWER <MPL> SELLS SEVEN-YEAR BONDS

Minnesota Power and Light Co is raising 55 mln dlrs through an offering of first and refunding mortgage bonds due 1994 with a 7-3/4 pct coupon and par pricing, said sole manager PaineWebber Inc. That is 68 basis points more than the yield of comparable Treasury securities. Non-callable for five years, the issue is rated A-2 by Moody's Investors Service Inc and A-plus by Standard and Poor's Corp. Reuter 

LA QUINTA MOTOR INNS INC<LQM>3RD QTR FEB 28 NET

Shr profit 25 cts vs loss nine cts Net profit 3,433,000 vs loss 1,310,000 Revs 37.1 mln vs 39.0 mln Nine mths Shr profit 28 cts vs profit 27 cts Net profit 3,883,000 vs profit 3,908,000 Revs 133.2 mln vs 132.0 mln Avg shrs 13.8 mln vs 14.2 mln Note: Current net includes gain on sale of 31 inns of 7,719,000 dlrs for qtr and 7,975,000 dlrs for nine mths. Reuter 

KANSAS CITY SOUTHERN INDUSTRIES SAYS IT EAGER TO PURCHASE SOUTHERN PACIFIC RAILROAD

FNMA ANNOUNCES 10 AND 20-YEAR MORTGAGE PRODUCTS

The Federal National Mortgage Association said it will begin purchasing 10 and 20-year fixed rate mortgages in addition to 15 and 30 year mortgages. It said the new intermediate term mortgage purchase programs are designed to offer home buyers more home financing flexibility. Edward J. Pinto, FNMA's Senior Vice President, said intermediate term mortgages offer "lower interest rates, substantial interest savings, lower inflation rates and, in many cases, faster equity build-up" than longer-term mortgages. Reuter 

U.S. CHIPMAKERS URGE SANCTIONS AGAINST JAPAN

The Semiconductor Industry Association urged the U.S. government to impose trade sanctions against Japan for violating the U.S.-Japan Semiconductor Trade Agreement. In a letter to Treasury Secretary James Baker the group said sanctions should be imposed against Japanese chipmakers as of April 1 and should continue until the United States is satisfied that there is full compliance with the agreement. The group said action by Japan to cut back on semiconductor exports is not what is required. "America's interests require that agreements be honored and that U.S. industries not bear the burden for the persistent unwillingness or inability of the government of Japan to deliver on its commitments," the trade group said. The White House Economic Policy Council is expected to discuss possible sanctions against Japan at a meeting scheduled for Thursday. The trade group said Japan has not lived up to the terms of the agreement last year which was aimed at ending Japanese dumping of semiconductors and at opening Japanese markets to foreign-based manufacturers. Reuter 

U.S. LEGISLATION COULD BAR JAPANESE DEALERS

The House Banking Committee approved legislation to bar foreign securities firms from designation as primary dealers in U.S. government securities unless the relevant foreign government allows U.S. securities firms the same trading rights. The impact of the proposed legislation would be on three Japanese securities firms already doing business in the U.S., an aide to the sponsor of the provision Rep. Charles Schumer said. Japan would have six months to open its government securities markets to U.S. firms before the ban would start. Other foreign firms would meet the test of reciprocal access. The legislation was approved as part of a major trade bill, which the House will consider next month. The bill also has to be considered by the Senate and signed by the president. The three Japanese firms are Nomura Securities Co. and Daiwa Securities Co., which received approval from the U.S. Federal Reserve Board to serve as primary dealers, and Aubrey G. Lanston Co., owned by the Industrial Bank of Japan. Schumer, a New York Democrat, said the Fed would not be allowed to designate any new firms as primary dealers unless their government allows reciprocal access to U.S. companies. Both the House and Senate Banking Committees opposed the Fed action on the two Japanese firms. Reuter 

BOLIVIAN DEBT BUYBACK PLAN GAINS GROUND

Bolivia's proposal to repurchase at a deep discount the 900 mln dlrs it owes to foreign commercial banks is likely to be accepted, central bank governor Javier Nogales Iturri said. Speaking to reporters at the annual meeting of the Inter-American Development Bank (IADB) here, Nogales said Bolivia's bank advisory committee, led by Bank of America, is seeking permission from creditor banks worldwide to go ahead with the scheme. More than 50 pct of the banks must give their approval, and Nogales said he is confident that this threshold will be reached. "It's working out very well, and I think we'll get clear majority," Nogales said. A senior banker working on the deal also said that banks are responding positively and said all the legal waivers necessary could be obtained within two months. Bolivia halted all payments on its commercial bank debt in March 1984. Hyperinflation has been curbed and public spending trimmed, but its debt is still trading as low as 10 cts on the dollar on the secondary market and many banks have written off most, if not all, of their loans to the country. Bankers see little chance for a substantive recovery in Bolivia's economic fortunes and so are willing to collect what they can on the loans. Nogales said Bolivia would offer to buy back the debt at a market price. He said some banks might want to hold out for a higher price, but others would see the repurchase offer as a window of opportunity to cut their losses. Bolivia intends to pay for the repurchase with aid that foreign governments, especially the United States and West Germany, are providing to help finance the eradication of coca crops. Cocaine, although illegal, is Bolivia's largest export. The campaign to persuade farmers to grow legal crops instead of coca would be financed instead using local currency, Nogales said. Because the fiscal deficit has been reduced to some four pct of gross domestic product, money supply could be increased to pay for the drug-eradication drive without too much of n impact on inflation, he added. Nogales said he did not expect Bolivia's debt repurchase to become a model for other debtors in dire straits. "We're not seeking a universal solution," he said." Reuter 

PDVSA PICKS ARCO-AGIP CONSORTIUM IN COAL VENTURE

Petroleos de Venezuela S.A. chose a consortium formed by Atlantic Richfield Co <ARC> and Italy's Agip-Carbone to exploit the coal deposits at Guanare in western Zulia state, PDVSA president Juan Chacin Guzman said. Chacin said PDVSA will sign a letter of intent next month to form a partnership with the consortium, which consists of Arco's Venezuelan subsidiary ACC Venezuela Inc, and Agip, a subsidiary of Italy's <Eni>. He said the consortium, which will own 48 pct of the joint venture, may be expanded later to include Carboex of Spain. PDVSA will have controlling interest of 49 pct in Carbozulia. Reuter 

S/P DOWNGRADES CHASE, CHEMICAL, IRVING, MANUFACTURERS, MELLON AND SECURITY PACIFIC

ICN <ICN> SAYS KODAK SALE WILL NOT AFFECT R/D

ICN Pharmaceutical Inc said it did not view Eastman Kodak Co's <EK> decision to sell its 2.3 pct share of ICN's common stock as having any effect on the status of its drug ribavirin or the previously reported ongoing development of that drug in the antiviral field. ICN recently submitted data to the Food and Drug Administration on studies using its antiviral drug ribavirin for treating some AIDS-related disorders. In a statement, ICN also said the sale will not effect its previously announced plans to seek an acquisition of a major pharmaceutical company. ICN also said the planned sale will have no effect on its long-term research partnership with Kodak and Kodak's continued funding of the Nucleic Acid Research Institute. Two years ago Kodak agreed to invest 45 mln dlrs over six years to form and operate a venture with ICN to explore new biomedical compounds. It acquired a 2.3 pct stake in ICN as a result of that agreement. ICN said Kodak today confirmed to ICN its continuing confidence in the progress of the joint project. ICN also said although there were discussions today between ICN and Kodak regarding a private sale of the shares to ICN, no decision has been made on this matter. Reuter 

RECENT U.S. OIL DEMAND UP 0.1 PCT FROM YEAR AGO

U.S. oil demand as measured by products supplied rose 0.1 pct in the four weeks ended March 20 to 16.16 mln barrels per day from 16.15 mln in the same period a year ago, the Energy Information Administration (EIA) said. In its weekly petroleum status report, the Energy Department agency said distillate demand was off 0.1 pct in the period to 3.258 mln bpd from 3.260 mln a year earlier. Gasoline demand averaged 6.72 mln bpd, off 1.2 pct from 6.80 mln last year, while residual fuel demand was 1.38 mln bpd, off 2.1 pct from 1.41 mln, the EIA said. Domestic crude oil production was estimated at 8.35 mln bpd, down 7.8 pct from 9.06 mln a year ago, and gross daily crude imports (excluding those for the SPR) averaged 3.44 mln bpd, up 16.3 pct from 2.95 mln, the EIA said. Refinery crude runs in the four weeks were 11.90 mln bpd, up 1.4 pct from 11.74 mln a year earlier, it said. In the first 78 days of the year, refinery runs were up 1.8 pct to an average 12.25 mln bpd from 12.04 mln in the year-ago period, the EIA said. Year-to-date demand for all petroleum products averaged 16.32 mln bpd, up 1.8 pct from 16.04 mln in 1986, it said. So far this year, distillate demand rose 0.1 pct to 3.31 mln bpd from 3.30 mln in 1986, gasoline demand was 6.60 mln bpd, up 0.1 pct from 6.59 mln, and residual fuel demand fell 0.4 pct to 1.42 mln bpd from 1.43 mln, the EIA said. Year-to-date domestic crude output was estimated at 8.41 mln bpd, off 7.7 pct from 9.11 mln a year ago, while gross crude imports averaged 3.96 mln bpd, up 28.1 pct from 3.09 mln, it said. Reuter 

FED APPROVES CHEMICAL BANK ACQUISITION OF TEXAS COMMERCE BANCSHARES

S/P DOWNGRADES SIX U.S. MONEY CENTER BANKS

Standard and Poor's Corp said it downgraded six U.S. money center bank holding companies, affecting about 13.3 billion dlrs of debt securities. They are Chase Manhattan Corp <CMB>, Chemical New York Corp <CHL>, Irving Bank Corp <V>, Manufacturers Hanover Corp <MHC>, Mellon Financial Corp <MEL> and Security Pacific Corp <SPC>. S and P said the action on Chase, Chemical, Irving and Manufacturers primarily reflected continued vulnerability to lesser developed countries and median financial performance. Standard and Poor's said its downgrade of Chemical also reflected that holding company's acquisition of Texas Commerce Bancshares <TCB>, which was just now approved by the Federal Reserve. For Mellon and Security Pacific, S and P cited higher non-performing assets and weaker operating earnings. The rating agency said it completed a review, based on 1986 results, of the largest U.S. bank holding companies. It paid special attention to reassessing the effect of exposures to lesser developed countries on the holding companies' earnings and capital. "Brazil's unilateral moratorium on debt service payments underscored the potential for polarization between bankers and debtor countries," S and P said. S and P noted that while Argentina, Brazil, Mexico and Venezuela each face unique economic problems, the lack of progress toward moderating their debt service burdens has been disappointing. However, the agency pointed out that a substantive improvement in the large banks' financial positions has acted as a counter-balance to the Latin American debt situation. Citing increasing financial strength, S and P said it affirmed the debt ratings of Citicorp <CCI>, Bankers Trust New York Corp <BT>, Bank of Boston Corp <BKB> and J.P. Morgan and Co Inc <JPM>. S and P noted that most U.S. bank holding companies have what it termed easily realizable capital resources available to them, such as undervalued real estate, appreciated portfolio securities and overfunded pension plans. "Most bank managements appear committed to improving the quality of their balance sheets," S and P said, noting many now emphasize long-term strategies over short-term earnings. Standard and Poor's reduced Chase Manhattan's senior debt to AA-minus from AA, subordinated debt to A-plus from AA-minus and preferred stock to A from A-plus. The commercial paper of the parent and its unit Chase Manhattan Bank of Canada were affirmed at A-1-plus. Chase has 3.2 billion dlrs of debt outstanding. It has 6.4 billion dlrs of loans to Argentina, Brazil, Mexico and Venezuela - one of the highest exposures to lesser developed countries among U.S. money centers. Chase's underlying profitability remains at median levels because of its high expense structure, S and P said. S and P cut Chemical's and the unit Chemical New York N.V.'s senior debt to AA-minus from AA and subordinated debt to A-plus from AA-minus. About 1.2 billion dlrs of long-term debt was affected. The agency cited Chemical's relatively large exposure to Latin American borrowers, particulary Brazil and Mexico, continued high levels of nonperforming assets and the pending acquisition of Texas Commerce. Aggregate exposure to Argentina, Brazil, Mexico and Venezuela was almost four billion dlrs at year-end 1986, or 105 pct of equity and reserves, S and P pointed out. Irving's senior debt was reduced to A-plus from AA-minus, with subordinated debt and preferred stock lowered to A from A-plus. Its commercial paper was affirmed at A-111-1plus. Irving has about 500 mln dlrs of debt outstanding. Its approximately 1.4 billion dlrs of loans to the four major Latin debtor countries account for 110 pct of year-end equity and reserves. S and P downgraded Manufacturers Hanover's senior debt to A from A-plus, subordinated debt to A-minus from A and preferred stock to BBB-plus from A-minus but affirmed its A-1 commercial paper. The bank has 3.8 billion dlrs of debt. S and P noted that Manufacturers has about 6.7 billion dlrs of loans to the major Latin debtor nations and has experienced weak earnings. However, the unit CIT Group Holdings Inc's AA-minus senior debt and A-1-plus commercial paper were affirmed. The rating agency cut Mellon's senior debt to A-plus from AA and preferred stock to A from AA-minus. It has 1.1 billion dlrs of debt securities. The commercial paper programs of Mellon Bank Canada and Mellon Australia Ltd, guaranteed by the parent company, were lowered to A-1 from A-1-plus. S and P cited continued lower operating earnings and rising nonperforming assets and charge-offs for Mellon. Security Pacific's 1.7 billion dlrs of debt was downgraded. Cut were its senior debt to AA from AA-plus, and subordinated debt and preferred stock to AA-minus from AA. Security Pacific Overseas Finance N.V.'s debt issues were reduced to AA from AA-plus. Affirmed were the parent's A-1-plus commercial paper and the BBB-rated debt of the unit Security Pacific Financial Systems. These actions reflected Security Pacific's continued high levels of nonperforming assets and charge-offs, S and P said. Reuter 

KANSAS CITY <KSU> READY TO BUY SOUTHERN PACIFIC

Kansas City Southern Industries Inc said it is ready to promptly purchase the Southern Pacific Transportation Co from Santa Fe Southern Pacific Corp <SFX> if the Interstate Commerce Commission rejects Sante Fe's attempt to reopen the merger of Southern and the Atchison, Tokepa and Santa Fe Railway. In a filing with the ICC late today, the company outlined four conditions of its offer to acquire Southern Pacific. Among the conditions are that Santa Fe enter into an agreement to indemnify Kansas City for any contigent liabilites of Southern Pacific existing as of the closing date, and that the financial condition of Southern remain largely unchanged from today onward. "We are willing, even eager, to make a fair market value offer in cash for the Southern Pacific," said Kansas City Southern president and chief executive officer Landon H. Rowland. "This offer disproves the constant derogation of the Sourthern Pacific by SFSP management, best exemplified by SFSP Chief Executive John Schmidt's comment in ICC hearings that the Southern Pacific was 'bankrupt,'" said Rowland. He said that merging Southern with Kansas City will achieve the benefits of an end-to-end merger while preseving the independece of the Southern Pacific versus its existing prime competitor, Santa Fe. Kansas said that Southern's management had estimated the value of the railroad in 1983 in the range of 281 mln dlrs to 1.2 billion dlrs. It said that Morgan Stanley and Co Inc and Salomon Brothers Inc, hired in 1983 to advise Southern and Santa Fe in their merger, appraised Southern as worth between 500 mln dlrs and 800 mln dlrs less than Southern's own internal valuations. Kanasa City Southern said it will make an offer for Southern after its books, records and properties are examined. "Once that examination has been completed (and even in the absence of a willingnes of SFSP to negotiate) KCSI will make an offer in writing...." said the company. Kansas also said it argued in the ICC filing that Santa Fe had not met the legal requirements justifying the Commission's reconsideration of the proposed merger of Santa Fe and Southern Pacific, two railroads that it said basically parallel each other throughout their routes. ICC voted four to one last summer to reject the merger as inherently anticompetitive. Kansas said Santa Fe in petitioning for reconsideration now argues that the trackage agreements with the Union Pacific, the Denver and Rio Grande Western and other railroads, adds to the value of the merger. Reuter 

GENCORP <GY> BID COULD BE RAISED, GROUP SAYS

An investor group said it might be willing to raise its 100 dlr per share offer for GenCorp but so far the company has turned down requests for a meeting. "We might be able to see some additional value if we could meet" and get more financial data, said Joel Reed, speaking for the investor group. Reed told Reuters that GenCorp chairman A. William Reynolds "was not interested in sitting down and talking with us at this time." Cyril Wagner sought the meeting in a recent telephone conversation with Reynolds, Reed said. Wagner and Brown, along with AFG Industries Inc <AFG>, recently launched a surprise tender offer for GenCorp. The offer is worth 2.23 billion dlrs. Reed said under the circumstances the 100 dlr per share tender offer, which expires April 15, is a fair offer. GenCorp gained 3-1/2 to 114 today on the NYSE. Reed outlined a plan to reshape GenCorp in the event his group wins control. He said aerospace, soft drink bottling and entertainment units are potential divestiture candidates. He said the tire business, which the group wants to keep, may be more viable if merged with another tire company. "One option would be to try to grow the tire business through combination or an acquisition," Reed said. He said he believes such a merger could create a stronger force in the tire industry. Gary Miller, chief financial officer of AFG, said his company has a record of acquiring mature businesses and boosting productivity. Automation and incentives tied to profit sharing have been used with success, he said. In the case of GenCorp's RKO General broadcasting stations, Reed said the plan of the partners is to step into GenCorp's shoes and proceed with plans to sell the stations. The partners said if they succed in acquiring GenCorp they intend to consummate sale of WOR-TV in New York to MCA Inc <MCA>. GenCorp last year entered into an agreement to sell the station for 387 mln dlrs. The partners also said if they acquire Gencorp they would also proceed with the proposed sale of KHJ-TV in Los Angeles to Walt Disney Co <DIS>. RKO General would receive 217 mln dlrs and Fidelilty Television, which challenged the license, would get about 103 mln dlrs. The partners also said the Federal Communications Commission established an expedited schedule for receiving comments on their request for special temporary authorization of proposed trust arrangements while the FCC considers a formal application for transfer of the broadcast unit. Reed said he was pleased with the expedited schedule because it provides time for the agency to act on the request before the expiration of the tender offer. He said it was the aim of the partners to move as quickly as possible to eliminate uncertainty surrounding the stations. Asked about criticism of the takeover attempt voiced by some municipal officials in Akron, Ohio, where GenCorp is headquartered, Reed said, "the plan of the partners offers long term growth for Ohio." He noted that the aerospace business, slated for divestiture under the partners' plan, is located in California. "Our program is one that overall would provide the greatest long term growth for all segments," he said. Reuter 

UNOCAL <UCL> PLANS INCREASE IN CAPITAL SPENDING

Unocal Corp said it intends to increase its spending for capital projects to 929 mln dlrs in 1987, eight pct more than the 862 mln spent in 1986. The company said in its annual report that it would increase spending for exploration and development of petroleum resources by about three pct to 614 mln dlrs from 1986's 595 mln dlrs, assuming oil prices hold around current levels. The planned spending for exploration and production in 1987 remains well below the 1.1 billion dlrs spent in 1985, Unocal said. The company's proved developed and undeveloped reserves of crude oil rose slightly in 1986, Unocal said. Net crude oil and condensate reserves were 752 mln bbls as of Dec 31, 1986, compared to 751 mln bbls at the end of 1985, Unocal said. The company said its net crude oil and condensate production averaged 248,200 barrels per day in 1986 compared to 251,300 bpd in 1985. Unocal said its worldwide natural gas reserves were 6.07 billion cubic feet in 1986 compared to 1985's 6.19 billion. Net natural gas output averaged 976 mln cubic feet per day in 1986, down 10 pct from 1985's 1,084 mln, the company said. Unocal said its average sales prices for crude oil was 12.67 dlrs a barrel worldwide in 1986 compared to 23.81 dlrs in 1985, and its average sales price for natural gas was 2.03 dlrs per thousand cubic feet in 1986 against 2.24 dlrs in 1985. Average production costs for crude oil and natural gas declined nearly 30 pct to 3.41 dlrs per bbl of oil equivalent in 1986 from 4.81 dlrs in 1985, Unocal said. In the annual report, the company called for imposition of an oil import fee by the U.S. government to set a floor price of about 25 dlrs a barrel for crude oil. "Simply stabilizing prices at about 18 dlrs per barrel will not materialy slow the drop in U.S. production or the rise in imports," Chairman Fred Hartley said in the annual report. "Without decisive action in Washington, this nation will once again become a hostage to OPEC's plans and policies," Hartley said. Reuter 

FED APPROVES CHEMICAL NEW YORK <CHL> MERGER

Chemical New York Corp and Texas Bancshares Inc <TCB> said the Federal Reserve Board approved their proposed 1.19 billion dlr merger. The companies also said the Securities and Exchange Commission declared effective as of March 24 the registration statement covering the securities Chemical will issue to Texas Bancshares shareholders as part of the merger. The companies said they expect to complete the merger, which will create a bank with 80 billion dlrs of assets, by the end of the second quarter. The merger still requires shareholder approval. Reuter 

VARITY<VAT> SEES IMPROVED RESULTS AFTER 1ST QTR

Varity Corp, earlier reporting a full year loss against a prior year profit, said improvement is expected in the balance of fiscal 1987 as new products fill the inventory pipeline, cutbacks in operating costs are realized and its newly acquired Dayton Walther business is fully integrated. However, operating results are likely to remain under pressure in the first quarter ending April 30, it said. Varity earlier reported a loss for fiscal 1986 ended January 31 of 23.3 mln U.S. dlrs, compared to a year-earlier profit of 3.9 mln dlrs. Varity said continued deterioration in major markets, a weakening U.S. dollar and unforeseen delays in launching major new lines of tractors contributed to the full year loss. Industry demand for farm machinery continued to erode during the latest fiscal year, with worldwide industry retail sales of tractors sliding more than 10 pct below last year's depressed levels, the company said. However, Varity increased its share of the global tractor market by more than one pct to 18.2 pct, it said. The combined impact of costly sales incentives and foreign exchange adjustments on margins was substantial, Varity said. Reuter 

CAMPBELL RESOURCES <CCH> UPS MESTON LAKE STAKE

Campbell Resources Inc said it raised its voting stake in <Meston Lake Resources Inc> to about 64 pct from 52 pct through acquisition of another 870,000 Meston Lake shares in its previously reported takeover bid. Campbell, in its bid that expired March 23, offered 80 cts cash and 1.25 "legended" Campbell shares for each Meston share. The legended shares are not tradeable for one year. It said the 3.4 mln Meston shares not tendered in the offer were held by about 550 stockholders, including Quebec's La Societe de developpement de la Baie James, with 1.3 mln shares. Reuter 

FPL GROUP <FPL> UNIT FILES TO OFFER PREFERRED

FPL Group Inc's Florida Power and Light Co unit said it filed a shelf registration with the Securities and Exchange Commission for the future sale, through one or more offerings, of one mln shares of serial preferred stock. It said that these shares, together with 150,000 shares of preferred stock that are unissued under a previous shelf registration, should cover the utility's preferred stock financing needs for the next two years. Reuter 

METROBANC <MTBC> SHAREHOLDERS APPROVE MERGER

Metrobanc, a federal savings bank, said its shareholders approved the previously announced merger with Comerica Inc <CMCA>, a bank holding company. Metrobanc said the merger is still subject to regulatory approval. Reuter 

CONNECTICUT ENERGY <CNE>UNIT SEEKS HIGHER RATES

Connecticut Energy Corp said its Southern Connecticut Gas Co unit filed with state regulators a letter of intent to raise its rates by 2.7 pct, or about 4.2 mln dlrs, beginning in late 1987. The company said it expects to file a formal application with the Connecticut Department of Public Utility Control within 60 days. The company said a rate increase is needed to cover higher operating and maintenance expenses that have occurred since it last received a rate hike of three pct, or 4.8 mln dlrs, in January 1985. Reuter 

CATTLEMEN ASSESSING DEATH LOSS FROM STORM

Blizzard conditions in parts of the west and southwest U.S. severely stressed beef cattle and Kansas cattlemen are reporting death losses from the storm, according to livestock associations in the area. Talk among futures traders that cattle had died from the cold and blowing snow accounted for some of the strength in Live Cattle futures at the Chicago Mercantile Exchange today. "Death (of cattle) can be directly attributed to the storm, but it's hard to get a handle on a number," Todd Domer, director of communications for the Kansas Livestock Association said. Domer noted that limited reports have been filtering in of death losses at feedyards and from grazing and cow/calf operations. Western Kansas was hardest hit while Eastern Kansas only had rain, he said. Paul Johnston of the Nebraska Livestock Feeders Association said, "There's no question that baby calves coming in that kind of blizzard are probably not going to make it." We were having such a nice winter and the cows were out calving before the storm hit, he added. The worst part of the storm came through the center of the state. Precipitation was generally in the form of wet snow and some feedlots are already like "soup", he said, inhibiting cattle movements. The storm also had an effect on weight gain of larger animals. Drifting snow caused problems in moving feed and mud made it hard for cattle to reach the feed once it was available. Domer noted that feedyards sources say a tremendous cutback has occurred in feed consumption by cattle in the yards, which may or may not lead to sickness over the next several days. Cattle reduced daily feed consumption to about 12 lbs from 25 during the worst of the blizzard, he said. Mud will be more a problem as the weather breaks and snow melts. Mud adds to stress on full-grown animals and endangers smaller ones which can fall and be trampled in pens. The cost of feeding rises as animals generally consume more in cold weather, Domer said. Domer said it will be at least 10 days before yards get back to normal. Roy Gallant, from Accu Weather Services, said that although the worst of the storm is over, there are still some strong gusty winds which will not diminish until tonight. The storm started late Sunday night in West Kansas and is just now winding down. The storm has moved into South Dakota, parts of Minnesota and Eastern North Dakota, he said. Snow accumulations from the storm totaled six to 10 inches in most sections and 12 to 18 in a few spots before moving north. This equals 1/2 to 1-1/2 inches of water. Drifts of four to six feet and up to 12 feet were reported, he said. There's a possibility of another storm brushing that region tomorrow night and Friday, Gallant added. Reuter 

PLAINS RESOURCES INC <PLNS> YEAR LOSS

Oper shr loss 31 cts vs profit three cts Oper net loss 887,886 vs profit 646,250 Revs 9,724,418 vs 10.8 mln Note: Year-ago oper net excludes tax credit of 230,000 dlrs. Reuter 

ECUADOR SIGNS 280 MLN DLR IADB LOAN

Ecuador signed four loans from the InterAmerican Development Bank (IADB) totaling 280 mln dlrs, the IADB said. Ecuador's finance minister, Domingo Cordovez, and IADB President Antonio Ortiz Mena, signed the loans after the IADB's annual meeting here. A 57 mln dlr loan is for urban development, 80 mln dlrs for industrial programs, 96 mln dlrs for highway rehabilitation and 46 mln for farm research. Reuter 

PERU'S DEBT OBLIGATIONS HIT 6.3 BILLION DLRS IN 1987

Peru's foreign debt obligation this year totaled 6.3 billion dlrs, including maturities falling due and overdue payments, equivalent to almost twice its expected exports of goods and services, Central Bank President Leonel Figueroa said. He told the InterAmerican Development Bank (IADB) annual meeting here that Peru will have to maintain its 10 pct limit on debt payments to preserve growth. Figueroa said gdp grew by almost nine pct in 1986, while inflation dropped to 63 pct from an annual rate of 280 pct in the first half of 1985. Reuter 

PENNZOIL (PZL) WILLING TO SETTLE TEXACO (TX) LAWSUIT

Pennzoil Co said it had not yet received any "meaningful settlement offer" from Texaco Inc but added that the company remained willing to consider proposals to settle the 10.2 billion dlr jury judgment it won against Texaco. In its newly-released annual report to shareholders, Pennzoil said it expected the Texas state court judgment, which was upheld by a state appeals court on February 12, to be upheld if appealed again. "To date, Pennzoil has yet to receive any meaningful settlement offer from Texaco, though it remains open to any realistic effort to settle the matter," Pennzoil chairman Hugh Liedtke said in the annual report. Pennzoil also said it had budgeted 212 mln dlrs for capital spending in 1987, a drop from the 233 mln dlrs spent last year. Proved U.S. and foreign reserves of natural gas declined to 964 billion cubic feet last year, from 1.01 trillion cubic feet in 1985, because of a virtual halt in its exploration program, Pennzoil said. Its crude oil reserves dropped to 140 mln barrels from 158 mln barrels in 1985. The Houston-based company said it sold an average of 339 mln cubic feet of domestic natural gas each day last year, a 17 pct drop from 1985. The average sales price for gas dropped by 60 cents per mcf to 2.16 dlrs per mcf, Pennzoil said. U.S. crude oil and gas liquids production last year fell to an average of 33,290 barrels per day from 34,102 barrels per day in 1985. The company's total revenues in 1986 declined to 482.3 mln dlrs, from 762.5 mln dlrs the previous year. Operating income in 1986 fell more than 80 pct, to 38.0 mln dlrs. Pennzoil said its goals for 1987 included development of its Point Arguello oilfield off the California coast, to maintain current production levels in its Bluebell-Altamont Field in Utah and to drill for prospects in the Gulf of Mexico's Mobile Bay area. "Production should begin late in the year from the Harvest Platform in the Santa Maria Basin offshore California," the company said. "Pennzoil's share of this production initially should be five thousand barrels a day, increasing to a peak of 15 thousand barrels a day, net, by 1989." In its sulphur business, Pennzoil said production totaled 2.1 mln long tons last year, a decline of 18 pct from 1985. The average sales price also declined, to 138.25 dlrs per long ton from 141.05 dlrs in 1985. "The long term outlook for our sulphur operations remains bright," the company said. "We expect sulphur's pricing structure to strengthen during the current year, probably in the third and fourth quarters." Reuter 

FARM CREDIT SYSTEM TO ASK FOR CONGRESSIONAL AID

A senior representative of the financially-troubled U.S. farm credit system is expected for the first time tomorrow to ask Congress to provide assurances that stock held by system borrowers will be guaranteed. Farm credit sources said Brent Beesley, president of the Farm Credit Corporation which represents the system, will make the request at a Senate Agriculture subcommittee hearing. They said Beesley would ask Congress to take some action to assure borrowers the stock is secure. But Beesley is expected to stop short of requesting other forms of government aid. Borrowers from the farm credit system hold some four billion dlrs in system stock which could be devalued if the mounting losses of the system persist, officials said. Beesley's request expected tomorrow is seen as the first official acknowledgment from the system itself that federal aid will be needed to guarantee the value of the stock. Yesterday, Jim Billington, a member of the Farm Credit Administration board which regulates the system, said Congress should plan to spend at least 800 mln dlrs beginning late this year to bail-out the system. Congress is moving swiftly toward legislation to aid the system. Sen. James McClure, R-Idaho, has drafted a resolution which would put the Senate on record as guaranteeing the value of farm credit system stock. The resolution may be brought to the Senate floor soon, Congressional sources said. In addition to requesting a guarantee of borrower stock, Beesley is expected tomorrow to endorse the creation of a secondary market, called "Aggie-mae" by some proponents, for the resale of farm real estate loans. Sources said the farm credit system will support the idea if the system is included in the operation of the market. Farm credit sources said the system decided to request a guarantee of borrower stock at a meeting this week in Denver of the 12 presidents of farm credit system districts. Beesley's testimony to the Congressional hearing tomorrow will not include any new financial forecast of system losses, officials said. Chairman of the FCA, Frank Naylor, yesterday said the system may lose as much as 1.4 billion dlrs this year. Reuter 

GV MEDICAL INC <GVMI> 4TH QTR LOSS

Shr loss 20 cts vs loss 26 cts Net loss 798,289 vs loss 777,667 Rev 262,738 vs nil Avg shares 3,930,360 vs 2,959,029 Year Shr loss 96 cts vs loss 1.25 dlrs Net loss 3,202,355 vs loss 3,060,407 Rev 676,341 vs nil Avg shares 3,339,174 vs 2,445,423 Reuter 

FIRST FEDERAL/ARKANSAS <FARK> IN COURT RULING

First Federal Savings of Arkansas FA said a federal district court denied a motion seeking class-action status for a lawsuit that alleges the bank violated securities laws in an offering of common stock. The lawsuit alleges that First Federal violated securities laws in connection with its initial public offering. Reuter 

IBC PRESIDENT NOT TO ATTEND ICO EXECUTIVE BOARD

Brazilian Coffee Institute (IBC) president Jorio Dauster said he will not attend the ICO executive board meeting and was surprised to hear that a report of his absence had a slightly depressing effect on the New York coffee market today. "I have too much work to accomplish here in Brazil at the moment. Besides the presence of the IBC president at an ICO executive board meeting is not a tradition," Dauster said. Dauster said except in rare cases, Brazil has always sent its London-based representative to ICO board meetings. Ambassador Lindenberg Sette will attend the meeting, he said. Reuter 

COLOMBIA TO MAINTAIN FOREIGN BORROWING LEVELS

Colombia plans to maintain foreign borrowing at levels similar to the 1982-86 period, during which it received a net 1.3 billion dlrs net of repayments, Finance Minister Cesar Gaviria said. He told the Inter-American Development Bank (IADB) annual meeting here that despite Latin America's debt crisis, Colombia continues to achieve positive credit flows reflecting the strength of its economy that grew five pct last year. Public Credit Director Mauricio Cabrera said Colombia plans to launch a foreign bond issue in the second half of 1987, possibly for 60 mln dlrs. Cabrera said a 50 mln dlr floating rate note (FRN) issue by Colombia is expected to close next month. It carries a 1-1/8 pct margin over Libor, with a seven year maturity and four years grace. He also told Reuters he did not expect any increase in Colombia's financing needs as a result of current falling coffee prices, after a surge last year doubled export income from this source to around three billion dlrs. "The drop will simply bring us back to 1985 levels, with a loss of no more than about 100 mln dlrs," he said. Colombia, with a total foreign debt of around 13 billion dlrs, has a foreign borrowing programme of around three billion dlrs this year, of which about one billion is new credits. Its foreign reserves ended 1986 at 3.5 billion dlrs, equivalent to more than nine months of imports and non-financial services, and GDP growth is again expected to reach five pct this year, Gaviria said. Reuter 

EXCHANGE RATE BILL CLEARS U.S. HOUSE PANEL

The House Banking Committee adopted legislation to direct the U.S. Treasury to begin negotiations aimed at seeking regular adjustment of exchange rates by countries such as Taiwan and South Korea, whose currencies are pegged to the value of the U.S. dollar. The measure was adopted as part of a wide-ranging trade bill that will be considered by the full House in April before it moves on to the Senate. The bill's many provisions also set as a priority for the U.S. the negotiation of stable exchange rates and urge government intervention as necessary to offset fluctuations. In addition, the Banking Committee bill would authorize U.S. banks to use a variety of means to deal with the debt problems of developing countries, such as lowering interest rates on existing debt, renegotiating loans or debt forgiveness. The bill would give a blanket waiver of any federal banking regulations that bar such actions. The bill would direct Treasury Secretary James Baker to discuss with debt-ridden developing countries the possibility of the U.S. setting up a public debt management agency that would purchase their debt at a discount and negotiate the restructuring of the debt. The Banking bill authorizes U.S. participation in a multilateral investment guarantee agency (MIGA) as requested by the administration. Congress would approve an initial U.S. subscription of 22 mln dlrs. And, it sets up a council on industrial competitiveness composed of industry and administration members to explore ways to make the U.S. more competitive in world markets. Reuter 

U.S. CHIPMAKERS URGE SANCTIONS AGAINST JAPAN

The Semiconductor Industry Association urged the U.S. government to impose trade sanctions against Japan for violating the U.S.-Japan Semiconductor Trade Agreement. In a letter to Treasury Secretary James Baker the group said sanctions should be imposed against Japanese chipmakers as of April 1 and continue until the U.S. is satisfied there is full compliance with the agreement. The group said action by Japan to cut back on semiconductor exports is not what is required. "America's interests require that agreements be honored and that U.S. industries not bear the burden for the persistent unwillingness or inability of the government of Japan to deliver on its commitments," the trade group said. The White House Economic Policy Council is expected to discuss possible sanctions against Japan at a meeting scheduled for Thursday. The trade group said Japan has not lived up to the terms of the agreement last year which was aimed at ending Japanese dumping of semiconductors and at opening Japanese markets to foreign-based manufacturers. Reuter 

LOMAC TO PAY COSTS IN FIRST SUPERFUND AGREEMENT

Lomac Inc, a publicly traded company, will pay the U.S. and Michigan governments to help clean up a toxic waste site in the first major settlement under the 1986 Superfund-Two act, Michigan officials said. Lomac will pay 17 mln dlrs to help clean the site, they said. Stewart Freeman, Michigan's chief environmental attorney, told Reuters that Lomac, a new company, agreed to buy a chemical site near Muskegon, Mich., formerly operated by Bafors Nobel Inc, a bankrupt subsidiary of A.B. Nobel of Sweden. The settlement was also the largest in history in a bankruptcy case involving environmental issues, Freeman said. Other companies with Superfund disputes are watching the case closely, he said. "There are a number of very large corporations talking to the attorney general," Freeman said, referring to Michigan Atty. Gen. Frank J. Kelley. Freeman would not identify the companies involved, saying he was not sure whether confidentiality agreements had been made. Lomac will pay 25-26 mln dlrs in the settlement. Five mln dlrs will be paid to the federal and 12 mln dlrs will go to the Michigan government for cleanup at the site, the Lakeway Chemical plant. The remaining funds will go to medical surveillance of former workers at the plant. Under the agreement, a trust fund will be set up "to monitor the health of employees who may have been exposed to dangerous chemicals that were manufactured at the plant before 1971," the Michigan attorney general's office said in a statement. Freeman said the medical fund was necessary because of possible medical problems among workers at the site. The Muskegon facility was formerly used to manufacture dyes. Freeman said Bofors Nobel spent 50 mln dlrs cleaning up the site, formerly owned by Lakeway Chemical Co, before "the economic decision was made in Sweden" to place the operation in bankruptcy. Under the agreement, Bofors Nobel will sell the site, which still holds an operating chemical plant, to Lomac. Some 150 employees work at the plant, a spokesman for the Michigan attorney general said. The state attorney general said cleanup at the site will begin "immediately," and will be supervised by federal and state officials. Freeman said the plant site is not presently listed on the federal superfund list, which qualifies the toxic waste site for federal cleanup funds. He said federal officials will try to get the Muskegon facility onto the superfund list. If they are unable to do so, the 5.0 mln dlr federal portion of the settlement will be turned over to Michigan officials to be used in the cleanup, Freeman said. Reuter 

WORLD BANK AFFILIATE PROVIDES CREDIT FOR HAITI

The World Bank today approved a 40 million mln dlr loan to assist an economic reform program under way in Haiti. The bank said the loan is being made through its affiliate, the International Development Association, and will be used to restore economic confidence, approve the allocation of resources, and stimulate economic growth. The bank said the the 50-year credit, which is interest free, comes as there is growing evidence that reforms already underway have improved the country's economic situation. REUTER 

U.S. AGRICULTURE SECY DOUBTFUL ON DEFICIT GOAL

U.S. Agriculture Secretary Richard Lyng today publicly expressed doubts that the federal government would meet the fiscal year 1988 deficit reduction target set by the Gramm-Rudman law. "I don't think anyone believes we'll meet the 108 billion dlr target," Lyng told the Virginia Farm Bureau. Lyng is believed to be the first top administration official to publicly express doubts the target would be met. The remark was quickly disavowed by the White House Office of Management and Budget (OMB). "His 'no one' does not include the OMB," said spokesman Edwin Dale. Lyng made the remark while describing the need for the agriculture sector to share the burden of cutbacks under last year's Gramm-Rudman law. "There needs to be some reduction of some expenditures to at least get close to the Gramm-Rudman figure," he said. "Agriculture would not be independent from that." Lyng's special assistant, Floyd Gabler, said the remark was an opinion based on Lyng's discussions with congressmen. "If the Secretary said that he's simply expressing an opinion he's gotten from the progress or lack of progress on the Hill," he said. Reuter 

CLABIR <CLG>, AMBRIT <ABI> CALL OFF MERGER

Clabir Corp and AmBrit Corp said they called off their plans for Clabir to buy the 16 pct voting interest in AmBrit that it does not already own. The companies said they agreed not to pursue the merger because several actions recently taken by AmBrit would mean substantial delays in completing the deal. They said they might revive merger plans at a later date or seek other ways for Clabir to increase its holdings in AmBrit. Reuter 

FAA ORDERS VOICE RECORDERS ON NEW COMMUTER CRAFT

The Federal Aviation Administration said it will require cockpit voice recorders to be installed on all newly made commuter aircraft by May 26 1989. The FAA said data from the cockpit voice recorder, which makes a record of cockpit conversation during flight, was invaluable to accident investigators. The new rule covers newly made jet and turbo prop commuter aircraft that carry six or more passengers and that must be flown by two pilots. Reuter 

TELECOMMUNICATIONS BILL CLEARS U.S. HOUSE PANEL

The House Energy and Commerce Committee approved major trade legislation that will give President Reagan authority to retaliate if negotiations to open foreign markets to U.S. telecommunications products fail. The provision was part of a major trade bill the committee approved on a vote of 26 to 15. It will be wrapped into a trade bill being written in several House committees and due to be considered in the full House in late April. The bill also requires foreign investors to file detailed reports to the Commerce Department on their U.S. holdings in real estate, securities or U.S. companies. In response to congressional concern over the Fujitsu proposal to take control of Fairchild Semiconductor Corp., the bill would give Reagan the power to bar foreign acquisitions of U.S. firms if the sale threatened U.S. national security. The legislation would bar for one year imports of advanced audio digital tape machines unless the recording capability is disabled. The action was taken after the U.S. recording industry said the new machines would lead to rampant recording piracy and legislation was needed to protect their rights. The bill authorizes government spending of 100 mln dlrs a year for five years to help pay for research by a consortia of semiconductor manufacturers. Reuter 

BANK BOARD TAKES CONTROL OF FLORIDA THRIFT

The Federal Home Loan Bank Board said it took control of the South Florida Banks and transferred its assets and deposits to a newly chartered federal mutual association. The Bank Board said it approved a new five-member board for the association. South Florida was a state chartered stock institution with 175.2 mln dlrs in assets. The Bank Board said the savings bank suffered from poorly underwritten loans and investments plus a high cost of funds and operating expenses, including excessive compensation of some former officers. Reuter 

MOODY'S DOWNGRADES ZENITH ELECTRONICS <ZE> DEBT

Moody's Investors Services Inc said it downgraded 200 mln dlrs of long-term debt of Zenith Electronics Corp. Cut were Zenith's senior debt to Ba-2 from Baa-3, convertible subordinated debt to B-1 from Ba-2 and commercial paper to Not-Prime from Prime-3. Moody's cited the company's overall losses. The agency also said it believes that future profits in the consumer electronics business will be limited because of intense competition from international market participants. Moody's pointed out that Zenith's total debt increased sharply over the past year and is being serviced by weak cash flow. A spokesman for Zenith criticized the action. "The company believes the downgrade is unwarranted. Operating results for 1986 improved over 1985 and Zenith was profitable in the second half of 1986," he said. Reuter 

SDC SYDNEY REPLACES CHAIRMAN

<SDC Sydney Development Corp> said it terminated its service agreement with chairman and chief executive Walter Steel on March 24, and appointed Donald Michelin as acting chief executive. "The performance of the company since Mr. Steel's appointment in June, 1985 has not fulfilled either Mr. Steel's plans or the objectives of Alexis Nihon Investments Inc, the principal creditor and largest shareholder, and a change in senior management was viewed as essential to redirecting the business of the company," SDC Sydney said. Michelin is an Alexis Nihon officer and director. Reuter 

COST OF PIK CERTIFICATES TO BE EYED BY CONGRESS

Congress, eager to find budget savings, launches a review of the U.S. Agriculture Department's generic commodity certificate program tomorrow, amid signs USDA and the General Accounting Office, GAO, are at odds over how much the program has cost U.S. taxpayers. The GAO concluded in a preliminary report last week that payment-in-kind, or PIK, certificates cost between five and 20 pct more than cash outlays, administration officials who asked not to be identified said. USDA officials, however, took issue with the report, saying it did not take into account storage, handling and transport savings that accrue to the government. The GAO then decided to re-examine the costs, sources said. The issue is an important one, because congressional budget committees are known to be considering limiting the use of certificates as a means of cutting spending. Agriculture Under Secretary Daniel Amstutz and GAO Senior Associate Director Brian Crowley are set to testify before the Senate Agriculture Committee tomorrow. Amstutz is expected to tell the committee that there are uncertainties in determining the cost of certificates compared to cash outlays, and that savings to the Commodity Credit Corp, CCC, almost equal costs, department sources said. USDA estimates that it costs the government about 75 cents to store, handle and transport each bushel of commodity put in government storage. It was unclear whether the GAO, Congress' investigative arm, would stick by its original analysis that it costs the government more to use certificates instead of cash in farm price and income support programs, Reagan administration sources said. The GAO is expected to point out that use of payment-in-kind, PIK, certificates has helped relieve tight storage by moving grain that otherwise might not have been sold. The testimony by Amstutz and GAO Senior Associate Director Brian Crowley comes as congressional budget committees intensify their efforts to pinpoint ways to cut the federal budget deficit -- including considering limits on the use of PIK certificates. The CCC issues dollar-denominated PIK certificates, or certs, as a partial substitute for direct cash outlays to farmers or cash subsidies to exporters. Certs can be used to repay nonrecourse loans or exchanged for CCC commodities or cash. Between April and December 1986, CCC issued 3.8 billion dlrs worth of certificates, according to USDA. Up to another 6.7 billion dlrs worth could be issued between January and August 1987, according to USDA. Certs can cost the government more than cash primarily because recipients can use the certificates to pay back government loans at levels below the loan rate. Eliminating this practice, called "PIK and roll," would save the government 1.4 billion dlrs between 1988-92, according to the Congressional Budget Office, CBO. That estimate, according to a CBO official, was based on an assumption that certificates cost the government about 15 pct more than cash payments. The Senate and House Budget Committees are known to be considering curbs on PIK-and-roll transactions among other savings alternatives. The GAO last week reached the tentative conclusion that the estimated three billion dlrs of certificates redeemed to date have cost the federal government between 150 mln and 600 mln dlrs, or between five and 20 pct, more than cash outlays, one administration official said. However, the GAO has decided to reassess those estimates based in part on USDA criticism, department officials said. The broad range of the cost estimate is partly attributable to the different effect certificates can have on market prices over the course of a crop year. USDA's Economic Research Service, for example, has found that between June and August last year, the 215 mln bushels of corn exchanged for certificates lowered the price of corn by between 35 and 45 cents per bushel. Between September and November, however, certificates had only a marginal impact on corn prices, according to the ERS study, obtained by Reuters. Reuter 

DAILY TELEGRAPH IN DEAL WITH NEWS INTERNATIONAL

<Hollinger Inc> said 58 pct-owned <The Daily Telegraph PLC>, of London, agreed to form a joint venture printing company in Manchester, England with <News International PLC>. Financial terms were undisclosed. It said the deal involved News International's acquisition of a 50 pct stake in the Telegraph's Trafford Park Printing Ltd subsidiary. The joint company will continue to print northern editions of the Telegraph and Sunday Telegraph, with spare capacity used to print The Sun and News of the World. The arrangement will significantly cut Telegraph costs, Hollinger said. Reuter 

USACAFES <USF> UNIT POSTS RECORD WEEKLY SALES

USACafes LP said sales at its Bonanza Restaurant unit rose 16.6 pct to a record 10.4 mln dlrs for the week ended March 22. That compares with sales of 8,909,000 dlrs for the comparable week last year, the partnership said. USACafes, which said year-to-date sales from the Bonanza chain were up 13 pct, attributed the increase to the budget steakhouse chain's decision to add chicken, seafood and salad entrees to its menu. It said the new entrees now account for two-thirds of the chain's sales. Reuter 

MACAO TO KEEP EXISTING SYSTEM FOR 50 YEARS

Portuguese Prime Minister Anibal Cavaco Silva said Portugal would hand back Macao to China on December 20, 1999, but added the existing political, economic and social system there would be maintained until the year 2050. Cavaco Silva, speaking on national television hours before the initialling in Peking of an agreement on the handover, said that under the accord Macao would be a special administrative region of China and would have a large measure of autonomy. Under the accord, Portuguese administration of the territory would end on December 20, 1999 but the existing system there would be maintained until the year 2050, Cavaco Silva said. "The existing way of life in Macao, the Portuguese laws, basically our political, economic and social system, will remain in force for a further 63 years from now," he said. Cavaco Silva said he would go to Peking in the first half of next month to formally sign the agreement with China, which would then be submitted to Portugal's parliament for approval. Cavaco Silva said that after Portuguese administration of Macao formally ended in 1999, the future government of the territory would enjoy complete autonomy except in the areas of defence and foreign relations. It would however be able to make economic, trade and finance agreements with other countries. The head of government would be named on the basis of elections held for the post. Macao would have an elected legislative assembly and an independent judiciary. There would be religious freedom, a free press and freedom of expression. The Portuguese language could continue to be used in the government, assembly and courts. Cavaco Silva said the current financial system would continue after the year 2000. The existing banks and freedom of capital movements would be maintained as would the convertibility of the pataca as the territory's monetary unit and the legal protection of foreign investment. Only the Macao government would be able to collect taxes. Cavaco Silva said that those among Macao's 400,000 population who held Portuguese nationality on the date of the handover would thereafter continue to be able to use their Portuguese passports and their nationality rights. The nationality issue had been one of the points of disagreement in the complex handover talks. The special administrative status to be granted to Macao after its handover mirrors a similar accord for the nearby British colony of Hong Kong, which reverts back to Chinese rule in 1997 under a 1984 Sino-British agreement. Reuter 

FRIEDMAN INDUSTRIES INC <FRD> QUARTERLY DIV

Qtly div seven cts vs seven cts prior Pay June one Record May four Reuter 

CHIRAC SEES FASTER PRIVATISATION

France's right-wing government now expects to raise about 40 billion francs this year from its privatisation program, 10 billion more than it targetted, Prime Minister Jacques Chirac said. The success of the program, launched late last year, meant the government would be able to go beyond the 30 billion franc figure it estimated in its 1987 budget, he said in a television interview. About 75 pct of the additional revenue would be used to cut state debt and 25 pct to provide additional funds for public sector investment, he said. Chirac said Finance Minister Edouard Balladur proposed to make two billion francs of supplementary funding available for a five biillion franc accelerated motorway building program. The remaining three billion francs for this would come from a motorway loan now in the domestic market. Balladur also proposed to make some extra cash available to the French national railways, SNCF, for the construction of high-speed rail track, and to boost research in the aerospace industry, he added. An estimated 15,000 jobs would be generated by speeding up motorway construction, Chirac said. Reaffirming his long term strategy of cutting the state sector deficit and easing taxes, Chirac repeated government pledges to cut the corporate tax rate to 42 pct from 45 pct in the 1988 budget. Personal income tax would also be reduced but details had still to be worked out, he added. The government aimed to make France the leading economic power in Western Europe within five years, he told his television interviewer. Reuter 

IADB MEETING ENDS WITH U.S. ISOLATED ON REFORM

The United States remained isolated among the Inter-American Development Bank's 44 members as the Bank ended its annual meeting here today without agreement on U.S. proposals to reform the regional lending institution. The three-day meeting was dominated by the dispute and by the failure of Brazil and its creditor banks to make any breakthrough on debt talks after Brasilia suspended interest payments last month. Brazil's Central Bank governor Francisco Gros said after talks with its 14-bank advisory committee here yesterday that it could not make a token interest payment now, as sought by banks, but would maintain contact with the banks. Delegates agreed to shelve discussion of IADB reforms until the half-yearly International Monetary Fund and World Bank meetings in two weeks time in Washington at which a decision will be urgently sought in order to maintain credit flows to the recession-hit region. "The Bank cannot maintain an adequate lending level unless it is given increased resources," IADB president Antonio Ortiz Mena told a press conference. Ortiz Mena said 42 countries opposed Washington's proposal to lower veto power over loans to 35 pct of the Bank's voting shares from a simple majority as at present. U.S. Treasury Secretary James Baker said Monday the United States, as 34.5 pct shareholder and provider of the bulk of the Bank's resources, should have more say in approving loans and conditioned a nine billion dlr increase in its contribution on approving the reforms. But Ortiz Mena said Latin America and the non-regional members including Europe and Japan had all supported a 40 pct veto level. Canada declined to state a position. Behind the dispute was a U.S. attempt to radically change the direction of the Bank, which has lent 35 billion dlrs to Latin America in its 28 years, and give it a bigger role in the current debt strategy with increased lending but more stringent conditions attached. But Ortiz said the Bank cannot divert too much of its resources to so-called sectoral lending, whereby loans to specific sectors are tied to economic reforms, because this could affect the Bank's Triple A rating as a borrower in world markets. "For this reason we have agreed to limit sectoral loans to 25 pct of the total, leaving the rest for investment in projects," he said. Ortiz Mena earlier told the Bank's closing session that as a result of negotiations here, the Bank can expect a new injection of about 25 billion dlrs for the period 1987-90. The United States has said it will only be able to support a level close to the sixth replenishment of funds, which came to 15.7 billion dlrs, unless its proposals are accepted. But despite the impasse, some Latin American delegates including Mexican Finance Minister Gustavo Petricioli said they were optimistic a compromise agreement could be reached next month. Reuter 

LATIN OIL PRODUCERS TO MEET IN CARACAS

Five regional oil producing nations will gather in Caracas tommorrow for a two-day meeting expected to center on ways to combat proposals for a U.S. tax on imported petroleum, the Venezuela's ministry of energy and mines said. Oil ministers from Mexico, Trinidad and Tobago, Ecuador and Venezuela will be on hand for the fifth meeting of the informal group of Latin American and Caribbean Petroleum Exporters, formed in 1983, it said. Colombia will also attend for the first time, as an observer nation, the ministry said. Energy and Mines Minister Arturo Hernandez Grisanti said the conference has no set agenda but one entire session Friday will be devoted to proposals for a tax on imported oil. Two of the group's members, Venezuela and Mexico, are second and third largest foreign suppliers of oil to the United States, respectively, following Canada. Venezuela, concerned about the effect such a tax would have on its exports, undertook a diplomatic push to coordinate strategy against such measures. In February, Canadian Energy Minister Marcel Masse was invited to Caracas for talks with Hernandez on proposals for an oil import tax. Reuter 

AUSTRALIAN RESERVE BANK CUTS REDISCOUNT RATE

The Reserve Bank of Australia this morning cut the rediscount rate from 17.30 pct to 17.00 pct. The rediscount is the rate at which the bank buys back treasury notes. Market sources said the cut reflected the recent easing in market interest rates. They also pointed to yesterday's treasury note tender where the 400 mln dlrs of 13-week notes went at an average yield of 15.473 pct, down from 15.870 last week. The 100 mln dlrs of 26-week notes went at an average 15.414 from 15.790 last week. Reuter 

ARGENTINA SAYS COULD FOLLOW BRAZILIAN DEBT MOVE

Central Bank President Jose Luis Machinea said Argentina could adopt the same posture as Brazil and suspend payments on its foreign debt if it failed to meet creditor bank demands. "If Argentina had the same difficulties in being unable to refinance (its debt) under the desired (creditor) conditions, that (Brasil's) is a path to take," Machinea said. Brasil last month suspended payments on a large part of its 109-billion dlr debt, the highest in the developing world. Machinea said Brasil did not suspend payments because it wanted to but because it lacked reserves. Argentina has since last month been negotiating a 2.15 billion dlr loan with the steering committee for its international creditor banks to meet 1987 growth targets. But Machinea said the talks were difficult and Argentina wanted to conclude them as soon as possible. "What the (creditor) banks are demanding is not the same as what Argentina is prepared to concede," Machinea said. Argentina has a global foreign debt of 50 billion dlrs. Its debt with private banks is about 30 billion dlrs. Reuter 

GENOVA <GNVA> SIGNS DEFINITIVE MERGER AGREEMENT

Genova Inc said it signed a definitive agreement for the previously announced merger with <Genova Products Inc>. Under the agreement, Genova Products will pay 5-3/8 dlrs a share for the 29 pct of Genova's outstanding common shares it does not already own. The company said it plans to complete the transaction, which requires shareholder approval, by the end of March. Reuter 

PENOBSCOT SHOE CO <PSO> 1ST QTR FEB 27 NET

Shr 69 cts vs six cts Net 421,306 vs 44,132 Revs 3,721,178 vs 3,125,935 Note: Current qtr net includes a gain of 281,000 dlrs, mostly from the sale of securities and property. Reuter 

DREXEL SAYS BUSINESS STRONG DESPITE TRADE PROBE

Drexel Burnham Lambert Inc said Wednesday its business is booming, despite its inability to distance itself from the insider trading scandal that has spread rumors and doubts through Wall Street. "For a company that's supposed to be under siege, we are doing extremely well. We are exceedingly profitable," a spokesman for the firm told Reuters. The rumors that have swirled around Drexel, more than any other broker, have involved concerns that its business will be threatened by the Federal probe, say Wall Street sources. The firm has long been at the leading edge of the mergers business and had ties to now-disgraced speculator Ivan Boesky. In the latest chapter of the story, Drexel said that some commodities firms have begun to limit the amount of business they will do with the firm, citing credit risks. Drexel has long been a powerful competitor in precious metals markets. But Drexel spokesman Steve Anredder told Reuters that Drexel's overall business is proceeding normally and the first-quarter profit "could be the strongest of anybody on Wall Street." "I wouldn't say we're not feeling any effect (from the trading probes)," he said. "But we're doing extremely well." The firm was among the first to be subpoenaed in the government's wide-ranging probe of illegal trading involving the use of confidential company information on Wall Street. Believed to be under particular scrutiny was Drexel's "junk bond" operation -- the issuance of high-risk speculative debt that it pioneered for financing corporate takeovers. "We have done nothing wrong," said the Drexel spokesman. "After a thorough investigation, we have found no evidence of any wrongdoing by the firm or anyone within the firm." The spokesman said that in the aftermath of the Boesky arrest, Drexel had not been charged. Nor had any individual at the firm been charged with illegal acts while employed by Drexel. One of its top merger specialists, Martin Siegel, was charged in connection with a former job. Still, more than any other firm on Wall Street, Drexel has suffered the consequences of the insider trading probe. To begin with, there have been a series of brief shocks in the junk bond market, in nervousness linked to rumors that Drexel might be in trouble. At one point, Drexel said Wednesday, a large Midwest bank refused to allow Drexel-issued bonds as collateral on credit lines. Two weeks ago, the restriction was withdrawn, it said. The company also was notified last month that the outside insurer of Drexel's individual brokerage accounts had decided not to renew coverage. Drexel has set up its own subsidiary handling part of the insurance. American International Group and a group of British underwriters have handled the rest. Drexel also appears to have lost ground to others in the mergers and acquisition business recently, market sources said. However, Anredder said that there was no sign that Drexel had lost any customers at all owing to the insider trading cases. But in citing results for the quarter, the company points mostly to other areas of success. Corporate financings have totaled 8 billion dlrs, including 3 billion dlrs in new junk bonds in the January-March period, Drexel said. Drexel maintains the lion's share of this lucrative business, trade sources noted. The market for junk bonds, although jittery, "has rallied back with a vengeance," Anredder said. Although they see new competition in the junk bond arena, market sources concur that Drexel remains king of the hill. While some of the leading Wall Street firms were limiting head-to-head dealings with Drexel in the commodity markets based on worries over the credit of the company, the Drexel spokesman called this "ridiculous." Reuter 

DAUSTER SAYS NO CHANGE IN BRAZIL'S COFFEE POLICY

Brazil will not announce any changes to its coffee export policy, Brazilian Coffee Institute (IBC) president Jorio Dauster said. He told Reuters Brazil was not planning to modify the position it held before the recent International Coffee Organisation meeting. Earlier this month, talks in London to set new ICO export quotas failed. Commenting on the outcome of a coffee producers' meeting in Managua last weekend, Dauster said that they discussed nothing involving the market. "In the meeting we agreed to work on behalf of the union of the producers in matters related to an international agreement," Dauster said. The Managua meeting was attended by representatives from Brazil, Mexico, Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua and Panama, the latter represented at the meeting merely as an observer. Reuter 

EXCHANGE RATE BILL CLEARS U.S. HOUSE PANEL

The House Banking Committee adopted legislation to direct the U.S. Treasury to begin negotiations aimed at seeking regular adjustment of exchange rates by countries such as Taiwan and South Korea whose currencies are pegged to the value of the U.S. dollar. The measure was adopted as part of a wide-ranging trade bill that will be considered by the full House in April before it moves onto the Senate. The bill's many provisions also set as a priority for the U.S. the negotiation of stable exchange rates and urge government intervention as necessary to offset fluctuations. Reuter 

CONSOLIDATE CAPITAL TRUST <CIOTS> 4TH QTR NET

Shr 32 cts vs nil Net 1.2 mln vs 100,000 Avg shrs 3,692,000 vs 3,148,000 Year Shr 1.02 dlrs vs 54 cts Net 3.7 mln vs 800,000 Avg shrs 3,607,000 vs 1,461,000 Note: Net is after depreciation. Full name is Consolidated Captial Income Opportunity Trust/2. Reuter 

SARNEY REITERATES THAT BRAZIL WILL NOT GO TO IMF

President Jose Sarney rejected calls from foreign creditors and from some Brazilian businessmen that the government talk to the International Monetary Fund. In a speech to about 3,000 mayors and local officials, Sarney reiterated that the government would not accept any monitoring of its economy by the IMF. He said, "We are going to struggle with courage for Brazil and its growth. For this reason I have said that Brazil will accept no monitoring by the IMF." In highly-publicized talks with Sarney near Sao Paulo last Saturday, several Brazilian business leaders said they favoured a return to the IMF, arguing that it would make debt negotiations easier and bring new money into the country. Reuter 

U.S. BANKS SEEN STEPPING UP SECURITIES ROLE

The Glass-Steagall Act separating banking and securities activities in the U.S. is all but dead following decisions by federal and state authorities, the chairman of Bankers Trust Co asserted. "There are plainly nails in the coffin of Glass-Steagall," Alfred Brittain said in remarks prepared for delivery to a meeting of bank and financial analysts. He noted the Federal Reserve Board is due to decide Bankers Trust's application for a subsidiary that can underwrite certain securities. Brittain said New York State bank regulators have welcomed applications for affiliates of New York-chartered banks which could underwrite corporate securities. And he said a U.S. Court of Appeals upheld Bankers Trust's commercial paper business. He said eventually the financial services industry will see fewer but bigger companies drawn from the ranks of the present commercial banks, investment banks and conglomerates. On another topic, Britain called for a redefinition of the role of the Federal Deposit Insurance Corporation. "I think we should return to the original purpose of FDIC insurance -- to protect small despositors and not depository institutions themselves," Brittain said. He suggested banks be permitted to offer both insured deposits and uninsured deposits. High quality assets would be segregated to back up insured deposits. He said big banks could then fail without draining the insurance funds. "Stockholders could be wiped out, management rmemoved and uninsured creditors could take their fair share of any losses," he said. But insured deposits under 100,000 dlrs would be protected. Reuter 

PALO VERDE UNIT 3 GRANTED OPERATING LICENSE

The United States Nuclear Regulatory Commission granted a low-power operating license to Unit 3 of the Palo Verde nuclear plant, plant's owners said. Owners of the Palo Verde plant include AZP Group's Arizona Public Service Co unit, which holds a 29.1 pct interest, and Southern California Edison <SCE> and El Paso Electric Co, which each own a 15.8 pct stake. The owners said the license will allow for fueling and testing of up to five pct of the plant's power. Fueling will begin in a few days, they said. The commission must review the results of the low-power testing before it can approve full-power operation. The owners of plant said they expect to begin full-power operation by the end of 1987. Reuter 

TREASURY'S BAKER SAYS HE STANDS BY PARIS PACT TO FOSTER STABLE CURRENCIES

MEMBERS VOTE TO DISSOLVE U.S. FARM CO-OP

The shareholders of Illinois Cooperative Futures Co voted to dissolve the 26-year-old firm, the futures trading arm of 85 farm cooperatives, its president said. Thomas E. Mulligan, president of the board of directors, said 87 pct of the 61 members voting favored dissolution. The directors recommended the move, citing falling volume and higher costs, when it called a special shareholders meeting last month. Mulligan said the cooperative would continue operating until April 24, when the member cooperatives will have to begin clearing their futures trades through other companies. Mulligan said one of the members, Farmers Commodities of Des Moines, Iowa, was attempting to organize a new cooperative to replace Illinois Coop as a clearing company. Sources close to Farmers Commodities confirmed its plans, but Hal Richards, president, could not be reached immediately for comment, and it was unknown how many cooperatives might be willing to band together. Industry sources said Farmers Commodities would face a difficult task in setting up a new clearing organization by April 24, the day Illinois Cooperative will be dissolved. They would have to obtain commitments from a sufficient number of cooperatives to meet minimum capital requirements, obtain trading memberships, and set up the office mechanisms to handle futures trading. In the meantime, commercial clearing firms have been courting the individual coops, trying to obtain their business with low trading rates. If Farmers Commodities is unable to set up a clearing organization by April 24, individual members will find other homes, and they're unlikely to change clearing firms a second time, one industry source said. The demise of Illinois Coop was set in motion by the withdrawl of Growmark, Inc., the largest member with more than 70 pct of the capital stock, according to sources within the cooperative. Mulligan acknowledged prior to the vote that Growmark had no need to belong to the cooperative since it became affiliated last year with Archer Daniels Midland. But he said Illinois Cooperative would still have been able to meet minimum capital requirements without Growmark. The vote to dissolve the organization was met with "a certain amount of pang," he said. "But in the final analysis, the decision has to be economic, not emotional." Reuter 

U.S. SENATE FARM PANEL MAKEUP STILL IN DOUBT

The composition of the Senate Agriculture Committee, in question since the death of Nebraskan Democratic Sen. Edward Zorinsky, remains in doubt. Zorinsky's death earlier this month cut the Democrats' majority on the committee to 9-8. Zorinsky's replacement, Republican David Karnes, has said he would like a seat on the panel, and Senate Republican Leader Robert Dole (R-Kan.) is said to have thrown his support behind Karnes, who would add a Midwestern vote to the panel. But Karnes' appointment to the committee would require at least one Republican to step off the committee. Aides to Republican Sens. Mitch McConnell (Ky.) and Pete Wilson (Calif.), whose spots on the panel were rumored to be in jeopardy, said their bosses were categorically opposed to being pushed off the committee. Committee Chairman Patrick Leahy (D-Vt.) told Reuters he had rejected a suggestion that Democrats and Republicans each add one member to the committee. Leahy said he would be "delighted" to have freshman Sen. John Breaux (D-La.) join the committee. But Breaux's appointment was being resisted by Midwestern Democrats, who feel southern states are adequately represented on the committee. An aide to Sen. James Exon (D-Neb.) said the senator, supported by Midwestern Democrats, had not ruled out the possibility of moving to the committee. The inability of the two parties to settle the matter could increase the possibility that the Democratic majority would be left untouched at 9-8. The issue is expected to be resolved any day, Senate staff said. Reuter 

BAKER SAYS HE STANDS BY PARIS CURRENCY AGREEMENT

Treasury Secretary James Baker said he stood by the Paris agreement among leading industrial nations to foster exchange rate stability around current levels. "I would refer you to the Paris agreement which was a recognition the currencies were within ranges broadly consistent with economic fundamentals," Baker told The Cable News Network in an interview. "We were quite satisfied with the agreement in Paris otherwise we would not have been a party too it," he said. Baker also noted the nations agreed in the accord to "co-operate to foster greater exchange rate stability around those levels." He refused to comment directly on the current yen/dollar rate but said flatly that foreign exchange markets recently tended "to draw unwarranted inferences from what I say." Baker was quoted on British Television over the weekend as saying he has no target for the U.S. currency, a statement that triggered this week's renewed decline of the dollar. "I think the Paris agreement represents evidence that international economic policy co-ordination is alive and well," Baker said. The Treasury Secretary stressed however it was very important for the main surplus countries to grow as fast as they could consistent with low inflation to resolve trade imbalances. He added that Federal Reserve Board chairman Paul Volcker has also "been very outspoken" in suggesting main trading partners grow as fast as they can. Baker noted that the J-curve, the delayed beneficial effect of a weakening of a currency on that country's trade balance, takes 12 to 18 months to work its way through to the trade deficit and it is now 18 months since the Plaza agreement to lower the dollar's value. He also said improvements in the trade deficit should come from other sources besides the exchange rate, and pointed out the administration's package to improve U.S. Competitiveness was now before Congress. REUTER 

BAKER DECLINES COMMENT ON VOLCKER REAPPOINTMENT

Treasury Secretary James Baker declined to comment on whether President Reagan would reappoint Paul Volcker to a third term as chairman of the Federal Reserve Board. "I spent four years and two weeks in the White House job refusing to comment on personnel matters," he said in an interview with the Cable News Network. "I'm not going to change now." But Baker did say Volcker has "done a tremendous job" and added they get on "extremely well", both when he was White House chief of staff and during his term at Treasury. When asked whether he differed with Volcker on international economic policy, Baker said "there's really no difference of opinion between us with respect to these matters." In other comments, Baker said he did not think a tax rise was a good idea and nor did President Reagan. But he believed Congress would enact some spending cuts. "The minute you say raise taxes, all restraints on spending go by the board." He once again pointed out that taxes were 19 pct of gnp but spending was at 24 pct, a statistic he used to argue strongly for spending cuts. reuter 

CHINA SAYS 1986 BUDGET DEFICIT 7.08 BILLION YUAN

China posted a budget deficit of 7.08 billion yuan in 1986, the fourth highest since 1949, after a surplus of 2.82 billion in 1985, Finance Minister Wang Bingqian told the National People's Congress. He put 1986 revenue at 222.03 billion yuan, against a budgeted 214.17 billion, and up from 185.41 billion in 1985, and expenditure at 229.11 billion, against a budgeted 214.17 billion and 182.59 billion in 1985. Official figures show the record post-1949 budget deficit was 17 billion yuan in 1979. Wang said the 1986 deficit was due to excess capital construction and administrative expenses and unjustified and extravagant investments outside the state plan. He also blamed the inefficiency of firms whose production costs and losses rose. He said subsidising state firms' losses cost 32.25 billion yuan. The 1985 budget did not give a separate figure for this. He said the processing industry developed too fast and some projects could not start operations because of power shortages, while too many non-productive facilities were set up. Wang said 1986 and 1985 investment in fixed assets rose 15.3 pct and 41.8 pct respectively year on year and consumption funds rose 12.5 pct and 23.7 pct, outstripping the growth in national income. Wang said revenues were affected by the steep fall in world oil prices, the decline in the price of primary products, a drop in income from customs duties and the rising cost of earning foreign exchange through exports. Revenue also fell because the state raised the rate of depreciation for fixed assets of certain state firms, reduced their regulatory tax and made other tax cuts for firms. Wang said 1986 tax receipts rose to 206.45 billion yuan from 201.82 billion in 1985, state treasury bond receipts to 6.2 billion from 6.04 billion and receipts from foreign loans rose to 7.87 billion from 2.5 billion. He said 1986 budgetary spending on capital construction rose to 65.57 billion yuan from 56.97 billion in 1985, on technical renovation and new products to 12.62 billion from 10.05 billion, aid to rural production and other farm expenses to 12.03 billion from 10.16 billion, culture, science, education and public health to 38 billion from 31.72 billion and defence to 20.13 billion from 19.15 billion. Wang said expenditure for repaying principal and interest on foreign loans in 1986 was 3.4 billion yuan, up from 3.26 billion in 1985. REUTER 

GUYANA FINANCE MINISTER OPTIMISTIC BUT SEEKS HELP

Guyana hopes to overcome its financial problems within three to five years and is now seeking help from donor governments, Finance Minister Carl Greenidge said. He said Guyana took its problems in January to the Caribbean Group for Cooperation and Development, which includes governments and multilateral agencies, with a view to finding a long-term recovery plan. Guyana's arrears to the International Monetary Fund (IMF) are now 70 mln dlrs and it would not be eligible for new loans in the near future, Greenidge told Reuters during the Inter-American Development Bank (IADB) annual meeting here. MORE Greenidge also said a World Bank mission would visit Georgetown this week to assess prospects for a rescue plan that would enable Guyana to revive its economy. But he said the government does not expect to be able to reduce its arrears this year. Arrears to the IMF and the World Bank are projected to rise to 100 mln dlrs by the end of 1987. About 90 mln dlrs of this, equivalent to nearly half Guyana's annual exports, would be owed to the IMF. "Expecting us to pay arrears is like asking a dying man to give a pint of blood," Greenidge said. But Greenidge said Guyana has taken steps to reduce its fiscal deficit, which now amounts to 65 pct of GDP. It has increased taxes, reduced public expenditure and refinanced its internal debt. He said the World Bank would meanwhile look at investment requirements for potential export-earning projects such as gold mining, timber, oil and kaolin. Because of its arrears, Guyana has been unable to draw down a 40 mln dlr World Bank loan for a bauxite industry rehabilitation project. Bauxite accounts for 90 mln dlrs of exports, or 40 pct of the total. REUTER 

BAKER OPPOSES STOCK TRANSACTION TAX PROPOSAL

Treasury Secretary James Baker said he opposed a stock transactions tax proposed by House Speaker Jim Wright, D-Tex, or other special taxes. "The stock transfer tax would be a particularly unfortunate approach to take," Baker said in an interview with Cable News Network. The United States has some of the most efficient capital markets in the world and new taxes would impair efficiency, he said. REUTER 

BAKER SEEKS MORE BANK LOANS TO DEVELOPING NATIONS

Treasury Secretary James Baker said banks must do more lending to developing countries. Baker, in an interview on Cable News Network, was asked about such loans after Standard and Poor's Corp today downgraded the debt of six major money centre bank holding companies, largely because of their heavy loan exposure to developing nations. Baker said developing countries must adopt free market economic policies such as that of the United States. He said capital flows will be required to support the needed reforms in those countries' economic systems. The money must come either through equity or debt and Baker said developing nations' "investment regimes do not support enough equity investment, so you've got to have some debt there." REUTER 

LIBYANS APPEAR TO BE PULLING OUT OF CHAD

Libyan forces appear to be withdrawing from their last stronghold in Chad after suffering defeats at the hands of French-backed government troops, according to officials in both the U.S. And France. In Washington, a State Department spokesman told reporters "we have no reason to doubt that Libyan forces are leaving Faya Largeau," Libya's main garrison in Chad. The French Defence Ministry said it could not confirm the departure of the Libyan troops, but an official said "it is extremely likely. They are deprived of air cover and supplies, and their morale must be zero." REUTER 

CHINA, PORTUGAL INITIAL MACAO PACT

China and Portugal today initialled a joint declaration under which the 400-year-old colony of Macao will be handed over to Peking on December 20, 1999, the official New China News Agency reported. Portuguese Prime Minister Anibal Cavaco Silve said in Lisbon yesterday that China had promised that Macao's existing political, economic and social system will be maintained until the year 2050. Macao, located across the Pearl River estuary from Hong Kong, has a population of about 400,000 people. REUTER 

BAKER SEES 15 TO 20 BILLION DLR DROP IN TRADE GAP

Treasury Secretary James Baker said he expected the U.S. Trade deficit to fall by 15 billion to 20 billion dlrs in 1987. Commenting on the deficit during an interview on Cable News Network, Baker said "I think you're going to see a 15 to 20 billion dlr reduction this year." The deficit was 170 billion dlrs in 1986. Baker noted that the benefits of a weaker currency take 12 to 18 months to affect the trade balance, and said it is now 18 months since the Plaza agreement to lower the dollar's value. REUTER 

Sumita says further yen rise would adversely affect Japanese economy

Sumita says major nations will continue to cooperate to stabilize currencies

N.Z. MONEY SUPPLY RISES 2.4 PCT IN JANUARY

New Zealand's broadly defined, seasonally adjusted M-3 money supply grew an estimated 2.4 pct in January against a 3.4 pct (revised from 3.6) rise in December and a 0.7 pct rise in January 1986. It said unadjusted M-3 increased to an estimated 30.13 billion N.Z. Dlrs from 30.08 (revised from 30.06) billion in December and 25.18 billion in January 1986. Year-on-year M-3 rose 19.66 pct in January from 17.80 pct (revised from 17.77) in December and 20.10 pct in January 1986. Narrowly defined year-on-year M-1 growth was 21.94 pct in January against 15.89 pct in December and 14.10 pct a year earlier. M-1 grew to an estimated 4.72 billion dlrs against 5.03 billion in December and 3.87 billion in January 1986. Year-on-year private sector credit, PSC, grew 31.07 pct in January against 30.64 pct (revised from 30.68) in December and 21.40 pct in January 1986. PSC grew to 22.69 billion dlrs from 22.24 billion in December and 17.31 billion in January 1986. REUTER