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Top Business Stories of The Week

Top Business Stories of The WeekJunk Bonds in ‘Goldilocks’ Market Reach Record: Junk bond sales reached a record this month as …

Top Business Stories of The Week

Junk Bonds in ‘Goldilocks’ Market Reach Record: Junk bond sales reached a record this month as rising profits and record low Federal Reserve interest rates foster lending and investment to the lowest-rated borrowers.

Companies worldwide issued $38.3 billion of junk bonds this month, passing the previous high of $36 billion in November 2006, according to data compiled by Bloomberg. Yields fell 0.95 percentage point this month to within 5.96 percentage points of government debt, the narrowest gap since January 2008, Bank of America Merrill Lynch index data show.

U.S. to Sell 27% Stake in Citigroup This Year: Nearly 18 months after the federal government stepped in to bail out Citigroup, Washington announced plans on to sell off its ownership stake. The Treasury said that it planned to sell its 7.7 billion common shares in Citigroup over the course of 2010. It will gradually reduce its 27 percent ownership position through a series of stock sales to investors.

The government would earn a profit of about $8 billion if it were to sell its entire stake. That would be on top of $8.1 billion in interest payments and other fees it has already collected, making Citigroup one of the government’s most lucrative investments of the Troubled Asset Relief Program.

The Hartford Sheds its $3.4 Billion TARP: The Hartford Financial Service said that it was repaying $3.4 billion in government aid it received in 2008 to help it bolster its balance sheet amid the nascent financial crisis.

The Hartford has about 1,800 employees in Minnesota. The property and casualty insurer bought a Florida-based thrift in 2008 and applied for aid under a provision of the Troubled Asset Relief Program called the Capital Purchase Program “We are pleased to complete our plan to return the U.S. Treasury’s investment in The Hartford and appreciated the opportunity to participate in CPP and the support of the American taxpayers,” company chairman Liam E. McGee said in a prepared statement.

American Airlines, JetBlue Forge Alliance: American Airlines has forged a new partnership with JetBlue that will allow the Fort Worth-based airline to connect passengers to 18 domestic markets where the two airlines currently do not compete.

In addition, JetBlue passengers are gaining the ability to connect to American flights that fly out of Boston and New York to international destinations served by American, including Barcelona, Spain and Tokyo, Japan. The partnership between the two airlines will operate mainly out of New York’s John F. Kennedy and LaGuardia airports and out of Boston Logan International Airport.

General Growth Files $6.55 Billion Bankruptcy Exit: General Growth Properties has an agreement to reorganize with $6.55 billion from Brookfield Asset Management, Pershing Square Capital Management and Fairholme Capital Management that will give the three investors a 65 percent stake in the second-largest U.S. mall owner.

General Growth filed a request in Manhattan bankruptcy court seeking approval of the proposal April 29 as part of a procedure to auction itself to the highest bidder. The company also said it plans to file a plan of reorganization around July 2, and will give its stakeholders the chance to evaluate higher and better offers while avoiding risks from changes in the financial markets.

CEO Median Pay Edges Lower in 2009: The median compensation for chief executives of 200 major U.S. companies fell marginally to $6.95 million in 2009, the Wall Street Journal said, citing an analysis by Hay Group management consultancy.

The median value of salaries, bonuses, long-term incentives, and grants of stock and stock options for the chief executives fell 0.9 percent, the Journal said. It was only the third time since 1989 that total direct compensation has fallen for U.S. chief executives.

AIG on Track to Repay U.S. Government Before 2013: Robert Benmosche said that he is “pretty comfortable” the bailed-out insurer will be able to repay the U.S. government before the 2013 expiration of its credit line. Robert Benmosche told Reuters that selling the AIG units to Prudential and life insurance unit American Life Insurance to MetLife will bring the company to a point at which it can begin formal discussions with the government about an exit.

Obama Administration Issues Fuel Efficiency Rules: The Obama administration has issued tough gas mileage standards for new cars and trucks hitting dealerships in the future.

The Transportation Department and the Environmental Protection Agency say the final rules will require 2016 model-year vehicles to meet fuel efficiency targets of 34.1 miles per gallon combined for cars and trucks, or the equivalent of 35.5 mpg with credits for reducing greenhouse gas emissions. That’s an increase of nearly 10 mpg over current standards.

Consumers will see higher costs. The standards will add more than $900 to each vehicle in 2016 but the government says consumers will save $3,000 over the life of their vehicles because of fuel savings. The new rules will cover the 2012 to 2016 model years.

March Auto Sales Jump 24 Percent, Toyota Rebounds: U.S. auto sales jumped 24.3 percent in March, the strongest result in months, led by a rebound at recall-hit Toyota Motor which offered record incentives aimed at putting the crisis behind it.

Toyota sales jumped nearly 41 percent in March, snapping two months of sales declines amid massive vehicle recalls and a rare production and sales halt for the world’s biggest automaker.

General Motors sales rose nearly 21 percent overall from a year earlier and it led the industry in total vehicle sales. Toyota was second in total sales, while Ford Motor ranked third after a nearly 40 percent sales increase.

U.S. sales topped the 1 million vehicle mark in March, which was the strongest monthly result since September 2008, excluding August 2009 when “cash for clunkers” incentives drove sales up sharply.

Factory, Jobs Data Boosts Hopes Recovery to Last: The number of workers filing new claims for jobless aid fell last week and factory activity in March hit its highest level in more than 5-1/2 years, strengthening hopes for continued economic growth without government support.

Manufacturing has led the economy out of its deepest recession since the 1930s, but the labor market has lagged. Job growth is essential to maintain expansion when the impetus from a rebuilding of inventories disappears later this year.

“The data suggest that the economic recovery is reaching a self-sustaining stage, which means it’s less prone to setbacks. If we wait a couple more months we are going to find that this recovery is very robust,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

Note * Reported according to chronology of the events

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