S&P Video: How Foreign Currency Risk Continues To Affect Multinational Companies

How Foreign Currency Risk Continues To Affect Multinational Companies

Shripad Joshi
Senior Director

Foreign exchange risk continues to affect multinational companies. In this CreditMatters TV segment, Standard & Poor’s Senior Director Shripad Joshi explains how the stronger dollar has created financial reporting challenges for companies and what lies ahead.

Reflections on Legal Issues Associated with Green Bonds: a reflection by Climate Bonds Senior Fellow Motoko Aizawa from our NYC legal workshop

Reflections on Legal Issues Associated with Green Bonds: a reflection by Climate Bonds Senior Fellow Motoko Aizawa from our NYC legal workshop

By Motoko Aizawa, Senior Fellow, Climate Bonds Initiative   

A 45 MW power plant running on soybean and recycled cooking oils, enough solar panels to cover six football fields, and 7 MW worth of fuel cells – when Syracuse Industrial Development Agency issued, on behalf of developer Destiny USA, $228 million tax-exempt green bonds in 2007 to finance a massive addition to a shopping mall, these were the green promises.  And they remained exactly that:  just promises.

The US Internal Revenue Service (IRS) audited the developer to see whether the bond’s tax-exempt status should be revoked, but ruled that the bonds were in compliance.  The lawyer representing the developer apparently said: “the bonds should be allowed to remain tax-exempt because the federal law creating the program only required it to describe the energy efficiency, renewable energy and sustainable design features planned for the project and did not require that the project actually include all of them.”  Read more

Webinar : Factor investing putting academic evidence into practice: How to implement it in your portfolio? May 26, 11am CET

Factor investing putting academic evidence into practice: How to implement it in your portfolio?

When:  Tuesday, 26 May 11:00 CET
Presented by:  –  Joop Huij, head of factor investing research
Presenter:  Maaike Veen

Register now >>
Factor investing putting academic evidence into practice: How to implement it in your portfolio?

More and more investors are realising the advantages of factor investing and starting to implement its lessons not just as an afterthought, but as a top-down element of the overall investment strategy. A large percentage of pension funds still have a cover ratio that barely exceeds the minimum requirement and face funding issues due to the ageing demographics. To meet liabilities, pension funds are looking for higher returns while at the same time have less appetite for risk. Is factor investing the solution for the seemingly opposing challenges of risk and return?

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Joop Huij, PhD, executive director, head of factor investing research
Mr. Huij, head of factor investing research, is responsible for the coordination of factor investing research and development of customised factor investing solutions. He specialises in empirical asset pricing and investment strategies. Mr. Huij also holds a part-time position as associate professor (with tenure) of finance at Rotterdam School of Management. He has published in, among others, the Journal of Banking and Finance, Journal of Empirical Finance, Journal of Financial Markets, and Financial Analyst Journal. Mr. Huij started his career as a researcher in 2007. He holds a PhD in finance from Rotterdam School of Management and a master’s degree in informatics & economics (cum laude) from Erasmus University Rotterdam.

India Disclosure Index – How India’s Leading Listed Companies Fare on Mandatory & Voluntary Disclosure

BSE 100 Index Companies Score Low on Mandatory and Voluntary Disclosure

Mumbai, 21 April 2015 — FTI Consulting, Inc. (NYSE: FCN), the global business advisory firm dedicated to helping organisations protect and enhance their enterprise value, today announced the launch of its India Disclosure Index, a report that tracks mandatory and voluntary disclosure practices amongst India’s leading publicly-listed corporations.

FTI Consulting reviewed publicly available disclosed information by leading publicly-listed companies in India to create a weighted, Composite Disclosure scoring system with six Mandatory Disclosure parameters and five Voluntary Disclosure parameters, and applied it to the Bombay Stock Exchange (“BSE”) 100 Index to create the India Disclosure Index. When scored on a composite scale of one to 10 (with a 10 score indicating that all 11 Mandatory Disclosure and Voluntary Disclosure parameters are publicly and readily available), the India Disclosure Index revealed that only 41 percent of constituent companies of the BSE 100 index were fully compliant on Mandatory Disclosure parameters. The report also revealed low levels of Voluntary Disclosure by Indian companies, with a median score of 3.5 out of a maximum of six and with most providing inadequate information relating to business strategy and debt. This is particularly concerning at a time when international institutional investors are demanding higher levels of voluntary disclosure from emerging market companies.

The low disclosure scores of the India Disclosure Index are a cause for concern in the context of the recently enacted Amended Clause 49 of the Securities and Exchange Board of India (“SEBI”) Listing Agreement, which places responsibility for ‘adequate disclosure and communications’ with the board of directors of India’s listed companies.

Key Highlights:

  • Average Composite Disclosure score ― 6.7/10
  • Median Mandatory Disclosure score ― 2.5/4
    • More than half of all BSE 100 index constituents have Mandatory Disclosure scores less than 2.5, reflecting poor mandated information disclosure.
    • Fifty-one percent of Indian companies did not provide analyst transcripts on websites.
  • Median Voluntary Disclosure score ― 3.5/6
    • A third of all BSE 100 index constituent companies have Voluntary Disclosure scores of three or less.
    • Sixty-eight percent of BSE 100 index constituents did not provide adequate information on debt-related information.
    • Fifty-seven percent of companies currently did not provide adequate strategy-related information on their corporate website.

Commenting on the launch of the India Disclosure Index, Amrit Singh Deo, Senior Director in the Strategic Communications segment of FTI Consulting, said, “We looked at disclosure in a holistic manner, covering voluntary as well as mandatory practices, to get an accurate picture of current practices amongst Indian companies. The low mandatory disclosure scores are surprising, but also something that can be easily fixed. The real challenge is to convince Indian boards and management teams that they need to go beyond mandated levels and disclose more information. At the heart of it, more disclosure and transparency are excellent proxies for better corporate governance.”

About the India Disclosure Index
The India Disclosure Index 2015 is a report of India’s leading companies by market capitalization, specifically those on the BSE 100 index, and their disclosure and financial communications practices, as assessed by 11 publicly available information disclosure parameters. The full methodology and ranking of the BSE 100 companies by their weighted disclosure scores (split by Mandatory and Voluntary Disclosure scores) can be found here: http://www.fticonsulting-asia.com/insights/reports/india-disclosure-index-2015.aspx.


Podcast : Smart beta investing in corporate and sovereign bond markets

RAFI Bond Indices are based on a transparent rules-based methodology that weights bonds using economic measures of company or country size. The results are indices that are correlated with debt service capacity–tilted toward higher credit quality firms or countries with lower risk of downgrade or default. Whether for corporate bonds or sovereign debt, the resulting indices historically have offered better risk-adjusted returns, according to simulations.

Traditional bond indices, which are weighted by the amount of debt outstanding, may not always be optimal for passive solutions. In traditional indices, the most indebted issuers receive the largest index weights, leaving investors overexposed to companies or countries with high debt burdens and credit risk.

Our approach to building a better bond solution is to create a better foundation for fixed income investing that stresses higher quality, lower risk, and improved risk-adjusted returns, while maintaining the benefits of passive index investing, i.e., transparency, broad representation, and diversification. RAFI Bonds offer a more thoughtful fixed income solution.


Speech by Hans Hoogervorst: ‘Bad accounting breeds bad policies’

Speaking today at the NAPF Investment Conference in Edinburgh, Scotland, Hans Hoogervorst, Chairman of the International Accounting Standards Board (IASB), said everybody is best served by accounting that reflects the economic reality, even if it makes for uncomfortable reading.

International Financial Reporting Standards (IFRS) require companies to provide up-to-date and comparable information about their pension liabilities. While the information may not make for very pretty reading, it helps investors make informed decisions, by bringing into the open, the challenges that companies face in underwriting these liabilities.

Mr Hoogervorst said long-term investors should not be deterred by temporary market fluctuations and investment fads but noted that it is very hard to distinguish short-term fluctuations from long-term trends, referring to the likely longevity of current monetary policies.

Read the full press release and speech.

Event – Identifying Turning Points in Indian Forex Markets for building Long Term Wealth FXStreet Friday, May 22, 2015 from 7:00 PM IST, Mumbai,

Event Details

Identifying Turning Points in Indian Forex Markets for building Long Term Wealth
Vishal will be discussing how he identifies entry and exit points on multiple timeframes when trading the Indian Forex markets. He will examine how to locate and judge the quality of the zones before taking a trade.

About Vishal Subandh

Vishal has been trading the Indian and Global Markets since 2008. He holds a Bachelor of Computer Engineering and Masters in Finance (United Kingdom, London) degrees. He has prior worked with leading investment banks like ING Bank (Europe, Amsterdam) and Credit Suisse in the fields of trading and risk management. He quit his job in 2010 to become a full time professional trader after joining Online Trading Academy. Within three years of hard work and dedication, his passion towards trading led him to become an Instructor and Senior Trading Mentor at Online Trading Academy. Vishal now heads the Research and Education team for Online Trading Academy in India. Vishal specializes in trading equities, futures, options, commodities and currencies markets. To become a successful trader one has to abide by a simple strategy and follow a rules based approach and that is his main focus when delivering a class to students.


Educational Proposal:

1. Attendees brief introduction (5 to 10 minutes)

2. Key Speech (45/50 minutes)
3. Q&A (10/15 minutes)
4. Thanks to our great sponsor Tradenext, the group will enjoy some snacks afterwards while making friends and keep talking.

Book your seat!

Have questions about Mumbai – Identifying Turning Points in Indian Forex Markets for building Long Term Wealth? Contact FXStreet

Myth Busted: India’s Top Corporates Are Hardly Regional Weaklings

Myth Busted: India’s Top Corporates Are Hardly Regional Weaklings

Conventional wisdom has it that India Inc. is lagging behind other Asia-Pacific nations when it comes to growth but exceeding their debt levels. Both China and countries in the Association of Southeast Asian Nations have enjoyed a period of robust, debt-financed growth over the past years. Now they are coping with the challenge of maintaining earnings generation while capital expenditure, mergers and acquisitions, and financial indebtedness are rising. In contrast, so the narrative continues, Indian corporates are highly indebted, while their growth has been muted for a number of years and investments have been contracting. However, this judgment merits revisiting. Thus, to evaluate its accuracy, we have analyzed the trends for India’s top 100 corporates, whose members we selected based mostly on market capitalization.


Can India Bridge The Gap With International Financial Reporting Standards?

Can India Bridge The Gap With International Financial Reporting Standards?

After years of slow progress, India has taken an important step toward integration with global financial reporting norms. In February of this year, the government presented a roadmap for the country’s nonfinancial companies to adopt Indian accounting standards (Ind-AS), which are essentially a diluted version of International Financial Reporting Standards. Select Indian nonfinancial companies (those that are listed on the stock exchanges and have a net worth of at least 5 billion Indian rupees) must follow these standards starting with fiscal 2017 (ending March 2017), and they will roll out for all nonfinancial companies in the following fiscal year. In addition, India’s securities market regulator is contemplating measures to improve disclosures in Indian companies’ financial statements. These developments will likely help enhance the transparency of Indian companies’ financial statements and make international comparisons easie

Issue 2 of The Essentials: Presentation of Financial Statements

Issue 2 of The Essentials: Presentation of Financial Statements

The Essentials aims to increase investors’ awareness of IFRS and enhance the insights they obtain when analysing information produced by IFRS financial statements. Each issue aims to provide an overview of how a specific accounting Standard (or aspect of it) is relevant to financial statement analysis.

In this issue:

  • Making the most of what’s presented in financial statements
  • Reporting principles investors will want to know
  • Reporting ‘extraordinary’ items

Click here for the article and here for more information about the IASB’s investor activities.

Audio Webinar – China Credit: Assessing China’s New Normal 14 May, 2015, 10:30 am HKT

China Credit: Assessing China’s New Normal
14 May, 2015, 10:30 am HKT Hong Kong/Singapore time, 12:30pm Melbourne/Sydney time

— How will China’s economic slowdown affect companies and banks?
— Is China heading for more defaults?
— Is the worst over for the property sector?
— What will happen to local government debt vehicle (LGFV) loans?
— What is the impact of China’s interest rate liberalization on the banking sector?

Standard & Poor’s Ratings Services, part of McGraw Hill Financial (NYSE: MHFI), is the world’s leading provider of independent credit risk research and benchmarks. We publish more than a million credit ratings. With over 1,400 credit analysts in 25 countries, and more than 150 years’ experience of assessing credit risk, we offer a unique combination of global coverage and local insight.

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Basel III Requirements Could Strengthen Islamic Banks’ Liquidity Management

Basel III Requirements Could Strengthen Islamic Banks’ Liquidity Management

In October 2014, the Islamic Finance Services Board (IFSB), an international standard-setting body of regulatory and supervisory agencies that aims to ensure the soundness and stability of the Islamic finance industry, published guidance on quantitative measures for liquidity management in institutions offering Islamic financial services. This note (IFSB-GN-6) set three main characteristics of high quality liquid assets (HQLA): low correlation with risky assets, an active and sizable market, and low volatility. This guidance for Islamic financial institutions also specifies how Islamic banks should implement the liquidity coverage ratio (LCR) and the net stable funding ratio related to Basel III, as well as the timeline for implementation. The introduction of a liquidity coverage ratio might help to address some of the industry’s long-standing weaknesses, particularly the lack of HQLA.

Credit Conditions: The Eurozone Is Looking Up, For Now

Credit Conditions: The Eurozone Is Looking Up, For Now

We have revised upward our forecast for eurozone growth due to the drop in oil prices, the weak euro, and the start of fully fledged quantitative easing (QE) by the ECB. Almost all of our seven structural drivers for a stable eurozone recovery have improved and growth in the continent could be even higher if, for example, the impact of quantitative easing and a weak euro were to be stronger than our base expectation. However, we are likely still far from a stable and robust recovery and serious downside risks remain, ranging from geopolitical to execution risks around QE. Some emerging economies in EMEA are hurting from low commodity prices, and may prove vulnerable once the ECB tapers. QE will be a net positive for the eurozone, but the possibility of unintended consequences, specifically ultra-low yields leading to policy complacency, as well as risk mispricing and asset bubbles, should not be underestimated.

India’s Top 100 Corporates: What Are Key Risks And Trends?

India’s Top 100 Corporates: What Are Key Risks And Trends?

Mehul Sukkawala
Senior Director

India is one of the few bright spots in the global economic landscape in 2015, and S&P believes that the country is at an inflection point. Mehul Sukkawala, Senior Director of Corporate Ratings discusses the key risks and trends for India’s top 100 corporates that S&P analyzed

India Ratings Webinar on Axis Bank Credit Profile post results, May 7 10am and 630pm IST

India Ratings and Research is hosting a webinar to discuss the credit analysis of Axis Bank based on the results announced recently. Join our analysts for an in-depth analysis and discussion on financial performance, asset quality, credit metrics and credit outlook of the bank.

We invite you to join the webinar on May 07, 2015 at
12:30 PM SG/HK; 10:00 AM IST (for APAC participants) & at
9:00 AM EDT/2:00 PM London; 6:30 PM IST (for North America and Europe participants)

Click on Register Now 

Webinar : The Power of Rebalancing: Fact, Fiction and Why it Matters, May 6 , 630pm IST

The Power of Rebalancing: Fact, Fiction and Why it Matters

Wednesday 6th May 2:00pm BST (3:00pm CEST / 9:00am ET)

Presented by:

–  Adrian Banner, Ph.D., chief executive officer and chief investment officer of INTECH
–  David Schofield, president of INTECH’s international division


Brendan Maton

Register now >>
The Power of Rebalancing: Fact, Fiction and Why it Matters

It is well-understood that rebalancing is a necessary step in restoring a portfolio of volatile assets back to its target weights. Whether it is performed periodically or triggered when actual weightings move too far from target, rebalancing a portfolio will naturally lead to selling assets that have outperformed the portfolio, and buying assets that have underperformed the portfolio.

It is much less widely understood that rebalancing can actually be a source of return for the portfolio. Despite the fact that this observation dates back to 1982 [Fernholz and Shay] and has been successfully used to manage portfolios for nearly as long, it has come under considerable attack in the recent past by some academics and practitioners. The main arguments used by these detractors are:

1.       There is no return benefit, because the portfolio’s expected wealth does not increase.
2.      The return benefit exists, but is due to diversification, not rebalancing.
3.      The return benefit relies on mean-reversion.

These arguments may appear compelling at first glance, but all three are fundamentally flawed. This webcast will tell you why.

Register now >>
Adrian Banner, Ph.D.
Chief executive officer and chief investment officer, INTECH
Dr. Banner was named chief executive officer in November 2012 and concurrently is the firm’s chief investment officer. He joined INTECH in August 2002 and has since been an integral part of the firm’s Princeton-based research team. Dr. Banner has extensive knowledge of INTECH’s trading systems, optimisation programs and research initiatives, both on an operational and theoretical basis. He has held various roles as part of the Princeton research team prior to being named CIO and subsequently CEO. Dr. Banner earned his Ph.D. in mathematics from Princeton University and his M.Sc. and B.Sc., also in mathematics, from the University of New South Wales, Australia. Dr. Banner has lectured on the stability of market capitalisation and low-volatility equity portfolios at a number of academic and professional conferences and has authored several scholarly papers on Stochastic Portfolio Theory.
David Schofield
President of INTECH’s international division – London
David is responsible for developing, implementing and managing the business effort for the firm outside of North America, including representing INTECH’s proprietary investment process to investors and consultants. Prior to joining INTECH in 2006, Mr. Schofield was responsible for developing Janus Capital International’s institutional activities in Europe, the UK and the Middle East, and had further responsibility for international consultant relations. Before joining Janus in 2001, Mr. Schofield spent 15 years in investment banking focusing on major institutional investors in Germany, France and the UK. During this time he worked for Salomon Brothers, Lehman Brothers and UBS in New York, London and Frankfurt. Mr. Schofield holds a Joint Honours Masters Degree in French and German from the University of Oxford. He is a published author and has 29 years of investment experience.


Register now for the webcast >>

Event : MATLAB for Risk Management and Fixed Income Analytics, 14 May 2015, 430pm

Join this free MathWorks seminar: MATLAB for Risk Management and Fixed Income Analytics 
ITC Grand Central, Mumbai, 14 May 2015 4:30 pm to 8:30 pm
Financial organizations around the world develop computational platforms based on MATLAB to achieve diversified quantitative analytics goals. MATLAB forms the basis of risk management and analytics systems in banks, asset managers, regulators and insurers. Risk platforms are also benefitting from big data technology, in fraud and anomaly detection for example. Many organizations also use MATLAB for pricing and analyzing fixed income assets and portfolios.

Attend this seminar to learn all about:

Overview of “MATLAB for Financial services”
Best programming practices in MATLAB, to build scalable and efficient computational systems
Using MATLAB for developing Risk Management Models
Using MATLAB for fixed income analytics
Admission is free but seats are limited.
Reserve your seat now.
We look forward to welcoming you for this seminar on 14 May 2015.

Can The Credit Quality Of EU And Brazilian Sugar And Ethanol Producers’ Rebound In A Low Price Environment?

Can The Credit Quality Of EU And Brazilian Sugar And Ethanol Producers’ Rebound In A Low Price Environment?

Maxime Puget, Associate Director
Flavia Bedran, Director

Low market prices are pressuring cash flows but regulatory changes could also play a role in the sector credit trends. In this CreditMatters TV segment, Standard & Poor’s Associate Director Maxime Puget and Director Flavia Bedran look at credit prospects for our rated issuers