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
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
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.
- 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.
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.
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.
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.
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.
Have questions about Mumbai – Identifying Turning Points in Indian Forex Markets for building Long Term Wealth? Contact FXStreet
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.
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
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.
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.
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 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
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)
Can The Credit Quality Of EU And Brazilian Sugar And Ethanol Producers’ Rebound In A Low Price Environment?
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
Bharti Airtel have put forward their mobile reach as the most effectual solution …Read more