CREDIT RISKS WITH CHINESE CORPORATIONS – TIME FOR CONCERN?
Where China is headed economically has been a major topic of concern given the country’s size and power base. Join specialists from Standard & Poor’s Ratings Services and S&P Capital IQ as they take a close look at the credit outlook for the country’s top corporations.
Terry Chan, Managing Director & Head of Corporate Research for Asia Pacific at Standard & Poor’s Ratings Services, will open the session with an informative discussion on key findings from recent statistical surveys of China’s top corporates.
Following this, the S&P Capital IQ team will discuss how to interpret the credit risk of companies in China, looking at:
The use of market- and fundamental-based metricsto gain deep insight into the credit risk of both rated and unrated companies.
Trends in credit markets for Standard & Poor’s rated companies and the top 150 corporates in China.
Extending coverage beyond the rated universe of corporates
Interpreting information from different credit risk measures for optimal guidance.
SEBI has been holding discussions with issuers and various other market participants
regarding the issues concerning development of Corporate Bond Market. Based on the
suggestions received in the aforesaid meetings, it has been decided to implement few changes which can be found here
Thiam Hee Ng, Senior Economist with ADB’s Office of Regional Economic Integration, warns the global financial market turmoil that has led to volatile capital outflows will make infrastructure financing costlier and more difficult. He says the region should encourage more stable sources of funding such as pension funds to promote much needed financing.
Fitch Ratings-Hong Kong-02 October 2013: Credible, coherent economic policy management by authorities in Emerging Asia will likely be the central factor in determining regional sovereign credit outlooks, as the economies face their weakest growth prospects since 1998, Fitch Ratings says in a Special Report.
Fitch Ratings-Mumbai/Singapore-30 September 2013: Fitch Ratings says that the asset quality indicators for Indian banks continue to deteriorate and will likely reach levels much worse than previously expected due to further weakening in the economic environment.
WPI Inflation rose to 6.5 per cent in September from 6.1 per cent in August. WPI inflation has surged in the last four months from 4.6 per cent in May due to rising inflation in primary articles and fuels, which have over one-third weightage in the WPI. The prices of primary articles rose over 13.5 per cent in September. Core inflation – measured by both non-food manufacturing inflation and CRISIL Core Inflation Indicator (CCII) – continued to remain weak at 2.1 per cent and 2.7 per cent, respectively in September. With inflation now out of RBI’s comfortzone for four months in a row, we expect a 25 bps repo rate hike on October 29, 2013.
“High Level Expert Committee on Corporate Bonds and Securitization” (“Dr. R.H. Patil Committee”) had recommended creation of “Centralized Database of information regarding Bonds”. While the information in respect of various bonds/debentures issued by issuers is available in a fragmented manner, it is felt that there is a need for having a comprehensive database on corporate bonds at a single place.
Considering the above, SEBI has issued a circular on “Centralized Database for Corporate Bonds/Debentures” on October 22, 2013. SEBI has mandated both the depositories viz. NSDL and CDSL to jointly create, host, maintain and disseminate the centralized database of corporate bonds/debentures. The depositories shall obtain requisite information regarding the bonds/debentures from Issuers, Stock Exchanges, Credit Rating Agencies and Debenture Trustees. The Database can be accessed by the public or any other users without paying any kind fees or charges.
TOKYO, JAPAN – Emerging East Asia’s local currency bond markets are still expanding but risks to the outlook are rising given the prospects of tighter US monetary policy, slower economic growth in Asia, and persistent capital outflows, according to the latest quarterly Asia Bond Monitor from the Asian Development Bank (ADB).
In the high-growth Indian banking system, banks face a constant need to replenish capital at regular intervals to support their growth. In addition, from April 1, 2013, Indian banks will begin to implement the new Basel III capital requirements. In Standard & Poor’s Ratings Services’ view, the higher capital requirement under Basel III will increase pressures on Indian banks to raise capital and could lead to some changes in the industry. However, we believe the top-tier banks in the Indian banking sector are relatively well-placed to manage the transition toward Basel III and the demands of a high-growth banking system.
The positive trend of Asia-Pacific sovereign ratings looks likely to break in the next one to two years. There isn’t a high likelihood of a sovereign rating upgrade during that period. Instead, three sovereign ratings in the region currently carry negative outlooks.
Banks are set to face a broad international leverage limit that will catch off-balance sheet risks and prevent them from hiding their debt, according to the head of the Basel Committee on Banking Supervision.
WEBCAST: Flexible Bond Investing in a Rising Interest Rate Environment
Interest rates in the US and other major bond markets have been trending lower for more than 30 years, producing a secular bull market in bonds that has heavily influenced the way investors think about the role of fixed income in their portfolio. However, with the recent rise in Treasury yields and signs of stronger US growth, investors have been put on notice that the era of falling interest rates may be drawing to a close and the risk of prolonged rise in rates appears to be growing.
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Investing in fixed income today requires a flexible and dynamic investment approach in order to weather the risk of rising rates and increasing volatility. In the current environment of potentially flat or rising interest rates, we discuss the emerging opportunities for a dynamic allocation approach to fixed income investing today that:
Removes benchmark constraint
Broadens the opportunity set
Increases potential for higher return
Acts as a complement to existing traditional fixed income exposures
HONG KONG, CHINA – The Indian economy has been under pressure with the recent depreciation of the rupee and capital outflows adding to structural constraints which are weighing heavily on its prospects for returning to a high growth path, says a new Asian Development Bank (ADB) report.
Asset quality deterioration, shortage of capital, and slowing credit growth could undermine the BRICMT (Brazil, Russia, India, China, Mexico, and Turkey) banks’ credit quality, especially amid economic slowdown following years of strong credit growth. In addition, there remain concerns about the rising household debt burden, given still low, although increasing, GDP per capita and cyclicality of these major emerging market economies. Furthermore, the following country-specific factors are pressuring the banks’ asset quality: increasing economic imbalances in Brazil due to a recently accelerating credit expansion by government-owned banks; rapid increase of high–risk unsecured lending in Russia; a highly leveraged corporate sector in India; lackluster export growth, debt-laden local governments, and many manufacturers suffering from oversupply in China; large homebuilders’ woes and deteriorating consumer lending in Mexico; and rapid credit card debt and consumer lending in Turkey.