After several tumultuous years, global sovereign creditworthiness is likely to continue stablizing in 2014, says Moody’s Investors Service in its just-published “2014 Outlook – Global Sovereigns: Credit Quality Stabilizing After Several Tumultuous Years”.
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More and more institutional investors around the world are turning to the reinsurance markets for higher returns for their portfolios. The result could be record issuance in 2013 for catastrophe bonds (CAT bonds)–high-yield debt issued by insurers in which principal, rather than being repaid at maturity, may instead offset insured losses when defined catastrophic events occur. At the same time, insurers are looking to increase their own protection in the face of increasingly severe natural-disaster claims from windstorms, earthquakes, hurricanes, and other natural disasters. The severity or frequency of such events may be increasing, and disasters that hit heavily populated areas can be prone to unexpectedly high insured losses. Even with the best predictive models, however, any given year can present reinsurers with surprises
Some analysts have turned up the volume on the risks facing Asia’s emerging economies. At the same time, global financial markets are exhibiting more turbulence, with significant sell-offs in emerging markets. Capital is exiting Asia, bourses and currencies are coming under pressure, funding costs are rising, and some company balance sheets are coming under stress. This has been particularly true in South and Southeast Asia, where external deficits are the norm. This market turbulence comes on the heels of recent cuts in Asian GDP growth estimates, most notably for China. Are we on the verge of a repeat of the Asian financial crisis as the region pays for its excessive borrowing post-Lehman? The road may be rocky in the near term, particularly for the largest deficit countries–India and Indonesia–but we don’t think this is the Asian crisis all over again.
Tokyo, December 11, 2013 — Moody’s Japan K.K. says that the outlook for the Asian consumer electronics industry is negative in 2014.
Is Rising Household Debt Weighing Down On Asia’s Banks?
In this CreditMatters TV segment, Ivan Tan, Director of Financial Services Ratings, discusses the trend of rising household debt in Asia and the rating implications, specifically for Malaysia and Thailand banks.
The need for China to rebalance its economy away from investment and toward consumption is well known. Also widely known is the policy prescription for that rebalancing: allow more interest rate and exchange rate flexibility, strengthen the social safety net, and make state enterprises pay higher dividends to the state. But how does the economy actually make this adjustment to one that has a higher proportion of GDP derived from consumer spending? Less publicized are the mechanics of how the Chinese economy will move to a higher consumption-to-GDP ratio, and which is the best path to take.
Join us for an interactive live webinar (Register now)on the 2014 outlook for Asia-Pacific economies, financial institutions and corporates. The webinar will provide you insights into the likely shift in the trend for 2014 for key sectors as well as the main risks on the horizon. Registration is complimentary.
- Asia’s Economies: Where Are the Risks in the Year of the Horse?
- Asia’s Financial Institutions: …But Some Asset Quality Bumps For Banks…
- Asia’s Corporates: …A Rough Ride For Some
- Paul Gruenwald, Managing Director, Chief Economist, Asia-Pacific
- Ritesh Maheshwari, Managing Director, Lead Analytical Manager, Financial Services Ratings, Asia-Pacific
- Terry Chan, Managing Director, Head of Corporate Research, Corporate Ratings, Asia-Pacific
- Andrew Palmer, Managing Director, Regional Criteria Officer, Asia-Pacific (Moderator)
Please feel free to forward this invitation to your clients or colleagues who may be interested to attend. Copies of selected reports, the presentation and replay will be made available to all registrants.
Standard & Poor’s Ratings Services’ webinars deliver a streamed audio and slide presentation. You will need computer speakers or headphones to listen to the audio stream.
Date: Wednesday , 11 December, 2013 , India, 11:00 a.m.
S&P Dow Jones Indices cordially invites you to a complimentary live webinar for investment professionals
India-focused Exchange Traded Funds (ETFs) attracted $240 million in investments in September this year, the biggest monthly inflow in nine months, and posted the best return in one year. Today, more and more portfolio managers are breaking the old asset allocation mold by moving away from static target allocations (e.g. the 60% equities/40% bond split) and leveraging index-based instruments, notably ETFs, as building blocks for dynamic allocations. How can this change in asset allocation thinking guide you?
Join this informative webinar and learn about strategic, tactical and alternative-asset allocation strategies using index-linked instruments.
· Innovative and unique ways professional managers can use index
instruments to execute on active asset allocation strategies
· Why some asset managers believe asset allocation can be more
efficient with index-linked vehicles when compared to simple
· Best indexing practices across asset classes and geographies
Credit Market Pulse is the newest market research publication from S&P Capital IQ. Produced with the busy investment management, credit officer and financial risk reporting audience in mind, S&P Capital IQ’s Credit Market Pulse is the first publication for the credit risk industry that provides a holistic overview of the health and trends of global credit capital markets leveraging the extensive analytical intelligence and depth of data from our own institution. The benchmarks, trends and individual company analyses examined in this, our inaugural issue, are intended to provide financial professionals with a better understanding of the risks and opportunities underlying their investment or lending decisions as well as how their portfolios perform against the market.
On Nov. 7, 2013, Standard & Poor’s Ratings Services affirmed the ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited sovereign credit ratings on India. The outlook on the long-term rating remains negative. India’s institutional strengths and high international reserves support our investment-grade rating on India. However, we note a marked slowdown in real growth, which complicates the government’s debt dynamics and ability to implement reforms
Standard & Poor’s affirmed the sovereign rating of India at BBB- with a negative outlook on November 7, 2013. In this CreditMatters TV segment, Standard & Poor’s Director of Sovereign Ratings Takahira Ogawa discusses the reasons behind the affirmation and the outlook for the sovereign.
There has been increasing interest over the largest emerging market banks and Standard & Poor’s Ratings Services’ expectations for their future performance. Below, we answer questions that investors and other market participants have asked us about the largest BRICMT (Brazil, Russia, India, China, Mexico, and Turkey) banks’ asset quality, their capital levels to support a still high lending growth, their profitability, and what effect the slowing economies in these six countries and the Federal Reserve’s expected tightening monetary policy will have. (Watch the related CreditMatters TV segments titled “Are The Good Old Days Over For Banks In Large Emerging Markets, Particularly China And India?,” dated Oct. 23, 2013, “Trends And Outlooks For Russian And Turkish Banks,” and “Can Brazil And Mexico’s Banks Handle The Economic Slowdown?,” both dated Oct. 22, 2013)
Amazing learning opportunity from the experts.
Please register at https://attendee.gotowebinar.com/register/892188069899921665
Ratings agency Moody’s Investors Service on Monday said the recent government decision to inject Rs 14,000 crore of capital in state-run banks is credit positive.
To register, Click here.
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.
Register at http://www.media-server.com/m/p/xpo4byip
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
Register at http://www.media-server.com/m/p/xpo4byip
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.