Category Archives: Rating Report

Search for Yield Leads to More Risks in Credit Funds

Search for Yield Leads to More Risks in Credit Funds
Link to Fitch Ratings’ Report: Credit Funds Dashboard April 2015
Fitch Ratings warns of the temptation that fixed income fund managers may have in current market conditions to overreach for yield, potentially loosening credit selectivity and leading to excessive credit and liquidity risk-taking.
Fund managers may be tempted to look for opportunities in lower-rated, less liquid, off-benchmark or longer-maturity bonds. This can lead to excessive risk-taking – there is a growing consensus among asset managers that the risks are beginning to outweigh the rewards, due to an overall increase in liquidity, re-pricing and idiosyncratic risk.
The inability to maintain discipline in credit selection and liquidity risk management, or the inability to de-risk the portfolio in a timely manner may put pressure on some fixed income Fund Quality Ratings. Furthermore, a potential change in market regime or market re-pricing (exacerbated by poor liquidity) may lead to more differentiation between funds’ performance, which in turn could lead to select rating actions.
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Moody’s: Global sovereign credit quality to continue stabilizing in 2014 after several tumultuous years

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”.

Read full report at https://www.moodys.com/research/Moodys-Global-sovereign-credit-quality-to-continue-stabilizing-in-2014–PR_287558?WT.mc_id=MDCAlerts_realtime

As Investors Seeking Higher Yields Eye New Catastrophe Bond Issues, What Are The Key Risks?

As Investors Seeking Higher Yields Eye New Catastrophe Bond Issues, What Are The Key Risks?

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

S&P : South And Southeast Asian Economies Grapple With Growth And External Financing Risks

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.

Moody’s: Asian consumer electronics outlook is negative in 2014

Tokyo, December 11, 2013 — Moody’s Japan K.K. says that the outlook for the Asian consumer electronics industry is negative in 2014.

See full article here https://www.moodys.com/research/Moodys-Asian-consumer-electronics-outlook-is-negative-in-2014–PR_288661

 

 

Is Rising Household Debt Weighing Down On Asia’s Banks?

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.

View full video at https://ratings.standardandpoors.com/?video=229674461&sp_mid=23308&sp_rid=22560

Economic Research: The Unpleasant Math Of Raising China’s Consumption-To-GDP Ratio

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.

S&P Live Webinar: 2014 Outlook For Asia-Pacific, Wednesday 11 December, 2013, 11am IST

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.

Discussion Topics:

  • 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

Speakers:

  • 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.

Register now at http://ratings-events.standardandpoors.com/content/APSG_131211_SEG_AP2014OutlookWebinar_RegForm

Visit SPRatings.com, a free, interactive, and informative portal to access highlights from our credit research offerings. Consider this your portal to perspective: www.spratings.com.

Index Inside Active: How to Make Friends with Foes, THURSDAY, DECEMBER 12, 2013 at 5:00 PM IST

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

securities selection

·  Best indexing practices across asset classes and geographies

THURSDAY, December 12, 2013

5:00 PM IST , Register here

or click on this link http://now.eloqua.com/es.asp?s=795&e=753445&elq=30438521de024290909227e6cd66ab21

Credit Market Pulse: November 2013

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.

Read report at http://img.en25.com/Web/StandardPoorsRatings/Credit-Market-Pulse-Nov-2013_FINAL.pdf?sp_mid=24876&sp_rid=22560

What’s Behind S&P’s Rating Affirmation On India

Rating On India Affirmed At ‘BBB-/A-3’; Outlook Remains Negative

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

What’s Behind Rating Affirmation On India

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.

Can The Largest Emerging Market Banking Systems Withstand Jitters About The Economy And Financial Markets?

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)

Read more at https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1205367&SctArtId=190527&from=CM&nsl_code=CMAP

CARE Research Webinar on Power Transmission & Distribution Sector, Thu, Nov 28, 2013 4:00 PM – 5:00 PM IST

Amazing learning opportunity from the experts.

Please register at https://attendee.gotowebinar.com/register/892188069899921665

Moody’s: Capital infusion credit positive for banks

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.

http://www.thehindu.com/business/Industry/moodys-capital-infusion-credit-positive-for-banks/article5281372.ece

 

Webcast: Flexible Bond Investing in a Rising Interest Rate Environment. Register now Nov 6, 2013, 2pm HK/1130amIST

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

Flexible Bond Investing in a Rising Interest Rate Environment
Date: Wednesday, 6 November, 2013
Time: 2pm HKG/SIN  (GMT+8)
5pm SYD (GMT+11)
Speaker: Philip Moffitt, Head of Fixed Income in Asia Pacific, Goldman Sachs Asset Management
Moderator: Jame DiBiasio, Editorial Director, Haymarket Financial Media
Free Registration: Register

Are Good Old Days Over For The Largest Emerging Market Banks?

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.

Read full report at https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1201866&SctArtId=187905&from=CM&nsl_code=LIME