Evaluating Sovereign Risk: Debt and Capital Markets. Derrill Allatt, Managing Partner, NewstatePartners, LLP
The panel will address the current state of sovereign capital markets, the realities of issuing government debt, and the future state of financing government expenditure.
Tricumen / Capital Markets: Results Review 2Q14 / 6m14Tricumen Ltd
Capital Markets: Results Review 2Q14 / 6m14
The capital markets 6m14 revenue for the Top 13 investment banks totalled $101bn, 3% below the prior year period. FICC weakened 9% during this period to $46bn, and equities revenue declined slightly too; but this was partially offset by strong issuance and advisory fees, and a modest advance in proprietary trading & principal revenues.
Banks continued trimming their headcounts but – contrary to expectations of many - there were no wide-ranging layoffs in 2Q14. Revenue/head productivity rose in all areas of issuance & advisory, and particularly ECM; but declined in FX, rates, commodities and equity derivatives.
The cost structure is shifting away from comp & benefits and towards non-comp, and IT in particular: several banks in this report have announced major investment programmes in specific areas of business (see Company section).
Barclays and RBS have published interim results in a new format. This report contains our initial analysis of their new 2013 and year-to-date 2014 revenues, and we will also review prior years in due course.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
The Financial Situation in the World by Wouter van der StokFelix Meißner
The Financial Situation in the World” by Wouter van der Stok
Mr. Van der Stok will present a brief history of the present global Economic/Financial Crisis, an analysis of future developments of this Crisis over the next 3 to10 years and how this will affect, without any exception, "me" as a person, family, business, city, nation and groups of nations
HERE YOU FIND THE RECORDING:
http://tinyurl.com/5vcl5hd
After a return to more expansionary monetary policies in early 2019, the world’s non-financial corporations borrowed an additional USD 2.1 trillion in the form of corporate bonds. In real terms, this is equivalent to the amount borrowed in the previous record year 2016 and represents a clear reversal of the decrease in corporate bond issuance during 2018. Adding the record borrowing during 2019 to the unprecedented build-up of corporate bond debt since 2008 means that the global outstanding stock of non-financial corporate bonds at the end of 2019 reached an all-time high of USD 13.5 trillion.
The new data in this OECD report, Corporate Bond Market Trends, Emerging Risks and Monetary Policy, shows that, in addition to its growing size, the quality and dynamics of the outstanding stock of corporate bonds have also changed. Compared with previous credit cycles, today’s stock of outstanding corporate bonds has lower overall credit quality, higher payback requirements, longer maturities and inferior covenant protection. These are features that may amplify the negative effects that an economic downturn would have on the non-financial corporate sector and the overall economy.
Find the full report at http://www.oecd.org/corporate/Corporate-Bond-Market-Trends-Emerging-Risks-and-Monetary-Policy.htm
Tricumen / Capital Markets: Results Review 2Q14 / 6m14Tricumen Ltd
Capital Markets: Results Review 2Q14 / 6m14
The capital markets 6m14 revenue for the Top 13 investment banks totalled $101bn, 3% below the prior year period. FICC weakened 9% during this period to $46bn, and equities revenue declined slightly too; but this was partially offset by strong issuance and advisory fees, and a modest advance in proprietary trading & principal revenues.
Banks continued trimming their headcounts but – contrary to expectations of many - there were no wide-ranging layoffs in 2Q14. Revenue/head productivity rose in all areas of issuance & advisory, and particularly ECM; but declined in FX, rates, commodities and equity derivatives.
The cost structure is shifting away from comp & benefits and towards non-comp, and IT in particular: several banks in this report have announced major investment programmes in specific areas of business (see Company section).
Barclays and RBS have published interim results in a new format. This report contains our initial analysis of their new 2013 and year-to-date 2014 revenues, and we will also review prior years in due course.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
The Financial Situation in the World by Wouter van der StokFelix Meißner
The Financial Situation in the World” by Wouter van der Stok
Mr. Van der Stok will present a brief history of the present global Economic/Financial Crisis, an analysis of future developments of this Crisis over the next 3 to10 years and how this will affect, without any exception, "me" as a person, family, business, city, nation and groups of nations
HERE YOU FIND THE RECORDING:
http://tinyurl.com/5vcl5hd
After a return to more expansionary monetary policies in early 2019, the world’s non-financial corporations borrowed an additional USD 2.1 trillion in the form of corporate bonds. In real terms, this is equivalent to the amount borrowed in the previous record year 2016 and represents a clear reversal of the decrease in corporate bond issuance during 2018. Adding the record borrowing during 2019 to the unprecedented build-up of corporate bond debt since 2008 means that the global outstanding stock of non-financial corporate bonds at the end of 2019 reached an all-time high of USD 13.5 trillion.
The new data in this OECD report, Corporate Bond Market Trends, Emerging Risks and Monetary Policy, shows that, in addition to its growing size, the quality and dynamics of the outstanding stock of corporate bonds have also changed. Compared with previous credit cycles, today’s stock of outstanding corporate bonds has lower overall credit quality, higher payback requirements, longer maturities and inferior covenant protection. These are features that may amplify the negative effects that an economic downturn would have on the non-financial corporate sector and the overall economy.
Find the full report at http://www.oecd.org/corporate/Corporate-Bond-Market-Trends-Emerging-Risks-and-Monetary-Policy.htm
The OECD Investment Policy Review of Georgia takes stock of recent achievements in improving the investment climate and assesses areas for the government to consider in strengthening its reform efforts to attract FDI that can have a positive impact on inclusive, sustainable growth. Find out more at http://www.oecd.org/investment/oecd-investment-policy-reviews-georgia-0d33d7b7-en.htm
This report provides an evidence-based overview of developments in capital markets globally leading up to the COVID-19 crisis. It then documents the impact of the crisis on the use of capital markets and the introduction of temporary corporate governance measures.
This Review offers policy recommendations to improve the legal, regulatory and institutional framework for capital markets in Croatia in a way that will foster a resilient and dynamic business environment, help realise the potential of Croatian corporations and give households better opportunities to diversify their long-term savings.
Asia is rapidly growing into the world’s largest stock market. In 2018, 51% of all equity capital raised through initial public offerings (IPOs) went to Asian companies. Today more than half of the world’s listed companies are from Asia. This development is reshaping global stock market in several ways: Households outside of Asia have increased their investments in Asian companies through pension funds, mutual funds and other intermediaries; it is increasingly common that listed companies are majority owned by the public sector or by other private companies; and smaller growth companies from Asia are using capital markets to raise money more extensively than smaller companies from the rest of the world.
This report provides a comprehensive and comparable analysis of world developments and the growing role of Asian capital markets since the mid-1990s. It focuses on primary equity markets, growth company listings, investment banking activities and ownership structure of publicly listed companies. It also contains a special chapter on how companies use foreign public equity markets to raise capital and to cross-list their shares.
This presentation provides key findings from the 2017 edition of the OECD Sovereign Borrowing Outlook. This includes gross borrowing requirements, net borrowing requirements, central government marketable debt, funding strategies and instruments and distribution channels.
Find out more information at http://www.oecd.org/finance/oecdsovereignborrowingoutlook.htm
This presentation by Adrian Blundell-Wignall shows key figures from the 2015 edition of the OECD Business and Finance Outlook.
Find more information about the Outlook at
http://www.oecd.org/daf/oecd-business-finance-outlook.htm
June 2017 - The 2017 edition of the OECD Business and Finance Outlook focuses on ways to enhance “fairness”, in the sense of strengthening global governance, to ensure a level playing field in trade, investment and corporate behaviour, through the setting and better enforcement of global standards. This presentation by OECD's financial markets expert Adrian Blundell-Wignall shows key findings from the publication. Find out more here http://www.oecd.org/daf/oecd-business-and-finance-outlook-2017-9789264274891-en.htm
Capital Markets Insights – Late Fall 2018Duff & Phelps
What’s been an increase in growth and acquisition-related financings and recapitalization transactions? Read the fall edition of Duff&Phelps’ Capital Markets Insights.
Fed's 2020 Quantitative Easing Debunked along with the controversial US$ 2.2 trillion relief bill, viewed as pork-barrel funding
CARES Act allows the Fed to:
1. meet in secrets with Wall Street incumbents,
2. provide liquidity of $484b (slush fund) thru SPVs making loans & loans guarantees,
3. never be audited (zero oversight),
4. not compliant to US Code requirements, Section 552b of Title 5
During the second quarter of 2016, acquisitive middle-market issuers capitalized on lenders’ increased risk appetite by entering into attractively priced and structured financings. The dramatic rally in Treasury yields (and other safe haven assets) triggered by the “Brexit” referendum at quarter’s end, augurs well for further improvement in domestic credit market conditions.
The OECD Investment Policy Review of Georgia takes stock of recent achievements in improving the investment climate and assesses areas for the government to consider in strengthening its reform efforts to attract FDI that can have a positive impact on inclusive, sustainable growth. Find out more at http://www.oecd.org/investment/oecd-investment-policy-reviews-georgia-0d33d7b7-en.htm
This report provides an evidence-based overview of developments in capital markets globally leading up to the COVID-19 crisis. It then documents the impact of the crisis on the use of capital markets and the introduction of temporary corporate governance measures.
This Review offers policy recommendations to improve the legal, regulatory and institutional framework for capital markets in Croatia in a way that will foster a resilient and dynamic business environment, help realise the potential of Croatian corporations and give households better opportunities to diversify their long-term savings.
Asia is rapidly growing into the world’s largest stock market. In 2018, 51% of all equity capital raised through initial public offerings (IPOs) went to Asian companies. Today more than half of the world’s listed companies are from Asia. This development is reshaping global stock market in several ways: Households outside of Asia have increased their investments in Asian companies through pension funds, mutual funds and other intermediaries; it is increasingly common that listed companies are majority owned by the public sector or by other private companies; and smaller growth companies from Asia are using capital markets to raise money more extensively than smaller companies from the rest of the world.
This report provides a comprehensive and comparable analysis of world developments and the growing role of Asian capital markets since the mid-1990s. It focuses on primary equity markets, growth company listings, investment banking activities and ownership structure of publicly listed companies. It also contains a special chapter on how companies use foreign public equity markets to raise capital and to cross-list their shares.
This presentation provides key findings from the 2017 edition of the OECD Sovereign Borrowing Outlook. This includes gross borrowing requirements, net borrowing requirements, central government marketable debt, funding strategies and instruments and distribution channels.
Find out more information at http://www.oecd.org/finance/oecdsovereignborrowingoutlook.htm
This presentation by Adrian Blundell-Wignall shows key figures from the 2015 edition of the OECD Business and Finance Outlook.
Find more information about the Outlook at
http://www.oecd.org/daf/oecd-business-finance-outlook.htm
June 2017 - The 2017 edition of the OECD Business and Finance Outlook focuses on ways to enhance “fairness”, in the sense of strengthening global governance, to ensure a level playing field in trade, investment and corporate behaviour, through the setting and better enforcement of global standards. This presentation by OECD's financial markets expert Adrian Blundell-Wignall shows key findings from the publication. Find out more here http://www.oecd.org/daf/oecd-business-and-finance-outlook-2017-9789264274891-en.htm
Capital Markets Insights – Late Fall 2018Duff & Phelps
What’s been an increase in growth and acquisition-related financings and recapitalization transactions? Read the fall edition of Duff&Phelps’ Capital Markets Insights.
Fed's 2020 Quantitative Easing Debunked along with the controversial US$ 2.2 trillion relief bill, viewed as pork-barrel funding
CARES Act allows the Fed to:
1. meet in secrets with Wall Street incumbents,
2. provide liquidity of $484b (slush fund) thru SPVs making loans & loans guarantees,
3. never be audited (zero oversight),
4. not compliant to US Code requirements, Section 552b of Title 5
During the second quarter of 2016, acquisitive middle-market issuers capitalized on lenders’ increased risk appetite by entering into attractively priced and structured financings. The dramatic rally in Treasury yields (and other safe haven assets) triggered by the “Brexit” referendum at quarter’s end, augurs well for further improvement in domestic credit market conditions.
This paper investigates the barriers to innovation perceived by Polish manufacturing firms. It refers to the heterogeneity of innovation active firms. We introduce a taxonomy of innovative firms based on the frequency with which they introduce commercialised innovations using data from both CIS4 (for 2002-2004) and CIS5 (2004-2006). Two groups of innovation-active firms are distinguished: those which introduced innovation in both periods covered by both CIS (which we call persistent innovators) and those which introduced innovation either in CIS4 or CIS5 (which we call occasional innovators). We use a four step analysis covering binary correlations, Principal Component Analysis, probit model and correlations of disturbances. Two types of explanatory variables describing firms’ characteristics and innovation inputs used are considered. The paper shows that there are considerable differences in sensitivities to the perception of innovation barriers and in complementarities among barriers between persistent and occasional innovators. In the case of occasional innovators, a kind of innovation barrier chain is observed. This has an impact on differences in the frequency of innovation activities between the two groups of innovators and results in a diversification of innovators.
Authored by: Ewa Balcerowicz, Marek Pęczkowski, Anna Wziatek-Kubiak
Published in 2011
Ensuring Public Debt Sustainability in Africa Prospects and PoliciesDr Lendy Spires
Sustainable levels of public debt may need to be reconsidered in the context of Africa’s high economic growth rates and improved debt management among other factors. There is scope for debt management strategies to emphasise growth - for countries with borrowing space, this includes prudent borrowing for growth-enhancing outlays. African policymakers need to adopt sound fiscal policies and complementary monetary policies, while seizing opportunities for growth-enhancing investment.
Current African debt is the lowest in decades, with the fastest decline posted by the most indebted countries thanks to debt relief and accompanying policies that made relief possible. Shortly after being hit by the global financial crisis in 2009, Africa staged a robust economic recovery and is now one of the fastest growing regions in the world. The continent’s performance is projected to remain strong despite the fragile and tepid global recovery. As several studies and scholars have now pointed out, Africa has the potential to become a global growth pole over the longer term.
However, vast infrastructure and human capital gaps constrain Africa’s development. Balancing the need to scale up growth-enhancing public outlays and debt sustainability is therefore a key policy challenge ahead. What constitutes sustainable levels of public debt may need to be reconsidered in the context of Africa’s high economic growth rates, reduced risk premia, low interest rates, and strengthened debt management capacity. During the past decade, debt sustainability has improved markedly and in the aftermath of the global financial crisis Africa’s debt-to-GDP today is lower than it has been in decades. Still, the global financial crisis has left some countries with looming fiscal challenges and deteriorating public debt sustainability.
This article considers the public debt legacy of the crisis in Africa. The following section summarises the recent fiscal and external indicators for African countries. We then present and discuss the varied fiscal outcomes among African countries as well as their impact on fiscal space four years after the global financial crisis.
No bubble trouble; stocks are still reasonably priced. This credit cycle has unique characteristics that continue to make high-yield bonds attractive. Interest-rate volatility poses greater risk than higher rates themselves.
After the storm- Global Financial Crisis 27 aug 2010Gaurav Sharma
Global Financial Order - Reasons for Crisis, Current Status, The BIG Shifts- Public Debt, Global De-leverage, Wealth Concetration & Creation.
Talk Delivered at Fore School Of Management, new Delhi
La pandemia di coronavirus (COVID-19) pone sfide di stabilità sanitaria, economica e finanziaria senza precedenti. A seguito dell'epidemia di COVID-19, i prezzi delle attività a rischio sono crollati e la volatilità del mercato è aumentata vertiginosamente, mentre le aspettative di inadempienze diffuse hanno portato a un aumento dei costi di indebitamento. Le decisive azioni di politica monetaria, finanziaria e fiscale volte a contenere le ricadute della pandemia e sono riuscite a stabilizzare gli investitori tra la fine di marzo e l'inizio di aprile. I mercati hanno recuperato alcune delle loro perdite.
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
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➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
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➢ Super Show 9 in HCM with Super Junior
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➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
What is the TDS Return Filing Due Date for FY 2024-25.pdfseoforlegalpillers
It is crucial for the taxpayers to understand about the TDS Return Filing Due Date, so that they can fulfill your TDS obligations efficiently. Taxpayers can avoid penalties by sticking to the deadlines and by accurate filing of TDS. Timely filing of TDS will make sure about the availability of tax credits. You can also seek the professional guidance of experts like Legal Pillers for timely filing of the TDS Return.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
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In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
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Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
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This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
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Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
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3. Determining Sustainable Level of Debt Several debt measures are utilised by debt managers and international investors to evaluate the sustainability of debt in a given country Debt-to-GDP The public-sector-debt-ratio provides the clearest picture of a country’s public sector debt stock as a percentage of annual production. Generally a level over 60% is considered high. Those countries with higher credit worthiness are able to borrow more without affecting their sovereign ratings as can be seen by the parabolic relationship between Debt-to-GDP and credit rating Interest-to-Revenues The ratio of public sector interest-to-general government revenues is the most commonly used measure of interest affordability as it provides an indication of the interest burden on annual fiscal resources. One government may have a high level of debt, however, through heavy concessional borrowing, might face a lower level of interest than another government with a lowerlevel of debt A ratio above 15% of revenues is generally considered high External Short-Term Debt-to-Reserves A metric of short-term external financing constraints, this ratio describes short-term debt (current-year amortisations, money market instruments, currency and deposits) as a percentage of central bank international reserves 2009 Public Sector Debt-to-GDP vs.. Credit Rating Interest-to-Revenues vs.. Credit Ratings Part 1: Key Challenges Facing Debt Managers Jamaica Greece Iceland Israel Philippines Ghana Bolivia Russia Chile AAA AA A BBB BB B CCC Jamaica Source: IIMF; S&P, Moodys; Fitch Pakistan Costa Rica Iceland Israel Bolivia AAA AA A BBB BB B CCC 3
4. Credit Ratings and Debt Sustainability S&P, Moody’s and Fitch all factor debt sustainability into their determination of credit ratings. These ratings then affect a Government’s ability to borrow externally. Additionally, ratings may serve as country ceilings, which affect the borrowing cost of private enterprises operating within a rated country The level of a country’s indebtedness is a major factor affecting its credit rating. While countries with historically strong sovereign credit worthiness, like Japan and Spain, may be given more flexibility in sustaining more debt, emerging market nations have traditionally been perceived as riskier. Recent events have called into question the debt sustainability of those historically AA- and AAA-rated nations like Greece, Spain and Portugal, which have faced downgrades in recent months IFR; Bloomberg, all figures as of 04 May 2010 Aggregated Sovereign Credit Rating vs.. Borrowing Spread Pakistan, 651bps Greece, 643 bps Ukraine, 551 bps Iceland, 375 bps Portugal, 275 bps Romania, 233 bps Philippines, 168 bps AA A BBB BB B CCC Part 1: Key Challenges Facing Debt Managers 4
5. Managing Rollover Risk Many governments worldwide (particularly within Europe) face large rollover requirements as a percentage of GDP in 2010before any allowance for financing budgetary deficits Debt rollover ratios exceed 20% of GDP for Belgium and Italy. Spain, for instance, must issue EUR 225bn this year in order to rollover its outstanding debts falling due in 2010, even though Spain has a debt-to-GDP of only 54% compared with 125% for Greece and 76% for Portugal. In addition to the need to refinance maturing debt, many European and other governments will need to increase their borrowings to finance their budgetary deficits. S&P has projected that European governments will be forced to borrow a record €1,446b in 2010 due to deteriorating public finances. IMF, S&P Advanced European Market Debt-Rollover Ratios EMEA Debt-Rollover Ratios Part 1: Key Challenges Facing Debt Managers 5
8. Higher than anticipated expenditures caused by financial crisis response measures such as bank takeovers and deposit guarantees
9.
10. Some governments are borrowing abroad in order to guarantee that they have adequate forex for their central banks
11. The inability to service or rollover large foreign-denominated debt payments (public sector or otherwise)
12.
13. Contagion Contagion describes the phenomena whereby financial shocks are transmitted from one economy to other interdependent economies. The term came into wide use during the late 1990s when financial crises spread across emerging market economies, affecting nations with healthy fundamentals and sound fiscal, monetary and exchange rate policies Various theories exist to explain why contagion occurs including: real links such as trade, the pass through of higher/lower market interest rates, a herd mentality among investors, and operations of multinational financial institutions spreading economic distress and investors selling debt of one country to fund losses elsewhere in the portfolio The threat of contagion is very real to debt managers as exogenous events can lead to the transmission of higher interest rates, reduced financing options and speculative exchange rate attacks that undermine the external balance and cause any number of other economic distress factors Bloomberg CDS Lockstep Movements Among Emerging Market Peers Part 1: Key Challenges Facing Debt Managers 7
14. Reaching Investment Grade IFR May 8 2010, Moody’s, S&P, Fitch Why are some emerging market countries perceived as less risky than their peers? Part 1: Key Challenges Facing Debt Managers 8
17. Taking advantage of higher growth to improve fiscal position and to reduce debt (Russia)
18. Implementation of Investor Relations Programmes (IRPs) (Brazil) Because of the recent turmoil surrounding the European sovereign debt crisis, a number of emerging market countries are now being perceived as less risky than advanced country peers. For instance, Chile’s CDS has recently been trading below UK’s. CDS for Brazilian, Mexican and Polish bonds are trading below those of Portugal 9 Part 1: Key Challenges Facing Debt Managers . Source: S&P S&Ps sovereign ratings methodology categories
20. Sources of Funding Bilateral and multilateral borrowing increased dramatically in the sovereign borrowing mix in 2008 and through much of 2009 due to reduced availability of external commercial financing Many Governments have sought IMF assistance in the form of a stand-by-arrangement (SBA) or drawn on the IMF’s Flexible Credit Line Some sovereigns with SBAs and FCLs have already returned to the international capital markets - even before the availability of official sector funding ends as was the case of Hungary in July 2009 and January 2010 Part 2: Some Solutions and Strategies IMF Current IMF Programmes (as of 29 April 2010) 11
23. Encouraging greater investor interest (‘placing the country on the map’) in other sectorsDuring 2009, sovereigns out-issued corporates US$129b to US$115b, with the bulk of issuance coming in the second half of the year. Sovereign bond issuance is already up by more than two-thirds in the first quarter of 2010 Thompson Reuters, Development Prospects Group Part 2: Some Solutions and Strategies 12
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25. The quality of economic and sovereign credit research and, most importantly, understanding of the country, its economic and political conditions and its creditworthiness
26. Experience in lead managing similar sovereign issues, including for example experience in bringing sub-investment grade sovereign borrowers to market
28. Individual character of the team assigned to the transaction; level of senior resources to be allocated, degree of familiarity with the countryPart 2: Some Solutions and Strategies 13
29. Case Study: Russian Federation Situation Overview After recovering from its debt crisis in 1998, the Russian economy sustained ten years of economic growth in excess of 5% through 2008. Oil receipts enabled the Russian authorities to accumulate assets in their National Wealth Fund and Fiscal Reserve Fund, which stood at US$88.8bn and US$40.9bn respectively as of 1 May 2010. These assets were instrumental in propping up the Russian private sector when the global financial crisis caused the Russian economy to contract by 7.9% GDP in 2009. No Russian credits suffered international bond defaults, in part due to well-timed interventions by the Russian authorities Prior to the most recent issues, Russia hadn’t issued in the international capital markets for many years, and its return required the development and implementation of a detailed medium-term external funding strategy that began in mid-2009 in order to obtain the lowest pricing possible Issuance Strategy The Russian Federation returned to the capital markets in order to provide corporate and sovereign-related entities with new sovereign benchmarks that would enable them to tighten their own credit spreads. Russia sought to raise US$5.5bn from five and 10-year issuances The Russian authorities took a hard-line on the pricing of the new bonds. Issuance at the tightest possible spreads was prioritised over achieving a high oversubscription ratio. The book size was deliberately kept under wraps in order to prevent investors from inflating orders Outcome Russia’s five- and ten-year issues were priced in line with official guidance at 125bps and 135bps wide of US Treasuries respectively and the bonds were two times oversubscribed, even in the face of a weak market. The ten-year yield fell inside of the Italian and Spanish sovereign yield curves. The issuance achieved the Ministry’s objectives of repricing the sovereign curve and establishing benchmarks for future supply Russia MoF Part 2: Some Solutions and Strategies 14
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31. Issuances could be simultaneously placed on domestic and foreign markets allowing for the widest possible investor base
33. Widely available local-currency bonds could pave the way for foreign investors to increasingly invest on local-currency exchanges and in private sector corporates
34.
35. Domestic-currency bonds could be ‘dumped’ rapidly by global investors causing more volatile price movements. More sophisticated investors may be located abroad, leaving domestic holders to bear the brunt of any depreciation in government debt assets
36. In order to have a successful local-currency issuance, capital controls must be limited or scaled back, which is a concern in some economies
37. External issuance of a domestic instrument is more expensive as legal costs, clearing mechanisms, road-shows and investor relations take on global proportionsPart 2: Some Solutions and Strategies 15
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39. Provides a channel for interacting with market participants and investors
40. Helps judge the potential timing of issuance in global capital markets, especially in instances of prolonged absences from the markets
41. Contributes to a more positive perception of the country by investors when making decisions to either maintain or increase exposure to the country, even in the face of increasing external payments pressures
51. Provide detailed information on the sovereign’s macroeconomic position, updated forecasts and insight on financing plans and other forthcoming events
52. Provide forward looking information on medium-term macroeconomic objectives and proposed policy measures, including future financing needs, debt position, amortisation schedules, future debt issuance, etcAn IRP needs to create formal communication channels for two-way exchange of views and information between sovereign debtors and market participants Part 2: Some Solutions and Strategies 17
53. Investor Relations Programme (IRP) (cont) Many sovereigns have been rewarded for the transparency of their investor relations efforts during the implementation of policy reforms. In the cases of Brazil, Turkey, and South Korea, for instance, the proper conveyance of their reform agenda through well established IRPs helped reduce borrowing costs. As can be seen below, the introduction of an IRP lowered the USD yield curve at 5-years by an average of 164bps for the sampled countries Sovereigns with developed programmes have fared better than those without. There is correlation between the rating of a country’s programme and its ability to withstand external shocks As can be seen below, those countries having the higher rated IRPs had lower 5-Year CDS spreads. This is indicative of the benefit of an open and transparent relationship between the sovereign issuer and investors Effect of IRP on Spread to USD Swaps ‘09 IIF Weighted Score vs.. CDS Spread (13 May 2010) Venezuela Pakistan Ukraine Institute for International Finance, Bloomberg Dom. Republic Part 2: Some Solutions and Strategies Philippines Turkey Brazil Peru 18
54. Domestic vs.. External Borrowing Domestic vs.. external debt financing should aim at minimising cost and risks for the overall economy There is no optimal approach for all circumstances as it depends on the availability of financing, economic environment, institutional framework and the degree of development of the domestic financial markets. However, there are a handful of factors that should be reviewed when deciding whether to borrow domestically or externally: Part 2: Some Solutions and Strategies 19
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56. The preventative approach is suitable in those countries, which are able to anticipate and publicly acknowledge the existence of a liquidity problem before it becomes a solvency problem
57. In outright solvency crises, voluntary debt exchanges are more difficult to achieve
58. A candid dialogue is essential in order to gauge creditor tolerance for an NPV reduction, obtain feedback on how to improve a proposal and generate an atmosphere of trust
65. Case Study: Belize Situation Overview Belize’s public sector debt stock rose rapidly from 2000 to 2005, driven by increased borrowing from private sector sources in order to finance the cost of emergency relief and the reconstruction process following a series of natural disasters in the period from 1998-2002. Repeated refinancing operations in previous years led to a consistent rise in borrowing costs: the effective weighted average interest rate on the external commercial debt stood at approximately 11.25% in mid-2006 In mid-2006, Belize’s public debt burden stood at approximately US$1.1b, which was equal to over 90% of estimated GDP. Interest on the public debt was due to exceed 27% of fiscal revenue in 2006. Servicing the external debt absorbed an average of 46% of Belize’s annual foreign currency earnings from exports of goods and services since 2002. Furthermore, debt service due to external commercial creditors was characterised by spikes caused by bullet maturities, some of which were linked to put options held by creditors Macroeconomic projections, undertaken in conjunction with the IMF, showed that Belize’s debt burden would contribute to acute twin financing shortfalls in the short- to medium-term IMF, Belize MoF Debt Stock Before Restructuring (June 2006) Savings Generated by Debt Exchange Offer Part 2: Some Solutions and Strategies 21
66. Case Study: Belize (cont) Exchange Strategy Belize pursued a strategy based on: The full and early engagement of creditors through open and constructive dialogue A policy of transparency in the dissemination of all economic and financial data and assumptions A willingness to find a solution that would address Belize’s needs in a credible manner but that would also be perceived as fair by creditors The support of the IMF, the IADB, and the CDB Before entering into dialogue with creditors, Belize built a case for debt relief by producing detailed macroeconomic projections that took into account the impact of the authorities’ economic reforms and the financial assistance expected from multilateral and bilateral lenders. The authorities presented creditors with a number of indicative debt restructuring scenarios, all comparable in NPV terms In December 2006, Belize announced the broad terms of its exchange offer and simultaneously suspended interim debt service payments. In order to ensure comparable treatment in NPV terms for all participating creditors, Belize incorporated exchange ratios into the exchange offer. Special legal procedures were put in place to encourage the reconstitution of stripped instruments as well as the use by participating creditors of the collective action clauses (CACs) embedded in some of the affected instruments Outcome Holders of 96.8% of the affected debt tendered their claims. The new debt service profile for the external commercial debt was radically different from the original one. Between 2007 and 2015, Belize will benefit from cash flow savings equal to US$482m. Additionally, consolidation of the country’s external commercial debt into a single benchmark-size (US$547m) instrument encouraged trading in Belizean instruments and broadened the country’s investor base A major economic crisis was averted and Belize now has a debt burden that has proven sustainable. The country’s credibility and standing in the international financial community was preserved: creditors acknowledged that Belize conducted itself in a transparent and responsible manner in very challenging circumstances IMF Part 2: Some Solutions and Strategies 22
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68. Will the markets be successfully persuaded that Greece can achieve debt sustainability without a comprehensive or partial debt restructuring?
69. If a restructuring of Greece’s debt becomes inevitable, will the Government have missed out on an opportunity to take a decisive and pre-emptive debt reprofiling action while it still had funds at its disposal?Part 2: Some Solutions and Strategies 23
70. Contact Us For further information, please contact: Derrill Allatt Managing Partner Newstate Partners LLP 33 Cavendish Square London W1G 0PW Phone: +44 (0) 20 7182 4641 E-mail: info@newstatepartners.com Website: www.newstatepartners.com 24