The Ministry of Finance plans to issue a total of 103.5 billion baht in government bonds in the third quarter of fiscal year 2011, which is close to the initial estimate. Key differences include the planned issuance of 30-40 billion baht in inflation-linked bonds. Demand for government bonds is expected to remain high due to high liquidity among savers, though foreign investor inflows into the bond market have slowed in recent months.
OGX reported highlights from its 2009 results and subsequent events:
- Completed five exploratory wells in the Campos Basin with estimated volumes between 2.1 to 4.7 billion barrels of oil equivalent.
- Acquired additional exploration blocks and increased participation in existing blocks.
- Independent assessment certified over 6.7 billion barrels of risked prospective resources across OGX's portfolio.
- Chartered its first FPSO and entered into a long-term production services agreement.
- Maintained a strong cash position of R$7.3 billion to fund its extensive exploratory commitments through 2013.
São Paulo, November 11, 2010 – Banco Indusval S.A., financial institution with activities primarily focused on middle market lending, operating in the Brazilian market for over 40 years, listed at the Stock, Commodities and Futures Exchange - BM&FBOVESPA under tickers IDVL3 and IDVL4, announces its financial results for the third quarter 2010 (3Q10).
The Reserve Bank of India cut its repo rate by 50 basis points to 8% and announced other monetary measures to boost the economy. It forecasts GDP growth of 7.3% for fiscal year 2013 assuming normal monsoons, but expects inflation to remain in the 6.5% range. Equity markets rose in response to the rate cut and bond yields declined, while the banking sector did not see major gains due to some policy measures that may negatively impact margins. The central bank maintained a cautious stance and signaled low probability of further rate cuts in the near term.
This document contains forward-looking statements about Bank Zachodni WBK's future business development and economic performance that may differ materially from expectations. It cautions that various risk factors could adversely impact the business. The bank aims to strengthen its market position as a universal bank offering retail, business, and investment banking services. Its outlook forecasts low double-digit revenue growth, a cost/income ratio of 41-43%, below-market cost of risk, and around 20% annual profit growth to achieve a 2013 PAT of €480 million.
Dynamic income funds: Are they right bets in the delayed easing rates scenario?Dhuraivel Gunasekaran
The document discusses how dynamic income funds may benefit from expected interest rate cuts in India. It analyzes the Reserve Bank of India's decision to keep interest rates unchanged due to high inflation. While inflation is expected to moderate, allowing for rate cuts in the fourth quarter of the fiscal year, the RBI will not cut rates aggressively until inflation is within its target range. This scenario could result in 25-50 basis point rate cuts by March 2013, benefiting long-term debt funds like dynamic income funds, which hold long-duration debt instruments and can appreciate in value when rates fall. The document proceeds to analyze dynamic income funds' performance during past interest rate cycles in India.
São Paulo, February 23, 2011 – Banco Indusval S.A., financial institution with activities primarily focused on corporate lending, operating in the Brazilian market for over 40 years, listed at the Stock, Commodities and Futures Exchange - BM&FBOVESPA under tickers IDVL3 and IDVL4, announces its financial results for the forth quarter 2010 (4Q10) and fiscal year 2010 (2010).
China raised interest rates for the second time in 2021 to curb inflation pressures. The one-year deposit rate was increased to 3.25% and lending rate to 6.31%. This move was expected after China also recently raised bank reserve requirements. Inflation remains high in China, with consumer prices at 4.9% in February and producer prices accelerating. The interest rate hike aims to support a soft economic landing by slowing credit growth and cooling demand.
Multiplus reported its 3Q12 earnings. Highlights included 24% growth in gross billings versus 3Q11, R$131 million in cash generation, and 225% growth in non-air redemptions. The company had over 10.5 million members, an 18% increase year-over-year. Multiplus delivered R$66.6 million in net income and R$130.5 million in free cash flow. Dividends of R$146.7 million were declared, representing R$0.95926 per share.
OGX reported highlights from its 2009 results and subsequent events:
- Completed five exploratory wells in the Campos Basin with estimated volumes between 2.1 to 4.7 billion barrels of oil equivalent.
- Acquired additional exploration blocks and increased participation in existing blocks.
- Independent assessment certified over 6.7 billion barrels of risked prospective resources across OGX's portfolio.
- Chartered its first FPSO and entered into a long-term production services agreement.
- Maintained a strong cash position of R$7.3 billion to fund its extensive exploratory commitments through 2013.
São Paulo, November 11, 2010 – Banco Indusval S.A., financial institution with activities primarily focused on middle market lending, operating in the Brazilian market for over 40 years, listed at the Stock, Commodities and Futures Exchange - BM&FBOVESPA under tickers IDVL3 and IDVL4, announces its financial results for the third quarter 2010 (3Q10).
The Reserve Bank of India cut its repo rate by 50 basis points to 8% and announced other monetary measures to boost the economy. It forecasts GDP growth of 7.3% for fiscal year 2013 assuming normal monsoons, but expects inflation to remain in the 6.5% range. Equity markets rose in response to the rate cut and bond yields declined, while the banking sector did not see major gains due to some policy measures that may negatively impact margins. The central bank maintained a cautious stance and signaled low probability of further rate cuts in the near term.
This document contains forward-looking statements about Bank Zachodni WBK's future business development and economic performance that may differ materially from expectations. It cautions that various risk factors could adversely impact the business. The bank aims to strengthen its market position as a universal bank offering retail, business, and investment banking services. Its outlook forecasts low double-digit revenue growth, a cost/income ratio of 41-43%, below-market cost of risk, and around 20% annual profit growth to achieve a 2013 PAT of €480 million.
Dynamic income funds: Are they right bets in the delayed easing rates scenario?Dhuraivel Gunasekaran
The document discusses how dynamic income funds may benefit from expected interest rate cuts in India. It analyzes the Reserve Bank of India's decision to keep interest rates unchanged due to high inflation. While inflation is expected to moderate, allowing for rate cuts in the fourth quarter of the fiscal year, the RBI will not cut rates aggressively until inflation is within its target range. This scenario could result in 25-50 basis point rate cuts by March 2013, benefiting long-term debt funds like dynamic income funds, which hold long-duration debt instruments and can appreciate in value when rates fall. The document proceeds to analyze dynamic income funds' performance during past interest rate cycles in India.
São Paulo, February 23, 2011 – Banco Indusval S.A., financial institution with activities primarily focused on corporate lending, operating in the Brazilian market for over 40 years, listed at the Stock, Commodities and Futures Exchange - BM&FBOVESPA under tickers IDVL3 and IDVL4, announces its financial results for the forth quarter 2010 (4Q10) and fiscal year 2010 (2010).
China raised interest rates for the second time in 2021 to curb inflation pressures. The one-year deposit rate was increased to 3.25% and lending rate to 6.31%. This move was expected after China also recently raised bank reserve requirements. Inflation remains high in China, with consumer prices at 4.9% in February and producer prices accelerating. The interest rate hike aims to support a soft economic landing by slowing credit growth and cooling demand.
Multiplus reported its 3Q12 earnings. Highlights included 24% growth in gross billings versus 3Q11, R$131 million in cash generation, and 225% growth in non-air redemptions. The company had over 10.5 million members, an 18% increase year-over-year. Multiplus delivered R$66.6 million in net income and R$130.5 million in free cash flow. Dividends of R$146.7 million were declared, representing R$0.95926 per share.
Indian stock markets gained for the seventh consecutive week, with the Sensex rising 3.04% and Nifty up 3.75%. Foreign institutional investors contributed to the rise by investing over Rs. 10,000 crore in Indian equities during the week. Several sectors such as auto, banks, capital goods and real estate saw gains over 6%. However, inflation declined to a 2-year low of 6.55% in January, giving the RBI scope to cut interest rates. Volatility is expected in the upcoming week due to F&O contract expiry and various economic data releases.
First Bank Group reported results for the 9 months ended December 31, 2009 and quarter ended March 31, 2010. For the 9 months ended December 31, 2009, gross earnings increased 28.8% to N196.4 billion compared to the same period in 2008. However, profit before tax declined 72.6% to N11.6 billion. In the quarter ended March 31, 2010, gross earnings declined 10.65% to N62.4 billion compared to the same quarter in 2009, while profit before tax increased significantly to N15.4 billion. First Bank remains well capitalized with a capital adequacy ratio of 17.67% as of March 31, 2010 and continues its strategy of growing earnings while improving asset
The banking sector in Malaysia saw stable loan growth of 10.9% year-over-year in March 2009, driven partly by a 20-30% jump in loans to government agencies and non-bank financial institutions. However, leading loan indicators remained subdued and loan growth is expected to slow significantly to 2-3% in 2009 due to weaker economic conditions. Non-performing loan ratios continued to improve in March. The report maintains a neutral outlook on Malaysian banks, expecting them to perform better than anticipated despite the economic downturn.
The Swedish economy continues to expand at a brisk pace according to recent data, with confidence increasing in many sectors. However, there are signs that the rate of expansion could slow, as confidence indicators level off and temporary factors like inventory build-up subside. Public finances are benefiting from the economic recovery and reforms, but fiscal policy will face challenges going forward as costs from demographics grow and subsidies are phased out. Exports and government revenues are growing, but inflation is rising and unemployment remains high, making economic policy tricky.
Troika Dialog Russia Forum February 2011MRSK Centre
The document provides preliminary results for 2010 and forecasts for 2011 for IDGC of Center. Key points include:
- IDGC of Center switched all its branches to RAB regulation and has a high level of regulated asset base.
- The company has shown strong financial performance with positive dynamics on key indicators over the last 4 years.
- Analysts expect the company's capitalization and growth prospects to increase further as the sector remains undervalued compared to foreign peers.
Banco Indusval reported financial results for 2Q10 and 1H10. Credit portfolio growth was moderate at 2.5% in the quarter, and default rates fell due to economic recovery. Net profit was R$8.3 million in 2Q10, up 13.7% from last quarter. Management comments indicated initiatives to improve products and services should have medium-term benefits, while credit to mid-sized companies grew and default rates declined.
The Indian stock markets extended their gains for a sixth straight week as the benchmark indices rose over 1%. Foreign investors have poured $3.6 billion into Indian equities so far this year, outperforming many global markets. The markets gained on positive US jobs data but slipped on India's lower-than-expected GDP growth of 6.9% for fiscal year 2012. Hopes of further aid to Greece helped the markets recover. Key factors to watch this week include India's January inflation data and various major company earnings announcements. The outlook is for a range-bound market between 5,200-5,480 points.
Banking & Nbfc Q411 Earnings & Policy Impacts (23rd May11)abhiseksasmal
The document discusses the impact of the recent 50 basis point hike in savings bank deposit rates by the RBI on banks. It estimates that public sector banks with higher savings account proportions of total deposits will be more impacted in terms of lower net interest margins and profits for FY2012. Specifically, it provides estimates of the increase in interest expenses, reduction in net interest margins, net interest income and profit before tax for some major public sector banks due to the savings bank rate hike.
The document provides forecasts for the Italian NPL and UTP transaction market and servicing industry for 2020 and 2021. It finds that:
1. The NPL ratio in Italy is expected to increase to 7.3% in 2021 from 6.2% in 2020, due to expected higher NPE inflows in 2021 as a result of the 2020 economic downturn.
2. The NPL transaction market is expected to remain dynamic with €34 billion in transactions projected for both 2020 and 2021. Unsecured portfolios are forecast to make up the largest share of transactions in 2020 at 31%.
3. The servicing industry stock of NPEs to manage is expected to grow significantly in 2021, potentially
This document summarizes Braskem's 4Q08 earnings conference call. It discusses the significant financial crisis and volatility in exchange rates, raw materials, and resin prices during the quarter. Braskem's net revenue was R$4.1 billion in 4Q08, down 18% from 3Q08. EBITDA was R$633 million, positively impacted by a R$74 million adjustment not related to the period. A R$1.9 billion real depreciation increased liabilities pegged to the US dollar. Braskem's priorities are focusing on financial strength and liquidity, accelerating synergies from acquisitions, maintaining profitability, recovering plant utilization rates, and assessing growth opportunities during the
The Bank of Thailand raised its policy interest rate by 25 basis points to 3.50% based on a 5-2 vote, marking the sixth rate hike this year. While the MPC statement showed a less hawkish stance due to weaker global economic data, it did not strike as being dovish. The MPC judged that inflationary risks remained significant and that domestic demand could sustain price pressures. The BoT expects Asian economies to withstand global economic impacts better than expected. The decision was in line with keeping policy rates normalized to contain domestic inflationary pressures.
The Bank of Thailand held its policy rate unchanged at 3.50% due to the impacts of flooding in Thailand and global economic uncertainties. While inflation remains a concern, reconstruction efforts are expected to boost domestic demand and the flooding will negatively impact production capabilities and consumer spending. One MPC member voted for a rate cut but the committee decided to keep the rate on hold until at least the end of 2012 given weak global economic growth prospects.
OGX achieved first oil production from its Waimea field in the Campos Basin in January 2012, within a record time frame of less than 3 years from discovery. In its first month of production, the FPSO OSX-1 operated with an average efficiency of 95-99%, highlighting the company's efficient execution from exploration and appraisal drilling to initial oil production. However, the document also cautions that OGX's resources are not proven reserves and are subject to significant risks and uncertainties.
São Paulo, May 11, 2010 – Banco Indusval S.A., financial institution with activities focused on middle market enterprises lending, operating in the Brazilian market for over 40 years, listed at the Stock, Commodities and Futures Exchange - BM&FBOVESPA under tickers IDVL3 and IDVL4, announces its financial results for the first quarter 2010 (1Q10).
Banco Santander (Brasil) reported its 2010 results. The Brazilian economy resumed growth in 2010 with GDP increasing 7.7% year-over-year after contracting 0.6% in 2009. Santander is the 3rd largest private bank in Brazil by total assets and had a market share of 11% in loans. In 2010, Santander's loan portfolio grew to R$160.6 billion while net profit increased to R$7.4 billion. The bank saw strong growth in its customer base, which expanded to over 24.8 million customers, an increase of 10.5% from the prior year.
The weekly market outlook document provided a summary of market performance for the week ending June 22, 2012. Some key points:
- Indian stock markets ended the week flat after gaining over 6% in the previous two weeks. Frontline indices saw marginal gains but extended their gaining streak to three weeks.
- Sentiment was dampened after the RBI maintained interest rates, defying expectations of a cut. Inflation also rose slightly to 10.36% in May.
- Technical support and resistance levels were provided for 30 Sensex stocks and 50 Nifty Midcap stocks to gauge the market outlook and inclination for the upcoming week.
This document summarizes a conference call about a company's 4th quarter 2006 results. It includes the following key points:
1) The Brazilian credit card market grew 12.1% in 2006, while the company's card base (CSU) grew 23.1%. CSU also increased its market share leadership.
2) CSU is set to start generating monthly revenues in May 2007 from its largest ever contract to process over 4 million credit cards for Caixa, Brazil's largest bank.
3) CSU's gross revenues grew 5.6% in 2006. Its CardSystem unit grew revenues 7.2% but had lower profit margins due to non-recurring revenues in 4Q2005.
The Public Debt Management Office has released Thailand's bond auction plan for Q1 2011. Total bond supply will be increased to Bt94.5 billion, up from Bt90 billion in Q4 2010. Key changes include reducing the size of 5-10 year bond auctions while increasing 30-year bond auctions. The PDMO may also issue more 50-year bonds depending on demand. Savings bonds of 7-12 years may be added, while developments to the primary dealer program are expected by March 2011.
K bank fx & rates strategies views on thailand’s bond market in q3KBank Fx Dealing Room
- The document summarizes views on Thailand's bond market in Q3, expecting about THB100 billion in government bond issuance, excluding THB40 billion in inflation-linked bonds. Fiscal conditions remain strong with revenue exceeding forecasts.
- It discusses details of the bond issuance schedule, and notes the introduction of Thailand's first inflation-linked bonds in July. Savings bonds will be issued in September.
- Monetary Policy Committee minutes reaffirmed inflation as a near-term concern over slowing global growth, though risks remain including energy prices and interest rate normalization. The policy rate forecast of 3.50% by year-end remains intact.
The Thai economy grew more slowly than expected in the third quarter of 2011, expanding just 0.5% quarter-over-quarter and 3.5% year-over-year. Private investment and exports continued to drive growth, but agricultural output declined due to floods. Household consumption growth also slowed as consumers became more cautious due to flooding. The economy is expected to grow only 1.5% for the full year due to flooding impacts. The Bank of Thailand is expected to cut interest rates by 50 basis points to boost the economy and restore confidence.
The document provides a disclaimer and forward-looking statements regarding a presentation by Banco Santander Totta, S.A. and Banco Santander, S.A. It cautions that the presentation contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. It also states that the information in the presentation should be read in conjunction with other public disclosures and does not constitute an offer to buy or sell securities.
Indian stock markets gained for the seventh consecutive week, with the Sensex rising 3.04% and Nifty up 3.75%. Foreign institutional investors contributed to the rise by investing over Rs. 10,000 crore in Indian equities during the week. Several sectors such as auto, banks, capital goods and real estate saw gains over 6%. However, inflation declined to a 2-year low of 6.55% in January, giving the RBI scope to cut interest rates. Volatility is expected in the upcoming week due to F&O contract expiry and various economic data releases.
First Bank Group reported results for the 9 months ended December 31, 2009 and quarter ended March 31, 2010. For the 9 months ended December 31, 2009, gross earnings increased 28.8% to N196.4 billion compared to the same period in 2008. However, profit before tax declined 72.6% to N11.6 billion. In the quarter ended March 31, 2010, gross earnings declined 10.65% to N62.4 billion compared to the same quarter in 2009, while profit before tax increased significantly to N15.4 billion. First Bank remains well capitalized with a capital adequacy ratio of 17.67% as of March 31, 2010 and continues its strategy of growing earnings while improving asset
The banking sector in Malaysia saw stable loan growth of 10.9% year-over-year in March 2009, driven partly by a 20-30% jump in loans to government agencies and non-bank financial institutions. However, leading loan indicators remained subdued and loan growth is expected to slow significantly to 2-3% in 2009 due to weaker economic conditions. Non-performing loan ratios continued to improve in March. The report maintains a neutral outlook on Malaysian banks, expecting them to perform better than anticipated despite the economic downturn.
The Swedish economy continues to expand at a brisk pace according to recent data, with confidence increasing in many sectors. However, there are signs that the rate of expansion could slow, as confidence indicators level off and temporary factors like inventory build-up subside. Public finances are benefiting from the economic recovery and reforms, but fiscal policy will face challenges going forward as costs from demographics grow and subsidies are phased out. Exports and government revenues are growing, but inflation is rising and unemployment remains high, making economic policy tricky.
Troika Dialog Russia Forum February 2011MRSK Centre
The document provides preliminary results for 2010 and forecasts for 2011 for IDGC of Center. Key points include:
- IDGC of Center switched all its branches to RAB regulation and has a high level of regulated asset base.
- The company has shown strong financial performance with positive dynamics on key indicators over the last 4 years.
- Analysts expect the company's capitalization and growth prospects to increase further as the sector remains undervalued compared to foreign peers.
Banco Indusval reported financial results for 2Q10 and 1H10. Credit portfolio growth was moderate at 2.5% in the quarter, and default rates fell due to economic recovery. Net profit was R$8.3 million in 2Q10, up 13.7% from last quarter. Management comments indicated initiatives to improve products and services should have medium-term benefits, while credit to mid-sized companies grew and default rates declined.
The Indian stock markets extended their gains for a sixth straight week as the benchmark indices rose over 1%. Foreign investors have poured $3.6 billion into Indian equities so far this year, outperforming many global markets. The markets gained on positive US jobs data but slipped on India's lower-than-expected GDP growth of 6.9% for fiscal year 2012. Hopes of further aid to Greece helped the markets recover. Key factors to watch this week include India's January inflation data and various major company earnings announcements. The outlook is for a range-bound market between 5,200-5,480 points.
Banking & Nbfc Q411 Earnings & Policy Impacts (23rd May11)abhiseksasmal
The document discusses the impact of the recent 50 basis point hike in savings bank deposit rates by the RBI on banks. It estimates that public sector banks with higher savings account proportions of total deposits will be more impacted in terms of lower net interest margins and profits for FY2012. Specifically, it provides estimates of the increase in interest expenses, reduction in net interest margins, net interest income and profit before tax for some major public sector banks due to the savings bank rate hike.
The document provides forecasts for the Italian NPL and UTP transaction market and servicing industry for 2020 and 2021. It finds that:
1. The NPL ratio in Italy is expected to increase to 7.3% in 2021 from 6.2% in 2020, due to expected higher NPE inflows in 2021 as a result of the 2020 economic downturn.
2. The NPL transaction market is expected to remain dynamic with €34 billion in transactions projected for both 2020 and 2021. Unsecured portfolios are forecast to make up the largest share of transactions in 2020 at 31%.
3. The servicing industry stock of NPEs to manage is expected to grow significantly in 2021, potentially
This document summarizes Braskem's 4Q08 earnings conference call. It discusses the significant financial crisis and volatility in exchange rates, raw materials, and resin prices during the quarter. Braskem's net revenue was R$4.1 billion in 4Q08, down 18% from 3Q08. EBITDA was R$633 million, positively impacted by a R$74 million adjustment not related to the period. A R$1.9 billion real depreciation increased liabilities pegged to the US dollar. Braskem's priorities are focusing on financial strength and liquidity, accelerating synergies from acquisitions, maintaining profitability, recovering plant utilization rates, and assessing growth opportunities during the
The Bank of Thailand raised its policy interest rate by 25 basis points to 3.50% based on a 5-2 vote, marking the sixth rate hike this year. While the MPC statement showed a less hawkish stance due to weaker global economic data, it did not strike as being dovish. The MPC judged that inflationary risks remained significant and that domestic demand could sustain price pressures. The BoT expects Asian economies to withstand global economic impacts better than expected. The decision was in line with keeping policy rates normalized to contain domestic inflationary pressures.
The Bank of Thailand held its policy rate unchanged at 3.50% due to the impacts of flooding in Thailand and global economic uncertainties. While inflation remains a concern, reconstruction efforts are expected to boost domestic demand and the flooding will negatively impact production capabilities and consumer spending. One MPC member voted for a rate cut but the committee decided to keep the rate on hold until at least the end of 2012 given weak global economic growth prospects.
OGX achieved first oil production from its Waimea field in the Campos Basin in January 2012, within a record time frame of less than 3 years from discovery. In its first month of production, the FPSO OSX-1 operated with an average efficiency of 95-99%, highlighting the company's efficient execution from exploration and appraisal drilling to initial oil production. However, the document also cautions that OGX's resources are not proven reserves and are subject to significant risks and uncertainties.
São Paulo, May 11, 2010 – Banco Indusval S.A., financial institution with activities focused on middle market enterprises lending, operating in the Brazilian market for over 40 years, listed at the Stock, Commodities and Futures Exchange - BM&FBOVESPA under tickers IDVL3 and IDVL4, announces its financial results for the first quarter 2010 (1Q10).
Banco Santander (Brasil) reported its 2010 results. The Brazilian economy resumed growth in 2010 with GDP increasing 7.7% year-over-year after contracting 0.6% in 2009. Santander is the 3rd largest private bank in Brazil by total assets and had a market share of 11% in loans. In 2010, Santander's loan portfolio grew to R$160.6 billion while net profit increased to R$7.4 billion. The bank saw strong growth in its customer base, which expanded to over 24.8 million customers, an increase of 10.5% from the prior year.
The weekly market outlook document provided a summary of market performance for the week ending June 22, 2012. Some key points:
- Indian stock markets ended the week flat after gaining over 6% in the previous two weeks. Frontline indices saw marginal gains but extended their gaining streak to three weeks.
- Sentiment was dampened after the RBI maintained interest rates, defying expectations of a cut. Inflation also rose slightly to 10.36% in May.
- Technical support and resistance levels were provided for 30 Sensex stocks and 50 Nifty Midcap stocks to gauge the market outlook and inclination for the upcoming week.
This document summarizes a conference call about a company's 4th quarter 2006 results. It includes the following key points:
1) The Brazilian credit card market grew 12.1% in 2006, while the company's card base (CSU) grew 23.1%. CSU also increased its market share leadership.
2) CSU is set to start generating monthly revenues in May 2007 from its largest ever contract to process over 4 million credit cards for Caixa, Brazil's largest bank.
3) CSU's gross revenues grew 5.6% in 2006. Its CardSystem unit grew revenues 7.2% but had lower profit margins due to non-recurring revenues in 4Q2005.
The Public Debt Management Office has released Thailand's bond auction plan for Q1 2011. Total bond supply will be increased to Bt94.5 billion, up from Bt90 billion in Q4 2010. Key changes include reducing the size of 5-10 year bond auctions while increasing 30-year bond auctions. The PDMO may also issue more 50-year bonds depending on demand. Savings bonds of 7-12 years may be added, while developments to the primary dealer program are expected by March 2011.
K bank fx & rates strategies views on thailand’s bond market in q3KBank Fx Dealing Room
- The document summarizes views on Thailand's bond market in Q3, expecting about THB100 billion in government bond issuance, excluding THB40 billion in inflation-linked bonds. Fiscal conditions remain strong with revenue exceeding forecasts.
- It discusses details of the bond issuance schedule, and notes the introduction of Thailand's first inflation-linked bonds in July. Savings bonds will be issued in September.
- Monetary Policy Committee minutes reaffirmed inflation as a near-term concern over slowing global growth, though risks remain including energy prices and interest rate normalization. The policy rate forecast of 3.50% by year-end remains intact.
The Thai economy grew more slowly than expected in the third quarter of 2011, expanding just 0.5% quarter-over-quarter and 3.5% year-over-year. Private investment and exports continued to drive growth, but agricultural output declined due to floods. Household consumption growth also slowed as consumers became more cautious due to flooding. The economy is expected to grow only 1.5% for the full year due to flooding impacts. The Bank of Thailand is expected to cut interest rates by 50 basis points to boost the economy and restore confidence.
The document provides a disclaimer and forward-looking statements regarding a presentation by Banco Santander Totta, S.A. and Banco Santander, S.A. It cautions that the presentation contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. It also states that the information in the presentation should be read in conjunction with other public disclosures and does not constitute an offer to buy or sell securities.
The Union Budget for 2012-13 focused on fiscal consolidation through tax measures and limiting subsidies while also emphasizing infrastructure development and inclusive growth. Key points include GDP growth projected at 6.9% for FY12 and 7.35-7.85% for FY13, increased spending on agriculture, education, and healthcare, and measures to attract investment into capital markets and infrastructure sectors. However, the lack of major reforms disappointed markets, which declined on the day of the budget.
Bank Negara: Tan Seri Dr Zeti Akhtar Aziz, pointed out that OPR had been
“front-loaded”. Zeti indicated that, there will not be any further OPR rate cuts
provided in improvement is seen in the second half of the year and further
improvement going into next year. Zeti expects the global and domestic
economies to improve by the second half of the year. (Source: The Edge Daily)
Axiata: Announcement of Headline KPIs for FY08. Axiata failed to achieve its
FY08 KPIs targets, citing increasing competition in the mobile market of Axiata’s
operating countries, currency volatility, liquidity shortages, and fluctuation of
interest rates. Axiata did not meet its target for revenue growth, EBITDA margin
and ROE for FY08. (Source: Bursa Announcement)
Ramunia: Currently engaging in preliminary discussion with Sime Darby
Engineering Sdn Bhd as a strategic partner. Ramunia and Sime Darby
clarified in an announcement that, they are in engaged in a discussion on a
potential corporate transaction as part of Ramunia’s search for a strategic
partner. (Source: Bursa Announcement)
Air Asia: Eyeing new associates in the Philippines and Vietnam. Datuk Seri
Tony Fernandes is keen on setting up affiliate airlines in the two countries. He
envisioned all AirAsia affiliates in Asean to become a single entity, ultimately.
(Source: Business Times)
G-7: Says strength of recovery depends on clean-up of banks' toxic
assets. In warning that the world economy could still take another turn for the
worse, the finance ministers and central bankers who met over the weekend in
Washington singled out the banks' impaired balance sheets as the biggest threat
to a sustainable recovery. Their remarks indicate it will be critical to follow
through on commitments to deploy taxpayer funds to buy distressed assets,
even as some gauges of financial stress ease. U.S. officials aim to finance the
purchases of as much as USD 1tr of loans and securities, and Germany is
pushing a plan to remove EUR 853b (USD 1.1tr) from balance sheets. (Source:
Bloomberg)
Mexico: Swine flu outbreak may deepen economic decline. The outbreak of
deadly swine flu may curtail tourism and compel shoppers to stay home, further
damaging an economy already reeling because of a U.S. recession that has cut
demand for exports. President Felipe Calderon closed Mexico City schools until
May 6, shut public events and declared emergency powers to order quarantines
to fight the flu, which has killed as many as 103 in Mexico. Finance Minister
Agustin Carstens said there’s “high potential” the outbreak will disrupt the
economy, with hotels and restaurants being the hardest hit. (Source: Bloomberg)
Germany: GfK consumer confidence holds steady for a third month in May
as slower inflation boosted household purchasing power and the recession
showed first signs of easing. GfK AG’s confidence index for, based on a survey
of about 2,000 people, was unchanged from April at 2.5%, the Nurembergbased
market-research company said in a statement. German business and
investor confidence increased this month on hopes that interest-rate cuts and
government stimulus packages will lift the economy out of its worst recession in
over six decades. Germany’s leading economic institutes predict the economy,
Europe’s largest, will shrink by 6% YoY this year. (Source: Bloomberg)
Ireland: Banks may report EUR 22.5b of loan losses. Ireland’s government is
preparing to buy EUR 90b (USD 119b) of property loans in a bid to stave off
nationalizing its biggest lenders. It may still end up with majority control of the
country’s banks. Companies led by Allied Irish Banks Plc may get 25% less than
the face value of their loans under the proposal from the National Asset
Management Agency, according to the median estimate of seven analysts
surveyed by Bloomberg News. That implies losses of EUR 22.5b. Analyst
estimates for the discount ranged from 15% to 30%. (Source: Bloomberg
This document summarizes the Malaysian government's recent liberalization measures for the country's financial services sector. Key points include:
1) Allowing up to 7 new licenses for foreign commercial and Islamic banks, with 4 in 2009 and 3 in 2011 that can be wholly foreign owned.
2) Increasing the foreign equity limit for domestic insurance, takaful, and investment banks to 70% from 49% previously.
3) Providing greater operational flexibility for foreign commercial banks, such as allowing microfinance branches and new regular branches.
4) The changes follow Malaysia's gradual "managed approach" to financial sector liberalization outlined in its 2001 Financial Sector Master Plan.
2015_01_09_SAN_Short term pain to restore sustainabilityAndrea Filtri
Santander announced a €7.5 billion accelerated bookbuild to boost its capital ratios. This addresses Santander's standalone capital needs and corrects distortions from its prior dividend commitment, but does not necessarily pave the way for mergers and acquisitions. The capital increase will dilute earnings per share by around 2% but normalize Santander's dividend policy. The report models a potential combination with Bankia and finds cost, funding, and capital synergies could generate double-digit returns on investment. However, the capital increase alone may not be sufficient to fund major acquisitions, which could require additional capital raising.
The document provides a summary and analysis of economic conditions in Thailand and other regions. It discusses:
1) Continued concerns about the eurozone debt crisis fueling demand for safe-haven currencies like the US dollar and depressing risk assets.
2) While US money supply growth looks better than the EU or Japan, high unemployment will likely lead the Fed to resume quantitative easing in mid-2012.
3) Local authorities in Thailand face challenges from losses at the Fiscal Debt Fund and risks of bond yield curve steepening given planned large bond issuances.
4) The analysis predicts the Bank of Thailand will cut its policy rate again in January and forecasts Thailand's economy could experience a V-shaped
The document provides a summary and analysis of economic conditions in Thailand and other regions. It discusses:
1) Continued concerns about the eurozone debt crisis fueling demand for safe-haven currencies like the US dollar and depressing risk assets.
2) While US money supply growth looks better than the EU or Japan, high unemployment will likely lead the Fed to resume quantitative easing in mid-2012.
3) Local authorities in Thailand face challenges from losses at the Fiscal Debt Fund and risks of bond yield curve steepening given planned large bond issuances.
4) The analysis predicts the Bank of Thailand will cut its policy rate again in January and forecasts Thailand's economy could experience a V-shaped
This document provides market commentary and macroeconomic forecasts for Q3 2010.
The key points are:
1) The sovereign debt crisis in Europe is not contained and big budget cuts are still needed.
2) The US economic recovery is slowing as stimulus winds down. Growth is expected to moderate to 1.5% in Q3.
3) The Japanese recovery is also slowing, with exports expected to contribute less as the strong yen weighs on manufacturers.
4) The Eurozone recovery remains fragile due to debt concerns, but the weaker euro is boosting exports and industrial production.
The Bank of Thailand held its policy rate unchanged at 3.50% due to the impacts of flooding in Thailand and global economic uncertainties. While inflation remains a concern, reconstruction efforts are expected to boost domestic demand and the flooding will negatively impact production capabilities and consumer spending. One MPC member voted for a rate cut but the committee decided to keep the rate on hold until at least the end of 2012 given weak global economic growth prospects.
China’s turning to “tough gradualism” in discipling local government borrowin...Terry Zhang
HONG KONG, 17 Jan 2018. Pengyuan International has released a research report, titled “China’s Turning To “Tough Gradualism” In Disciplining Local Government Borrowing Foretells Higher Risk of LGFV Default”. This research report is accessible via the link: http://www.pyrating.com/CreditResearch.
The first default on public bond of local government financing vehicles in China (LGFVs) could possibly happen in 2018, although the odds are still less than 50% according to a report published today by Pengyuan International titled “China’s Turning To ‘Tough Gradualism’ In Discipling Local Government Borrowing Foretells Higher Risk of LGFV Default”.
The central government of China launched recently a three-year critical battle against financial risks. Allowing LGFV default (“shock therapy”) may become a policy choice to dispel investor belief in implicit government support to LGFVs and thus help tame hidden local government borrowing, which occurred primarily through LGFVs.
“We believe Chinese government is turning to ‘tough gradualism’ rather than “shock therapy” in disciplining local government borrowing”, said Liang Zhong, analyst of Pengyuan International, “in another word, the central government is likely to tighten relevant discipline gradually, bearing in mind the needs to balance between achieving growth target and securing financial stability”.
The report argues that the “tough gradualist approach” means some type of credit events could happen before the others. For instance, the first default on public bond by LGFV sector in onshore market is likely to precede LGFV default on public bond in offshore.
As the risk of LGFV default rises, greater scrutiny of LGFV creditworthiness becomes increasingly necessary, including scrutinizing provincial economic and fiscal data according to the report.
“If China’s central government adheres to ‘tough gradualism’, namely tightening discipline steadily over local government borrowing, there it is good chance that the once relentless hidden LGT borrowing could be tamed markedly within three years.” Said Mr. Zhong.
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+852 3596 6140
liang.zhong@pyrating.com
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This document analyzes interest-only/principal-only (IO/PO) mortgage-backed securities. It finds that:
1) The PO security has much longer duration than the underlying mortgage pool and is highly sensitive to interest rate increases. In contrast, the IO security typically has negative duration and increases in value when rates rise.
2) A contingent-claims valuation model shows that IO values fall and PO values rise dramatically as rates approach the optimal prepayment point.
3) While risky, IO/PO securities can provide hedging opportunities for investors due to their differing interest rate sensitivities. However, their valuation depends on assumptions about prepayment behavior.
4) Market prices of traded
This document summarizes the key financial results of Itaú Unibanco Holding S.A. for the second quarter of 2011:
- Net income was R$3.6 billion, up 2.1% from the previous quarter. Recurring net income was R$3.3 billion, down 8.8% from the prior quarter.
- The loan portfolio totaled R$360.1 billion, up 4.4% from the previous quarter and 22.3% from a year ago.
- Non-interest expenses increased 3.7% compared to the previous quarter to R$8.0 billion, confirming a trend of deceleration.
- The bank reported second quarter 2020 earnings results, with net income of $14.1 million, lower than previous quarters due to a reduction in loan balances and interest/fee revenues in light of the economic environment.
- The commercial loan portfolio decreased 16% through scheduled maturities and selective new lending at wider spreads, maintaining strong asset quality with no non-performing loans.
- Liquidity increased to $2 billion as the bank rapidly collected loan maturities and accessed diversified funding sources, extending the tenor of its borrowings.
- While net interest income decreased due to lower loan volumes, the bank benefited from favorable interest rate movements and credit quality remained robust.
This document provides an analyst's picks for the banking and financial sector in 2011. It begins with a summary of developments in the banking sector in 2010, including regulatory changes and performance. The outlook for 2011 is then discussed, with an anticipated credit growth of 18% but pressure on net interest margins. Several top picks are then highlighted, including private banks HDFC Bank and Axis Bank, public banks IOB and IDBI, and NBFCs REC and LICHF. Key financial metrics and investment highlights are provided for each pick.
The document summarizes the key financial highlights of a company's 2nd quarter 2011 conference call. It notes that net income totaled BRL 60.2 million in 2Q11, with an annualized return on equity of 17.2%. The credit portfolio reached BRL 12,234.8 million by the end of June 2011 and remained of high quality. The quality and performance of the corporate and middle market business segments are also discussed.
Top Debt fund schemes to participate in falling interest rates environmentDhuraivel Gunasekaran
1) The document discusses how different categories of debt mutual funds could be impacted as interest rates are expected to fall over the next 6-12 months.
2) It recommends short-term funds for the next 2-3 months and longer duration funds like gilt funds and income funds for investors with higher risk appetite who can stay invested for 9-15 months.
3) The top performing long duration debt funds that could benefit from falling rates are identified as Kotak Gilt - Invest, Birla Sunlife G Sec – LT, Kotak Bond - Plan A, and SBI Magnum Income.
Be cautious into 3Q. 1Q09 results of the six banking stocks we cover
were generally in line, with combined net profit down 2.1% QoQ and
13.1% YoY. However, the weak 1Q09 GDP suggests growing stress in
system loans over the coming months. We remain cautious on banks’
profits, especially from 3Q09. Underweight the sector.
1Q down a sharp 13.1% YoY. Other than AMMB’s positive surprise,
results were generally in-line. The combined net profit of our banking
universe was flattish QoQ but fell a sharp 13.1% YoY on lower treasury
and FX income and higher loan loss provisions. Net interest income
expanded, but the weak equity market continued to affect brokerage
income, which contracted for the 5th to 6th consecutive quarter.
Some signs of stress. Domestic loans continued growing at most
banks. QoQ loan growth at the major banks (Maybank, CIMB Bank and
Public Bank) outpaced system growth. Some loan segments, however,
have begun showing stress. Domestic NPL saw upticks in the
consumer (mortgage, autos) and working capital segments. Net NPL
ratios continued to trend down due to the expanded loans base.
Earnings to contract. There were no major revisions in our individual
earnings forecasts except for AMMB (FY09: +16%, FY10: +7%). Our
combined net profit forecast was upgraded by a marginal 0.1% for 2009
and 0.7% for 2010. We expect sector earnings to contract 9.9% in
2009, before recovering to 6.8% growth in 2010 (previously -10.1%,
+6.1% respectively). This excludes further impairment in the value of
long-term investments, merger costs and other one-offs.
Asset quality concerns. 1Q09 GDP (-6.2% YoY, -7.7% QoQ) should
be the weakest, suggesting that the worst may be over. However, we
expect economic recovery to be slow, with real GDP to return to the
3Q08 high only in 4Q10. There is a 3-6 month interval from GDP trough
to NPL peak. Hence, banks are set to report weaker profits on rising
NPLs and higher credit charges from 3Q09.
Mainly Sells. Against regional peers, the larger Malaysian banks are
pricey. The current liquidity driven market has pushed valuations up but
prospects for a strong economic recovery stay hazy. Sell into strength.
Similar to K bank perspectives bond supply update (20)
KBank Capital Market perspectives May 18 markets wrap up - positioning for ...KBank Fx Dealing Room
Global markets are experiencing renewed volatility due to concerns about the future of the eurozone and slowing economic growth. Investors have sold risky assets like stocks and bought safe-haven assets such as the U.S. dollar, Japanese yen, U.S. treasuries and German bunds. The U.S. dollar has strengthened about 8% against other major currencies over the past year. Asian currencies have also weakened against the dollar, with the Thai baht declining about 2%.
1) A parliamentary election in Greece failed to form a new government, increasing the risk of Greece defaulting on its debt obligations or leaving the eurozone.
2) If Greece stops implementing austerity measures required for its bailouts, it will have no choice but to default, as it will have no incoming or outgoing funds. This will be a showdown between Greece's new leader and European creditors.
3) During the period of uncertainty until the next election, volatility in currency markets like the USD/THB will likely rise. However, the eurozone will ultimately take steps to keep Greece in the eurozone and inject more liquidity, reducing volatility once a solution is reached.
The document provides a summary of movements in various financial markets and commodities over the past quarter. It notes that the USD/THB remained in a sideways channel tracking EUR and gold. The EUR/USD was rangebound between 1.3000-1.3400 with focus on Spain. The USDJPY strengthened from 84 to 81 after the BoJ signaled no further easing but the market expects more bond purchases. The THB interest rate swap rose in Q1 on improved sentiment in Europe. NYMEX crude oil remained in an uptrend channel between $100-110. Coal prices continued to drop due to oversupply of the cheaper substitute, natural gas. Rubber rebounded in Q1 but
The document provides a summary of movements in various financial markets and commodities over the past quarter. It notes that the USD/THB remained in a sideways trend influenced by EUR and gold movements. The EUR/USD traded in a narrow range of 1.3000-1.3400 with focus on Spain. The USDJPY strengthened from 84 to 81 after the BoJ signaled no further easing but the market expects more bond purchases. THB interest rate swaps rose in Q1 on improved sentiment in Europe and comments from Thailand's central bank. NYMEX crude oil remained in an uptrend channel between $100-110. Coal prices continued to drop due to oversupply of the cheaper substitute,
1) Portugal's debt problems stem from rigid product and labor market regulations that have led to declining productivity and competitiveness.
2) While political risks are lower than other troubled European countries, more time is needed to restore Portugal's economy as significant reforms have been implemented.
3) The IMF assesses that existing financial assistance for Portugal is adequate, but risks remain and additional funds from Europe may be needed, though funds are available.
- The Federal Reserve decided to keep the target range for the Federal Funds rate at 0-0.25%, as it has since December 2008, and expects to maintain this accommodative stance through late 2014.
- While the economy has been expanding moderately and unemployment has declined, the Fed judges that conditions still warrant exceptionally low interest rates.
- Inflation has picked up due to higher oil and gas prices but core inflation remains stable, and the Fed expects inflation to remain at or below its target in the medium term.
- The Fed will continue its program to extend the average maturity of its securities holdings and is prepared to adjust the size and composition of holdings as needed.
- Thai economic indicators showed broad-based improvement in January from the impacts of flooding in 2011, but growth remains below pre-flood levels. Private consumption and investments increased.
- Manufacturing production continued rising as supply chain issues ease, though export-dependent sectors saw slower growth. Inflation declined further.
- The document discusses risks from higher oil prices and the ongoing European debt crisis, as well as positive factors like the risky asset rally and additional European funding measures.
Thailand has been placed on FATF's watch list due to a lack of progress in fighting money laundering and terrorism financing. FATF noted that Thailand has not fully implemented its action plan to address deficiencies, including adequately criminalizing terrorist financing and strengthening anti-money laundering supervision. Being placed on the watch list means fund transfers involving Thailand will face higher scrutiny and could lead to economic sanctions if issues are not addressed. As FATF members account for 83% of the global economy, sanctions would significantly impact Thailand. Thai authorities must now comply with FATF's recommendations to avoid further consequences.
§ Thai GDP dropped 9.0% year-over-year in the fourth quarter of 2011 due to declines in domestic and external demand from severe flooding, much less than forecasts.
§ The floods resulted in decreases in private consumption, government spending, investment and exports while imports also dropped.
§ For 2011, Thai GDP growth was only 0.1%, far below previous forecasts, due to the flooding impact.
§ NESDB expects Thai GDP growth to recover to 5.5-6.5% in 2012 as investment increases, though exports growth was forecast lower, and inflation is projected at 3.5-4.0%.
The document provides a market movement update for February 2012, summarizing trends in currency exchange rates and commodity prices over various time periods. It notes that the USD/THB spot rate has fallen over 22% since 2007 but only 7% since 2011. Other currency pairs and commodity prices such as oil, gold, and copper are also discussed. The document concludes by highlighting opportunities for cheap baht funding through currency swaps and recommending options hedging strategies.
This document provides an economic update on Thailand with data from November and December 2011. It discusses declines in the SET index, farm income, manufacturing production, private consumption, investment, exports and imports due to the European debt crisis and flooding in Thailand. Headline inflation declined to 3.53% in December as food and transportation prices fell with improved flooding conditions. Government bond yields rebounded at the end of December on news of large planned bond issuances in the coming quarters.
KBank Capital Market perspectives Dec 30 flooding and economic slowdown in n...KBank Fx Dealing Room
The Thai economy contracted sharply in November 2011 due to the severe flooding which impacted all economic sectors. Key economic indicators such as manufacturing production, exports, private consumption, and investment all declined significantly from the prior month and year. The Thai baht also weakened substantially against the US dollar in November amid the slowing global economy and flooding impacts on Thailand.
- Exports and imports in Thailand fell in November, with exports down 12.4% year-over-year and imports down 2.4%, leading to a larger trade deficit of $1.373 billion.
- The declines were due to ongoing effects of severe flooding during the quarter, which disrupted manufacturing production and supply chains. Exports of industrial goods and vehicles fell sharply.
- Weak exports will likely warrant a more dismal economic outlook, leading the Bank of Thailand to consider further interest rate cuts to support recovery. The document forecasts USD/THB volatility in the first half of 2012, with a target rate of 29.50 by year-end.
The document provides a monthly economic and foreign exchange outlook report. It discusses several topics:
1) Concerns over the Mayan calendar prophecy and global economic outlook in 2012.
2) Expectations that the US dollar will weaken and Thai baht will strengthen against the dollar in 2012.
3) Analysis showing high global debt levels could continue weighing on economic growth.
4) Charts tracking economic indicators and currency movements.
The report concludes by examining relationships between the euro/US dollar exchange rate and the US dollar/Thai baht rate. It finds the baht tends to strengthen as the euro strengthens against the dollar.
The document provides market updates on currency movements and interest rates from December 2011. It summarizes data on the EURUSD, USDTHB, crude oil, gold prices, and Thai and US interest rates. The USDTHB movement shows a narrow trading range in 2011. The document suggests the THB may weaken against the USD initially in 2012 before strengthening. It also notes the USDTHB is correlated with the SET index and EURUSD. Crude oil is forecast to trade between $75-110 per barrel in 2012. Gold support is seen at $1,500 per ounce. Soft interest rate environments are expected in Thailand and the US in the first half of 2012.
1. Economics /
.Mean S Capital Market Perspectives
KBank Strategy
Update on bond supply for Q3 FY2011 FX / Rates
30 March 2011
Bt103.5bn bond supply in Q3 is close to initial estimate; the
actual supply is merely Bt4bn bigger than foreseen last year Nalin Chutchotitham
nalin.c@kasikornbank.com
Key difference is the issuance of Bt30-40 of inflation-linked
bonds that remained unofficial
During our seminar for institutional investors last week, the
director of PDMO clarified that government’s financing needs had
reduced substantially from their initial estimate
We continue to expect policy rate to move up to 3.25% by July
and bond yields on the front-end could rise further, making the
Disclaimer: This report
yield curve flatter in the next quarter must be read with the
Stay with bonds along the mid-curve as long-dated bonds sees Disclaimer on page 6
that forms part of it
little value in an inflationary environment
Q3 bond supply in line with initial estimate
KBank Capital Market
The Ministry of Finance would be issuing a total of Bt103.5bn of bonds in the third
Research can now be
quarter of the fiscal year 2011. The size is close to our initial estimate ($99.5bn) which
accessed on Bloomberg:
had been derived from the PDMO’s (Public Debt Management Office) whole year plan.
KBCM <GO>
The major difference is likely to be the issuance of Bt30-40bn worth of inflation-linked
bonds that remained unofficial despite much news and excitement among the
regulators and investors. We expect that the market would continue to have high
demand for government bonds, due to the high level of liquidity among savers. Foreign
investors’ inflows into the bond market had slowed in recent months but continued to
be observable. An added risk factor to the performance of the bond market is the
increases in fixed deposit rates, which had risen rapidly due to banks’ competition and
loan expansion.
Table 1. LB auction plan for FY2011 (based on PDMO documents) unit : billion baht
Initial
tenor Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Total Budget
5Y 13 - 14 - 10 - 16 - 20 - 20 - 27 10 36 20 93 100
7Y - 12 - 10 - 10 - - 10 9 - 12 12 20 10 21 63 65
10Y - 10 - 7 - 7 - 10 - 10 - 13 10 14 10 23 57 70
12Y 8 - 8 - - - - - - - 8 - 16 0 0 8 24 40
15Y - 6 - 6 - 8 - 8 8 - 8 - 6 14 16 8 44 45
20Y - 6 - - 6 6 - 8 - 6 - 6 6 12 8 12 38 45
30Y 3 - 3 - 5 - 5 - 6 - - - 6 5 11 0 22 20
50Y - - - - - 3.5 - - 4.5 - - - 0 3.5 4.5 0 8.0 4.5
4Y FRN - 7 - 8 - 8 - 8 - 10 - 10 7 16 8 20 51 55
CPI linked - - - - - - - - - - - - - - - - 0 9
Total 24 41 25 31 21 42.5 21 34 48.5 35 36 41 90 94.5 103.5 112 400 453.5
Source: PMDO, KBank
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3. Reduced financing needs by the government
As shown in Table 3, the government needs less funding compared to the previous two
fiscal years (total financing amounted to Bt537bn, down from Bt661bn in FY2010). In
particular, revenue collection had improved while fiscal spending to stimulate the
economy is spread out between the years as there had been strong economic growth
last year. Furthermore, a significant extent of debt-profile restructuring had been done
during the past two years - PDMO did this by issuing long-dated bonds to refinance Financing needs reduced
short-term debts, effectively lengthening the average time to maturity of the to Bt537bn in FY2011
government’s repayment profile. Hence, the overall supply outlook is positive for the from Bt661bn in FY2010
bond market. In addition, there is still substantial liquidity in the hands of investors. We on economic growth
show in two graphs below the maturing government bonds during the past quarters and
capital inflows from maturing Korean bond funds going forward.
Fig 2. Benchmark bond issuance shows PDMO’s aim for
Fig 1. FY2010 and FY2011 benchmark bond issuance
increasing liquidity in the secondary market
Bt bn Government bond issuance Bt bn Benchmark bond issuance
140 350
120 300
100 93
250
80 63 200
57
60 44 150
38
40 100
22
20 8 50
0 0
5Y 7Y 10Y 15Y 20Y 30Y 50Y FY2008 FY2009 FY2010 FY2011
FY2010 FY2011 5Y 7Y 10Y 15Y 20Y 30Y 50Y
Source: PDMO, KBank’s estimate Source: PDMO, KBank’s estimate
Outlook on bond yields and the policy rate
Backed by the hawkish comments from the Bank of Thailand (please refer to our earlier
piece on MPC minutes or www.bot.or.th), we maintain our call for another three rate Maintain expectation of
hikes during the next three MPC meetings. These hikes would bring the policy rate to 3 more rate hikes by
3.25% by July, 2011. BoT. Target 3.25% by
July
BoT continued to signal a shift of weight to inflationary concerns for its monetary policy
conduct going forward. Vis-à-vis the risks of slower-than-expected growth for Thailand
(Kasikorn Research Center had revised downwards base-case growth for Thailand this
year to 3.6% from 4.5%) in the aftermath of earthquakes and tsunamis in Japan, as
well as higher energy prices due to unrests in the MENA region (Middle-East and North
Africa), it does seem that the central bank prefers an unwavering and preemptive
approach to inflation control.
For asset allocation, we do see higher value in the mid-curve bonds: the front-end is
risky due to continued rate hikes and the long-dated bonds are not attractive in an
inflationary environment. While the supply of 5-year bonds during the next three
months is at Bt36bn, there is sufficient liquidity in the secondary market and a history of We recommend mid-
strong investors’ demand. curve bonds as long-
dated bonds are
In any case, we continue to expect the yield curve to remain in a bear-flattening mode unattractive in an
in the next quarter. The total supply of bonds with maturities of 10-30 years amounts to inflationary environment
a mere Bt45bn, an amount easily absorbed by the market. Furthermore, PDMO’s
director, Mr. Chakkrit Parapuntakul, shared with investors at a KBank seminar for
institutional investors last week that the PDMO would try to manage the supply of
bonds such that borrowing costs do not rise by too much – indicating that the Q4 bond
33
3
4. supply for long-dated bonds could still be reduced from original plan should yields
become unfavorable for the government to borrow.
Fig 7. Maturing government bonds (calendar year) Fig 8. Maturing Korean bond funds (returning liquidity)
Bt bn
Maturing Government loan bonds Bt 90 bn
bn baht 70
61
100 89 60
88
80 70 50 44
40
60
40 30
40
20 14 14 13
9 7 9
20 10 3
3 0
0 0
Q4/2010 Q1/2011 Q2/2011 Q3/2011 Q4/2011 Q1/2012 Apr May Jun Jul Aug Sep Oct Nov Dec
Principal Korean bond funds maturing in 2011
Source: Bloomberg, KBank Source: Bloomberg, KBank
Fig 7. Yield spread 2-5 and 5-10 Fig 8. Forward implied bond curves
bps % Bond yields implied curve shifts
160 4.50
120
4.00
80
3.50
40
3.00
0
Jan-08 Jan-09 Jan-10 Jan-11 Mar-11 Jun-11 Sep-11 Dec-11 tenor (yrs)
2.50
2-5 bond spread 5-10 bond spread 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Source: Bloomberg, KBank Source: Bloomberg, KBank
44
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6. Disclaimer
For private circulation only. The foregoing is for informational purposes only and not to be considered as an offer to buy or
sell, or a solicitation of an offer to buy or sell any security. Although the information herein was obtained from sources we
believe to be reliable, we do not guarantee its accuracy nor do we assume responsibility for any error or mistake contained
herein. Further information on the securities referred to herein may be obtained upon request.
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