Wednesday 27th August 2014
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South Africa’s central bank has disagreed with a ratings decision by Moody’s to downgrade Capitec Bank Limited (Capitec) by two notches, and place it on review for a further downgrade. The central bank says it respects the independent opinion of rating agencies but that it does not “agree with the rationale given in taking this step”. Two reasons are given for the rating action: a lower likelihood of sovereign systemic support based on decisions recently taken in relation to African Bank Limited (African Bank), and heightened concerns regarding the risk inherent in Capitec’s consumer lending focus. “With regard to the first point, it is important to reiterate that the approach taken by the SARB to any resolution to address systemic risk will always be based on the circumstances and merits of the particular prevailing situation. Decisions will also be informed, as was the case with African Bank, by principles contained in the Key Attributes for Effective Resolution Regimes proposed by the Financial Stability Board (FSB), which have the objective that a bank should be able to fail without affecting the system,” notes the central bank in an official statement. “This is in keeping with evolving international best practice. In the case of African Bank bond holders and wholesale depositors are taking a 10% haircut, which is generally regarded as being very positive given that the trades following the announcement of African Bank's results were taking place at around 40% of par. Therefore in fact substantial support was provided, not reduced. Moreover, all retail depositors were kept whole and are able to access their accounts fully,” it adds - According to the Hong Kong Monetary Authority (HKMA) credit card receivables increased by 2.1% in the second quarter to HKD112, after a reduction of 6.7% in the previous quarter. The total number of credit card accounts edged up by 0.7% to around 16.8m.The rollover amount, which reflects the amount of borrowing by customers using their credit cards, increased by 2.9% during the quarter to HKD19.2bn. The rollover ratio also rose marginally from 17.0% to 17.1% in the same period. The charge-off amount increased to HKD569mduring the quarter from HKD528m in the previous quarter. Correspondingly, the quarterly charge-off ratio rose to 0.51% from 0.46% in the previous quarter. The amount of rescheduled receivables transferred outside the surveyed institutions’ credit card portfolios reduced to HKD94m from HK$109m in the previous quarter. The delinquent amount increased to HKD249m at end-June from HKD239m at end-March. However, the delinquency ratio remained the same at 0.22% because of an increase in total card receivables. The combined delinquent and rescheduled ratio (after taking into account the transfer of rescheduled receivables mentioned above) edged up to 0.29% from 0.28% during the same period - Harkand has been awarded a contract to support Apache with inspection, repair and maintenance work (IRM) as well as light construction (LC) across their assets in the North Sea, following completion of a competitive tender exercise. The award includes the provision of vessels, ROV and diving services for a three-year period, plus two one-year options. The firm will also support offshore marine construction contractor EMAS AMC who have been awarded a separate contract for pipe lay and heavy construction as part of the same tender process. Harkand Europe managing director, David Kerr, said: “This contract is an important step in strengthening our close working relationship and growing our North Sea business with Apache.

BlackRock index update reveals global market moves

Wednesday, 16 January 2013
BlackRock index update reveals global market moves BlackRock has released its quarterly update of the BlackRock Sovereign Risk Index (BSRI), showing key movements by Australia, China, India, Japan, New Zealand, South Africa and the United States. The BSRI provides investors with a framework for tracking sovereign credit risk in 48 countries, drawing on a pool of financial data, surveys and political insights. http://www.ftseglobalmarkets.com/

BlackRock has released its quarterly update of the BlackRock Sovereign Risk Index (BSRI), showing key movements by Australia, China, India, Japan, New Zealand, South Africa and the United States. The BSRI provides investors with a framework for tracking sovereign credit risk in 48 countries, drawing on a pool of financial data, surveys and political insights.

The update also contacts the newly created interactive BSRI, which allows for viewing individual country scores, comparing two countries and sorting overall rankings by index components. The BSRI was developed through the BlackRock Investment Institute (BII) in June 2011, in recognition of the growing focus by investors around world on sovereign risk debt. The BSRI uses more than 30 quantitative measures, complemented by qualitative insights from third-party sources.

Highlights of the report include Japan’s fall in the rankings as a result of its sharply deteriorating fiscal balance – a space worth monitoring in 2013 as a new government and central bank governor settle in. “The fiscal profile of Japan worsened enough to cause it to slip two spots to 35th place, even as its other BSRI components improved. Japan now ranks just ahead of South Africa but below the likes of Turkey, Indonesia and Slovakia,” according to the BII.

The US remained at 15th place even as it teetered on the edge of the “fiscal cliff” of automatic tax hikes and spending cuts. "The last-minute deal was better than nothing, we think, but its limited scope means more tortured budget talks – and market volatility – ahead,” BII strategists said.

China, Australia and New Zealand moved up in the rankings, with Australia jumping three spots due to an improved primary budget balance. “China rose two spots to 16th place on the back of higher government revenues as a percentage of GDP. China’s ‘Willingness to Pay score’ improved due to the relatively smooth once-a-decade leadership change,” according to the report.

India remained at 39th place, but the country’s profile improved on most fronts, according to the BII: “India’s ‘Fiscal Space’ improved on a lower debt-to-GDP level and an improving primary balance. Among major BSRI movements, the BII also noted that South Africa dropped two notches to 36th place: “South Africa slid two spots to 36th place mainly due to a rapidly worsening current account deficit. Anecdotal evidence has money fleeing the country at a rapid pace, and the BSRI appears to reflect this.”

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