Thursday 21st 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.

L&G Investment Management and Source offer a new index for commodity investment

Monday, 09 January 2012
L&G Investment Management and Source offer a new index for commodity investment Legal & General Investment Management (LGIM) and Source have launched the LGIM Commodity Composite Source ETF. The fund, which tracks the LGIM Commodity Composite Index, is designed to offer diversified exposure to commodities in a UCITS-compliant exchange traded fund (ETF).  http://www.ftseglobalmarkets.com/

Legal & General Investment Management (LGIM) and Source have launched the LGIM Commodity Composite Source ETF. The fund, which tracks the LGIM Commodity Composite Index, is designed to offer diversified exposure to commodities in a UCITS-compliant exchange traded fund (ETF). 

The LGIM Commodity Composite Index aims to be a new kind of benchmark for broad-based commodity exposure, says L&G. Using LGIM’s experience as an index manager (LGIM manages £347bn in assets) and both a quantitative and qualitative screening process, it offers exposure to a selection of what it terms ‘best of breed’ commodity indices. Graeme Dewar, head of strategy implementation at LGIM, explains that the firm is “seeing increasing demand from pension clients looking for access to this asset class.  Their primary requirements are for an efficient, dynamic product with diversification of counterparty risk.  Our solution has been to develop an innovative type of benchmark index that includes a minimum of three constituent sub-indices.  These sub-indices are selected using LGIM’s experience and core skill set to deliver a high quality, dynamic commodity composite index.”

The index at launch comprises four sub-indices and will be reviewed at least annually to ensure that it captures developments in commodity indexation.

Investors wishing to gain exposure to the LGIM Commodity Composite Index can do so via the LGIM Commodity Composite Source ETF. Source’s ETF structure combines physical investment in US Treasury bills with a swap overlay to provide more consistent index tracking. To diversify both counterparty risk and the composition of the index, the index references a number sub-indices and the fund will use multiple swap counterparties.  Source says it has mandated four swap counterparties for this product: Barclays Capital, Citigroup, JP Morgan, and UBS.

The LGIM Commodity Composite Source ETF will complement Source’s existing range of exchange traded commodities. Source chief executive Ted Hood explains: “Single-commodity ETCs are useful for investors who want to build a tailored portfolio. But, like LGIM, we see the need for a well-constructed commodity index, providing diversified exposure, at a reasonable cost and in a UCITS-compliant fund.  We are delighted to be partnering with LGIM, one of the world’s leading index managers, to create an ETF that tracks this groundbreaking index”.

The LGIM Commodity Composite Source ETF is listed on the London Stock Exchange and trades in GBP and USD. It is registered for sale in the UK and Ireland and is in the process of being passported to Austria, France, Germany, Finland, Italy (for institutional investors only), Luxembourg, the Netherlands, Sweden and Switzerland.

INDEX COMPOSITION

The indices included in the initial composition of the LGIM Commodity Composite Index are as follows:

 

Index name

Bloomberg Code

Barclays Capital Commodity Index Pure Beta TR

BCC1C1PT Index

Citi CUBES Index Total Return

CCUBDJTR Index

JPMCCI Ex-Front Month Energy Light Index (Total Return)

JMCXXELT Index

UBS Bloomberg Constant Maturity Commodity Index

CMCITR Index

PRODUCT SUMMARY

Product Name

LGIM Commodity Composite Source ETF

ISIN

 IE00B4TXPP71

Base currency

USD

Trading currency

GBP / USD

Management Fee

0.40% per annum

Average Swap Fee

0.45% per annum

Listing

London Stock Exchange

Benchmark

LGIM Commodity Composite Index

Benchmark Bloomberg Ticker

TGPLGCC <Index>

UCITS eligible

Yes

Domicile

Ireland

 

 

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