US SOVEREIGN CREDIT
Gilts to shine brighter from tomorrow
JP Morgan will include 27 fully accessible Indian government bonds in its GBI-EM global index suite starting June 28, allowing global investors to deploy funds in these bonds.
Debt ceiling standoff could trigger US rating downgrade, TD's Goldberg says
Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, warns of a potential severe debt ceiling standoff in the U.S. in 2025, similar to the 2011 crisis, which could lead to another sovereign credit rating downgrade. Despite Congress suspending the debt ceiling until 2025, concerns over rising U.S. debt persist following forecasts by the Congressional Budget Office of significant deficits for fiscal years 2024 and 2025.
Bond yields jump, rupee weakens as trends fall short of hopes of largest NDA win
Government bonds and the rupee weakened as Lok Sabha election results indicated a lower NDA majority. 10-year bond yield rose 9 bps to 7.03%, rupee fell to 83.42/$1. Yields impact borrowing costs. Market awaits full election outcome.
Stock brokers push lending; InsuranceDekho’s latest acquisition
Happy Tuesday! Tech-first broking companies are looking to diversify into the credit business to build a larger financial services play. This and more in today’s ETtech Morning Dispatch.
S&P downgrades French credit rating in blow to Macron
Ratings agency Standard & Poor's downgraded France's credit score on Friday citing a deterioration in the country's budgetary position, a blow to Emmanuel Macron's government days before EU parliamentary elections. France's general government debt will increase to about 112 percent of GDP by 2027, up from around 109 percent in 2023, "contrary to our previous expectations", the agency added.
Sovereign ratings is for state; at the margins for markets
Sovereign ratings, a product of the pre-depression era when analysts were a rarity and communication was expensive, are turning into dinner-table conversations rather than driving investment decisions.
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Traditional financial services catch the super app bug
Financial services companies such as Aditya Birla Capital, Angel One and Muthoot Fincorp are building superapps -- a one-stop applications for all their customers' needs. This development comes as large groups such as Reliance Industries and Tata Group have already rolled out such superapps for everything from shopping to payments and credit under one roof.
Bearing the brunt today, but good for long term: 6 stocks from the financial services sector with upside potential of up to 30%
For all those who were again thinking why the financial services sector stocks are leading the recent phase of decline. A look into FPI holding patterns would throw the answer. It is the financial services, including banks where FPIs have the maximum exposure, so if they are booking profit, the first round of selling is bound to come in the sector where they have maximum holding.But there is another part to the story, which is when they come back, it is the very same sectors where they buy the first, because financial services and banks are the best proxy play to GDP growth. Also the fact that the majority of these stocks have ample liquidity plays an important part in the kinds of strong moves these stocks see.
Muthoot Finance raises $650 million via offshore dollar bonds
The non-banking financial company raised the funds through bonds maturing in three years and nine months at a coupon rate – or rate of interest – of 7.125%. The funds will be used for onward lending and other activities that are allowed under the Reserve Bank of India’s external commercial borrowing guidelines.
Fitch sees rupee rebounding to 82 per dollar on bond inflows
The rupee is expected to appreciate to 82 per dollar by the year-end, from about 83.50 currently, Jeremy Zook, a director at Fitch in Hong Kong, said in an interview last week. The Reserve Bank of India may continue to prevent any sharp swings in the currency by absorbing inflows, he said.
Israel's long-term credit rating is downgraded by S&P, 2nd major US agency to do so, citing conflict
Israel's credit rating downgraded by S&P due to Iran conflict. Drone attack near Isfahan. Moody's also downgraded over Hamas. Hezbollah confrontation ongoing. Gaza Strip tensions remain high. S&P's negative outlook, May 10 review pending."}
MF Query: ‘I have Rs 7-8 lakh surplus funds but don’t want to invest in stock markets’
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts.
Oil prices fall on big build in US crude, fuel inventories
Brent crude futures fell 28 cents, or 0.3%, to $89.14 per barrel. U.S. West Texas Intermediate crude futures fell 35 cents, or 0.4%, to $84.88. U.S. crude stocks climbed by 5.8 million barrels in the week ended April 5
Give up Moody & Poor standards: Nilesh Shah
India's engagement with global rating agencies has not yielded desired results for its sovereign credit rating. However, the country has successfully engaged with agencies managing global bond and equity indices, resulting in increased weight in the indices. India aims to further enhance its position by upgrading South Korea's status and ensuring full inclusion of HDFC Bank in the index.
Abu Dhabi sovereign fund to invest space tech, AI this year
Khaldoon Mubarak, managing director of Abu Dhabi's Mubadala Investment, told an investor conference in Abu Dhabi that sovereign wealth funds had an opportunity and responsibility to transform from asset investors to enablers of global progress.
Today is last day to invest in Sovereign Gold Bonds (SGB) 2023-24 Series-IV: 8 important things to know
SGB Last Date: The Sovereign Gold Bonds (SGB) Series IV 2023-24 is open for subscription with an interest rate of 2.50%. Investors can purchase units of SGB, with tax exemptions and tradability. Investment limits apply, and the last date to invest is February 16, 2024. Eligible investors include individuals, HUFs, trusts, universities, and charitable institutions.
Rothschild to foray into India's debt advisory market on rising investor interest
Rothschild plans to enter the Indian credit market, focusing on leverage finance, special situations, and corporate restructuring. The firm sees an opportune moment in the credit cycle and is encouraged by the demand for sophisticated structured financing solutions. They are attracted by the influx of capital from alternative capital providers, such as infrastructure-focused funds and investment-grade lenders.
Fragile-five days long gone as funds pile into India, Indonesia
The original Fragile Five — which also included Turkey, South Africa and Brazil — referred to nations perceived to be most at risk due to their heavy reliance on foreign investment to drive growth. Improving finances — as reflected in credit-default swaps — show the market’s view of India and Indonesia has swung almost 180 degrees since the term was coined in 2013.
Falling deposit a temporary cause of concern; money stays within economy: Dinesh Kumar Khara, SBI
SBI Chairman Dinesh Kumar Khara discusses the impressive budget numbers and their impact on the growth potential of the economy. He highlights the importance of fiscal consolidation, private sector investment, and global investment in attracting capital and improving sovereign rating. Khara also mentions the positive impact of lower interest rates, government borrowing, and inclusion in the global bond index on the banking sector. He addresses concerns about the drop in savings and the movement of money into financial markets, emphasizing that it ultimately supports economic activity.
Moody's’ Christian de Guzman explains why it is not yet time to give India higher sovereign rating
Christian de Guzman of Moody's Investors Service states that India's fiscal consolidation has progressed since the pandemic, but it has not yet reached the level prior to the downgrade to BAA3. The bond markets are responding positively to the government's efforts, with lower borrowings and increased capital inflows expected. For a ratings upgrade, India's weak points, such as fiscal consolidation and debt reduction, need to show material improvement. India is not alone in the region in terms of gradual fiscal consolidation post-pandemic.
Growth of Asian emerging, developing economies to be credit strengths for many govts in APAC: S&P
S&P Global Ratings predicts that Asian emerging and developing economies will remain a credit strength for many governments in the region, with 19 out of 21 countries receiving a sovereign rating in the Asia-Pacific region having a stable outlook. The agency expects stable outlooks on most long-term foreign-currency sovereign ratings in the region, with few changes expected in the next year or so.
New creditors, differing interests and coordination issues are hobbling sovereign debt restructuring
An IMF analysis suggests that several low-income countries (LICs) have been at high risk of debt distress or are in debt distress. Between 2010 and 2022, interest payments on both domestic and external debt of developing countries increased by 64%, and of African countries by 132%.
Shweta Rajani on benefits of sovereign gold bonds and how to invest in AI space
“We have seen some of these active fund managers gradually increasing their exposure to technology. And in India, most fund managers have allocations to a few of the companies that have been developing a lot of AI – Infosys, HCL Tech, Wipro. In the last two years, the allocations have gone up. There are various other sectors also which are benefiting from it.”
US government shutdown later this year would not hurt rating: Fitch
the latest factor to prompt worry on Wall Street about U.S. political governance after a near-miss with a partial federal government shutdown this weekend and a debt ceiling crisis earlier this year.
US Treasury yields flat to slightly higher; credit default swaps edge up
U.S. one-year credit default swaps widened to 22 bps on Wednesday, from 21 bps at Tuesday's close. The U.S. two-year Treasury yield was last up 1.4 basis points (bps) at 5.089%, while the 10-year yield inched lower to 4.552%
Moody's warns US government shutdown would be 'credit negative'
The shutdown would not impact government debt payments but it would highlight how political polarization is impacting fiscal decisions, particularly as it would follow political brinkmanship on the government's debt ceiling earlier this year, said Moody's. The debt ceiling crisis, even though it was resolved before a potential debt default, was a major factor leading another credit rating agency, Fitch, to downgrade its U.S. rating by one notch in August.
This fund manager is afraid of an imminent credit event, holding 23% in cash. Here’s why
“More people are selling these bonds than buying them. So we could get trapped into a credit spiral and any kind of unforeseen event, a bankruptcy or a blow up in a hedge fund will turn everybody very cautious and people will run for exits and the crowded exit will lead to a lot of pain.”
Climate change could reduce India's credit rating, study finds
The study, published on Monday in the journal Management Science, is the first to anchor climate science within "real world" financial indicators. It suggests that 59 nations will experience a drop in sovereign credit rating in the next decade without emissions reduction.
Rating agencies, don’t be such a Fitch
Naturally, questions will arise over the timing of the rating action. Expectations of monetary tightening bringing the US economy to a standstill are receding. Doomsayers are in retreat, and Fitch finds itself under attack — from the administration and from independent observers. Standard & Poor’s, Moody’s and Fitch had warned the US its AAA credit rating was at risk. But only one has acted on it.
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