Wednesday, December 9, 2015

SGX's OTC trading platform for Asian bonds launched

SGX's OTC trading platform for Asian bonds launched

SINGAPORE Exchange (SGX) on Thursday announced the launch of SGX Bond Pro, its over-the-counter (OTC) trading platform for Asian bonds.
The electronic platform is SGX's attempt at improving liquidity for bonds issued by Asian companies in G3 currencies - US dollars, euros and the yen.
While SGX Bond Pro has begun trading Asian corporate bonds in G3 currencies, Asian local currencies will follow, SGX said on Thursday.
"The secondary Asian bond market faces an institutional liquidity challenge as a result of increasing fragmentation and concerns among participants of information leakage and subsequent market impact resulting in a prevalence of small trade sizes," SGX said in a statement.
"SGX Bond Pro aims to address this through features that re-aggregate liquidity, provide enhanced protections for institutional investors and encourage larger trade sizes."
In October, UBS was given the key role of general counterparty for SGX Bond Pro.

Tibet to get first KFC next year, amid China expansion

Tibet to get first KFC next year, amid China expansion

[DALLAS] KFC is expected to open its first restaurant in Tibet next year, as parent Yum Brands Inc looks to expand in the Chinese market and shake off a series of food scares and marketing blunders that have severely dented its sales in the country.
A franchisee will open the KFC restaurant, known for its American-style fried chicken, in the Tibetan capital, Lhasa, in the first half of 2016, Yum said in a statement.
The move comes as the owner of the KFC, Pizza Hut and Taco Bell brands prepares to spin off its business in China. The China unit aims to roughly triple its restaurant count to 20,000 and bring in more franchise partners.
KFC pulled plans to set up shop in Tibet more than a decade ago, saying in 2004 it was not "economically feasible" to enter the region. The Dalai Lama, Tibet's exiled spiritual leader and a staunch vegetarian, opposed Yum's plans at the time.
As China's economy stutters, Yum's 6,900 China restaurants face the challenge of luring diners who increasingly are looking for healthier, local options and going online to hunt for deals.
Yum executives are hosting an investor meeting in Dallas on Thursday, where they are expected to unveil more details about the China spinoff planned for late 2016.
REUTER
S

Visa sells US$16 billion of bonds in fourth-biggest deal of 2015

Visa sells US$16 billion of bonds in fourth-biggest deal of 2015

[LONDON] Visa raised US$16 billion in its first bond sale to finance the payment network's 21.2 billion euro (S$32.7 billion) takeover of Visa Europe.
The deal is the fourth-largest corporate debt offering this year after Actavis Plc's US$21 billion debt sale to buy Allergan, AT&T's US$17.5 billion bond offering funding the purchase of DirectTV and AbbVie's US$16.6 billion financing to buy Pharmacyclics Inc.
"It's an inaugural issuance, it's across the curve, and this very well could be one of the last major investment-grade deals of 2015," said Jesse Rosenthal, an analyst at CreditSights Inc. "Visa bonds are prime candidates for long-term buy and hold portfolios." Visa's is the latest in a string of large bond deals in a year where investment-grade companies have issued a record US$1.28 trillion of debt before the Federal Reserve raises interest rates for the first time since 2006. Fed Chair Janet Yellen and other policy makers at the US central bank have signaled they remain prepared to raise their key rate as soon as their next meeting starting Dec 15.
'Another Unknown' The Fed meeting "creates another unknown in the market environment and speaks to the reason why doing a deal of this size at a time when it's still not so close to the meeting is probably ideal," said Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC. "We are at a point where if the company waited any longer, it would probably have to wait until January, given the market expectations for this month." Visa sold the notes in six parts, according to data compiled by Bloomberg. The longest dated part of the sale was US$3.5 billion in 4.3 per cent 30-year bonds that yield 1.32 per centage points more than similar-maturity Treasuries, according to a person with knowledge of the offering. That's less than the initially offered spread of 1.55 per centage points, said the person, who asked not to be identified because the information isn't public.
The yield represents a 21 basis points discount for the company compared to bonds of similar maturity and rating, according to Bank of America Merrill Lynch Indexes.
The acquisition will allow Visa to unify its brand globally after eight years as separate companies. The lack of contributions to earnings from Europe has long been seen as a weakness for Foster City, California-based Visa and an advantage for smaller competitor MasterCard, which owns its European business.
The deal is expected to be completed by June 30, according to a Nov 2 statement.
BLOOMBERG

Italian government set for 4b euro payday after tax dodgers disclose wealth

Italian government set for 4b euro payday after tax dodgers disclose wealth

[MILAN] The Italian government said on Wednesday it was set to rake in at least 3.8 billion euros (S$5.9 billion) after tax dodgers took advantage of an amnesty deal to declare money and assets hidden abroad.
The so-called voluntary disclosure programme, which was launched a year ago and ended on November 30, brought to light nearly 60 billion euros in undeclared wealth, the economy ministry said in a statement.
"The (resulting) tax revenues are estimated at around 3.8 billion euros. With interest, the final proceeds could easily reach around 4 billion euros," the statement said.
The Italian authorities received 130,000 voluntary declarations as a result of the scheme, amounting to a total of 59.5 billion euros, it said.
Some 70 per cent of that was hidden in Switzerland. To a lesser degree, funds were also stashed in Monaco, the Bahamas, Singapore and Luxembourg, the ministry said.
"Unlike previous measures, the taxpayer taking part in this scheme still has to pay the total tax and interest, it's only the penalties that have been reduced," the statement said.
The ministry hailed the voluntary cooperation scheme as a success, saying the "era of banking secrecy is over".
"The relationship between the tax authorities and the taxpayers starts afresh with a renewed dialogue that will be based essentially on trust," the ministry said.
The centre-left government in October approved a 27 to 30 billion euro budget designed to ensure a fledgling economic recovery takes wing in 2016 at the cost of slowing the reduction of the country's massive 2.2 trillion euro debt.
By the government's own estimates, annual losses to tax evasion exceed 90 billion euros with almost half that down to VAT (sales tax) not being paid.
AFP

Britain wants to stay in 'reformed EU': Cameron

Britain wants to stay in 'reformed EU': Cameron

[Bucharest] British Prime Minister David Cameron said on Wednesday that Britain wants to stay in the European Union but only if the bloc carries out "difficult" reforms including limits to migrant benefits.
"I want Britain to stay in a reformed European Union. That is why I am seeking important reforms to address the concerns of the British people about the status quo," he told a press briefing during a visit to Bucharest.
"As (EU president Donald Tusk) said earlier this week, we are making good progress, but I recognise that some areas are more difficult than others, particularly the reforms I've proposed on welfare," he said.
The British leader last month formally laid out a list of demands to his EU counterparts which include a controversial bid to prevent EU migrants from claiming certain state benefits during their first four years in the country.
Mr Tusk said Monday he expects a deal at a summit in February to keep Britain in the bloc, despite a lack of consensus over the key demand on migrant benefits.
In a letter to European Union leaders, Mr Tusk warned that uncertainty over a potential "Brexit" was destabilising the 28-nation bloc.
Mr Cameron, who has promised to hold a referendum on Britain's EU membership by the end of 2017, had hoped to get a deal by a summit later this month but has now acknowledged that will not happen.
On Wednesday he said: "I support the principle of free movement, to work, it's a basic treaty right and a key part of the single market."
He added however: "It was never envisaged that free movement would trigger quite such vast numbers of people moving across our continent." A net migration rate in Britain of "well over 300,000 a year... is not sustainable," he said.
AFP

West will remain vulnerable to IS threat: experts

West will remain vulnerable to IS threat: experts

[WASHINGTON] The Islamic State group has brought down a crowded airliner over Egypt, shot up Paris cafes and other soft targets, and inspired attacks like the shooting rampage last week in California.
And experts say the West is and will remain vulnerable to the threat, for the foreseeable future.
IS may not have exerted direct control over all these attacks. But it inspired them, welcomed them and glorified them, analysts say.
That is unlikely to change any time soon, as thousands of foreign jihadists swell the group's ranks in Iraq and Syria with the idea, at least for some of them, of coming home seasoned and even more deeply radicalised.
"Every European security service that I have talked to in the last year is petrified of the issue of foreign fighters, and there is almost no solution to it," said Bruce Riedel, a former CIA official who now works at the Brookings Institution.
The Soufan Group, an intelligence consultancy, released a report Tuesday that said the number of foreign fighters who have travelled to Iraq and Syria since 2011 is thought to have reached 27,000 to 31,000, from at least 86 countries - double the estimate from a year ago.
"Think about the problem of just monitoring people when they come back. We're going to put them all in jail. Most of them will be out within 48 hours, because they did not commit a crime in France or in Belgium," said Mr Riedel, speaking of Europe's returnee fighters.
"And it's very hard to prove that they committed a crime in Syria or Iraq. Do they have the intention to commit a crime? Possibly. But you can't keep people in jail in democracies because they are suspected to have the intention of committing a crime," he added.
Close monitoring of these thousands of suspects would require around the clock work by virtually the full manpower of all western security and military forces, he added.
"It's impossible to do. So we have a serious problem: it's what I call task saturation," Mr Riedel added.
Besides jihadists returning home from the Middle East, the Islamic State group can rely on an unknown number of supporters like the married couple that shot dead 14 last week in San Bernardino, California.
These kind of people turn radical without having direct contact with the Islamic State group and without drawing much attention to themselves before attacking.
David Kilcullen, a counter-terrorism expert who took part on Tuesday with Riedel in a terrorism conference in Washington, calls this "leaderless jihad." "Instead of having a clandestine structure with two-way communication and secret plans that need to be protected, you have an open communication structure that is broadcast-based, with people who communicate openly with people who are underground and who act in general terms, in accordance with the guidance," said Mr Kilcullen.
"The possibility of the melding of foreign fighters returning to their homeland with the existence of the underground network in various parts of the EU in particular changes significantly the domestic threat," he added.
The December 2 mass shooting in San Bernardino, in the wake of the Paris attacks last month, shows "the limits of the counterterrorism 'radar' constructed after 9/11 to detect and disrupt network-based attacks." This radar needs to be "recalibrated," it added.
Terror cells formed by a married couple that keeps to itself, or a group of brothers or childhood friends who are careful to stay away from mosques and off the Internet before striking, are impossible for intelligence services cells to detect or infiltrate.
"There is no computer programme that can detect and predict violent radicalisation at the granular level of two individuals," said the Soufan Group.
"The odds are in the criminals' favour if they keep quiet and act quickly," it added.
"As impossible as it is to eradicate violent crime, it is impossible to eradicate terrorism, especially attacks planned under the radar," the group added in its study.
"There are lessons to be learned from the San Bernardino attack, and one of them might be that there will be more such attacks in the future, despite our best efforts."
AF
P

Bank of England might send message on distant rate hike bets

Bank of England might send message on distant rate hike bets

[LONDON] The Bank of England on Thursday might seek to challenge the view in financial markets that it is still a very long way from raising interest rates, nearly seven years after it cut them to a record low.
Britain's central bank surprised investors last month when it released a barrage of economic forecasts that suggested it might leave rates unchanged until early 2017, pushing down the value of sterling.
But a top BoE official later warned investors against reading too much into the Bank's projections when it came to assessing the outlook for rates.
Some economists expect a similar signal when the Bank announces the outcome of its monthly policy meeting at 1200 GMT. "A crucial question now is: Does the Monetary Policy Committee really want to sound anything like as dovish as markets?" Investec economist Chris Hare said.
All 52 economists in a Reuters poll believed the Bank will announce on Thursday that it is keeping its benchmark lending rate at 0.5 per cent, where it has sat since early 2009 when Britain was in the grip of the financial crisis.
Almost all the economists in the poll thought the MPC would once again vote 8-1 against raising rates.
BoE Governor Mark Carney and his colleagues have said they want to see more of a pick-up in British wages before they start to think about moving more quickly towards a rate hike.
Possibly adding to their caution, a recent further fall in global oil prices could keep inflation below zero for longer.
Carney has previously sent messages that a rate hike might be on the way, only to be knocked off course by surprises such as the plunge in oil prices and this year's surge in concern about a slowdown in China and other emerging markets.
Yet there are other reasons why the Bank might feel that the time is approaching for a rate hike.
The Federal Reserve is widely expected to raise US interest rates for the first time since 2007 next week, giving the Bank a chance to see how the global economy and markets react before it has to make up its mind on when to follow suit.
At home, a pick-up in Britain's dominant services industry in November pointed to a recovery in overall economic growth in the final months of 2015 after a dip in the third quarter, and could start to heat up inflation before long. "We think that there is the case for a baby step in the hawkish direction on the back of firmer domestic data, less bad external news and the likelihood that the Fed will hike imminently," Scotiabank economist Alan Clarke said.
Economists at Morgan Stanley say British inflation could rise to 1 per cent by March, much quicker than the BoE has forecast. That would back the case for a rate hike in May although it would be the start of a very slow rise. "It will be enough to get the Bank hiking but it will also be slow enough that the Bank could be knocked off course," Jacob Nell, an economist with Morgan Stanley, said.
Another reason for the Bank to be cautious is Britain's planned referendum on its membership of the European Union.
Economists polled by Reuters said uncertainty over the vote's result, which could hurt business investment and growth, was the biggest risk to Britain's economy in 2016.
British Prime Minister David Cameron has said he plans to hold the referendum before the end of 2017.
REUTERS

Moody's eyes Brazil downgrade to junk citing political risks

Moody's eyes Brazil downgrade to junk citing political risks

[SAO PAULO] Moody's Investors Service put Brazil's credit rating on review on Wednesday for a possible downgrade to junk status due to a severe economic recession, failed austerity efforts and rising risks of political paralysis.
Moody's said it based its decision on "worsening governability conditions" after Congress opened impeachment proceedings against President Dilma Rousseff.
If Moody's follows through with a downgrade in the usual three-month review period, it would be the second ratings agency to strip Brazil of its investment-grade status, following a cut by Standard & Poor's in September.
A second downgrade to junk is likely to trigger capital outflows because many foreign pension funds and other large investors are required to unload bonds once two separate agencies rate them as speculative grade.
A Moody's downgrade could drive some US$1.6 billion of investments out of the Brazilian market, estimated Barclays economist Bruno Rovai.
The Brazilian real plunged to a record low in September after the S&P downgrade to junk, but the currency rebounded more recently as fears of sudden capital flight eased.
Local market reaction to Moody's move on Wednesday was largely imperceptible. "The impact is negative because of the obligatory adjustment among funds, but ... a good part of that foreign adjustment has been made by markets," said Juliano Ferreira, a strategist with the Icap brokerage in Sao Paulo. "The volume of dollars that could leave the country due to a downgrade isn't what it would have been in the past," he added.
Moody's said it had taken the decision due to "rapidly and materially deteriorating macroeconomic and fiscal trends and diminished likelihood of trend reversal in the next 2-3 years." Moody's senior analyst Samar Maziad told Reuters later that Brazil's fiscal and economic outlook was no longer likely to improve starting in 2017 as previously expected because impeachment proceedings have drawn Congress' attention away from passing measures needed to improve the country's accounts. "It makes a complicated political dynamic even more complicated," she said. "The longer it takes, the worse (it is)," added the analyst, referring to the impeachment proceedings.
Economic data last week showed Brazil's economy contracted 4.5 per cent in the third quarter from a year earlier, confirming the worst recession in 25 years as investment plunged and inflation jumped above 10 per cent per year.
REUTER
S

Global commodities storm sinks stocks again

Global commodities storm sinks stocks again


[NEW YORK] World stocks endured another plummet Wednesday as worries about retreating commodity prices and volatile currencies pushed equities lower.
Mining companies remained in focus one day after global giant Anglo American stunned markets with news it would cut 85,000 jobs. Some miners, such as London-kisted Rio Tinto and Freeport McMoRan of the US, rallied, but analysts described sentiment as still unsettled by Anglo's grim outlook.
Oil prices also continued to weaken, as the leading US and European benchmarks closed at multi-year lows for the third straight day following last week's Opec meeting, which took no action despite plunging prices.
Analysts also cited a surge in the euro, which was up to US$1.1026 from US$1.0619 last Wednesday, a day before a European Central Bank stimulus package disappointed markets.


"The currency markets and the oil markets have been driving the positioning in equity markets and that's been mostly selling," said Michael James, managing director of equity trading at Wedbush Securities.
US stocks finished firmly lower after a volatile session, with the tech-rich Nasdaq falling 1.5 per cent and the broad-based S&P 500 losing 0.8 per cent.
The stronger euro weighed on Frankfurt, which fell 0.8 per cent, and Paris, where the CAC 40 lost 1.0 per cent.
Analysts also saw the rising yen as a factor in a 1.0 per cent fall in the Nikkei in Japan.
Shanghai eked out a minor gain after a slightly better-than-forecast inflation reading for November.
News of yet another giant industrial merger in the works provided the action in US markets. DuPont and Dow Chemical both jumped 11.9 per cent on prospects of their combining into the world's biggest chemical company, with annual sales totalling more than $90 billion. The deal, if finalised, could make 2015 a record year for total transactions.
Yahoo ended 1.3 per cent lower after announcing a retreat from plans to hive off its Alibaba stake and instead seek a "reverse spinoff" of its core Internet properties. Chairman Maynard Webb firmly endorsed Marissa Mayer to stay on as chief executive.
Embattled German auto giant Volkswagen jumped 6.3 per cent after concluding its emissions-cheating scandal was not as bad as feared, at least with respect to carbon dioxide emissions from some cars. The company said further testing showed that Volkswagen had not misrepresented emissions counts in these instances.
However, Volkswagen continues to face myriad questions over the pollution-cheating software installed in 11 million diesel cars worldwide.
REUTERS

728 X 90

336 x 280

300 X 250

320 X 100

300 X600