No takers for short-term corp debt

Source :MUMBAI: 29 MAR, 2011, 05.12AM IST, RUCHIRA ROY,ET BUREAU 


The demand for short-term corporate debt has been drying , pushing yields up, due to liquidity squeeze. Besides, investors are also going in for debt papers from banks, which is available to them at attractive yields and robust credit quality. 


The credit spreads for the tenor of three-month to one-year corporate debt has widened by 50-75 basis points (one basis point is one hundredth of a percentage point). 

Credit spread is the yield differential between yields of government and corporate debt papers. The traded volume in corporate debt segment fell from Rs 703.90 crore to Rs 484.21 crore for the week ended March 4 2011, on the National Stock Exchange , according to RBI data. 


Analysts say, spreads have widened due to the squeeze in the systemic liquidity and their balance sheet needs, which has forced banks to borrow from the markets at 9.45% to 10.15% yields in the threemonth to six-month paper segments , thus putting pressure on corporate bond yields. 

Another reason is that investors are also sceptical about the liquidity of the corporate debt paper in a tight liquidity scenario . "One of the reasons why there is lack of appetite for corporate credit is investors are getting the best yields and top credit quality in these public sector undertaking, or PSU, bank papers.


 So they don't want to take the credit call. Liquidity of the paper is another reason why investors are not showing any interest, since there might not be many buyers in a situation where liquidity is in the deficit mode," says Ajay Manglunia, senior vice-president of Edelwiess capital. 

Yet another reason for the distortion of spreads has been that RBI has bought government bonds worth about Rs 70,000 crore in the last three months, which has suppressed government bond yields. After almost having done away with open market operations, or OMOs, RBI has once again resumed using the instrument to infuse longer term liquidity in the system. 


Government bonds can be repurchased from the central bank through its repo facility, but repo in corporate debt is still to take off, since it is saddled with intermediate funding issues. 

The higher cost of funds for funding corporate bonds has also gone up with a rising interest rate regime, as well as the repo rate (6.75%) that has remained at the operative rate for sometime, which has led to a loss of appetite for even the medium-term corporate debt papers. "The cost of funds for the unsecured market, or the clean market, has shot up higher than the repo rate, even as the repo rate has scaled higher ," says a senior official from Morgan Stanley Primary Dealership .

Marry me, marry my finances

Every time you repeat the words,

‘I can do it!’ with conviction, 

you cancel or override your fear 

and increase your confidence."

-- Brian Tracy

-- Brian Tracy




Source :mydigitalfc:Kumar Shankar Roy: Mar 24 2011 , Bangalore

Experts say couples will do well 

going for joint financial 

planning

Six months into their marriage, Shanti and Sundeep discovered that they have not been able to marry their money. A couple in their late 20s and both fiercely independent, for the wife the husband seemed to have too many credit cards, while the husband thought the wife’s Rs 20 lakh MBA education loan EMIs were taxing. Arguments about money hamper many marriages. Debt, power-play, extended family and financial decision making, among others, are some key reasons related to money that are among the top marriage-killing money issues, according to experts.

Modern power play: In the earlier system, the male earned and the women managed. Now, the power equations have changed. Both the male and female counter-parts earn and spend.

“I have seen cases where none of them is managing the money. Managing the money is important. I am not saying women have become spendthrift. But both have to earn, spend and manager money. Usually, couples adopt ‘spend from one account and save in another’ model. Fifteen years down the line, one account has the entire corpus while the other is empty. These situations create problems,” says Gaurav Mash­ruwala, founder of ACE, a financial advisory firm. Instead of the prevalent ‘you spend your money and I spend my money’, he advises couples to adopt the ‘we do it together” model.

Date with debt: From education loans to car loans, credit cards to luxury habits, most people come to a marriage with financial baggage.

If one partner has more debt than the other and does not share the information freely, sparks do start flying when discussions about earning, spending and EMIs come up.

“The age-old conflict between spenders and savers does rear its ugly head often. It is important to be upfront about debt servicing obligations such as car loan, college loan, and other such things. Even if one of them wants to support their parents, it is important to disclose this information. The same is the case with splitting the bills. While it is a reasonable scheme but the process often builds resentment over the individual purchases made by one of the partners,” feels Anil Rego, founder and chief executive officer of Rights Horizons, a financial consulting firm.

Problems aplenty: With the traditional model’s line of earning and managing money getting increasingly blurred, problems crop up. Quarrelling couples often go to court to settle the marriage once and for all: divorce.

The courts in India, unlike the western ones, are not that liberal in grating huge alimony. Permanent alimony depends upon the status and life style of the spouse during the marriage, whether the spouse (normally the wife) is employed or not, is there a justification in making a huge demand, what is reasonable, etc, said Thiruvengadam BC, a legal practitioner. Divorce is not the answer, say experts. Personality is an important aspect of a marriage and will play a major role in financial plans as well as marital bliss or lack thereof. “It is important to ensure that two people complement their financial habits. Enforcing rules later naturally cause nasty friction,” says Sanjay Das, a Kolkata-based financial planner.

Loan dues of SKS Microfinance mount to Rs 1,250 cr in AP

source : BL:G. NAGA SRIDHAR:Hydrabad:March 22 :2011

SKS Microfinance Ltd's dues on loans in Andhra Pradesh for the last five months have mounted to Rs 1,250 crore, according to its Chief Executive Officer, Mr M. R. Rao.

“We have a provisioning policy in place and are making provisions. The repayments in 18 others States where we operate are up to 98 per cent,” Mr Rao, told Business Line here on Tuesday.

When asked on the efforts to recover the dues, Mr Rao said: “Our loan officers are visiting the villages every day in strict adherence to the law in AP. Before October 2010, the repayments in AP were 99 per cent. But this repayment culture appears to have gone now.”

The business operations of the country's only listed and largest MFI came to a standstill along with other MFIs in AP after the row over alleged harassment of clients by MFIs and the subsequent legislation put in place by the State Government to regulate MFIs in October 2010.

The exact impact of business hit in AP on the Hyderabad-based company's top and bottom lines would only be known after the declaration of the fourth quarter and full-year results some time in May.

Andhra Pradesh accounts for over 25 per cent of SKS' total outstanding loan portfolio. As it is ‘business as usual' in other markets, SKS was able to raise funds. “We have almost frozen securitisation deals for about Rs 700 crore,” he added

DE-RISKING

On the strategy to minimise the impact of business loss in AP, Mr Rao said a mapping of potential and risk in States other than AP was being done. “Our exposure to other States has been growing. Going forward we hope to have a balanced exposure in all regions, say, 10 per cent from each State,” Mr Rao said.

The fresh hiring of field staff has also been frozen. “We are actually sitting on surplus staff in AP. In line with our HR policy, there are no retrenchments. But we are not hiring,” the SKS functionary said.

SKS Micro's scrip gained 2.83 per cent to end at Rs 561.90 on the Bombay Stock exchange

AT&T to Buy T-Mobile for $39 Billion

Source :NEW YORK:By AP : Time:sunday :March 20:2011

AT&T Inc., the country's second-largest wireless carrier in the United States, on Sunday said it will buy T-Mobile USA, the fourth-largest, from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion.

AT&T will pay about $25 billion in cash and the balance in company stock in a deal that gives Deutsche Telekom about an 8 percent equity stake in AT&T.

T-Mobile is coming off of two years of flat revenue as it struggles to compete with much larger rivals AT&T and Verizon Wireless. Bellevue, Wash.-based T-Mobile USA's subscriber count has stalled at just under 34 million, though it posts consistent profits.

There have been reports over the last year that Deutsche Telekom has been looking at radical moves to let it get more value out of its U.S. holding, including a possible combination with Sprint Nextel Corp. or some other U.S. partner.

AT&T said in a statement Sunday the deal gives it an "optimal combination of network assets" that adds capacity sooner than any other alternative. It also said the deal will improve network quality for the customers of both companies and increase the number of cell towers by about 30 percent in some of its most populated areas.

The deal has been approved by the boards of both companies, but will likely face tough scrutiny from regulators. Dallas-based AT&T can increase its cash portion by up to $4.2 billion, with a reduction in the stock component, as long as Deutsche Telekom receives at least a 5 percent equity ownership interest in the buyer.

AT&T will finance the cash part of the deal with new debt and cash on its balance sheet and will assume no debt from T-Mobile.

Bank of Baroda chief M D Mallya is BS Banker of the Year

Source :BS Reporter / New Delhi 

Mangalore Devdas Mallya, the chairman & managing director of Bank of Baroda, is the Business Standard Banker of the Year for 2010. Mallya was chosen by a five-member jury headed by Securities & Exchange Board of India’s former chairman, M Damodaran, for BoB’s sterling performance over the last couple of years.


 The jury had shortlisted three bankers from 30 on performance parameters ranging from growth in deposits, advances, assets and bad debt to return on assets and business per employee.


Mallya took charge of BoB in 2008 at a time when global turbulence in the financial sector had threatened to shake India’s banking foundation. Mallya’s mandate was to take BoB to a new level and attract the young. Not only did the person with an “ice temperament” — as colleagues describe him — steer the bank out of the storm, he brought about good growth numbers and a better-than-counterparts showing. BoB’s profits grew 55 per cent in 2008-09 and 37 per cent in 2009-10. Return on assets improved to 1.21 per cent this financial year from 1.1 per cent last year, while return on equity increased to 22.19 per cent from 19.48 per cent.



At the peak of the crisis, the bank contained its incremental delinquency ratio at 1.13 per cent (for 2009-10), with a provision coverage ratio of 74.9 per cent as on March 31, 2010. Investors took note and the stock price outperformed the sector, fetching a return of over 172 per cent.




For Mallya, “cautious aggression” and “stable growth with quality” were key words that helped him steer a steady course through the mayhem. In an interview with Business Standard — the details of which are published in the Banking Annual distributed with today’s edition — when Mallya was asked if BoB’s risk appetite was less than its strength, the CMD said: “…look at our growth of 28 per cent (credit). Where is the conservative approach in that? We are aggressive, but cautious.” So, Mallya played with a straight bat, unlike those playing to the gallery with flamboyance, and it paid off.
The Banking Annual also deals with two key areas in the sector. Both are as pertinent to the reader as the country’s economic pace to the global financial health. One is about Reserve Bank of India’s dilemma in allowing industry to open banks, which is the cover story; and second on how clean the books of banks are.


But what was a nightmare for bankers is history now. Days of cautious hope are back. The managing director & chief executive of India’s largest private sector bank ICICI Bank, Chanda Kochhar, in an interview to Business Standard’s Banking Annual, said: “Sustainable, profitable growth is back.”


When the global economy is bouncing back and India, in particular, is outpacing the globe in growth, the benefits of the phenomenon must percolate down to consumers. Therefore, financial inclusion -- banking the unbanked -- and improving servicing of customers top the agenda. The Banking Annual finds benefits for the aam admi in both.

Banks raise Rs 2,980 cr via certificates of deposits

Source : BS :Reuters / Mumbai March 21, 2011, 20:22 IST

Banks raised Rs 2,980 crore via certificates of deposits (CDs) on Monday, compared with Rs 1,895 crore on Friday.

Yield on the three-month Reuters CD benchmark was at 9.95%, higher than 9.85% at its previous close, and the one-year Reuters CD fixing was at 10.05%, higher than 10% on Friday.

"Liquidity crunch in the banking system is keeping the short end rates higher. Being year end mutual funds are active buyers while banks are rolling over CDs keeping the demand firm," a senior dealer with a state-run bank said.




"The view that there may be another rate hike ahead because of the stubborn inflation is pushing up the short end rates higher," a dealer with a foreign bank said.


Last week, the Reserve Bank of India raised interest rates for the eighth time since last March, in line with expectations, and warned both of inflationary pressures and emerging risks to growth.
Liquidity situation, which is still strained in the banking system post the advance tax outflows, is expected to ease next week once the government ploughs it back to the system.


Banks borrowed a total of Rs 78,890 crore from the central bank's twin repo auctions, lower than Rs 1,40,000 crore on Friday.


According to Thomson Reuters data, volumes in the secondary market were at Rs 445 crore, lower than Rs 450 crore on Friday.

Buffett looking at investing in India, large countries

Source :zeenews:Wednesday, March 23, 2011, 11:27


Bangalore: Billionaire Warren Buffett on Tuesday said he is looking to invest in large countries like India, China and Brazil, but added that restrictions on foreign ownership in India's insurance industry could act as a deterrent in the sector.

Speaking to reporters on his maiden visit to India, Buffett also said the US economy was improving and that the devastating earthquake in Japan would not hurt global growth.

"India is a very logical place to look so I hope I spend some money here," Buffett told reporters in Bangalore, adorned in a flower garland and a red "teeka" -- a dash of vermillion placed on foreheads as a symbol of good wishes.

Buffett also said the US economy was improving. "The American economy is getting better month by month," he said. "The more India prospers or China prospers, the more the United States is going to prosper over the long term," he added.

He also said the earthquake in Japan - which has left at least 21,000 people dead or missing and has triggered the world's worst nuclear crisis in a quarter of a century -- would not hurt global growth.

"In terms of its effect on the world economy over any period of time, it's not going to be that important," he said. "It's going to be important for Japan, obviously, but it will not stop the growth of the world economy," he added, a day after he said the crisis created a "buying opportunity."

Buffett, nicknamed the Oracle of Omaha, a reference to his prodigious skill in picking out great investments that are followed closely by investors, and his Omaha, Nebraska origins, said he was looking at industries with modest rates of change.

The 80-year-old investor who is yet to name a successor to take over his USD 200-billion empire, skirted questions on the succession plan but praised Berkshire veteran Ajit Jain for smoothly running much of the company's insurance business.

"He loves what he does, he's not looking to take my job. If he was, the board of directors would probably put him in there in a minute," he said.

Four names top the list of potential candidates to succeed Warren Buffett as chief executive of Berkshire Hathaway, including that of India-born Ajit Jain.

Industries of interest

When asked if he would invest in India's USD 60 billion information technology industry or in the semiconductor business, Buffett said he preferred sectors he had expertise in.

"I think about the soft drink industry or the chewing gum industry, some thing that's much easier for me to understand," he said.

Berkshire owns a stake in Wrigley since 2008, when it poured USD 6.5 billion into Mars Inc's USD 23 billion acquisition of the chewing gum maker. And Coca-Cola is one of Berkshire's biggest investments.

Buffett said he liked large countries like India, China, Brazil, United Kingdom and Germany. "We need to invest billions of dollars and that's very tough in emerging markets," he said.

"I don't consider India as an emerging market, I consider India as a very big market. We continue to look at large countries like India."

Earlier this month, Berkshire Hathaway agreed to become a corporate agent for India's Bajaj Allianz General Insurance, marking its entry in to the insurance sector in Asia's third-largest economy.

Indian rules do not allow foreign firms to own more than 26 percent of an insurance company - a move that is seen by many overseas firms as restrictive.

The insurance portal, owned entirely by Berkshire, will sell motor insurance policies for Bajaj Allianz, avoiding the foreign ownership restrictions.

"It would be more attractive to us if we could buy more than 26 percent," Buffett said. "I would say that for the time being, and perhaps for some time, our activities in insurance here will be at the agency level rather than at the underwriting level," he said.

Buffett was in Bangalore to visit the local arm of TaeguTec, a unit of Israeli metal-cutting tool maker ISCAR Metalworking, in which Berkshire has a majority stake. He is also expected to meet policymakers and company executives.

Ranked the world's third-richest man by Forbes magazine, Buffett is also using his visit to India to encourage philanthropy.

Visiting South Korea on Monday, Buffett said Berkshire, which had USD 38 billion of cash equivalents at the end of 2010, was looking for more large-scale acquisitions anywhere in the world. 

Buffett looking at investing in India, large countries

Source :zeenews:Wednesday, March 23, 2011, 11:27


Bangalore: Billionaire Warren Buffett on Tuesday said he is looking to invest in large countries like India, China and Brazil, but added that restrictions on foreign ownership in India's insurance industry could act as a deterrent in the sector.

Speaking to reporters on his maiden visit to India, Buffett also said the US economy was improving and that the devastating earthquake in Japan would not hurt global growth.

"India is a very logical place to look so I hope I spend some money here," Buffett told reporters in Bangalore, adorned in a flower garland and a red "teeka" -- a dash of vermillion placed on foreheads as a symbol of good wishes.

Buffett also said the US economy was improving. "The American economy is getting better month by month," he said. "The more India prospers or China prospers, the more the United States is going to prosper over the long term," he added.

He also said the earthquake in Japan - which has left at least 21,000 people dead or missing and has triggered the world's worst nuclear crisis in a quarter of a century -- would not hurt global growth.

"In terms of its effect on the world economy over any period of time, it's not going to be that important," he said. "It's going to be important for Japan, obviously, but it will not stop the growth of the world economy," he added, a day after he said the crisis created a "buying opportunity."

Buffett, nicknamed the Oracle of Omaha, a reference to his prodigious skill in picking out great investments that are followed closely by investors, and his Omaha, Nebraska origins, said he was looking at industries with modest rates of change.

The 80-year-old investor who is yet to name a successor to take over his USD 200-billion empire, skirted questions on the succession plan but praised Berkshire veteran Ajit Jain for smoothly running much of the company's insurance business.

"He loves what he does, he's not looking to take my job. If he was, the board of directors would probably put him in there in a minute," he said.

Four names top the list of potential candidates to succeed Warren Buffett as chief executive of Berkshire Hathaway, including that of India-born Ajit Jain.

Industries of interest

When asked if he would invest in India's USD 60 billion information technology industry or in the semiconductor business, Buffett said he preferred sectors he had expertise in.

"I think about the soft drink industry or the chewing gum industry, some thing that's much easier for me to understand," he said.

Berkshire owns a stake in Wrigley since 2008, when it poured USD 6.5 billion into Mars Inc's USD 23 billion acquisition of the chewing gum maker. And Coca-Cola is one of Berkshire's biggest investments.

Buffett said he liked large countries like India, China, Brazil, United Kingdom and Germany. "We need to invest billions of dollars and that's very tough in emerging markets," he said.

"I don't consider India as an emerging market, I consider India as a very big market. We continue to look at large countries like India."

Earlier this month, Berkshire Hathaway agreed to become a corporate agent for India's Bajaj Allianz General Insurance, marking its entry in to the insurance sector in Asia's third-largest economy.

Indian rules do not allow foreign firms to own more than 26 percent of an insurance company - a move that is seen by many overseas firms as restrictive.

The insurance portal, owned entirely by Berkshire, will sell motor insurance policies for Bajaj Allianz, avoiding the foreign ownership restrictions.

"It would be more attractive to us if we could buy more than 26 percent," Buffett said. "I would say that for the time being, and perhaps for some time, our activities in insurance here will be at the agency level rather than at the underwriting level," he said.

Buffett was in Bangalore to visit the local arm of TaeguTec, a unit of Israeli metal-cutting tool maker ISCAR Metalworking, in which Berkshire has a majority stake. He is also expected to meet policymakers and company executives.

Ranked the world's third-richest man by Forbes magazine, Buffett is also using his visit to India to encourage philanthropy.

Visiting South Korea on Monday, Buffett said Berkshire, which had USD 38 billion of cash equivalents at the end of 2010, was looking for more large-scale acquisitions anywhere in the world. 

Dawood planning to attack CBI headquarters over 2G probe?

Source :Zeenews Bureau:23rd March 2011:12:27


New Delhi: The 2G scam continues to get murkier by the day. Few days after former telecom minister A Raja’s close aide Sadhick Batcha committed “suicide” at his residence in Chennai, it has come to light that security has been tightened at the headquarters of the CBI, which is probing the 2G scam, fearing an attack by underworld don Dawood Ibrahim’s D-Company.

Reports said on Wednesday that the CBI received information a few days back that the D-Company might target its headquarters in New Delhi to destroy the documents that relate to the irregularities in allocation of 2G spectrum.


A leading daily today quoted a top senior CBI official as saying on condition of anonymity, “A source in Mumbai passed on information to our officials a few days ago that D-Company is planning to target the CBI headquarters with the intention to destroy the 2G probe papers. We have taken all the required precautions. An alert has been sounded out at all the agency offices. The investigation team has been asked to be careful.”

It has been reported that intelligence agencies are looking into alleged underworld connection of Swan Telecom (which is now known as Etisalat DB) promoter Shahid Usman Balwa, who is under arrest and judicial custody for his role in the 2G scam. 


The newspaper reported that the intelligence agencies were so far able to link D-Company with the 2G scam only through Balwa.

The CBI is set to file its first chargesheet in the 2G scam by the end of this month, and will name Raja, his former personal secretary RK Chandolia, former telecom secretary Siddharth Behura and two telecom companies as accused. 

Air tickets above Rs 1 lakh now under I-T scanner

 

Source :Chinmayi Shalya, TNN | Mar 23, 2011, 04.42am IST

Mumbai: A special court on Monday convicted a former I-T commissioner and his wife for amassing assets disproportionate to their known source of income.


Finding Vishwanath Shrivastava guilty of the charges against him, special judge N P Dhote sentenced him to three years' rigourous imprisonment and fined him Rs 5 lakh. His wife, Nisha, was sentenced for one year and fined Rs 50,000. They were on bail since 2001.


The CBI had registered a case against Shrivastava a, an IRS officer from the 1964 batch, alleging that while working as an income tax commissioner at Allahabad and Mumbai from 1986 to 2001, he had accepted illegal gratification from private parties and accumulated assets worth Rs 12.57 lakh.