Category Archives: bonds

Sudden Plunge in #Venezuela Reserves Alarms Creditors @Business


BofA estimated Venezuela had $77bn of assets available for sale or securitization at the end of the first quarter, down from $81 billion in 2014.

Venezuela’s reserves are dwindling after the price of oil, which accounts for 95 percent of the nation’s export revenue, fell 44 percent in the past year. Traders now see a 44 percent chance the country will default in the next year, the highest in the world and up from 34 percent a month ago.

Facing an ever-worsening shortage of hard currency, President Nicolas Maduro has pulled an average of $65 million a day from central bank reserves since the end of March.

Read the whole article online on Bloomberg here:  The Sudden Plunge in Venezuela Dollar Reserves Alarms Creditors – Bloomberg Business

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#Ukraine: A crisis unfolds


Reserves: $20bn; Debt: $59.5bn, $35bn maturing before 2017

Franklin resources is willing to assume the risk: 
From Bloomberg, 
Franklin Boosted Ukraine Bet to $6 Billion as Selloff Began
Dec 4, 2013, 11:18:50 AM
Franklin Resources Inc.’s biggest funds ramped up their bet on Ukraine by more than $1.4 billion in the third quarter, adding to the asset manager’s status as the country’s largest international bondholder weeks before street protests deepened the worst rout in developing markets.
To read the entire article, go to http://bloom.bg/1hxAf4t

And more in this article on the search by Ukrainian officials for cash.

From Bloomberg, Ukraine Officials Scour Globe for Cash as Protests Build
Dec 4, 2013, 11:05:28 AM
Ukrainian officials are fanning out to Beijing, Moscow and Brussels to drum up economic backing as the largest protests in almost a decade persist back home over the failure to sign a European trade pact.
To read the entire article, go to http://bloom.bg/1eTO9Kz

Moody’s downgrades Cyprus bonds


Another one "to bite the dust?"

Moody's decision to lower Cyprus' debt rating to just above junk status is the latest sign the island nation may become the fourth eurozone country heading towards a bail-out

Moody's downgrades Cyprus bonds

By Peter Spiegel in Brussels

The rating agency's decision is the latest sign the island nation may become the fourth eurozone country heading towards a bail-out

Read the full article at: http://on.ft.com/r3wlk1

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China complains of U.S. debt, but has too much at stake to dump dollars


It is the ultimate ”too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA. If Beijing even hinted that it might try to sell part of its U.S. debt, ”other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. ”It would be financial suicide for China.”

From The International Herald Tribune:

China complains of U.S. debt, but has too much at stake to dump dollars
BY DAVID BARBOZA

SHANGHAI — However grim Washington’s debt and deficit negotiations may seem to U.S. citizens, the impasse is nearly as disturbing for China.

As the United States’ biggest foreign creditor — holding an estimated $1.5 trillion in Treasury securities and other U.S. government debt — China has been a vocal critic of what it considers Washington’s politicized profligacy.

”We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors,” Hong Lei, a Foreign Ministry spokesman, said at a news conference last week.

Beijing might prefer to respond by starting to dump some of its U.S. debt. But in this financial version of the Cold War, analysts say, both sides fear mutually assured destruction. One reason America would want to avoid defaulting on its debt is that such a move could alienate China, which is a steady purchaser of Treasury securities. Beijing, meanwhile, already has too much invested in U.S. debt to do much more but continue to buy, hold and grumble.

It is the ultimate ”too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA. If Beijing even hinted that it might try to sell part of its U.S. debt, ”other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. ”It would be financial suicide for China.”

http://www.nytimes.com/2011/07/19/business/china-largest-holder-of-us-debt-remains-tied-to-treasuries.html

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RIP: QE2


QE2 is no more. Yesterday the FED concluded its last asset purchase of the QE2 program.



The question now is what will be the next move by the FED as it remains committed to ensuring that the economic recovery continues amid signals that the general recovery is slowing.
  • Treasury Secretary, Timothy Geither has reportedly indicated to the Obama administration that he could well step down in the coming months.

>Mongolia plans to issue first sovereign bonds


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The money has not yet come in, but the debt has already started…

Mineral-rich Mongolia plans to issue first sovereign bonds – FT.com

Mongolia plans to issue its first sovereign bonds this month, marking a milestone for capital markets in this resource-rich democracy.


The newly created Development Bank of Mongolia will issue $700m in sovereign bonds to fund lending programmesin areas that include infrastructure, industry, energy and roads. 

the issuance would take place in tranches beginning this month, with the first slice likely to be $100m.

The bond will be in tugrik, the Mongolian currency, which has appreciated by 1.6 per cent against the dollar since January.
investment in the mining sector has soared in the past two years along with global commodities prices.

Government revenues from the mining sector are set to jump next year as the Oyu Tolgoi copper and gold mine comes online, and politicians in Ulan Bator are looking for ways to manage the coming influx into state coffers.

The Development Bank is being set up with training from the Korean Development Bank and the Development Bank of Japan. 
yields on the bonds could be quite low, perhaps 6-8 per cent.


Mongolian sovereign debt has a B1 non-investment grade rating from Moody’s


Read the full article here: FT.com / Capital Markets – Mineral-rich Mongolia plans to issue first sovereign bonds

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>Higher Rates Likely to Keep Euro Rising – WSJ.com


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Higher Rates Likely to Keep Euro Rising – WSJ.com 
NEW YORK—Currency investors’ scramble for yield is likely to lift the euro against the dollar this week, but rising concerns about the euro-zone’s sovereign-debt crisis could curb the common currency’s gains.

Zuma Press

The European Central Bank, headed by President Jean-Claude Trichet, right, is expected to keep raising interest rates in the months ahead as the Federal Reserve leaves rates near zero.
The European Central Bank is expected to continue raising rates in the months ahead while the Federal Reserve leaves U.S. rates near zero for the rest of this year, a prospect that is boosting the euro.
The euro hurdled $1.45 for the first time since January 2010 last week, before pulling back slightly, while some big foreign-exchange banks have raised their forecasts for the common currency. Deutsche Bank and Citigroup now both expect the euro to rise toward $1.50 in coming months.
“The biggest driver for two months now has really been interest rates, interest rates and, of course the third thing being, interest rates,” said Jonathan Wetreich, a currency strategist with Brown Brothers Harriman.
As worries grew last week that Greece will eventually need to restructure its debt, and as Moody’s Investors Service downgraded Ireland’s credit rating on Friday, the euro retreated against the dollar, but only to the $1.44 area, still among the strongest levels it has seen this year.
Late Friday, the euro was at $1.4427 from $1.4494 late Thursday. The dollar was at ¥83.08 from ¥83.45.
Interest-rate differentials will likely push the euro even higher in the week ahead, analysts said.
“It’s really a question of whether the euro is getting to a valuation where it’s harder to keep going, but I think it will keep going,” said Adnan Akant, head of foreign exchange and managing director at money manager Fischer Francis Trees & Watts, a New York unit of BNP Paribas. The money manager is still betting on the euro to rise, though it’s not an “overemphasized” position, he said.
“If you clear your head and think about what’s going on, it’s still an interest-rates story,” he said.
The spread between the euro and dollar two-year swap rate touched its highest level since 2008 on Friday, and if it continues to widen, it will be euro-supportive, said Ron Leven, a strategist with Morgan Stanley.
Deutsche Bank raised its euro forecast Friday, projecting the euro will rise to near $1.50 in the next three to six months. The bank had previously expected the euro to trade within a $1.25 to $1.40 range against the dollar throughout 2011. Citigroup now expects the common currency at $1.50 over six to 12 months, up from a previous forecast of $1.45.
Meanwhile, J.P. Morgan Asset Management, one of the world’s biggest asset-management firms, has abandoned its bet on a decline in the euro against the dollar, said Robert Michele, global chief investment officer for the New York, London and Asia investment teams of J.P. Morgan Asset Management’s Global Fixed Income Group, in a phone interview Friday.
However, the euro-zone debt crisis still poses a risk for the euro, analysts said.
If Greece is forced to restructure its debt, it “is likely to send a shockwave” through the euro zone and its currency, said Brian Dolan, chief currency strategist at Forex.com.
In addition, Finland, which is the only euro-zone country that requires bailouts to be approved by parliament, held parliamentary elections Sunday. The anti-bailout True Finns Party appeared to make a strong showing, according to exit polls, and that could raise fears about whether the results will undermine a planned rescue for Portugal.
Investors continue to view Spain as the real tipping point, though it seems to be on solid ground for now because of headway on reforms and fiscal austerity measures. But market analysts are keeping a close eye on the shaky Spanish housing market, the country’s high jobless rate and its vulnerable savings banks.
If such sovereign-debt jitters still weigh on the currency this week, it could mean a mild rebound for the U.S. dollar, Mr. Dolan said.

—Min Zeng contributed to this article