After misreading risks of investing in sub-prime mortgage securities that triggered the current global financial crisis, Moody's Investors Service, Standard & Poor's and Fitch Ratings are about to face more disclosure requirements and greater accountability for debt analyses.
Bloomberg reported the US Securities and Exchange Commission would propose firms seeking to sell bonds disclose the grades they received while shopping among credit-rating companies, quoting people familiar with the matter.
Other changes scheduled for disuccion today at a Washington meeting may make it easier for investors to sue credit raters and require the companies to disclose revenue from their biggest clients, the people said.
Congress will decide whether the steps go far enough to reform an industry whose wrong assessments on subrime-mortgage securities fuelled the financial crisis by helping banks sell assets that went sour.
House Financial Services Committee chairman Barney Frank this week said he wanted to cut references to credit ratings from US rules, because the provisions fostered reliance on ratings and deter investors from doing research.
"What happens as a result of these rules is that investors have to buy securities that have particular ratings," said Frank Partnoy, a University of San Diego law professor and former Morgan Stanley banker who has written research papers about credit-rating companies.
"It creates this incredible dysfunctionality where the ratings agencies, instead of surviving based on their ability to generate good ratings, are basically selling licenses" to the capital markets.
The SEC will seek addiional comment on a proposal, issued in June 2008, to drop requirements that the US$3.5 trillion (Bt118 trillion) mutual-fund and money-market industry rely on assessments from ratings companies for purchase decisions, according to the people. The SEC plans include removing some references to ratings from its rules, the people said.
"The commission will consider measures to strengthen oversight of credit-rating agencies and improve the quality of ratings through greater transparency and accoutntability," SEC spokesman John Nester said on Tuesday.
Friday, September 18, 2009
10-year yield 4%
The Finance Ministry has approved the sale of 7.74 billion baht worth of 10-year government bonds for a weighted average accepted yield of 3.977%. Accepted bid yields ranged from 3.9% to 4.05%,with the coupon rate 3.875% and bid coverage of 0.85 times.
Also sold were 8 billion baht in floating-rate bonds due in September 2013 for an average yield of 1.461%.Accepted bid yields ranged from 1.44% to 1.47%, with the coupon rate 6M Bibor (Bangkok Interbank Offered Rate)-0.15% and the bid coverage ratio 2.69 times.
Also sold were 8 billion baht in floating-rate bonds due in September 2013 for an average yield of 1.461%.Accepted bid yields ranged from 1.44% to 1.47%, with the coupon rate 6M Bibor (Bangkok Interbank Offered Rate)-0.15% and the bid coverage ratio 2.69 times.
Friday, September 11, 2009
BOT MULLS ANOTHER BOND ISSUE
The Bank of Thailand (BOT) might issue another batch of savings bonds this year after the overwhelming response to the recent issue, with total subscription at Bt130.7 billion. The move is a part of its plan to restructure its liquidฌity management by increasing longterm instruments to absorb excess liquidity. This could reduce shortterm tools like bilateral repurchase market.
BOT assistant governor Suchada Kirakul said yesterday that the central bank will issue a new tranche of savฌings bonds if the government does not issue its second lot of savings bonds within this year.
Moreover, it has to consider if demand and supply in the market was appropriate.
The Finance Ministry has planned to issue between Bt30 bilฌlion and Bt50 billion savings bonds in October after its first batch of Bt80 billion savings bonds sold out like hot cakes.
"If we issue a lot of the twoyear and fouryear bonds, we could reduce the shortterm instruments. The government is not issuing the bonds currently but we have to closely coordinate with them," said the assistant governor.
Liquidity surplus in the finanฌcial system now stands at Bt2.9 trillion, Bt1.7 trillion of which is available in the banking system. Of the total Bt2.9 trillion, a mere Bt500 billion is absorbed by bonds for periods of over a year.
The BOT said about 60,000 investors bought the BOT savings bonds totalling Bt130.69 billion, 60 per cent of which were sevenyear maturity bonds.
Suchada said after issuing the savings bonds, the central bank has reduced absorbing liquidฌity through other channels such as bilateral repurchase and deposit facility.
In addition to bonds, the central bank injects or absorbs the liquidity with many tools, including the bilateral repurchase operation, outright purchase and foreign exchange swap.
"We want to use different tools and don't want to rely largely on any particular instrument," she said.
Currently, the outstanding BOT bonds, including saving bonds, amount to Bt1.5 trillion.
Suchada said the central bank has reduced its liquidity absorpฌtion activities as the government has yet to spend after it had issued savings bonds worth Bt80 billion in early August.
Moreover, the excessive liquidity slightly dropped due to corpoฌrate tax payment.
The BOT makes liquidฌity projection to ensure it is on track. But the liquidity that the central bank provides daily to commercial banks would decline from around Bt800 billion to Bt900 billion to Bt660 billion.
Suchada said a number of banks have actively reacted to a series of savings bond issues by the government and the central bank by raising longterm fixed deposit rates or introducing special deposit packages to attract customers.
"The interestrate structure has not yet changed and the rates have long hit rock bottom," said the assistant governor.
Meanwhile, the BOT has obtained a contribution of 802 million special drawing rights (SDR), or US$1.25 billion (Bt42.6 trillion), from the International Monetary Fund (IMF) in August.
BOT assistant governor Suchada Kirakul said yesterday that the central bank will issue a new tranche of savฌings bonds if the government does not issue its second lot of savings bonds within this year.
Moreover, it has to consider if demand and supply in the market was appropriate.
The Finance Ministry has planned to issue between Bt30 bilฌlion and Bt50 billion savings bonds in October after its first batch of Bt80 billion savings bonds sold out like hot cakes.
"If we issue a lot of the twoyear and fouryear bonds, we could reduce the shortterm instruments. The government is not issuing the bonds currently but we have to closely coordinate with them," said the assistant governor.
Liquidity surplus in the finanฌcial system now stands at Bt2.9 trillion, Bt1.7 trillion of which is available in the banking system. Of the total Bt2.9 trillion, a mere Bt500 billion is absorbed by bonds for periods of over a year.
The BOT said about 60,000 investors bought the BOT savings bonds totalling Bt130.69 billion, 60 per cent of which were sevenyear maturity bonds.
Suchada said after issuing the savings bonds, the central bank has reduced absorbing liquidฌity through other channels such as bilateral repurchase and deposit facility.
In addition to bonds, the central bank injects or absorbs the liquidity with many tools, including the bilateral repurchase operation, outright purchase and foreign exchange swap.
"We want to use different tools and don't want to rely largely on any particular instrument," she said.
Currently, the outstanding BOT bonds, including saving bonds, amount to Bt1.5 trillion.
Suchada said the central bank has reduced its liquidity absorpฌtion activities as the government has yet to spend after it had issued savings bonds worth Bt80 billion in early August.
Moreover, the excessive liquidity slightly dropped due to corpoฌrate tax payment.
The BOT makes liquidฌity projection to ensure it is on track. But the liquidity that the central bank provides daily to commercial banks would decline from around Bt800 billion to Bt900 billion to Bt660 billion.
Suchada said a number of banks have actively reacted to a series of savings bond issues by the government and the central bank by raising longterm fixed deposit rates or introducing special deposit packages to attract customers.
"The interestrate structure has not yet changed and the rates have long hit rock bottom," said the assistant governor.
Meanwhile, the BOT has obtained a contribution of 802 million special drawing rights (SDR), or US$1.25 billion (Bt42.6 trillion), from the International Monetary Fund (IMF) in August.
Tuesday, September 8, 2009
CHINA TO FLOAT FIRST YUAN BONDS IN HK
Beijing will sell government bonds denominated in the mainland's yuan for the first time in Hong Kong this month, its Finance Ministry said yesterday, in a move to expand the international use of its tightly controlled currency.
Some 6 billion yuan (Bt30 billion) worth of bonds will be sold on September 28, the ministry said. Hong Kong is a Chinese territory but has its own currency and regulatory system and often is used by Chinese companies to deal with foreign investors.
DOLLAR CONCERNS
The yuan does not trade on global markets despite China's huge foreign trade, but Beijing is gradually expanding its use abroad. Chinese officials have expressed concern about the stability of the dominant US dollar and also have called for creation of a new global reserve currency.
Beijing signed a currency-swap deal with Argentina in March and has promised to lend yuan to the central banks of South Korea, Malaysia, Indonesia and Belarus in the event of a financial emergency. That could lead to the currency's use in private transaction.
A few mainland institutions, including state-owned China Construction Bank and Bank of China, have issued yuan-denominated bonds in Hong Kong.
Premier Wen Jiabao, the mainland's top economic official, has promised to strengthen trade and finance links with Hong Kong. Other officials have said it may become the centre for handling finance in yuan outside the mainland.
"This measure has a significant impact on promoting the depth and breadth of the Hong Kong bond market and strenghthening Hong Kong's position as an international financial centre," the territory's government said in a statement.
The Finance Ministry gave no details of who would handle the bond issue.
Two banks-London-based HSBC Holdings and Hong Kong-based Bank of East Asia-in May said they had become the first non-mainland companies approved to sell yuan bonds.
Some 6 billion yuan (Bt30 billion) worth of bonds will be sold on September 28, the ministry said. Hong Kong is a Chinese territory but has its own currency and regulatory system and often is used by Chinese companies to deal with foreign investors.
DOLLAR CONCERNS
The yuan does not trade on global markets despite China's huge foreign trade, but Beijing is gradually expanding its use abroad. Chinese officials have expressed concern about the stability of the dominant US dollar and also have called for creation of a new global reserve currency.
Beijing signed a currency-swap deal with Argentina in March and has promised to lend yuan to the central banks of South Korea, Malaysia, Indonesia and Belarus in the event of a financial emergency. That could lead to the currency's use in private transaction.
A few mainland institutions, including state-owned China Construction Bank and Bank of China, have issued yuan-denominated bonds in Hong Kong.
Premier Wen Jiabao, the mainland's top economic official, has promised to strengthen trade and finance links with Hong Kong. Other officials have said it may become the centre for handling finance in yuan outside the mainland.
"This measure has a significant impact on promoting the depth and breadth of the Hong Kong bond market and strenghthening Hong Kong's position as an international financial centre," the territory's government said in a statement.
The Finance Ministry gave no details of who would handle the bond issue.
Two banks-London-based HSBC Holdings and Hong Kong-based Bank of East Asia-in May said they had become the first non-mainland companies approved to sell yuan bonds.
BOT MULLS ANOTHER BOND ISSUE
The Bank of Thailand (BOT) might issue another batch of savings bonds this year after the overwhelming response to the recent issue, with total subscription at Bt130.7 billion. The move is a part of its plan to restructure its liquidฌity management by increasing longterm instruments to absorb excess liquidity. This could reduce shortterm tools like bilateral repurchase market.
BOT assistant governor Suchada Kirakul said yesterday that the central bank will issue a new tranche of savฌings bonds if the government does not issue its second lot of savings bonds within this year.
Moreover, it has to consider if demand and supply in the market was appropriate.
The Finance Ministry has planned to issue between Bt30 bilฌlion and Bt50 billion savings bonds in October after its first batch of Bt80 billion savings bonds sold out like hot cakes.
"If we issue a lot of the twoyear and fouryear bonds, we could reduce the shortterm instruments. The government is not issuing the bonds currently but we have to closely coordinate with them," said the assistant governor.
Liquidity surplus in the finanฌcial system now stands at Bt2.9 trillion, Bt1.7 trillion of which is available in the banking system. Of the total Bt2.9 trillion, a mere Bt500 billion is absorbed by bonds for periods of over a year.
The BOT said about 60,000 investors bought the BOT savings bonds totalling Bt130.69 billion, 60 per cent of which were sevenyear maturity bonds.
Suchada said after issuing the savings bonds, the central bank has reduced absorbing liquidฌity through other channels such as bilateral repurchase and deposit facility.
In addition to bonds, the central bank injects or absorbs the liquidity with many tools, including the bilateral repurchase operation, outright purchase and foreign exchange swap.
"We want to use different tools and don't want to rely largely on any particular instrument," she said.
Currently, the outstanding BOT bonds, including saving bonds, amount to Bt1.5 trillion.
Suchada said the central bank has reduced its liquidity absorpฌtion activities as the government has yet to spend after it had issued savings bonds worth Bt80 billion in early August.
Moreover, the excessive liquidity slightly dropped due to corpoฌrate tax payment.
The BOT makes liquidฌity projection to ensure it is on track. But the liquidity that the central bank provides daily to commercial banks would decline from around Bt800 billion to Bt900 billion to Bt660 billion.
Suchada said a number of banks have actively reacted to a series of savings bond issues by the government and the central bank by raising longterm fixed deposit rates or introducing special deposit packages to attract customers.
"The interestrate structure has not yet changed and the rates have long hit rock bottom," said the assistant governor.
Meanwhile, the BOT has obtained a contribution of 802 million special drawing rights (SDR), or US$1.25 billion (Bt42.6 trillion), from the International Monetary Fund (IMF) in August.
BOT assistant governor Suchada Kirakul said yesterday that the central bank will issue a new tranche of savฌings bonds if the government does not issue its second lot of savings bonds within this year.
Moreover, it has to consider if demand and supply in the market was appropriate.
The Finance Ministry has planned to issue between Bt30 bilฌlion and Bt50 billion savings bonds in October after its first batch of Bt80 billion savings bonds sold out like hot cakes.
"If we issue a lot of the twoyear and fouryear bonds, we could reduce the shortterm instruments. The government is not issuing the bonds currently but we have to closely coordinate with them," said the assistant governor.
Liquidity surplus in the finanฌcial system now stands at Bt2.9 trillion, Bt1.7 trillion of which is available in the banking system. Of the total Bt2.9 trillion, a mere Bt500 billion is absorbed by bonds for periods of over a year.
The BOT said about 60,000 investors bought the BOT savings bonds totalling Bt130.69 billion, 60 per cent of which were sevenyear maturity bonds.
Suchada said after issuing the savings bonds, the central bank has reduced absorbing liquidฌity through other channels such as bilateral repurchase and deposit facility.
In addition to bonds, the central bank injects or absorbs the liquidity with many tools, including the bilateral repurchase operation, outright purchase and foreign exchange swap.
"We want to use different tools and don't want to rely largely on any particular instrument," she said.
Currently, the outstanding BOT bonds, including saving bonds, amount to Bt1.5 trillion.
Suchada said the central bank has reduced its liquidity absorpฌtion activities as the government has yet to spend after it had issued savings bonds worth Bt80 billion in early August.
Moreover, the excessive liquidity slightly dropped due to corpoฌrate tax payment.
The BOT makes liquidฌity projection to ensure it is on track. But the liquidity that the central bank provides daily to commercial banks would decline from around Bt800 billion to Bt900 billion to Bt660 billion.
Suchada said a number of banks have actively reacted to a series of savings bond issues by the government and the central bank by raising longterm fixed deposit rates or introducing special deposit packages to attract customers.
"The interestrate structure has not yet changed and the rates have long hit rock bottom," said the assistant governor.
Meanwhile, the BOT has obtained a contribution of 802 million special drawing rights (SDR), or US$1.25 billion (Bt42.6 trillion), from the International Monetary Fund (IMF) in August.
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