Floating interest – Bobs Birdhouse http://bobsbirdhouse.com/ Mon, 21 Nov 2022 08:10:48 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://bobsbirdhouse.com/wp-content/uploads/2021/06/cropped-icon-32x32.png Floating interest – Bobs Birdhouse http://bobsbirdhouse.com/ 32 32 WDI CEF: Another bump in distribution, fully covered (NYSE: WDI) https://bobsbirdhouse.com/wdi-cef-another-bump-in-distribution-fully-covered-nyse-wdi/ Mon, 21 Nov 2022 06:24:00 +0000 https://bobsbirdhouse.com/wdi-cef-another-bump-in-distribution-fully-covered-nyse-wdi/ PM pictures Written by Nick Ackerman, co-produced by Stanford Chemist. This article was originally published to members of the CEF/ETF Income Laboratory on November 6, 2022. Earlier this year, the Western Asset Diversified Income Fund (NYSE: WDI) increased their distribution a little. Now they’ve increased it a bit more since previous update. This emphasizes once […]]]>

PM pictures

Written by Nick Ackerman, co-produced by Stanford Chemist. This article was originally published to members of the CEF/ETF Income Laboratory on November 6, 2022.

Earlier this year, the Western Asset Diversified Income Fund (NYSE: WDI) increased their distribution a little. Now they’ve increased it a bit more since previous update.

This emphasizes once again that the decline in value of the portfolio does not affect the income generated. In fact, the latest semi-annual report shows us that income generation in the fund has accelerated with an increase in net investment income or NII. Enough that further increases in the future are a real possibility.

The value of the underlying portfolio is negatively affected due to rising interest rates. The Fed also doesn’t seem ready to end the rate hike any time soon. So there could certainly be additional pressure in the future. At the same time, the fund is trading at a steep discount, which could potentially be an attractive entry level for investors.

The basics

  • Z-score over 1 year: -0.73
  • Discount: 12.64%
  • Distribution yield: 11.84%
  • Expense ratio: 1.48%
  • Leverage: 31.19%
  • Assets under management: $1.15 billion
  • Structure: Temporary (early liquidation date, June 24, 2033)

WDI’s objective is “to obtain a high current income. As a secondary investment objective, the fund will seek capital appreciation. They will bring a “flexible and dynamic” approach. They plan to do this by rotating sectors and stocks in response to market conditions, focusing on what we believe are undervalued stocks with attractive fundamentals.

For greater flexibility, they have no restrictions on investing in above or below investment grade securities. This means that they will cover the full spectrum of credit quality, leading to a truly multi-sector bond fund with limited constraints. It can be positive if they can handle it successfully. This leaves investors a little more in the dark and more dependent on the management team to manage the fund.

The fund is leveraged, which would bring the total expense ratio to 1.82%. However, while higher interest rates will negatively impact leverage by increasing costs, the fund is also hedged. They use both forward contracts and interest rate swaps. By shorting Treasury futures, they can realize a gain if Treasury prices decline. This happens when interest rates rise. Interest rate swaps work the same way. They can essentially swap a floating rate for a fixed rate.

WDI Interest Rate Swaps

WDI (Western Asset) Interest Rate Swaps

Performance – Attractive discount

One of the most attractive features of the fund is the discount. The fund is newer, but it quickly became heavily discounted. This tends to happen with any new CEF. In particular, a fixed income fund would have a particularly hard time getting to market in a rising rate environment.

They were launched in mid-2021, so it wasn’t long after the Fed started indicating that higher rates were coming. Obviously not for the potential to generate income, but for the prices of the underlying bonds.

Chart

Y-Charts

Given the environment and the understanding that bond prices are discounted at higher rates, it’s not too surprising to see negative returns so far.

Chart

Y-Charts

The question now would be how much an investor thinks rates could rise from here. The Fed had announced that it was now seeing rates above their initial target of 5%. We are close to 4% for the effective federal funds rate. It’s been a fast and rapid rise in rates through 2022.

Chart

Y-Charts

The other question is how and what will the Fed break with rates rising so rapidly. There lies another risk to consider, credit risk. Credit risk exists due to WDI’s portfolio containing significant exposure to below investment grade bonds and loans. Those types of companies and issuers that aren’t as financially stable and a bump in the economy can send them into default.

So if rates go up another 1% or 2%, things could probably start to stabilize. However, if we double again from here, we could see significantly lower lows in the market and the WDI.

The effective duration of WDI is 4.40 years. This means that for every 1% increase in interest rates, WDI’s portfolio would decline by 4.4%. Given the decline in total NAV return of around 20%, we have clearly seen a lot of this play out.

Distribution – Another increase, fully covered

Another increase in the distribution of WDI brings us to a monthly payment of $0.125. This was after they launched a payout of $0.117 to start with.

Chart

Y-Charts

There is also room for further increases in the future. NII coverage at the end of June was 109.4%. The NII of $39.956 million was also an increase from the prior quarter. They reported $18.679 million in the first quarter, which doubled to $37.358 million to match the equivalent six-month period. Given that the first quarter is included in the half-year report, this suggests that the portfolio’s earnings generation accelerated in the second quarter.

WDI semi-annual report

Half-year report WDI (Western Asset)

However, since they have increased the payment since then, we have to recalculate how much the estimated annual payment would cost them. In this case, the annualized payout is $1.50 and they last reported 51,788,210 shares outstanding.

This gives us an estimate of the total annual payment of $77,682. This makes the potential annualized NII of $79.913, based on this latest semi-annual report, more than enough to cover the payout. There is even an additional ability to increase the payout again. This is especially true if they can raise the NII again due to their floating rate exposure.

For tax purposes, all distributions paid in 2021 were ordinary income. As a fixed income fund, this generally means it is more appropriate to hold it in a tax-sheltered account. Since they hold bonds and loans that bear interest, this is likely to be the case on a regular basis.

WDI tax character

WDI Tax Character (Western Asset)

WDI Portfolio

Now it’s time to look at what kind of bric-a-brac this fund has in its vault.

The credit quality breakdown shows us that’s a lot.

Distribution of WDI credits

WDI Credit Breakdown (Western Asset)

The overwhelming majority of the portfolio is allocated to BB and B. It’s certainly not the most junkie portfolio in the CEF space, but we also have a fairly large share allocated to CCC.

CCC is the type of debt that is “vulnerable to non-payment”. They need just about everything to do well, otherwise they will fail. Thus, an allocation of this part of the portfolio is unlikely to survive until 2023.

Portfolio turnover was last reported at 25%. For six months, that would suggest they could renew about half of their portfolio each year. This makes them not too aggressive, but also not very passive either. This is good because they can potentially squeeze out what they believe to be the most vulnerable bonds and loans in the CCC tranche.

Looking at where the portfolio is invested, it really is a multi-sector bond fund. We have the largest allocation to high yield bonds. This was followed by substantial allocations to bank loans, bonds secured by loans (CLOs) and commercial mortgage-backed securities (CMBS).

WDI portfolio exposure

WDI Portfolio Exposure (Western Asset)

We also have NARMBS. It sounds like one of those things that could break when central banks are aggressive. It’s always those acronyms that come out of nowhere.

In this case, it is not so harmful. It represents non-agency residential mortgage-backed securities.

Looking at the portfolio, bank loans and exposure to CLOs will be the ones that offer the most protection against higher rates. This is because they are going to be massively based on floating rates. This is where the higher income-generating capacity of the portfolio likely comes from as rates rise.

In addition, RMBS and CMBS may be exposed to variable rates. The vast majority, however, will be fixed rate.

Although 2023 is likely to be challenging if we experience a recession that most expect, loan exposure may have some protection. Loans are higher in the capital stack than bonds. Therefore, the recovery rate will be higher when things start to go downhill.

Looking at the top positions in the fund, we can see that the weightings of each position are quite low. This means that there is no high concentration in a single name.

WDI Top Positions

WDI Top Positions (Western Asset)

In fact, the only allocation above 2% here is WACXX. It’s a money market fund from Western Asset themselves.

According to CEFConnect, WDI had 319 positions at the end of August. For a multi-sector bond fund, a high number of securities is normal. They are spread across many holdings, so there is no significant risk that one individual, or a handful of individuals, could drive the portfolio down.

Conclusion

WDI is attractively discounted and fully hedges its high distribution yield. That makes it an interesting name right now. The main risk is of course the continuation of aggressive rate hikes. Depending on how high the rates are, the WDI will drop further. The increase in the distribution was not sufficient to offset the decline in the underlying portfolio.

Still, if rates stabilize, WDI could climb back to parity with its net asset value per share. This would provide some benefit, even if the portfolio does not appreciate from this level. As a term fund, the net asset value will be realized one day. However, we have until 2033 to start worrying about this angle of play.

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The “largest” floating offshore wind farm comes online in the North Sea https://bobsbirdhouse.com/the-largest-floating-offshore-wind-farm-comes-online-in-the-north-sea/ Tue, 15 Nov 2022 19:32:52 +0000 https://bobsbirdhouse.com/the-largest-floating-offshore-wind-farm-comes-online-in-the-north-sea/ A facility that is currently considered the largest floating offshore wind farm in the world has produced its first electricity, providing power for oil and gas exploration operations in the North Sea. On November 13, Hywind Tampen began feeding Equinor’s drilling at the Gullfaks oil and gas field. The wind farm is located approximately 87 […]]]>

A facility that is currently considered the largest floating offshore wind farm in the world has produced its first electricity, providing power for oil and gas exploration operations in the North Sea.

On November 13, Hywind Tampen began feeding Equinor’s drilling at the Gullfaks oil and gas field. The wind farm is located approximately 87 miles off the coast of Norway, in waters at depths ranging from 260 meters to 300 meters.

Norway has been a leader in the development of offshore wind installations in the North Sea.

The turbine which will enter service on Sunday is the first of seven expected to be commissioned by the end of this year. Four more turbines are expected to enter service next year. Equinor said the wind farm, when fully operational, will have a generating capacity of 88 MW.

“I am proud that we have now started production at Hywind Tampen, Norway’s first and largest floating wind farm,” said Geir Tungesvik, Equinor’s Executive Vice President for Projects, Drilling and Procurement. , in a press release. “This is a unique project, the world’s first wind farm powering oil and gas production facilities.”

Other companies involved in the Hywind Tampen project include Vår Energi, INPEX Idemitsu, Petoro, Wintershall Dea and OMV.

Fueling the oil and gas sector

The Hywind Tampen facility is one of several offshore wind farms being developed to power offshore oil and gas drilling. General Electric (GE) has announced that it could deploy 1.5 GW of offshore wind to support the decarbonization of oil and gas production in the Gulf of Suez, as part of an alliance with the Egyptian group of fossil energy EGAS.

GE signed the agreement at the ongoing COP27 climate summit in Sharm El Sheikh, Egypt. Seasplit, an offshore renewable energy engineering group, will also participate in the deal, with the three groups cooperating on the “technical and economic feasibility” of the project.

Hussein Meharafa, CEO of Seasplit, said in a statement: “Egypt has huge offshore wind resources. Our data analysis shows that the Gulf of Suez can reach up to 10 GW of wind capacity. This ambitious and visionary announcement paves the way for the exploitation of these resources to eventually transform the Gulf of Suez into a net zero industrial zone… [and] should create new localization, supply chain and employment opportunities.

Joseph Anis, CEO of GE Gas Power EMEA, said: “This initiative has the potential to make Egypt a regional hub and exporter of renewable energy and can set new benchmarks in the supply of clean energy for stimulate industrial operations. The partners said excess electricity from offshore wind could be sent to the onshore grid.

Siemens Gamesa Turbines

Equinor said the Hywind Tampen wind farm is expected to supply around 35% of the electricity demand of the Gullfaks and nearby Snorre oil and gas fields. In a statement, the company said the use of wind power “will reduce CO2 emissions.2 field emissions of about 200,000 tons per year.

The 11 Siemens Gamesa 8 MW turbines at Hywind Tampen are installed on a floating concrete structure, with a common mooring system. Floating wind turbines allow installation in deeper waters, compared to fixed-bottom wind turbines. In 2017, Equinor began operating Hywind Scotland, a 30 MW floating wind farm with five turbines, a project believed to be the world’s first floating wind farm.

Several other floating wind farm projects have either entered service in the past five years or are in development. Earlier this year, the Biden administration said it wanted at least 15 GW of floating offshore wind capacity installed off the US coast by 2035. The administration’s “Floating Offshore Wind Shot” aims to reduce costs of floating offshore wind technologies by more than 70% over the next decade and beyond.

“Scaling floating offshore wind technology will open up new opportunities for offshore wind power off the coasts of California and Oregon, in the Gulf of Maine and beyond,” the company said. White House in a statement in September announcing the program. US Department of the Interior officials announced in October the first-ever sale of development rights for facilities off the California coast.

Global Development

Kansai Electric Power and Japan’s RWE Renewables announced an agreement last year to assess the feasibility of what they called a “large-scale floating offshore wind project” off the coast of Japan. RWE is developing several projects around the world, including the Sofia Offshore Wind Farm, a planned 1.4 GW facility in the Dogger Bank area of ​​the North Sea which the company says “is the largest offshore wind project in the portfolio. of RWE”.

Australia has announced plans for at least three larger offshore wind power developments, with interest from Equinor and others including Shell and Orsted. The state of Victoria is at the forefront of offshore wind in Australia, with a capacity target of 4 GW by 2035 and 9 GW by 2040. The 2.2 GW Star of the South project, Majority-owned by Denmark-based Copenhagen Infrastructure Partners and in development for the past decade, is now expected to come online in 2028, state officials say.

Darrell Supervisor is associate editor of POWER (@POWERmagazine).

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IMF agrees to lend $4.5 billion to Bangladesh and proposes priority reforms https://bobsbirdhouse.com/imf-agrees-to-lend-4-5-billion-to-bangladesh-and-proposes-priority-reforms/ Sun, 13 Nov 2022 07:45:16 +0000 https://bobsbirdhouse.com/imf-agrees-to-lend-4-5-billion-to-bangladesh-and-proposes-priority-reforms/ The International Monetary Fund (IMF) recently agreed to lend Bangladesh $4.5 billion to help rebuild its depleting foreign exchange reserves as part of a large-scale reform package. Of the total sum, $3.2 billion will be disbursed under the Extended Credit Facility (ECF) and the Extended Funding Facility (EFF), while $1.3 billion will be disbursed under […]]]>
The International Monetary Fund (IMF) recently agreed to lend Bangladesh $4.5 billion to help rebuild its depleting foreign exchange reserves as part of a large-scale reform package. Of the total sum, $3.2 billion will be disbursed under the Extended Credit Facility (ECF) and the Extended Funding Facility (EFF), while $1.3 billion will be disbursed under the for Resilience and Sustainability (RSF).

In granting the loan amount, the IMF highlighted certain reform priorities, including increasing the tax-to-gross domestic product (GDP) ratio, modernizing the monetary policy framework, improving the business climate and mobilizing additional financing to meet spending needs.

The International Monetary Fund has agreed to lend Bangladesh $4.5 billion to help replenish depleting foreign exchange reserves as part of a wide-ranging reform package. Of this total, $3.2 billion will be provided under the Extended Credit Facility and the Extended Funding Facility, while $1.3 billion will be disbursed under the Resilience and Sustainability Facility.

Exchange rate flexibility, improving governance and the regulatory framework in the financial sector, developing capital markets, boosting growth potential and building climate resilience are other priorities cited by the IMF.

The preliminary deal would require approval by the IMF’s executive board in Washington, DC.

A mission made up of IMF officials reached an agreement with the government of Bangladesh after a 15-day visit.

The funds will be available in seven installments by 2026, with the first installment of $447 million arriving in February. The rest will come in six installments, each amounting to $559 million.

With an inherently floating interest rate, the average rate on loans will be 2.2%, Finance Minister AHM Mustafa Kamal was quoted as saying by Bangladeshi media.

According to an IMF statement, greater revenue mobilization and expenditure rationalization will help increase growth-enhancing spending. “The impact on vulnerable people will be mitigated by higher social spending and better targeted social protection programs.”

“The monetary stance will be guided by the outlook for inflation. Modernizing monetary policy will promote macroeconomic stability and improve policy transmission. Increased exchange rate flexibility will help cushion external shocks,” he said. he adds.

Fibre2Fashion (KD) News Desk


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Minor International: STRONG PERFORMANCE IN 3Q22 WITH PROFITS OF BAHT 4.6 BILLION EXCEEDING PRE-PANDEMIC LEVELS https://bobsbirdhouse.com/minor-international-strong-performance-in-3q22-with-profits-of-baht-4-6-billion-exceeding-pre-pandemic-levels/ Thu, 10 Nov 2022 06:47:18 +0000 https://bobsbirdhouse.com/minor-international-strong-performance-in-3q22-with-profits-of-baht-4-6-billion-exceeding-pre-pandemic-levels/ PRESS RELEASE – November 10, 2022 FOR IMMEDIATE RELEASE STRONG PERFORMANCE IN 3Q22 WITH PROFITS OF BAHT 4.6 BILLION EXCEEDS PRE-PANDEMIC LEVELS Minor International Public Company Limited (“MINT”) today announced its third quarter 2022 financial results, reporting a profit of 4.6 billion baht for 3Q22, compared to a loss of 436 million […]]]>


PRESS RELEASE – November 10, 2022

FOR IMMEDIATE RELEASE

STRONG PERFORMANCE IN 3Q22 WITH PROFITS OF BAHT 4.6 BILLION EXCEEDS PRE-PANDEMIC LEVELS

Minor International Public Company Limited (“MINT”) today announced its third quarter 2022 financial results, reporting a profit of 4.6 billion baht for 3Q22, compared to a loss of 436 million baht for the 3T21. For 9M22, MINT recorded a profit of 2.4 billion baht, a significant turnaround from a loss of 11.6 billion baht for 9M21. On a basic basis, excluding non-recurring items, MINT recorded a basic profit of 2.0 billion baht for 3Q22, surpassing pre-pandemic levels in 3Q19 for all three business units. This is a significant turnaround from the basic loss of 2.4 billion baht in 3Q21 and a qq sequential improvement in basic profit of 1.2 billion baht in 2Q22. These results reflect the continued recovery in demand as well as MINT’s sustained efforts to generate both results in terms of turnover and profit. MINT’s balance sheet position continues to strengthen, due to higher earnings generation and active debt management, leading to a further reduction in the leverage ratio at the end of 3Q22.

Minor Hotels’ strong financial results continued in 3Q22, with a basic profit of 1.5 billion baht reflecting a turnaround from a basic loss of 2.4 billion baht in the same period of the year. prior year and a 32% increase over 2Q22 base earnings. Strong growth in leisure and business travel demand across all key geographies fueled this core earnings growth. Hotels in Europe and Latin America posted historically strong operating results in the third quarter as a strong rebound in the business and corporate segments, as well as leisure demand, lifted RevPar to a higher level 21% compared to 2019 in EUR, mainly thanks to an ADR increase. Similarly, the RevPar of the Australian and Maldivian portfolios of Minor Hotels also remained well above pre-COVID-19 levels, while increased international tourist arrivals and room rate strength saw the RevPar of its Thai hotels to reach 75% of pre-pandemic levels.

Minor Food’s 3Q22 core profit of 399 million baht improved significantly in both yy and qq, demonstrating an increase in restaurant business and its ability to operate more efficiently while generating higher revenue. Minor Food’s China hub returned to profitability during the quarter, thanks to the relaxation of COVID-19 measures in key cities since June 2022 and the operational adaptability of the hub to the requirements of different cities. Despite continued COVID-19 control measures in some regions, most stores in China were able to resume catering and delivery services during the quarter. Thailand and Australia hubs continued to generate higher profits in 3Q22, driven by successful efforts to maximize in-store traffic through strong and innovative core product categories, e.g. Thailand ice cream and coffee in Australia. As a result, group-wide same-store sales increased 16.6% year-on-year. Along with the expansion of outlets and the reopening of temporarily closed stores last year, total system sales jumped 41.3% year-on-year and were 2% above pre-pandemic levels. in 2019. Meanwhile, Minor Lifestyle’s 3Q22 core profit turned positive at 72 million baht after a 86 million baht core loss in the same period last year due to traffic higher in stores and increased operational efficiency.

MINT remains fully focused and determined to strengthen its balance sheet. Net debt repayment, coupled with a higher equity base through profit generation and asset sales, significantly reduced MINT’s net interest-bearing debt to equity ratio to 1, 19x at the end of 3Q22, compared to 1.36x at the end of 2021 and 1.30x at the end of June 2022. At the same time, MINT maintained strong liquidity with 27 billion baht of cash in hand and 30 billion baht of unused credit facilities at the end of 3Q22. Along with stronger operating results, average free cash flow in the quarter was positive at 5.8 billion baht.

Going forward, the solid positive infrastructure of forward hotel and food reservations will set the stage for MINT to achieve record performance. MINT expects its European hotel hub to continue to see the return of international long-haul travel from North American and Asian markets, large-scale trade events and trade fairs, and growing demand from large companies.

Airlines are increasing capacity in key destinations, boosting arrivals for hotels in Thailand and elsewhere. The continued recovery of long-haul flights should be another catalyst for strong growth. Portfolios in the Maldives, Australia and the Middle East should continue to benefit from positive demand, which will allow them to continue to increase room prices. Minor Food continues to innovate with new store formats, its brand loyalty platform as well as the development of new products. Recently, the Chicken Chicken concept was successfully launched in Thailand. At the same time, MINT is looking for opportunities to capture even more operational efficiencies to further enhance the sustainable success of the business. Energy contract pricing, particularly in Europe, is already mostly locked in for 2022 and 2023, bolstering society’s confidence in managing inflation concerns, while accelerating debt repayment and interest rate hedging will help better manage interest rate costs. In addition to the early repayment of a €100 million floating rate ICO loan in August 2022, NH Hotel Group expects to repay an additional €100 million in December, much earlier than expected.

Mr. Dillip Rajakarier, CEO of MINT Group, commented, “Our strong third quarter financial results demonstrate the strengths and resilience of MINT across all business units. I am proud of our employees who have gone above and beyond for our guests and customers during the challenging period we have just emerged from. grateful that we continue to exceed our customers’ expectations and their support. With the operational performance of all three business units already exceeding pre-COVID-19 levels, we are extremely confident in the success of our responsible growth strategy through a portfolio of leading hotel and restaurant brands Positive momentum should allow us to weather macroeconomic pressures With careful management of resources, we are optimistic that we will continue to deliver strong results in 2023 with improved margins.

About Minor International: Minor International (MINT) is a global company focused on three main activities: hotels, restaurants and the distribution of lifestyle brands. MINT is a hotel owner, operator and investor with a portfolio of over 520 hotels under the Anantara, Avani, Oaks, Tivoli, NH Collection, NH, nhow, Elewana, Marriott, Four Seasons, St. Regis and Radisson Blu brands in 56 country. across Asia-Pacific, the Middle East, Africa, the Indian Ocean, Europe, South and North America. MINT is also one of Asia’s largest catering companies with over 2,400 system-wide outlets in 23 countries under The Pizza Company, The Coffee Club, Riverside, Benihana, Thai Express, Bonchon, Swensen’s, Sizzler, Dairy Queen, Burger King and Coffee Journey. MINT is one of Thailand’s largest distributors of lifestyle brands and contract manufacturers. Its brands include Anello, BergHOFF, Bossini, Charles & Keith, Esprit, Joseph Joseph, Radley, Zwilling JA Henckels and Minor Smart Kids. For more information, please visit www.miner.com.

Press contacts: Chaiyapat Paitoon / Namida Artispong on tel. : (662) 365-7500

Disclaimer

pcl international minor published this content on November 10, 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unmodified, on November 10, 2022 06:46:04 UTC.

Public now 2022

All MINOR INTERNATIONAL news

2022 sales 112B
3,054 million
3,054 million
2022 net income 1,556 million
42.3 million
42.3 million
Net debt 2022 104B
2,821 million
2,821 million
PER 2022 ratio 111x
2022 return 0.13%
Capitalization 153B
4,159 million
4,159 million
EV / Sales 2022 2.29x
EV / Sales 2023 1.93x
# of employees
Floating 84.4%

Chart MINOR INTERNATIONAL


Duration :

Period :




Minor International Technical Analysis Chart |  MarketScreener

Trends in Technical Analysis MINOR INTERNATIONAL

Short term Middle term Long term
Tendencies Bullish Bearish Bearish




Evolution of the income statement

Sale

To buy

Medium consensus TO BUY
Number of analysts 17
Last closing price THB29.00
Average target price THB36.67
Average Spread / Target 26.5%


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Oil Price Rises Up To 5% As Dollar Falls, Russian Pricing Talks Add To Mix https://bobsbirdhouse.com/oil-price-rises-up-to-5-as-dollar-falls-russian-pricing-talks-add-to-mix/ Fri, 04 Nov 2022 22:00:15 +0000 https://bobsbirdhouse.com/oil-price-rises-up-to-5-as-dollar-falls-russian-pricing-talks-add-to-mix/ NEW YORK (UrduPoint News/Sputnik – Nov 05, 2022) Oil prices rose as much as 5% on Friday as the dollar fell on expectations that the Federal Reserve could resort to higher interest rate hikes weak from December in its attempt to contain inflation. Adding to the rally, media reported that the Group of Seven (G7) […]]]>

NEW YORK (UrduPoint News/Sputnik – Nov 05, 2022) Oil prices rose as much as 5% on Friday as the dollar fell on expectations that the Federal Reserve could resort to higher interest rate hikes weak from December in its attempt to contain inflation.

Adding to the rally, media reported that the Group of Seven (G7) countries, along with Australia, have agreed to set a fixed price – rather than adopt a floating rate – on Russian oil.

West Texas Intermediate, the US benchmark for crude known as WTI, traded in New York, gained $4.44, or 5%, to $92.61 a barrel. WTI’s session high was $92.81, marking a nine-week high since breaking above $90 on Wednesday for the first time since Oct. 11. For the week itself, WTI was up 5.4%.

London-traded Brent, the global benchmark for crude, settled down $3, or 3%, at $97.67 a barrel. The global crude benchmark hit a session high of $98.74 earlier in the day.

The dollar index, which pits the US currency against the euro, yen, pound sterling, Canadian dollar, Swedish krona and Swiss franc, fell for the third time in four days due to speculation that the Fed might walk away from the interest rate hikes it has made. since June.

The Fed added 400 basis points to key rates this year, up from just 25 before, but barely made a dent in inflation, with the trend at its highest since the 1980s.

Several Fed officials spoke Friday about the possibility of an interest rate pivot, saying smaller hikes could do the same job of containing inflation for a longer period.

Investors, economists and business leaders have also been warning for some time that the United States could slide into recession just two and a half years after the latest downturn that erupted with the coronavirus pandemic measures at the mid-2020. One reason for that would be the Fed’s aggressive interest rate hikes, they said.

The US economy slumped in the first two quarters of the year, with back-to-back negative growth of 1.6% and 0.6% in gross domestic product that technically put the country in recession. Third-quarter GDP, however, came in at 2.6%.

Friday’s oil rally was further fueled by fears of retaliation from Moscow for the G7 plan to cap the selling price of Russian oil to limit the country’s ability to fund the war in Ukraine without choking off global supplies.

Russian President Vladimir Putin has warned in the past that his country will not export oil to countries participating in the G7 plan.

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Poland’s Bank Millennium third-quarter results hit by payment holidays https://bobsbirdhouse.com/polands-bank-millennium-third-quarter-results-hit-by-payment-holidays/ Mon, 24 Oct 2022 08:49:00 +0000 https://bobsbirdhouse.com/polands-bank-millennium-third-quarter-results-hit-by-payment-holidays/ WARSAW, Oct 24 (Reuters) – Bank Millennium (MILP.WA), part of Portuguese banking group Millennium bcp (BCP.LS), reported a net loss of 1.0 billion zlotys ($205.31 million) on Monday. dollars) in the third quarter as the bank counted loan repayment holiday fees. Earlier this year, Poland introduced measures to allow borrowers hit by rising interest rates […]]]>

WARSAW, Oct 24 (Reuters) – Bank Millennium (MILP.WA), part of Portuguese banking group Millennium bcp (BCP.LS), reported a net loss of 1.0 billion zlotys ($205.31 million) on Monday. dollars) in the third quarter as the bank counted loan repayment holiday fees.

Earlier this year, Poland introduced measures to allow borrowers hit by rising interest rates to take advantage of so-called payment holidays. These would suspend repayments for up to eight installments, four per year in 2022 and 2023.

Sharp increases in interest rates by the central bank to fight inflation have hurt many borrowers in a country where variable rate mortgages are the norm.

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Bank Millennium said the cost of this was estimated at 1.423 billion zlotys ($292.16 million) before tax and 1.153 billion zloty after tax.

If excluded, the BM Group would post a net profit of 152 million zlotys, despite high costs related to its portfolio of foreign currency mortgages (a total of 640 million zlotys before tax) and some large one-off items, a indicated the bank. .

“These costs were the direct cause of a significant net loss in the third quarter of 2022,” he said, referring to payment holidays.

Millennium estimated that if all eligible borrowers took advantage of the payment holidays, the maximum impact on the group’s results would be 1.799 billion zlotys.

Millennium said that in the third quarter, the actual level of loan holiday usage averaged 66% of eligible borrowers, and September’s numbers were higher than August’s.

Millennium also said its results were down due to additional regulatory contributions and the cost of provisions for the reimbursement of commissions levied on certain mortgages.

As in previous quarters, costs related to its foreign currency mortgage portfolio remained high and continued to reduce the profitability of the group’s core business, the bank said.

“Total provisions for legal risk related to foreign currency mortgages in the third quarter amounted to 498 million zlotys,” he said.

Millennium also said that excluding all mortgage portfolio costs and loan holiday costs, the group would have made a net profit of PLN 743 million in the third quarter.

($1 = 4.8706 zlotys)

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Reporting by Pawel Florkiewicz; Editing by Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

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Citizens Financial Group Announces Pricing of $600 Million Citizens Bank, NA Senior Bond https://bobsbirdhouse.com/citizens-financial-group-announces-pricing-of-600-million-citizens-bank-na-senior-bond/ Thu, 20 Oct 2022 20:34:00 +0000 https://bobsbirdhouse.com/citizens-financial-group-announces-pricing-of-600-million-citizens-bank-na-senior-bond/ PROVIDENCE, RI–(BUSINESS WIRE)–Citizens Financial Group, Inc. (NYSE: CFG) today announced the pricing of $600 million 6.064% Senior Fixed/Floating Rate Notes of Citizens Bank, NA (“CBNA”) and maturing in 2025 (the “Bonds”). CBNA intends to use the net proceeds from the offering of Notes for general corporate purposes. The note offering is expected to close on […]]]>

PROVIDENCE, RI–(BUSINESS WIRE)–Citizens Financial Group, Inc. (NYSE: CFG) today announced the pricing of $600 million 6.064% Senior Fixed/Floating Rate Notes of Citizens Bank, NA (“CBNA”) and maturing in 2025 (the “Bonds”).

CBNA intends to use the net proceeds from the offering of Notes for general corporate purposes. The note offering is expected to close on October 25, 2022, subject to customary closing conditions.

BofA Securities, Inc., JP Morgan Securities LLC, Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and Citizens Capital Markets, Inc. are acting as joint bookrunners for the note offering.

The notes are being offered through CBNA’s $10.0 billion global banknote program. The Notes are not deposits and are not insured or endorsed by the Federal Deposit Insurance Corporation or any other government agency and are subject to investment risk, including possible loss of principal. The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and are being offered pursuant to an exemption from registration under the Securities Act provided by Section 3(a )(2) of it. A purchaser of the Notes, by making a purchase, will be deemed to have represented and agreed that it is an institution that is an accredited investor within the meaning of SEC Rule 501(a) under the Securities Act, that it is purchasing the Securities for its own account or the account(s) of one or more other investors who are qualified investors and which it, or each of the other qualified investors, holding a beneficial interest in a Security will hold a beneficial interest undivided principal amount of at least $250,000 at all times.

This press release is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy these securities, and there will be no sale of these securities in any state or jurisdiction in which any such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or territory.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $224.7 billion in assets as of September 30, 2022. Headquartered in Providence, Rhode Island, Citizens offers a wide range of retail and commercial banking products and services for individuals, small businesses, ETIs, large corporations and institutions. Citizens helps its clients reach their potential by listening to them and understanding their needs in order to offer advice, ideas and tailor-made solutions. In Consumer Banking, Citizens offers an integrated experience that includes mobile and online banking, a full-service customer contact center, and the convenience of approximately 3,400 ATMs and more than 1,200 branches in 14 states and the district. of Columbia. Consumer Banking’s products and services include a full suite of banking, lending, savings, wealth management and small business offerings. In commercial banking, Citizens offers a wide range of financial products and solutions, including lending and leasing services, deposit and cash management services, foreign exchange risk management solutions, interest rate interest and commodities, as well as loan syndication, corporate finance, mergers and acquisitions, and debt and equity markets capabilities.

Forward-looking statements

“Safe Harbor” Statement within the meaning of the Private Securities Litigation Reform Act of 1995: This communication contains “forward-looking statements”, that is, statements relating to future and not past events. In this context, forward-looking statements often address our future business and financial performance and financial condition, and often contain words such as “expect”, “anticipate”, “intend”, “plan ‘, ‘believe’, ‘seek’, ‘see’, ‘will fly’, ‘would’ or ‘target’. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Uncertainties that could cause our actual results to differ materially from those expressed in our forward-looking statements include the inability to complete such transaction or to make or take any deposit or other action necessary to complete such transaction on a timely basis or no way. . These or other uncertainties may cause our actual future results to differ materially from those expressed in our forward-looking statements.

CFG-IR

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Fixed Income ETF Investment Strategies in a Rising Yield Environment – October 18, 2022 https://bobsbirdhouse.com/fixed-income-etf-investment-strategies-in-a-rising-yield-environment-october-18-2022/ Tue, 18 Oct 2022 16:32:17 +0000 https://bobsbirdhouse.com/fixed-income-etf-investment-strategies-in-a-rising-yield-environment-october-18-2022/ Worries about rising rates have paralyzed the world of investors this year. The global level of inflation is on the rise. The Fed has decreed several rate hikes this year. With the latest US inflation reading beating inflation, the Fed is expected to raise rates further this year. St. Louis Federal Reserve Chairman James Bullard […]]]>

Worries about rising rates have paralyzed the world of investors this year. The global level of inflation is on the rise. The Fed has decreed several rate hikes this year. With the latest US inflation reading beating inflation, the Fed is expected to raise rates further this year.

St. Louis Federal Reserve Chairman James Bullard has left open the possibility of the central bank raising interest rates by 75 basis points at each of its next two meetings in November and December, while saying that it was too early to tell. Benchmark yields on US Treasuries hit the 4% level on October 14.

iShares 20+ Year Treasury Bond ETF (TLT Free Report) has lost about 34% this year. It’s no wonder that in the face of rising bond yields, investors may be wary of investing in fixed income securities, since bond yields and bond prices are inversely related. But there are fixed income avenues that would help investors mitigate these threats while proving profitable. Below we highlight a few:

Interest-Hedged High Yield ETFs

High yield interest rate hedged ETFs take on the risk of rising rates while providing strong current income. This ETF has proven quite resilient in this year’s turmoil.

ProShares High Yield Interest Rate Hedged ETF (HYHG Free Report) includes long positions in USD-denominated high yield corporate bonds and short positions in US Treasuries or bonds of approximately equivalent duration. The ETF returns 5.03% annually and is down 7.2% this year.

Convertible Bond ETFs

Convertible bonds are those that can be exchanged if the holder chooses, for a specific number of preferred or common shares if the company’s stock price exceeds a certain conversion price during the term of the bond. The main difference of the asset with traditional bonds is that convertible bonds offer investors the right to convert their bond holdings into shares of a company at the discretion of the holder.

SSI First Trust Strategic Convertible ETFs (FCVT Free Report) invests at least 80% of its net assets in a diversified portfolio of US and non-US convertible securities. It earns 4.85% per annum and charges 95 basis points in fees. FCVT has lost 2.2% over the past three months.

Senior Loan ETFs

Senior Loans are floating rate instruments and provide protection against rising interest rates. In a nutshell, a relatively high yield opportunity coupled with protection against impending interest rate hikes should help the fund perform better.

Highland Senior Loan ETF/iBoxx (SNLN Free report) could therefore be a good choice for future pieces. It earns around 4.29% per annum and charges 66 basis points in fees. The SNLN is down 7.9% this year.

ETF TIPS

TIPS are government bonds whose nominal value increases with inflation. TIPS ETFs not only fight rising prices, but also protect long-term earnings.

iShares 0-5 Year TIPS Bond ETF (STIP Free report) earns 3.88% annually and is down 8% this year. The fund charges fees as low as 3 basis points (read: ETF TIPS for betting on higher inflation).

Floating Rate Bond ETFs

Floating rate notes are investment grade bonds that do not pay a fixed rate to investors but have variable coupon rates that are often linked to an underlying index (such as LIBOR) plus a variable spread depending on the issuer credit risk. The coupons of these bonds being adjusted periodically, they are less sensitive to a rise in rates compared to traditional bonds.

iShares Floating Rate Bond ETF (FLOW Free report) has an effective term of 0.10 years and therefore presents minimal interest rate risks.

Short-term cash ETFs

Investors might want to hold money in uncertainty. We believe that cash and short-term fixed income securities can play a bigger role in the stability of a portfolio.

PIMCO Enhanced Short Maturity Active ETF (MINT Free report) may be appropriate for non-immediate cash allocations. The fund charges 35 basis points, earns 1.17% annually and has lost 3% this year (read: Is cash hoarding a safe bet right now? Focus on ETFs).

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Floating Clan Takes Over Halifax’s Northwest Arm https://bobsbirdhouse.com/floating-clan-takes-over-halifaxs-northwest-arm/ Sun, 16 Oct 2022 14:06:57 +0000 https://bobsbirdhouse.com/floating-clan-takes-over-halifaxs-northwest-arm/ Whether a witch weighs the same as a duck was undecided on the waters of the Northwest Arm in Halifax on Sunday morning, but dozens of witches proved they could float. On stand-up paddleboards and in rowing hulls, canoes and kayaks, (mostly) women dressed in black, with peaked hats, left St. Mary’s Yacht Club at […]]]>

Whether a witch weighs the same as a duck was undecided on the waters of the Northwest Arm in Halifax on Sunday morning, but dozens of witches proved they could float.

On stand-up paddleboards and in rowing hulls, canoes and kayaks, (mostly) women dressed in black, with peaked hats, left St. Mary’s Yacht Club at 9 a.m. and snaked around the arm, testing the wind resistance of coats, capes, and related garments.


The Witches weren’t the only ones paddling the Northwest Arm on Sunday morning. A dog was spotted on the water during the first annual Witches Paddle in Halifax on October 16, 2022. – Bill Spurr

Luckily there wasn’t really much wind, no bubbles, no problems and not much work.

“Calm water in the morning,” said Sarah Thompson, organizer of Witches Paddle. “I know some people wanted to do it a bit later…but safety wise, I think it’s better to do it when the water is calm, it allows more experts to get out on the water. You can see kids there with their parents, and I don’t think that would happen if the water was rougher.


People showed up early at St. Mary's Boat Club in Halifax to take part in the first annual Witches Paddle on Sunday, October 16, 2022. - Bill Spurr
People showed up early at St. Mary’s Boat Club in Halifax to take part in the first annual Witches Paddle on Sunday, October 16, 2022. – Bill Spurr

The original plan was to assemble and leave the Dingle, but HRM Recreation stepped in and offered their space at St. Mary’s, along with rental canoes.

Thompson said the event provided an opportunity to have one last organized paddle before the cold weather hits, and she thought if her hometown of Sarnia, Ont., could host an annual witches’ paddle, then Halifax should do it too.


A witch sits in her kayak before heading to the Witches Paddle in the Northwest Arm in Halifax on Sunday, October 16, 2022. - Bill Spurr
A witch sits in her kayak before heading to the Witches Paddle in the Northwest Arm in Halifax on Sunday, October 16, 2022. – Bill Spurr

“I saw them popping up in different cities, so I thought, why not here? There isn’t, we have tons of water, a paddling community, and not just stand-up paddlers, but kayakers, canoeists, things like that,” said Thompson, who received 120 statements. of interest.

“I feel good about participating, it’s our first, we’re going to start again. We had help from the media, it was on a lot of pages, and it was on the radio the other day, which helped get it out into the community. Word of mouth travels fast and I think next year will be even bigger.


Two women pump their paddleboards before heading out for the Witches Paddle on Sunday, October 16, 2022. - Bill Spurr
Two women pump their paddleboards before heading out for the Witches Paddle on Sunday, October 16, 2022. – Bill Spurr

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RBA could halt mortgage increases thanks to record immigration https://bobsbirdhouse.com/rba-could-halt-mortgage-increases-thanks-to-record-immigration/ Fri, 14 Oct 2022 02:05:00 +0000 https://bobsbirdhouse.com/rba-could-halt-mortgage-increases-thanks-to-record-immigration/ This is precisely what the September report delivers. Goldman Sachs economists commented that “composition was strong, with broad-based strength in cyclical and wage-sensitive service categories including housing, medical services, child care and auto repair.” The Fed’s Preferred Proxy at The Wall Street JournalNick Timiraos, argued that “another uncomfortably high inflation reading for September is likely […]]]>

This is precisely what the September report delivers. Goldman Sachs economists commented that “composition was strong, with broad-based strength in cyclical and wage-sensitive service categories including housing, medical services, child care and auto repair.”

The Fed’s Preferred Proxy at The Wall Street JournalNick Timiraos, argued that “another uncomfortably high inflation reading for September is likely to keep the central bank on track to raise interest rates by 0.75 percentage points at its meeting this month. next” and “further increases the risk that officials will delay a planned slowdown as the pace of the rate rises next”.

Prior to the news, financial markets had been pricing the Fed’s top policy rate at around 4.6%, which they raised to 4.9%. Fed officials shocked investors at their last meeting when they raised their forecast terminal cash rate to 4.5%, and now there is every risk the Fed will start considering a handful of five to less. that the monthly inflation and labor market data obviously start to turn around.

Higher interest rates are positive for cash investors, but negative for virtually everything else. And dopey stock investors seem not to have fully digested the news. Them&The P 500 was only down 26% from its post-pandemic peak. After falling more than 3% on the inflation news, touching 3502 points, the market embarked on a bizarre five percentage point rally, breaking through 3700 points before the end of the session.

Different in Australia

There was no clear explanation for the huge bounce other than pundits indicating that put options were moving in-the-money and/or the index was moving into technical “oversold” territory.

While the Reserve Bank of Australia had until its October meeting sought to imitate the Fed’s measures, it ended up belatedly recognizing that local circumstances are radically different. Unlike the United States, the Australian housing market is booming while wage growth remains anemic despite the hysteria on the subject.

Streamlining one of the world’s most aggressive monetary policy tightening cycles, the RBA claimed it had private ‘linkage’ data that pointed to a much more worrisome picture of wage growth than official data. published by the Australian Bureau of Statistics.

And yet, when the RBA first released its linkage data, it showed wage growth very similar to the ABS figures – in particular, rising at a rate close to 3%, which is significantly lower. to the long-term historical trend and the 3 to 4% growth, according to the RBA, is necessary to generate sustainable inflation in its target range.

After forcing interest rates to rise 250 basis points in just six meetings (or over five months), Martin Place has begun to recognize that it makes sense to assess the devastating impact of what is a rise record share of borrowers’ income that is consumed by repaying the interest and principal of their debts.

This is in fact a shock of a similar magnitude to what the regulator has historically asked banks to estimate when stress testing borrowers’ ability to repay their debts in a scenario where they were subject to extreme increases in interest rates.

Another example where the Australian economy is different is the behavior of our housing market. In most other countries, the vast majority of debt is at fixed rates, and often fixed for terms of 20 to 30 years. In Australia, most loans are variable rate and adjust immediately to changes in the RBA’s cash rate, making its monetary policy moves more powerful.

While US house prices just recorded their first-ever post-pandemic monthly decline of just 0.3%, Australian house prices are collapsing at 16% a year. Specifically, home values ​​in Australian capitals have fallen by more than 6.2% since their peak in May and are well on track to meet our forecast of a total loss of 15-25% from the peak. in the hollow.

In Sydney, home values ​​have lost over 9.7% and are depreciating over 21% per year based on data for the last three months. Brisbane is not far behind with a similarly wild three-month annualized loss north of 19%. During the first half of October, Brisbane overtook Sydney as Australia’s worst performing capital.

Losses in Melbourne are more modest, melting at a lower annual rate of 13%. There is certainly no evidence that the bottom is in sight for what will be the biggest decline ever in the Australian property market.

A silver lining

The most positive thing that can be said is that the rate of decline in home prices nationwide appears to have stabilized at around 16%.

But that’s before borrowers feel the full impact of all the RBA’s interest rate hikes (which are only gradually being passed on by banks) and before Martin Place has (recklessly) hit households. with the additional rate hikes it signals.

A silver lining is that the RBA could be nearing the end of this cycle. If it raises rates an additional 50 basis points in November and December, its target cash rate will sit at 3.1%, well above its minimum neutral rate estimate of around 2.5%. This means that borrowers will have swallowed up an incredible 300 basis point rate hike in a very short time.

There is every chance that this unprecedented increase in the cost of borrowing will crush demand across the economy and eliminate the risk of the emergence of a wage/price spiral, which is obviously the objective of the RBA.

This dynamic will be reinforced by a huge increase in immigration, which this column has predicted for some time. In July 2021, we argued that “the opening of borders to flows of vaccinated and rigorously tested human capital, presumably after the March 2022 Federal Election, will precipitate a wave of skilled and much-needed overseas talent arriving in Australia”.

And it turned out. Our chief macro strategist, Kieran Davies, has documented the biggest quarterly increase in net overseas migration to Australia in over 20 years. This has been fueled by a record increase in the number of students returning to study in Australia, coupled with strong growth in the number of people on work or skilled visas.

With one of the lowest unemployment rates in half a century, the country desperately needs to attract more global talent to ease potential inflationary pressures. This should buy the RBA time to avoid raising its cash rate to the level of more than 4.1% currently set by the markets.

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