KUALA LUMPUR: The ringgit and a host of other currencies strengthened against the US dollar after US Federal Reserve chairman Ben Bernanke signalled interest rates would be kept at the current super low levels as the US economy had not yet recovered from the problems caused by its credit crisis.
Stock markets in Asia, however, were mixed at the close of trade yesterday but crude oil and gold rose after the Federal Open Market Committee (FOMC) meet and a historic first post-FOMC press conference by Bernanke who indicated that inflationary pressure was on the rise in the US and economic growth would probably be slower this year than earlier predicted.
“The ringgit is already reacting,” said RAM Holdings Bhd senior economist Kristina Fong.
The ringgit, which was at 2.96 against the US dollar at press time, climbed for the seventh straight day and has been the best performing currency among the major currencies in Asia over the past week.
Analysts have said the ringgit's attraction is not only the interest rate differential it enjoys with the US but also the much lower inflation rate compared with other countries in this region.
Gold rose US$4.75 an ounce to US$1,532.1 and Brent crude oil retraced gains earlier and was trading at US$125 a barrel for June delivery.
At the FOMC meet on Wednesday in the US, the Fed decided to leave interest rate unchanged at between 0% and 0.25% and will continue with its US$600bil quantitative easing programme that will end in June.
With Asian countries, including Malaysia, having the bias to raise rates, the widening interest rate differential and the quantitative easing the US is committed to would mean increased focus on emerging markets.
“There is a possible widening of interest rate differentials and that will indicate more capital inflows into the regional economies,” Fong said.
Stock markets reacted differently as analysts said investors were happy to note pro-growth policies would continue in the US but were wary over the sluggish growth forecast for this year.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index closed up 5.39 points at 1,535.3,
The Fed in its meeting and the subsequent media briefing by Bernanke indicated it would initially not grow its balance sheet and re-invest proceeds from maturing securities once its ongoing quantitative easing concluded, which economists said was a clear hint monetary easing would eventually come to an end.
In a report yesterday, CIMB Research said the Fed had noted the upside risks to inflation given the headwinds from higher energy and food prices.
“It will monitor inflation and expectations for future prices closely but said so far, so good',” it said.
With the Fed saying “long term inflation expectations have remained stable and measures of underlying inflation have been subdued,” CIMB said that could suggest the Fed was in no rush to raise overnight interest rates from their existing near-zero levels.
“That said, the Fed upped its inflation estimate this year from 1.3% to 1.7% to 2.1% to 2.8%. Core inflation forecasts were tweaked up from 1.0% to 1.3% to 1.6%,” said CIMB Research.
On the direction of interest rates in the US, CIMB thinks the Fed is is no hurry to raise interest rates given its downbeat tone on the economic recovery.
“Even though inflation pressures have started to build up due to rising commodity prices and energy costs, it is not yet at a tipping point',” it said.
“The FOMC reaffirmed its current monetary policy stance of keeping the Fed funds rate exceptionally low for an extended period. As such, we now expect the Fed to keep the rates at 0.0% to 0.25% till year-end, a revision from 0.75% by end-2011.”(Source: The Star Online)
Friday, April 29, 2011
CIMB completes sukuk issue
KUALA LUMPUR: CIMB Group Holdings Bhd’s Islamic banking unit, CIMB Islamic Bank Bhd, completed the issuance of RM250mil Tier 2 junior sukuk on April 21, which was priced at 4.2% per annum.
“The AA1-rated junior sukuk with a maturity of 10 years is callable at year five and on each subsequent distribution date. Priced competitively at 4.2% per annum, the junior sukuk is not subject to any step up distribution rate after the call date,” CIMB said in a statement yesterday.
On April 14, CIMB Group also completed the issuance of a RM500mil 5-year medium term note (MTN), to refinance existing credit facilities.
The MTN, rated AA1 by RAM, pays a coupon of 4.2% per annum.
“Both the Junior Sukuk and the MTN received overwhelming responses from investors, with both issuances about three times subscribed. The final pricing of 4.2% per annum for both issuances is very attractive, at approximately KLIBOR + 0.15%. The current market environment remains very conducive for corporate issuers including banks to tap the fixed income markets,” said CIMB Group deputy CEO and treasurer Datuk Lee K Kwan.
CIMB Bank Bhd had earlier secured several US dollar term loan facilities for tenures of three and four years on an unsecured floating rate basis, with all-in pricing of 0.90%-0.98% per annum above LIBOR. The loans will refinance maturing US Dollar liabilities with long term facilities at attractive costs. (Source: The Star Online)
“The AA1-rated junior sukuk with a maturity of 10 years is callable at year five and on each subsequent distribution date. Priced competitively at 4.2% per annum, the junior sukuk is not subject to any step up distribution rate after the call date,” CIMB said in a statement yesterday.
On April 14, CIMB Group also completed the issuance of a RM500mil 5-year medium term note (MTN), to refinance existing credit facilities.
The MTN, rated AA1 by RAM, pays a coupon of 4.2% per annum.
“Both the Junior Sukuk and the MTN received overwhelming responses from investors, with both issuances about three times subscribed. The final pricing of 4.2% per annum for both issuances is very attractive, at approximately KLIBOR + 0.15%. The current market environment remains very conducive for corporate issuers including banks to tap the fixed income markets,” said CIMB Group deputy CEO and treasurer Datuk Lee K Kwan.
CIMB Bank Bhd had earlier secured several US dollar term loan facilities for tenures of three and four years on an unsecured floating rate basis, with all-in pricing of 0.90%-0.98% per annum above LIBOR. The loans will refinance maturing US Dollar liabilities with long term facilities at attractive costs. (Source: The Star Online)
RHB Capital suitors to be shortlisted to 6
China banks said to be showing little interest in the 25% stake
PETALING JAYA: The number of interested parties in Abu Dhabi Commercial Bank's block in RHB Capital Bhd will be shortlisted to six by middle of next month, sources said.
So far, 15 banks and private equity firms have shown interest in the 25% stake, the sources said.
Speculation was rife that the suitors included banks from China.
However, there is no conclusion yet as to who the ultimate buyer would be. So far, China banks have shown very little interest in the block, the sources told StarBiz.
Another Chinese bank emerging as shareholder in one of Malaysia's banking groups is a possibility although many will ask what the existing China banks in the country have achieved so far.
As long as there was no cross-holding by a single institution, the application might be considered, said another source, However, factors such as synergies are important.
So far, two Chinese banks - Bank of China (Malaysia) Bhd and Industrial and Commercial Bank of China (ICBC) Malaysia Bhd - were awarded licences in 2000 and 2009 respectively.
Bank of China offers services such as overdraft, savings and current accounts, cashier's orders, trade finance, remittances and project financing.
ICBC Malaysia, which has four branches, offers personal (accounts and services, investment, credit facilities), corporate (trade financing, credit facilities, global payments and cash management, treasury products and services, investment banking) and internet (account management, transfers, fixed deposit) banking.
Analysts are watching for developments in the purported interests of DBS owned by Singapore's Temasek which, in turn, holds 14.8% of Alliance Financial Group (AFG) and Australia and New Zealand Banking Group (ANZ) which owns 24% of AMMB.
If ANZ was to acquire a stake in RHB, it would need to merge AMMB with RHB.
In the case of DBS possibly buying the RHB stake, it is unclear if AFG will be merged with RHB or Temasek will sell off its stake in AFG, as investors can only hold one banking licence.
Reuters also reported last week that the Carlyle group and TPG Capital were making a joint-bid for a US$1.5bil stake in RHB Capital.
However, it may be difficult for private equity firms to get the nod from the authorities, following the court battle between Ng Wing Fai of Primus Pacific Partners Ltd and the other directors of EON Bank Bhd.
Although Primus lost the case in the court yesterday, analysts reckoned it might be an experience to be avoided in future. Moreover, there is little synergy between private equity and banks.
Primus, which holds a 20.2% stake in EON Capital Bhd, was challenging the other directors on their decision to table the takeover bid (which Primus considers undervalued) from Hong Leong Bank to shareholders. (Source:The Star Online)
PETALING JAYA: The number of interested parties in Abu Dhabi Commercial Bank's block in RHB Capital Bhd will be shortlisted to six by middle of next month, sources said.
So far, 15 banks and private equity firms have shown interest in the 25% stake, the sources said.
Speculation was rife that the suitors included banks from China.
However, there is no conclusion yet as to who the ultimate buyer would be. So far, China banks have shown very little interest in the block, the sources told StarBiz.
Another Chinese bank emerging as shareholder in one of Malaysia's banking groups is a possibility although many will ask what the existing China banks in the country have achieved so far.
As long as there was no cross-holding by a single institution, the application might be considered, said another source, However, factors such as synergies are important.
So far, two Chinese banks - Bank of China (Malaysia) Bhd and Industrial and Commercial Bank of China (ICBC) Malaysia Bhd - were awarded licences in 2000 and 2009 respectively.
Bank of China offers services such as overdraft, savings and current accounts, cashier's orders, trade finance, remittances and project financing.
ICBC Malaysia, which has four branches, offers personal (accounts and services, investment, credit facilities), corporate (trade financing, credit facilities, global payments and cash management, treasury products and services, investment banking) and internet (account management, transfers, fixed deposit) banking.
Analysts are watching for developments in the purported interests of DBS owned by Singapore's Temasek which, in turn, holds 14.8% of Alliance Financial Group (AFG) and Australia and New Zealand Banking Group (ANZ) which owns 24% of AMMB.
If ANZ was to acquire a stake in RHB, it would need to merge AMMB with RHB.
In the case of DBS possibly buying the RHB stake, it is unclear if AFG will be merged with RHB or Temasek will sell off its stake in AFG, as investors can only hold one banking licence.
Reuters also reported last week that the Carlyle group and TPG Capital were making a joint-bid for a US$1.5bil stake in RHB Capital.
However, it may be difficult for private equity firms to get the nod from the authorities, following the court battle between Ng Wing Fai of Primus Pacific Partners Ltd and the other directors of EON Bank Bhd.
Although Primus lost the case in the court yesterday, analysts reckoned it might be an experience to be avoided in future. Moreover, there is little synergy between private equity and banks.
Primus, which holds a 20.2% stake in EON Capital Bhd, was challenging the other directors on their decision to table the takeover bid (which Primus considers undervalued) from Hong Leong Bank to shareholders. (Source:The Star Online)
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