Financial bonds – Purple Ribbon Project http://purpleribbonproject.com/ Fri, 26 Nov 2021 06:10:09 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://purpleribbonproject.com/wp-content/uploads/2021/10/icon-12.png Financial bonds – Purple Ribbon Project http://purpleribbonproject.com/ 32 32 First Financial: ANNOUNCEMENT ON BEHALF OF THE SUBSIDIARY FCB ISSUANCE OF NT $ 10 BILLION FINANCIAL BONDS. https://purpleribbonproject.com/first-financial-announcement-on-behalf-of-the-subsidiary-fcb-issuance-of-nt-10-billion-financial-bonds/ Fri, 26 Nov 2021 06:10:09 +0000 https://purpleribbonproject.com/first-financial-announcement-on-behalf-of-the-subsidiary-fcb-issuance-of-nt-10-billion-financial-bonds/ close Provided by: First Financial Holding Co. Ltd. SEQ_NO 3 Announcement date 2021/11/26 Announcement time 14:04:04 Topic ANNOUNCEMENT ON BEHALF OF SUBSIDIARY FCB ISSUANCE OF THE FINANCIAL BONDS NT$ 10 BILLION. Date of events 2021/11/26 What element he responds to paragraph 11 Declaration 1.Date of the board of directors resolution:NA 2.Name [issue no.__ of (secured, […]]]>

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Provided by: First Financial Holding Co. Ltd.

SEQ_NO

3

Announcement date

2021/11/26

Announcement time

14:04:04

Topic

 ANNOUNCEMENT ON BEHALF OF SUBSIDIARY FCB
ISSUANCE OF THE FINANCIAL BONDS NT$ 10 BILLION.

Date of events

2021/11/26

What element he responds to

paragraph 11

Declaration

1.Date of the board of directors resolution:NA
2.Name [issue no.__ of (secured, unsecured) corporate bonds of
___________ (company)]:
FIRST BANK 2ND ISSUE OF PERPETUAL NON-CUMULATIVE
SUBORDINATED,UNSECURED OF THE FINANCIAL BONDS 2021.
3.Total amount issued:NT$ 10 BILLION.
4.Face value per bond:NT$ 10 MILLION.
5.Issue price:PAR.
6.Issuance period:ISSUE DATE DEC 22, 2021. NO MATURITY DATE.
7.Coupon rate:ISSUE COUPON 1.40%.
8.Types, names, monetary values and stipulations of collaterals:NA
9.Use of the funds raised by the offering and utilization plan:
STABILIZE THE BIS RATIO,ENHANCE THE LONG TERM CAPITAL AND PREPARE
FOR FUTURE BUSINESS DEVELOPMENT.
10.Underwriting method:ENGAGED CONSULTANT.
11.Trustees of the corporate bonds:NA
12.Underwriter or agent:YUANTA SECURITIES CO.AND KGI SECURITIES CO.
13.Guarantor(s) for the issuance:NA
14.Agent for payment of the principal and interest:
FCB BRANCHES.
15.Certifying institution:NA
16.Where convertible into shares, the rules for conversion:NA
17.Sell-back conditions:NA
18.Buyback conditions:
AFTER 5 YEARS AND 7 MONTH OF ISSUANCE, ACCORDING TO SUBPARAGRAPH 5 OF
PARAGRAPH 2 OF ARTICLE 10 OF ��REGULATIONS GOVERNING THE CAPITAL ADEQUACY
AND CAPITAL CATEGORY OF BANKS��, SUBJECT TO THE PRIOR APPROVAL OF THE
COMPETENT AUTHORITY AND ONE OF THE FOLLOWING CONDITIONS, THE DEBTS MAY BE
REDEEMED BEFORE MATURITY.FIRST BANK WILL ANNOUNCE THE REDEMPTION 30 DAYS
BEFORE THE SCHEDULED REDEMPTION DATE AND REDEEM THE DEBTS IN WHOLE AT FACE
VALUE PLUS INTEREST PAYABLE.
A. THE CAPITAL ADEQUACY RATIO OF THE BANK AFTER BEING REDEEMED SHALL MEET
THE MINIMUM REGULATORY CAPITAL ADEQUACY RATIO.
B. REPLACE THE ORIGINAL CAPITAL INSTRUMENT WITH A CAPITAL INSTRUMENT WITH
EQUIVALENT OR HIGHER QUALITY.
19.Reference date for any additional share exchange, stock swap, or
subscription:NA
20.Possible dilution of equity in case of any additional share exchange,
stock swap, or subscription:NA
21.Any other matters that need to be specified:
SUPPLEMENTARY ANNOUNCEMENT OF THE BOARD OF DIRECTORS RESOLUTION 2021/5/12.

Disclaimer

First Financial Holding Co. Ltd. published this content on November 26, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on November 26, 2021 06:09:09 AM UTC.

Public now 2021

All news about FIRST FINANCIAL HOLDING CO., LTD.

Sales 2021 62,227 million
2,238 million
2,238 million
Net income 2021 19 781 million
711 million
711 million
Net debt 2021

PER 2021 ratio 15.6x
Yield 2021 4.29%
Capitalization 309 B
11,086 million
11,095 million
Capi. / Sales 2021 4.96x
Capi. / Sales 2022 4.67x
Number of employees 9,906
Free float 79.5%

Chart FIRST FINANCIAL HOLDING CO., LTD.
Duration :

Period:

Technical Analysis Chart of First Financial Holding Co., Ltd.  |  MarketScreener

Technical Analysis Trends FIRST FINANCIAL HOLDING CO., LTD.

Short term Mid Road Long term
Tendencies Bullish Bullish Bullish

Evolution of the income statement

To sell

To buy

Average consensus SOCKET
Number of analysts 8
Last closing price

NT $ 23.80

Average price target

TWD22.23

Spread / Average target -6.58%


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BoE’s Bailey skeptical of stablecoin security https://purpleribbonproject.com/boes-bailey-skeptical-of-stablecoin-security/ Tue, 23 Nov 2021 15:31:00 +0000 https://purpleribbonproject.com/boes-bailey-skeptical-of-stablecoin-security/ Bank of England Governor Andrew Bailey poses for a photo on day one in his new role at the Central Bank in London, Britain March 16, 2020. Tolga Akmen / Pool via REUTERS Register now for FREE and unlimited access to reuters.com Register now LONDON, Nov. 23 (Reuters) – Bank of England Governor Andrew Bailey […]]]>

Bank of England Governor Andrew Bailey poses for a photo on day one in his new role at the Central Bank in London, Britain March 16, 2020. Tolga Akmen / Pool via REUTERS

Register now for FREE and unlimited access to reuters.com

LONDON, Nov. 23 (Reuters) – Bank of England Governor Andrew Bailey has said he does not believe stablecoins are likely to evolve into a secure and regulated form of currency, leaving digital currencies in the central bank as a more likely future for electronic payments.

“I think we have two choices overall,” Bailey told lawmakers in the upper house of the UK parliament, as part of an inquiry into the future of digital payments.

“Is this going to evolve into a world of (asset) backed stablecoins that has silver-like characteristics that could be regulated? I have to say… I’m skeptical about this.

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“Or … is the best contribution, especially to financial stability, the best alternative to that perhaps central bank money in digital form?”

Stablecoins are a form of virtual currency whose values ​​are tied to traditional assets such as the US dollar or commodities, and their rise has accelerated discussions by central banks around the world about digital versions of their currencies.

Policymakers fear that a stablecoin or similar payment mechanism promoted by a tech giant – something Facebook (FB.O) has been working on for several years – will quickly snowball and become dominant, raising issues of competition, confidentiality and financial stability.

The BoE and the UK Treasury said this month they will hold formal consultations in 2022 on whether to move forward on a possible central bank digital currency (CBDC) which, if approved , would be introduced in the second half of the decade.

During his appearance before the House of Lords Committee on Economic Affairs on Tuesday, Bailey said he was not considering the BoE offering digital bank accounts directly to savers.

“We don’t see this as an entry by the Bank of England into the retail bank account business through a central bank digital currency,” he said.

Instead, the BoE would provide the means of settlement to a regulated platform on which banks, and possibly other digital wallet holders, would operate.

The BoE would need powers over the platform companies to protect the privacy and use of personal data, Bailey said.

Bailey also said that work on a central bank digital currency was intended to solve problems with retail and cash transactions, and not as a tool to implement unconventional monetary policy such as a rate of negative interest.

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Reporting by David Milliken Writing by William Schomberg

Our standards: Thomson Reuters Trust Principles.


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First digital bond issued on a SIX regulated market highlights a need for standards https://purpleribbonproject.com/first-digital-bond-issued-on-a-six-regulated-market-highlights-a-need-for-standards/ Sat, 20 Nov 2021 20:39:41 +0000 https://purpleribbonproject.com/first-digital-bond-issued-on-a-six-regulated-market-highlights-a-need-for-standards/ Headquarters of the Swiss Stock Exchange (Boerse) operated by the SIX Group in Zurich (Photo by … [+] Fabrice COFFRINI / AFP) AFP via Getty Images Important events do not seem significant when they occur. Hardly anyone noticed when bitcoin paper was uploaded to the cypherpunks mailing list in 2009. Now it has spawned a […]]]>

Important events do not seem significant when they occur. Hardly anyone noticed when bitcoin paper was uploaded to the cypherpunks mailing list in 2009. Now it has spawned a few new industries and rocked many established industries. Likewise, the release of the first digital bond on a regulated market announced by SIX yesterday did not cause significant waves. Of course, it is unfair to compare the effects of the publication of a piece of local code by a lone wolf to the actions of an institution like the Swiss Stock Exchange. However, the two are linked by the data structure of the blockchain.

The bond market is relatively stable, but there is no shortage of drama, such as Argentina’s sovereign default and its standoffs or the virtual destruction of the global financial system by bonds backed by US subprime mortgages and now a bond. digital. Bonds are considered a safer value because the age of bond debt makes them less risky. SIFMA’s 2021 Capital Markets Information Digest shows that outstanding global bond markets rose 16.5 percent to $ 123.5 trillion in 2020, while global long-term bond issuance rose 19.9% ​​to $ 27.3 trillion. Compare that to the global market capitalization which rose 18.2% year-on-year to $ 105.8 trillion in 2020, mostly fueled by rising stock prices. The annual issuance of bonds eclipses the issuance of shares. Stocks are a perpetual instrument, while bonds have a duration and often pay a recurring or embedded coupon.

A press release from the Swiss Stock Exchange dated November 18 indicates that SIX has placed the first senior unsecured digital bond in CHF with a total volume of CHF 150 million and maturing in 2026. The bond is innovative because it is made up of two interchangeable parts linked together. The digital part (Part A) of the bond for CHF 100 million and the traditional part (Part B) of the bond for CHF 50 million. Each will be traded and held in different structural sub-bodies of the exchange. The coupon amounts to an anemic 0.125% per annum. This is normal for the price of bonds, a safe instrument, it has been heavily oversubscribed. Indeed, the returns are negative if inflation is taken into account; in that it’s better than cash. The net proceeds of the loan will be used for the general purposes of financing SIX.

The DLT used was Corda de R3. Corda is not a blockchain according to many, including its CEO. Under the covers, Corda is backed by a micro-ledger, a mini blockchain. This bond issue is a test for SIX Digital Exchange, which is a manifestation of SIX’s mandate to operate infrastructure services.

In digital bonds, for trading, for custody, for operations and post-trade processes, standards are important. Bonds cannot be considered fully digital until common operations can be automated and digitized. The calculation of coupon and value payments underpins risk analysis and secondary markets, which operate on price, depend on the attributes of bonds. A lack of standards disrupts the world of bonds. Costs mount for institutions creating their own infrastructure to define, assess and track obligations. This is natural for instruments that have evolved over hundreds of years, if not thousands. Standards development organizations such as the InterWork Alliance (IWA) are important in this context.

Now known as IWA, a GBBC project; IWA started life as a Token Taxonomy Initiative (TTI) within the Enterprise Ethereum Association (EEA). The DNA of the EEA is Ethereum and its rich suite of de facto token standards. These de facto standards sparked a revolution in cryptocurrencies and created DAOs, DeFi, and an explosion of NFTs. This revolution now extends to other public and private blockchains. TTI has created the Token Taxonomy Framework (TTF) which is open source on github. TTF defines a set of basic building blocks of a symbolic language as well as the crystallization of that language into a specific link type. This symbolic language is spoken in a neutral manner on the platform. In other words, the token can be built on Solana, on Hyperledger Fabric, on Polychain as long as the token, its interface and attributes can be implemented. The token behaves in a strictly deterministic manner. It is also possible to reason about the value of the token, as well as to deal with emerging events with circuit breakers and other integrated guardrails.

The basic definition of any TTF digital token is expressed using a short token formula. From this symbolic formula, a series of artifacts, from function model code to business functionality, is generated. This ensures that everyone from technologists to business users to compliance officers are working from the same functional specification. These are standards for the modern era, which contain tools to generate everything, including a visual representation of a token. A series of specially designed artifacts, all generated from the token formula. A digital token is the basis of an ecosystem which, for any instrument, also consists of contracts between counterparties and analyzes based on the interaction between the token and the contracts, thus building what is in effect a multi-party system that feeds the life cycle of an instrument. This is the key to digitizing instruments such as bonds that have existed since Mesopotamian times.

This awareness led to the creation of the Inter Work Alliance based on the TTF as a foundation. So far, the story has a common thread that arouses skepticism among people who have been seasoned working in capital markets grappling with shattered and fragmented financial market infrastructure. This is a real challenge for the adoption by traditional finance types of businesses. A certain dose of skepticism, a healthy blockchain suspicion that many associate with Bitcoin, and a sense of déjà vu is blocking adoption. The merger of IWA with the Global Blockchain Business Council addresses this problem head-on. GBBC, founded by the tireless Sandra Ro, is one of the most influential associations in the blockchain industry with more than 350 institutional members and 70 jurisdictions. The GBBC and the World Economic Forum had already started a survey on Blockchain standards called GSMI. The next natural step for GBBC is to partner with an organization that has a pedigree in developing standards. The merger between IWA and GBBC was natural; announced in September and recently completed.

In the meantime, the IWA has not been idle. The Sustainability Working Group has been the most active and has created symbolic standards to monitor the different forms of the voluntary emissions market. This market-based approach covers both emission allowances and carbon offsets and addresses the topical subject highlighted by COP26. These kinds of initiatives can help humanity escape the “blah-blah-blah” mentality that constrains us. A market-based approach cannot work if emission allowances are huge and carbon offsets are cheap. Of course, the price of these offsets must be prohibitive and traceable for the world to escape the peculiarity of an increase of more than 1.5 degrees in average temperatures.

The standard for digital bonds, when a simple formula turns into an implementation that every part of a multi-party system can agree upon and automatically generates a variety of tools to create and monitor bond behavior in a way. platform neutral, with price extensions and risk management of digital bonds, creates cost savings. Reducing costs will democratize the investment landscape and make participation more decentralized. In addition, looking at the link through the lens of standards opens up possibilities for new behaviors and new products. So revolution and evolution are triggered by standards. A new task force has been revived within IWA to examine debt capital markets. This group is made up of both traditional actors and new actors with all the tools of the TTF. GBBC is poised to amplify this message and take it to many businesses and jurisdictions.


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KNM drops 11% in active trade on non-payment of Thai bonds https://purpleribbonproject.com/knm-drops-11-in-active-trade-on-non-payment-of-thai-bonds/ Fri, 19 Nov 2021 02:34:34 +0000 https://purpleribbonproject.com/knm-drops-11-in-active-trade-on-non-payment-of-thai-bonds/ KUALA LUMPUR (November 19): KNM Group Bhd shares fell in morning trading on Bursa Malaysia on Friday (November 19) after the oil and gas equipment services group said it missed principal and coupon payments on Thai bonds worth RM 352.57 million as it encountered challenges due to the Covid-19 pandemic, in addition to unfavorable conditions […]]]>

KUALA LUMPUR (November 19): KNM Group Bhd shares fell in morning trading on Bursa Malaysia on Friday (November 19) after the oil and gas equipment services group said it missed principal and coupon payments on Thai bonds worth RM 352.57 million as it encountered challenges due to the Covid-19 pandemic, in addition to unfavorable conditions at its subsidiary Impress Ethanol Co Ltd (IECL) in Thailand.

The counter opened at 16 sen, down 11.11% or two sen from its previous close.

At the time of writing, KNM – the most active stock on Bursa so far – had cut its loss, still down one sen or 5.56% to 17 sen.

At 17 sen, the stock had a market cap of RM568.34 million.

The meter had plunged 50% from its peak of 32 sen on September 7. Since the start of the year, it has fallen 22.73%.

Some 44.37 million shares have traded so far in the day, which is lower than its 200-day average volume of 68.09 million.

KNM stated that the non-payment event could have a negative impact on the group’s financing facilities as well as on its subsidiaries in the event that the respective financial institutions suspend their financing facilities granted to KNM pending the resolution of the ‘non-payment event.

The group also noted that it is at an advanced stage of discussions with several financial institutions to secure new financing for the repayment of the bonds, but said final approval decisions on the new financing facilities are not expected. be taken before the due date. obligations.

The bonds matured on Wednesday. The company has a grace period until December 2 to pay the principal and until December 9 to pay the coupon before an event of default occurs.

For the second quarter ended June 30, 2021 (2QFY21), KNM’s net profit decreased 5.91% to RM 10.56 million from RM 11.22 million for the same quarter last year, Quarterly revenue having fallen 26.14% to RM 245.98 million from RM 333. 03 million for 2QFY20.

The group said the drop in net profit and revenue was largely due to the slow replenishment of orders caused by the Covid-19 pandemic around the world.

For the cumulative six-month period ended June 30, 2021, net profit fell 72.84% to RM 8.55 million from RM 31.48 million a year earlier. Six-month cumulative revenue, on the other hand, declined 28.73% year-on-year to RM 477.21 million from RM 669.59 million.

Regarding its outlook, KNM expects the outlook for FY21 to remain difficult due to continued uncertainties in the global economic outlook resulting from the impact of the Covid-19 pandemic.

“The underlying industries that determine our business outlook, such as oil and gas, petrochemicals and energy, will remain difficult as recovery from the disruption of the Covid-19 pandemic depends largely on the speed of roll-out of vaccination in the majority of countries. populations, stability of crude oil prices and resurgence of the Covid-19 pandemic, especially in Asia.

“The board will take the necessary steps to manage and mitigate these uncertainties. We believe that with the various efforts undertaken by different governments, the global economy will show an improvement towards the end of 2021 with higher vaccination rates and easing of lockdowns, especially in large economies like the United States. , Europe and China, ”he added.

Read also:
KNM misses Thai bond payments amid pandemic challenges and adverse operating conditions at subsidiary


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Stocks and bonds remain broadly stable as traders wait for US retail data https://purpleribbonproject.com/stocks-and-bonds-remain-broadly-stable-as-traders-wait-for-us-retail-data/ Tue, 16 Nov 2021 10:46:38 +0000 https://purpleribbonproject.com/stocks-and-bonds-remain-broadly-stable-as-traders-wait-for-us-retail-data/ Equity, bond and currency markets struggled to move on Tuesday, as traders refrained from betting ahead of US retail sales data that could reignite concerns over rate persistence high inflation. The European regional stock index Stoxx 600 rose 0.2%, hitting its latest record as a rally in energy stocks added to gains in a better-than-expected […]]]>

Equity, bond and currency markets struggled to move on Tuesday, as traders refrained from betting ahead of US retail sales data that could reignite concerns over rate persistence high inflation.

The European regional stock index Stoxx 600 rose 0.2%, hitting its latest record as a rally in energy stocks added to gains in a better-than-expected quarterly earnings season.

The FTSE 100 in London fell 0.1% and the futures contracts following the Wall Street S&P 500 index remained stable.

Later on Tuesday, U.S. retail sales data will provide more clues to the strength of the world’s largest economy and may firm up market expectations for when the Fed will raise interest rates for the first time, after keeping them close to zero in March 2020.

Economists polled by Reuters expect sales to rise 1.4% in October from the previous month, amid strong household savings, recovering demand and the rush for gifts from Christmas to alleviate supply chain shortages.

“The stronger the outlook for consumers, the more pressure there will be for inflation,” said Gergely Majoros, member of the investment committee of European fund manager Carmignac.

“We believe that the inflation cycle in the United States will be longer than [is being] prices and expected by markets and central banks.

Stock investors had mainly estimated that the inflationary shocks that propelled the annual rate of increase in consumer prices to a 30-year high of 6.2% last month would fade as post-pandemic economies shrink. would normalize.

However, fears of more prolonged inflation could push prices down and raise yields on longer-term U.S. government bonds, Majoros added, putting pressure on stock valuations which tend to fall when yields on stocks. low risk assets are increasing.

The benchmark 10-year Treasury bill yield, which was flat at 1.616% on Tuesday, has remained relatively stable in recent weeks. The two-year Treasury yield, which tracks short-term monetary policy expectations, fell from around 0.4% ahead of last Wednesday’s US Consumer Price Report to 0.53%.

Traders also bought US dollars to position their portfolios to benefit from an increase in interest rates.

The dollar index, which tracks the US currency against six others including the euro and yen, held its highest level in 16 months on Tuesday.

Elsewhere, the pound sterling rose 0.4% against the dollar to $ 1.345, as bets in the Bank of England market increased borrowing costs. BoE Governor Andrew Bailey told the House of Commons Treasury Committee “the job market looks tight” and was “very worried about the inflation situation”, ahead of the data on UK consumer prices on Wednesday.

In Asia, the Hong Kong Hang Seng stock index rose 1.1% as investors cheered on what appeared to be a cordial discussion between US President Joe Biden and Chinese leader Xi Jinping. In a rare virtual meeting, Biden urged Xi not to allow competition between the two economic powers and closely related business partners to “turn into conflict” and “be clear and honest where we disagree. and to work together where our interests intersect ”.


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Opinion: Do you think the United States will experience hyperinflation? There is a better chance that interest rates will go to zero https://purpleribbonproject.com/opinion-do-you-think-the-united-states-will-experience-hyperinflation-there-is-a-better-chance-that-interest-rates-will-go-to-zero/ Wed, 10 Nov 2021 14:59:00 +0000 https://purpleribbonproject.com/opinion-do-you-think-the-united-states-will-experience-hyperinflation-there-is-a-better-chance-that-interest-rates-will-go-to-zero/ People often ask me, “What’s the point of owning bonds with such low interest rates?” I’ve heard this question for most of my career, and although the risk profile of holding bonds has changed, they still have the same goal in a portfolio that they still have: To give you stability when you need it […]]]>

People often ask me, “What’s the point of owning bonds with such low interest rates?”

I’ve heard this question for most of my career, and although the risk profile of holding bonds has changed, they still have the same goal in a portfolio that they still have:

  • To give you stability when you need it most (usually when the stock market is down).

  • To provide you with income that makes them superior safe haven assets over cash.

As I explained before, this is as true in a low flow environment as it is in a high flow environment. In fact, if you are a bond holder with the appropriate time horizon (holding bonds to maturity), you actually want the rates to be to augment you can thus rebalance your bond portfolio into more income-generating instruments.

Read: Consumer prices soar again, pushing the US inflation rate to its highest level in 31 years

But what if the rates don’t go up? What if the inflation that everyone is worried about now does not persist? What if the United States looks a lot more like Germany and Japan than it does Zimbabwe or Argentina?

In other words, what if US long-term interest rates slowly rise towards zero percent? It’s a pretty opposite point of view at this point, but much more likely, in my opinion, than the possibility of hyperinflation.

The basic theory is as follows:

  1. Fiscal policy combined with the intervention of the Federal Reserve causes inflation (short term).

  2. Whenever the government and the Fed relax their policies, the stifling secular deflationary trends of technological growth, globalization, demographics and inequality reinforce the downward trend in inflation and interest rates.

  3. The economy is slowing, the Fed and the Treasury react at some point with additional intervention.

  4. Rinse, wash, repeat as secular trends stifle these government interventions.

If rates were to eventually continue their secular trend towards 0%, the 10-year Treasury bill would earn a total return of 15.5%. Not bad for an instrument with a yield of 1.45% with the highest credit quality in the world.

Of course, smart asset allocation is not an all-or-nothing business. We don’t need to choose to only hold hyperinflation hedges Where deflation hedges. We can choose to hold a wide variety of assets that protect us no matter what.

I have said several times over the past few months that this is perhaps the most confusing investment environment in history. That’s why we shouldn’t overlook any potential scenario, including one in which long-term interest rates hit 0% and bonds end up outperforming most other asset classes.

– I am a great advocate for the use of bonds as a form of insurance during and around retirement to help increase the predictability of returns during this highly unpredictable transition period for retirees.

Cullen Roche is Founder and Chief Investment Officer of Disciplinary funds, a financial consulting company. He is the author of Blog on pragmatic capitalism, where this column first appeared. Follow him on twitter @cullenroche.



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Chinese bond rout passes from Evergrande to other big developers https://purpleribbonproject.com/chinese-bond-rout-passes-from-evergrande-to-other-big-developers/ Mon, 08 Nov 2021 05:12:39 +0000 https://purpleribbonproject.com/chinese-bond-rout-passes-from-evergrande-to-other-big-developers/ (Bloomberg) – Investor worries are shifting to the strongest Chinese real estate companies as the massive sell-off in the sector’s dollar bonds turns to higher-quality borrowers. Bloomberg’s Most Read A dollar bond from China’s largest real estate company by sales, Country Garden Holdings Co., fell 2 cents to 77.4 cents on Monday morning after hitting […]]]>

(Bloomberg) – Investor worries are shifting to the strongest Chinese real estate companies as the massive sell-off in the sector’s dollar bonds turns to higher-quality borrowers.

Bloomberg’s Most Read

A dollar bond from China’s largest real estate company by sales, Country Garden Holdings Co., fell 2 cents to 77.4 cents on Monday morning after hitting a record 10.3 last week. China Vanke Co., the country’s second largest, also slipped. A dollar bill sold by one of its units was listed down to 96.2 cents after falling 3.2 cents last week, the biggest drop since March 2020.

The crackdown on excessive debt in the country’s real estate sector and the debt crisis of Asia’s largest junk bond issuer, China Evergrande Group, has left investors to focus almost entirely on the worst developers. noted until recent days. But as concerns grow about the impact on the wider economy, pressure has spread to the nation’s largest real estate companies.

Lombard Odier’s Asian credit director Dhiraj Bajaj said last week that there is a risk of systemic default in the real estate sector.

Non-payments have so far been limited to small businesses which pose a lower risk to financial markets. But fears of rising stress at Kaisa Group Holdings Ltd., China’s third largest borrower of dollar debt among developers, have rekindled concerns that the credit crunch that started with Evergrande is getting harder and harder. to contain.

With contagion risks now affecting China’s largest and highest-rated real estate companies, some investors see better value in weaker companies that offer the potential for greater rewards.

Even though overall prices remain at troubled levels, some bonds sold by weaker Chinese real estate companies have rebounded. The 13% one-unit Evergrande note due 2022 that had a coupon due on Saturday is listed at 22.5 after rising 4.7 cents in the previous two weeks. The obligation of Yango Justice International Ltd. due 2022 is 25.4 cents after climbing about 3.7 cents through the end of last week.

© 2021 Bloomberg LP


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I Bonds, providing a safe space for cash, get a big rate hike https://purpleribbonproject.com/i-bonds-providing-a-safe-space-for-cash-get-a-big-rate-hike/ Fri, 05 Nov 2021 22:56:00 +0000 https://purpleribbonproject.com/i-bonds-providing-a-safe-space-for-cash-get-a-big-rate-hike/ As the country recovers from the pandemic, rising prices have become a concern for many Americans. But inflation has also pushed up the rates on some government savings bonds, creating an opportunity for people looking for a safe haven for their money. New Series I Savings Bonds, called Inflation Bonds or Bonds I, issued within […]]]>

As the country recovers from the pandemic, rising prices have become a concern for many Americans. But inflation has also pushed up the rates on some government savings bonds, creating an opportunity for people looking for a safe haven for their money.

New Series I Savings Bonds, called Inflation Bonds or Bonds I, issued within the next six months will earn a rate of 7.12 percent, the Treasury Department announcement this week. This represents the second Initial rate never offered on bonds, the ministry said. The new inflation-based rate applies to I bonds issued from November of this year to next April, as well as older I bonds that still bear interest.

In comparison, the average rate for a one-year online certificate of deposit is less than 0.5%, according to financial site DepositAccounts.com.

“This is a very good deal,” said Stephen Biggs, chief investment officer at HC Financial Advisors in Lafayette, Calif., Of the current rate for I bonds.

Savings bonds are generally low-risk investments, but the rate structure of I-bonds is complicated and has some drawbacks, such as limits on how much you can buy and penalties if you cash them in early.

“Although Series I bonds may seem very attractive at first glance, investors should carefully consider the complexities associated with cap on purchase amounts before making an investment,” said Kevin Shea, senior portfolio manager at Creative Planning. , a wealth management company in Overland. Park, Kan.

The rate obtained by inflationary bonds, which were first published in 1998, consists of two parts: a base rate, set for the life of the bond; and a rate that varies with inflation, as measured by the Consumer Price Index, which can be reset every six months, in May and November. The Treasury Department uses a formula to combine these two rates into a “composite” rate.

For over a year, the fixed rate on I bonds has been a disheartening zero. Yes, zilch. This means that all interest earned on these I bonds comes from their variable inflation rate. No one knows for sure whether the current episode of rapid inflation will be temporary or persist into the next year. But if the inflation rate on bonds were to fall, while the fixed rate remained at zero, the rate paid on bonds might be less attractive.

The composite rate on new bonds could even reach zero, although it is guaranteed to never drop below. So you’ll at least get back your original investment when you buy the bond back, according to the Treasury.

You won’t owe state or local income tax on the interest earned, but you will owe federal income tax, although you can wait to redeem the bonds to pay it off. (If you use the money for higher education, you may be able to avoid some or all of the federal taxes.)

Inflation bonds pay interest for 30 years, unless you redeem them earlier. You can trade Digital I Bonds online and have the money deposited into your bank account. If you still hold paper bonds, you can buy them back at local banks, depending on Direct cash.

Savers who bought I Bonds years ago when the fixed rate component was higher can now earn double-digit composite rates. Holders of bonds issued from May to October 2000, for example, will earn 10.85% because the last variable rate of inflation is added to the bond’s fixed rate of 3.6%, said Ken Tumin, founder of DepositAccounts. .com.

To see what your bond rate is paying, check on TreasuryDirect, the website operated by the Office of the Tax Service, which is part of the Treasury Department.

So how do you buy bonds? There are two ways. The first is to buy them from TreasuryDirect.gov. To do this, you will first need to create an online account with a minimum deposit of $ 25 and link it to your bank account. You will not receive a paper deposit; most new savings bonds are electronic and stay in your digital account.

You can buy up to $ 10,000 of Digital I Bonds per person per year.

The second way is to buy bonds I at tax time with your federal tax refund. You can buy bonds up to $ 5,000 this way – the only way to get paper savings bonds.

A couple who files a joint tax return can purchase up to $ 25,000 per year – $ 10,000 each, plus an additional $ 5,000 at tax time. It is possible to buy more of them, by buying bonds I as a gift.

There are other caveats. You must hold the bond for at least 12 months before redeeming it. So if you are using the bonds for emergency funds, Mr Tumin said, you should have some extra money set aside elsewhere, in case you need it sooner. “It’s not an ideal emergency fund,” he said.

And keep in mind that if you redeem an I Bond within five years, you will have to pay a penalty equal to the interest for the previous three months.

The latest episode of inflation may be transient, so I Bonds should be considered along with other options to beat inflation over the long term, said Jacob Kuebler, senior financial advisor at Bluestem Financial Advisors in Champaign, Ill. . “Over a long period,” he said. says, “the stock market is a good hedge against inflation.”


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Bond traders revolt https://purpleribbonproject.com/bond-traders-revolt/ Thu, 04 Nov 2021 13:20:14 +0000 https://purpleribbonproject.com/bond-traders-revolt/ November 6, 2021 gLOBAL OBLIGATION the markets are waking up from a long sleep. The Federal Reserve announced this week that it would end its massive bond buying program. At the same time, bond investors are responding to higher inflation: In a group of 35 economies, five-year bond yields have increased on average 0.65 percentage […]]]>

gLOBAL OBLIGATION the markets are waking up from a long sleep. The Federal Reserve announced this week that it would end its massive bond buying program. At the same time, bond investors are responding to higher inflation: In a group of 35 economies, five-year bond yields have increased on average 0.65 percentage points over the past three months. An upheaval is taking place not only in emerging markets, but also in rich countries like Australia and Great Britain. Sudden moves inevitably raise fears of market turmoil, such as the taper tantrum of 2013. However, the bond shift taking place today is actually quite different.

Before the pandemic, interest rates around the world were low, reflecting latent inflation. When the coronavirus hit nearly two years ago, most central banks pledged to keep their policy rates lower for longer to help the recovery. Many also agreed to buy bonds, reducing their yields.

The main reason for this sudden change today is rising inflation. Among the 38 member economies of the OECD, a club of rich countries, inflation hit an uncomfortable 4.6% year on year in September. Soaring energy and food prices are only part of the story: even if you take them out, the figure was 3.2%, the highest in nearly two decades.

For months, central banks have been saying high inflation is a blow caused by temporary supply constraints. But action in bond markets shows investors believe central banks are acting too slowly. Some monetary authorities have already tightened their policies. Brazil announced a rate hike of 1.5 percentage points last week. The central banks of Canada and Australia have abandoned forecasts that rates will remain low. As of this writing, the Bank of England must decide to raise rates. Some policymakers are holding on: Christine Lagarde, the boss of the European Central Bank, insisted that it is “very unlikely” to raise interest rates next year.

The specter of central bank deviations from markets, and the resulting fluctuations in interest rates, will confuse those who remember 2013, when the Fed awkwardly revealed its unexpected intention to start scaling back its program. bond purchases. The resulting mini-global panic shook growth and knocked out some emerging economies, especially those with large dollar debts.

However, we are not in 2013. One difference is that the evolution of the bond markets is more nuanced. The rise so far in nominal five-year government bond yields in America, for example, is less than half of what it was eight years ago. Real bond yields, after factoring in expected inflation, are minus 1%, still close to record lows. This will promote easy conditions in the real economy. And while yields on short-term government bonds rise, there has been much less movement in long-term bonds.

The other difference today is the absence of financial panic. An increase in the cost of debt can lead to defaults and capital flight. But many emerging economies have healthy foreign exchange reserves, which makes them resilient. Stock markets show no signs of distress: Stock prices hit an all-time high this week. Bank stocks have risen 28% this year, as rising interest rates can increase their profits. And the bond markets remain open for business. In October, emerging markets outside of China issued near-record levels of corporate and sovereign debt.

No reason to be alarmed, then. Markets are betting that central banks must accelerate interest rate hikes, not that they will lose control over inflation. Nevertheless, it is worth bearing in mind the extraordinarily difficult task facing central banks. During the unpredictable end of a pandemic, they must try to normalize ultra-accommodative monetary policy amid extremely high asset prices, high debt levels and above target inflation. Typing tantrum 2.0 is not yet in progress. But don’t rule out a bigger bond brawl.

This article appeared in the Leaders section of the print edition under the headline “Bond traders are agitated”


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Top 3 things to know about the World Bank’s sustainability bonds https://purpleribbonproject.com/top-3-things-to-know-about-the-world-banks-sustainability-bonds/ Wed, 03 Nov 2021 04:02:03 +0000 https://purpleribbonproject.com/top-3-things-to-know-about-the-world-banks-sustainability-bonds/ 1. Private investors support the financing of World Bank projects in developing countries. Private capital raised through the sale of Sustainable Development Bonds in global bond markets is used to support the financing of World Bank projects in developing countries. These bonds are issued by the International Bank for Reconstruction and Development (IBRD) – the […]]]>

1. Private investors support the financing of World Bank projects in developing countries.
Private capital raised through the sale of Sustainable Development Bonds in global bond markets is used to support the financing of World Bank projects in developing countries. These bonds are issued by the International Bank for Reconstruction and Development (IBRD) – the founding institution of the World Bank Group. The IBRD, known simply in the capital markets as the World Bank, has been issuing bonds in the capital markets since 1947 and has raised more than $ 1,000 billion. Fundraising from the private sector through bonds is at the heart of the World Bank’s business model – which leverages the World Bank’s triple A credit rating to attract investors and use the proceeds. to support the financing of World Bank projects in developing countries. Countries then repay the loans plus interest.

Today, with paid-in capital of its 189 members totaling $ 19 billion, the World Bank links private investors to sustainable development through the sale of its bonds. This funding supports the financing of IBRD operations, which currently span approximately 60 countries and focus on the World Bank Group’s dual goals of ending extreme poverty and promoting shared prosperity.

Commercial banks, pension funds, asset managers, official institutions and insurance companies are the biggest buyers of World Bank sustainability bonds. These investors are increasingly focusing on managing environmental, social and governance (ESG) risks through their investments and looking for ways to have a positive impact.

“Raising private sector fundraising through bonds is at the heart of the World Bank’s business model – which relies on the World Bank’s triple A credit rating to attract investors and use the proceeds to support the financing of World Bank projects in developing countries. ”

2. The World Bank is the world’s largest issuer of sustainable bonds.
The World Bank launched the first labeled green bond in 2008 to engage investors around the positive contribution of the World Bank on climate change. This green bond responded to the growing interest of investors in the risk linked to climate change by offering a simple product adapted to their portfolio. It eventually became the norm for a market focused on increasing transparency and investing for impact. While the World Bank continues to issue green bonds, most are now labeled as Sustainable Development Bonds.

The Sustainable Development Bond label highlights how proceeds are used to support the financing of projects with both green and social goals and emphasizes the holistic approach taken by the World Bank to mainstream climate change into all its operations, as explained in its Climate change action plan 2021-2025. For example, 100% of all World Bank projects are screened for climate risk, and 95% of all IBRD projects last year had climate finance components, including in what are traditionally considered sectors ” social “such as health and education.

The World Bank is the largest issuer of so-called “sustainable” bonds. World Bank Sustainable Development Bonds Aligned with Sustainable Bonds Guidelines as published by the International Capital Markets Association. Sustainability-labeled bonds themselves have grown in leaps and bounds as demand from private investors increases for products that provide information on how they support sustainable activities. According to Bloomberg, those labeled investments have grown from $ 40 billion in 2019 to over $ 70 billion in 2020 – and in the first three quarters of 2021, they have already reached over $ 140 billion. But the amount of labeled bonds still only represents a tiny percentage (less than 3%) of the overall bond market. The growth potential is important, as investors assess the entire bond market for sustainable investment opportunities that allow them to manage ESG risks and invest in products that have a positive impact on society.

“The Sustainable Development Bond label highlights how the proceeds are used to support the financing of both ecological and social projects and underlines the holistic approach taken by the World Bank to mainstream climate change in all of its operations. ”

3. The World Bank’s impact reports provide a model for financial markets.
As a pioneering issuer of green and sustainable bonds, the World Bank has led transformative change in capital markets. One of these areas reported a positive impact. The World Bank worked with investors and other multilateral development banks to establish the first “Harmonized Framework for Reporting on the Impact of Green Bonds” in March 2015. The World Bank has since broadened and adapted the concept of reporting its sustainability obligations, explaining how all funds raised through their sale support the Sustainable Development Goals (SDGs). In his last investor impact report, the World Bank worked with the Stockholm Environment Institution to develop a methodology for mapping projects according to the 17 different SDGs. The tool applies automated text mining software to match each project to SDG targets. The objective of this work is to explore methodologies that can be used to provide a lens through which investors can view the indicative contributions of World Bank-funded projects to the SDGs and share preliminary results to assist other issuers. and investors to connect the results of projects or investments to the SDGs.

This document has been prepared by the World Bank (International Bank for Reconstruction and Development, IBRD) for informational purposes only. The World Bank makes no representations, warranties or assurances of any kind, express or implied, as to the accuracy or completeness of the information contained in this document. This document does not constitute an offer to sell securities of the World Bank. Any offering of World Bank Bonds will be made solely on the basis of the relevant offering documentation, including, but not limited to, the prospectus, term sheet and / or final terms, as applicable. , prepared by the World Bank or on behalf of the World Bank. Bank, and is subject to restrictions under the laws of several countries. World Bank bonds may only be offered or sold in accordance with all of these laws.

Disclaimer

World Bank Group published this content on November 03, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 03 November 2021 04:01:03 AM UTC.



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