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SOVERIGN # DEBT # RATINGS

World Bank chief warns

of ‘a dangerous period’

SINGAPORE

His comments came at a particularly devastating time for markets, where major stock indexes are reeling from repeated waves of selling.

Singapore’s Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam was even grimmer than Mr Zoellick, saying yesterday that a global recession would be more likely than not, with the US and European economies at “stall speed”.

And Mr Tharman warned that Singapore’s economy could be hit. “In the short-term we’re not going to be immune to a slowdown of the major drivers of the global economy,” Mr Tharman added.

Separately, in an interview with

But in a news conference earlier in the day, he said:

“I don’t believe the US and the world will go into a double dip.” A double-dip recession refers to economic contraction followed by a short-lived recovery that is followed by another recession.

Acknowledging that there were “high degrees of uncertainty”, Mr Zoellick said: “I think that in the case of the US economy we’re likely to see an ongoing slow growth, ongoing high unemployment.”

US leaders should tackle reforming the tax code in the world’s biggest economy and should be more aggressive in negotiating trade deals, Mr Zoellick said.

But he made a distinction between those long-term concerns and the crisis Europe is currently facing, warning that European leaders must urgently address risks to euro zone sovereign debt.

“Europe has reached a point where I think the challenges for its leadership are more imminent. In the US, I don’t mean to suggest these problems can be deferred forever, but they’re not quite as market sensitive,” he said.

Mr Zoellick said bond buying by the European Central Bank can buy time, but fundamental changes are needed to get Europe’s cash-strapped economies on a sound footing.— With the global economic outlook increasingly grim and markets showing heightened volatility, World Bank chief Robert Zoellick warned yesterday that the world was heading into a “dangerous period”, although he said he did not believe the United States and the world would lapse back into recession.Bloomberg TV yesterday, Mr Zoellick said: “We are moving into a dangerous period.” He was in Singapore for the third World Bank-Singapore Infrastructure Finance Summit and to open a World Bank centre to support development projects throughout the region.

 

" Temasek bought 4.4 billion shares in CCB "

What is CCB?

pharoah88      ( Date: 06-Sep-2011 10:47) Posted: Temasek ploughs S$3.4b more into China bank HONG KONG Temasek bought 4.4 billion shares in CCB at HK$4.94 each on Aug 29, according to the bank’s filing with the Hong Kong exchange. The filing did not say who Temasek bought the shares from but a person familiar with the situation said these shares were part of those sold by Bank of America (BofA) that day.— Singapore investment company Temasek Holdings has invested a further HK$21.7 billion (S$3.4 billion) into China Construction Bank (CCB), raising its stake to 8.1 per cent from 6.3 per cent of the bank’s Hong Kong-listed shares, according to a regulatory filing yesterday.

 

CORPORATES 

are  nOw  wOrkIng  fOr

DEBTORS 

[Preference Shares / Bonds]

rather than SharehOlders  ? ? ? ?

whO  pAy  theIr  sAlArIes

 

Sembcorp Marine: Underpinned by still-strong fundamentals

 

Temasek ploughs S$3.4b more into China bank

HONG KONG

Temasek bought 4.4 billion shares in CCB at HK$4.94 each on Aug 29, according to the bank’s filing with the Hong Kong exchange.

The filing did not say who Temasek bought the shares from but a person familiar with the situation said these shares were part of those sold by Bank of America (BofA) that day.— Singapore investment company Temasek Holdings has invested a further HK$21.7 billion (S$3.4 billion) into China Construction Bank (CCB), raising its stake to 8.1 per cent from 6.3 per cent of the bank’s Hong Kong-listed shares, according to a regulatory filing yesterday.

 

7. Singapore
> GDP per capita: $56,521.731

Singapore is the sole Southeast Asian nation with a solid triple-A rating.

Despite a reliance on foreign trade exports, investors consider Singapore the safest place today for Asia. Its population is tiny at 4.74 million and its revised GDP is $291.9 billion. Singapore did not avoid the recession, but it also proved to bounce back the most.

Public debt is artificially high at 102.4% of GDP but that is a government tie of the Central Provident Fund.

Imagine this for austerity measures:

Singapore has actually not borrowed to finance any government deficits since the 1980s.

S& P and Moody’s have no issues with the AAA rating and outlook, nor should investors.

The only obvious risks are military action, climate change, or an unknown geological event.

Barring those, Singapore has as solid of a triple-A status as they come.

 

At Risk of Losing AAA Rating:

1. Austria
> GDP per capita: $39,634.128

We were surprised to see Austria has a triple-A rating with a stable outlook.

Its business ties to the lands of the PIIGS and to Eastern Europe hurt its balance sheet.

The country has a low population above 8.2 million and its 2010 GDP was roughly $332 billion per adjusted figures.

The 2010 public debt ratio was 70.4% of GDP. Our take is that the ties to Germany may give it perhaps an artificial triple-A rating. The EIU said, even before the latest waves of weakening in trading partner nations, that Austria needs to continue restructuring, emphasizing knowledge-based sectors, move to greater labor flexibility, and grow labor participation to offset unemployment and aging trends and low fertility rates. Our own internal risk assessment is more critical than S& P and Moody’s and we just do no count Austria as a true triple-A in the European austerity path and with the the PIIGS nations facing so many woes, whether the European Union bails them out or not.

2. Finland
> GDP per capita: $34,585.453

Finland is a worrisome triple-A nation. It has a large landmass and a small population of about 5.25 million. It has a GDP of roughly $186 billion, a higher unemployment rate today, and a deep reliance on trade. Its precious technology sector is suffering with Nokia’s decline and the CIA Factbook noted that general government finances will remain in deficit during the next few years. Being rich in timber today does not weigh as much as being reliant entirely on imports of energy, raw materials, and many components for manufacturing. While 2010 debt to GDP was only 45.4%, it is easy to argue that this could skyrocket higher in hard times. Aging population trends, taxation risks, and that pesky Nokia problem all act in unison to keep us from considering Finland as a true triple-A nation.

3. France
> GDP per capita: $34,077.040

France is one of the world’s strongest nations and is the runner-up for Big Brother status in the euro. The population is now about 65.3 million and GDP was ranked as No.10 in the world at $2.145 trillion. France actually withstood the recession better than many other nations. But the CIA data showed that budget deficit rose from 3.4% of GDP in 2008 to 7.8% of GDP in 2010 with its public debt going from 68% of GDP to 84% over the same period. With France being a key guarantor in the EU and the woes of the PIIGS nations, France could easily find itself at-risk of losing its the triple-A rating. Its banks also own substantial U.S. debt. We still view the debt rating risks more harshly than the ratings agencies on a longer-term basis. Pension reform, tax reform, demographics, immigration, a high degree of exposure to bailouts, all combine with a very stubborn labor force to put France potentially under the same risk that the U.S. faces in the years ahead.

4. United Kingdom
> GDP per capita: $34,919.511

The United Kingdom has kept its triple-A rating since ratings were initiated. The third largest economy in Europe after Germany and France has a population of about 62.7 million and its revised GDP figure was $2.17 billion. England is in a funk even if the ratings are not under immediate fire. The Brits face property woes and S& P did actually give the nation a ‘negative outlook’ before reverting back to ‘stable’ in 2010. That puts our top allies at risk all over again if collateral damage comes from the U.S. Our banking systems have many overlaps. One risk is that while it has coal, natural gas, and oil resources, reserves are declining and it is now a net importer of energy.

The U.K.’s revised public debt to GDP was left at 76.5%. The financial meltdown and property crash was brutal in England, perhaps even more so than in the U.S. Taxation issues are ongoing, along with risks of bank nationalization, unavoidable austerity measures, rising debt, deficit spending, and urban immigration remain — all present large challenges in the intermediate-term and in the long-term. What has helped to save England is that it stayed out of the euro, so it can print pound sterling if needed. Still, the U.K. has nearly all of the same risks as the U.S. has for its triple-A status, which puts it at real risk.

5. United States
> GDP per capita: $47,283.633

The United States has so far managed to technically escape the triple-A downgrade hangman. For now. This is the trickiest of all triple-A rating analysis, and it is relatively easy to argue that the triple-A rating here is actually a manipulated rating. For a ratings agency to downgrade the U.S., some will claim that there is no such thing as a triple-A rating. Both political parties have deep responsibility in having helped to torpedo the financial standing of the nation. Fitch and Moody’s have both keyed in negatively about the long-term triple-A prospects, and S& P wants even more budget cuts ahead.

The world’s biggest economy has a population of 313 million and revised GDP figure of $14.66 trillion. Moody’s warned back in December 2010 that the nation faced credit negative forces. The warnings have only grown. Public debt was not as high in 2010 at only 58.9% of GDP per the CIA data. But that was then. High deficits, declining tax revenues, and current entitlement demands will drive this far higher. It was immediately after the debt ceiling was lifted that Fitch opined that this only one step that the process has not ended and that the rising debt profile to over 100% of GDP (after 2012) is a “not consistent with the United States retaining its AAA sovereign rating.”

The pains of healthcare and social security reform the argument that the recession never really ended and is coming back a worsening employment situation unrealistic entitlement expectations of the public continued property value declines still high deficit spending military spending obligations a crumbing infrastructure a refusal to increase tax revenues of any form whatsoever a historically short debt-maturity schedule with artificially low rates and a few dozen more issues all jeopardize the U.S.’s highly cherished triple-A ratings status. The U.S. is under review by ratings agencies, and the economy is literally softening under our feet.

This is said with sadness, but the ratings agencies have already begun the U.S. downgrade process. The rest of the process is only up to whether or not Washington and the public can reach down and accept the notion that less is more in the end. The coming changes required will mean that Warren Buffett’s predictions of a greater future have no merit.

**************

After you have reviewed the nations with triple-A ratings, the reality is much more sobering than it was even six months ago. The United States has been a large part of the ratings woes, but Europe shares in much of the blame. The post-austerity world is going to create new winners as well as some losers. The global business climate is challenging, at best.

This article was written by a concerned American who tried to leave political views at the door. The ratings agencies did no favors before the recession took hold and they are doing no favors today. Still, a look in the mirror and action by all economic participants from the very bottom to the highest level is still needed. A triple-A rating just does not have the same meaning that it used to. If you think that S& P and Moody’s won’t downgrade the U.S. and other nations, think again. Egan Jones has already formally downgraded the U.S. from a triple-A rating.

JON C. OGG


Read more: The Last AAA Countries (And Those At Risk) - 24/7 Wall St.http://247wallst.com/2011/08/04/the-worlds-remaining-aaa-countries-and-those-that-are-at-risk-of-being-downgraded/#ixzz1U450CDcY

 

Safe AAA:

1. Australia
> GDP per capita: $39,699.358

Australia was a solid AAA earlier this year and nothing has changed. Sure, it faces pressure from floods earlier this year, but the country is rich in natural resources that have to be used to build the world whenever the economy rises again. The low population of 21.5 million, an $882.4 billion GDP in 2010 projections, vast resource reserves, lower labor costs, and a low unemployment rate all act as a shield of global woes. Its public debt for 2010 was only projected to be 22.4% of GDP. The AAA rating is stable at S& P, and at Moody’s it’s Aaa with a stable outlook.

2. Canada
> GDP per capita: $39,057.444

Canada has a solid triple-A rating, and its deep trading ties to the U.S. does not jeopardize it, even if the U.S. has a troubled triple-A with a negative outlook. Canada has vast natural resources and its citizens mostly avoided the real estate and debt bubble that hurt the U.S. The population is under 34 million, its GDP is about $1.33 trillion, and public debt at the end of 2010 was a mere 34% or projected GDP. Neither Moody’s nor S& P have any issues with the triple-A ratings and stable outlook, and our take is that Canada is perhaps the safest triple-A rating of all nations in the Western Hemisphere.

3. Denmark
> GDP per capita: $36,449.554

Denmark has a relatively strong economy and claims a well educated population. The nation has a large dependence on foreign trade for goods and services and a small population of just over 5.5 million. Revised GDP data was put at $201.7 billion. What helped Denmark so much is that it had a surplus in its balance of payments before the government started spending to drive the economy. Its high property prices are a concern, as is a slowing trade environment. S& P has a solid AAA with a stable outlook and Moody’s has a Aaa with a stable outlook. The country has kept the Danish Kroner rather than officially joining the euro. Low birth rates, an aging population, taxation, immigration trends, and climate change are all risks for the small country longer-term by our count. However, Denmark has a sub-5% unemployment rate and a 2010 debt to GDP of only 46.6%. Denmark’s triple-A status remains firm here unless its services sector gets hit too hard with land prices all over again.

4. Germany
> GDP per capita: $36,033.284

Germany is still what we call “King of the Euro” with what is now just an undervalued Deutsche mark. With a population of 81.4 million and having the No.5 global economy, it cannot avoid leading the eurozone bailouts. GDP was $2.94 trillion in 2010 and its unemployment rate is healthy for a European nation. It also has a highly skilled labor force. The growing pains of absorbing East Germany are behind it and the ratings agencies bring no quarrel with its triple-A rating. Budget deficits, subsidies, tax cuts, aging population trends, immigration and the obvious leadership in eurozone bailouts do pose a risk. Still, public debt is tolerable at 78.8% of 2010 GDP. While any continued spending would pose longer-term risks, our take is that Germany will keep a triple-A rating longer than most nations.

5. Holland
> GDP per capita: $40,764.548

Holland, or The Netherlands, is in better shape than many eurozone countries. Its population is nearly 16.8 million and GDP is roughly $676.9 billion. A solid labor force, a surplus to its current account, and strong global industry all make it appear better than many eurorzone sister nations. High-tech exports, financial firms dominance, and its trade are all lags if and when the next recession takes hold. Budget deficits were high at 4.6% of 2009 targets and 5.6% of GDP in 2010 per earlier CIA data this year. Public debt is now projected at 64.6% of GDP and the ratings agencies have no current issues with the Dutch. Our take is that the triple-A rating has no severe risk as long as those dikes holding back the sea continue to work just fine.

6. Norway
> GDP per capita: $52,012.506

Norway has one of the best ratings going for it and the Economist Intelligence Unit gave it the only true AAA in earlier reports. The nation is rich in resources with a low population of almost 4.7 million people. GDP is highly dependent on the price of oil and was about $255.3 billion, and unemployment remains very low. Public debt was 47.7% of GDP. Norway is just about self-sufficient even if the climate of ‘welfare capitalism’ exists with close to 50% of exports being in oil. It also has the world’s second largest sovereign wealth fund valued at more than $500 billion. S& P and Moody’s have no issue with the triple-A ratings, and we view Norway as being just fine unless oil and fish suddenly go out of style.

7. Singapore
> GDP per capita: $56,521.731

Singapore is the sole Southeast Asian nation with a solid triple-A rating. Despite a reliance on foreign trade exports, investors consider Singapore the safest place today for Asia. Its population is tiny at 4.74 million and its revised GDP is $291.9 billion. Singapore did not avoid the recession, but it also proved to bounce back the most. Public debt is artificially high at 102.4% of GDP but that is a government tie of the Central Provident Fund. Imagine this for austerity measures: Singapore has actually not borrowed to finance any government deficits since the 1980s. S& P and Moody’s have no issues with the AAA rating and outlook, nor should investors. The only obvious risks are military action, climate change, or an unknown geological event. Barring those, Singapore has as solid of a triple-A status as they come.

8. Sweden
> GDP per capita: $38,031.484

Sweden is the largest of Scandinavian nations with nearly 9.1 million people. GDP was $354.7 billion per revised 2010 CIA data. Public debt in 2010 was 40.8% of GDP, shockingly low for Europe and Scandinavia. The nation was also not wrecked by World War II due to its neutral-nation status. Still, the country does rely heavily on exports it was not immune from the recession and it has reformed some financial policies while recovering. Immigration and population trends have been an issue, but the ratings agencies actually have no issue with its triple-A status. For that matter, we can’t criticize the triple-A rating at this point.

9. Switzerland
> GDP per capita: $41,663.047

Switzerland has only grown in standing since the woes of Europe and the world have grown in 2011. The solid triple-A status appears to be immune to the happenings around its border nations. The world’s banking center has actually had to warn that it might intervene if its currency strengthens too much more because it cannot export if other currencies keep falling. The mountain nation has a population of just over 7.6 million and 2010 revised GDP of about $324.5 billion. Unemployment is shockingly low public debt is still at 38.2% per revised 2010 data its taxation is rather low its healthcare system is a blended mechanism there are barriers to getting citizenship and a sensible retirement model all combine to offer no real threats at all to the triple-A rating here. The world can drive itself to hell, and Switzerland dominates.

 

The markets have been roiled recently by the debt ceiling debate, the potential debt downgrade of the U.S., and the likely new recession that will come from the austerity measures.

For now, the U.S.’s triple-A rating appears to be secure, but only temporarily. When we last covered the full list of nations that still have triple-A ratings from key credit rating agencies our point was simple: there are some strong triple-A nations and some weak triple-A nations. As of today, there are many more weak triple-A ratings than there were just six months ago.

Moody’s has already affirmed the U.S. government’s Aaa rating, but with a negative outlook.

Fitch also affirmed its AAA rating for the U.S., but warned that the rising debt profile to over 100% of GDP (after 2012) is not consistent with retaining the crucial AAA sovereign rating.

As a result of the weakening economy, and following the ratings agency actions, 24/7 Wall St. has decided to reassess the entire global triple-A landscape. Our previous take was that some nations already seemed to be far less deserving of the triple-A rating category than others. The key assumption here is that the U.S. is no longer a true triple-A- rated nation. This implies that other nations with similar conditions are also at risk of losing their triple-A rating, and that there are really far fewer than 17 true nations in the triple-A club now. Our review includes updated figures from Standard & Poor’s and Moody’s along with revised statistics from the CIA World Factbook. We’ve sourced also from the Economist Intelligence Unit, Fitch, Egan Jones, and elsewhere.

S& P still has a triple-A rating on Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Singapore, Sweden, Switzerland, the United Kingdom, and the United States.

Other triple-A nations like Guernsey, Isle of Man, Liechtenstein, and Luxembourg we left out due to their small size and dependence upon other nations. Moody’s ratings were also used to make sure that the discrepancies are not overlooked.

The writing is on the wall.

The U.S. can still count itself as a triple-A nation, but not indefinitely and not even for too much longer. Even the newly agreed debt-ceiling deal will not keep a downgrade from coming at some point in the intermediate-term if the hints from the ratings agencies are serious. Keep in mind that Japan lost its AAA rating in the late 1990s. It was further downgraded earlier this year. It was as recently as 2009 that S& P cut Ireland’s AAA rating. Italy and Spain were both AAA rated in the 1990s, but Spain was actually raised back to AAA   before losing it again in 2009.

 

Overweight on Singapore Banks as a Defensive Call

The Monetary Authority Singapore released the July month-end data yesterday. Loan growth in Singapore beat last month's all time high as corporate loans continue to move full steam ahead while mortgages slowed consecutively for the fifth month. Overweight the Singapore banks as a defensive call Macquarie Equities Research (MER) remains positive on Singapore banks from a regional perspective since January, as the banks’ balance sheet strength, yield, and SGD appreciation make them attractive in volatile markets. From a bottom up perspective, MER believes the banks offer reasonable value at current levels. Top pick is UOB UOB is the top pick, given MER’s positive view on its bank-centric business model and conservative management style. This is a defensive call. According to MER, investors who are more bullish on the world should opt for OCBC, which also has significant exposure to insurance, asset management, and private banking. MER retain Neutral rating on DBS due to their exposure to Singapore and Hong Kong which makes them a geared play on Fed tightening, but the Fed has pledged to hold rates low until 2013. Code Name Type Expiry Exercise Price OW5W DBS MB eCW111201@ Call 01-Dec-11 13.70 OY4W DBS MB ePW120106@ Put 06-Jan-12 13.80 OV6W UOB MB eCW111205@ Call 05-Dec-11 18.60 OJ8W OCBC Bk MBeCW120104@ Call 04-Jan-12 9.40

pharoah88      ( Date: 30-Aug-2011 21:18) Posted: AUGUST 2011 Singapore banks Credit Ratings AA-

 

WILLIAM PESEK

Japan needs an Arab Spring.

WILLIAM PESEK

Minister. Next came Mr Naoto Kan, who last week resigned to make room for yet another leader.

Analysts and pundits are busy criticising politicians in Tokyo for going with the safe choice — Mr Noda — when Japan is navigating a world economy that is anything but.

Yet let’s put blame where it belongs:

Japan’s 127 million people.

There’s some truth in the old saw that people generally get the leaders they deserve.

In Japan’s case, voters need to begin demanding more of leaders and speaking out forcefully for change.

Instead, they offer nothing more than numbing silence.

If you’d told me 10

years ago, when I moved to

Tokyo, that today I’d be writing

about an eighth leader, I

never would’ve believed it. Yet

here we are, analysing and philosophising

about whether Mr

Yoshihiko Noda will last longer

than the last five.

In April 2001, Mr Junichiro

Koizumi grabbed the job from

the hapless Yoshiro Mori.

Mr Koizumi stuck around

for an unthinkably long five

years. He talked big about economic

reforms, promised even

bigger and managed to get a

few things done. Then Mr Koizumi

turned the keys over to

the forgettable Shinzo Abe, who

then passed them to Mr Yasuo

Fukuda and Mr Taro Aso.

Political lightning struck in

August 2009. Voters tossed out

the Liberal Democratic Party

that had been in power for

roughly 54 years. The Democratic

Party of Japan might have

fared better if it picked someone

other than political lightweight

Yukio Hatoyama as Prime

 

As Finance Minister, Noda was a one-trick policy-maker.

Expect more of the same from Prime Minister Noda and lots of talk about raising taxes to pay for earthquake reconstruction. Mr Noda should first divert money from wasteful spending on public works projects, given the hit the economy will take as tax bills rise.

 

That 200% debt is cry for revolution

Japan’s new Premier isn’t known for fresh thinking or bold ideas — but change is what its people must demand

pharoah88      ( Date: 26-Aug-2011 08:50) Posted: SOVERIGN  DEBT  RATINGS:   25th AUGUST 2011 -  SINGAPORE  AAA -  JAPAN  AA3   2nd AUGUST 2011 - AMERICA  AA+

 

ROBERT STONE: " I'm actively buying S-chips and Vietnam shares"

 

Thu: 1 September 2011

- Credit rating agency Moody’s said that it expects Singapore’s gaming revenue to grow in the double digits over the next 12-18 months.

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Is  Moody's  PAID  by  sOmebOdy  ? ? ? ?

 

Banking stocks are seeing considerable weakness on the day, dragging the KBW Bank Index down by 1.4 percent.

Notable losses by Bank of America (BAC) and Zions Bancorp (ZION) are helping to pull the index down off the nearly one-month closing high it set on Monday.

---

BAC is working for Warren Buffet instead of shareholders.

It pays 6% on 5 Billion Preference shares.

 

AUGUST 2011

Singapore banks

Credit Ratings

AA-

 

BANK of AMERICA

wIll  bE  SLAVING fOr

WARRANT  BUFFETT

pAyIng 

6%  dIvIdEnd  On

A$5 BILLION  Preference Shares 

ANNUALLY

---

BANK Of AMERICA  is  TRAPPED

shArEhOldErs  shOUld  dUmp  the  shArEs  dOwn

 

SOVERIGN  DEBT  RATINGS:

 

25th AUGUST 2011

-  SINGAPORE  AAA

-  JAPAN  AA3

 

2nd AUGUST 2011

- AMERICA  AA+

 

 

Is  thIs 

S C A M

? ? ? ?

---

tAkIng  CREDITORS'  MONEY

tO  shOw  As

Own    WEALTH

? ? ? ?

---

BANKRUPT  BILLIONAIRES ? ? ? ?

BEWARE

AWARE

SCARE

CARE