Debt Finance – CTXETG http://ctxetg.com/ Fri, 14 Jan 2022 22:06:13 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://ctxetg.com/wp-content/uploads/2021/06/icon-150x150.png Debt Finance – CTXETG http://ctxetg.com/ 32 32 The United States is preparing sanctions against Russia linked to the crisis in Ukraine | Dechert LLP https://ctxetg.com/the-united-states-is-preparing-sanctions-against-russia-linked-to-the-crisis-in-ukraine-dechert-llp/ Fri, 14 Jan 2022 21:44:32 +0000 https://ctxetg.com/the-united-states-is-preparing-sanctions-against-russia-linked-to-the-crisis-in-ukraine-dechert-llp/ Key points to remember The United States, Russia, the North Atlantic Treaty Organization (“NATO”) and the Organization for Security and Cooperation in Europe (“OSCE”) held a series of talks this week aimed at defuse the situation on the Ukrainian border. . US officials have indicated that if the talks fail to prevent Russia from further […]]]>

Key points to remember

  • The United States, Russia, the North Atlantic Treaty Organization (“NATO”) and the Organization for Security and Cooperation in Europe (“OSCE”) held a series of talks this week aimed at defuse the situation on the Ukrainian border. .
  • US officials have indicated that if the talks fail to prevent Russia from further escalating tensions with Ukraine, the United States will respond by imposing tough new economic sanctions against Russia, as well as other financial measures. , technological and military. US officials described the strategy as “start high, stay high.”
  • Meanwhile, U.S. Senate Democrats have introduced the 2022 Defense of Ukraine Sovereignty Act (“DUSA”), which would require the White House to impose sanctions on senior Russian government officials and certain institutions. Russian financial institutions, to cut off these financial institutions from SWIFT and other financial messaging services, to prohibit American persons from engaging in transactions involving new Russian sovereign debt and to sanction parties involved in the Nord Stream 2 pipeline and possibly sanction other Russian extractive industries.
  • The DUSA was introduced as an alternative to Senator Ted Cruz’s recent Russia bill, which sought to impose significant penalties on companies involved in the Nord Stream 2 pipeline. it only creates potential discord with the European Union.
  • While DUSA is said to have the support of the White House, it is unclear how quickly the Senate will act. Even if DUSA becomes law, its measures will only come into effect if the White House determines that Russia is involved in a significant escalation of hostilities in Ukraine with the intent to undermine, overthrow, or dismantle the Ukrainian government or otherwise interfere with territories or sovereign integrity. In the meantime, President Biden could implement most of the measures set out in the DUSA himself at any time through executive orders.
  • All businesses and individuals with exposure to Russia should monitor developments as the proposed measures could have a significant impact on international finance and trade.

Fund

In 2014, the United States imposed a number of escalating economic sanctions by executive order on Russian government entities and officials as well as the Russian defense, financial services, and energy sectors. The United States also imposed severe restrictions on trade with Crimea. In 2017, in response to alleged Russian interference in the US presidential election, cyberattacks and other “aggressive” actions, Congress passed legislation codifying Russian sanctions – the Countering America’s Adversaries Through Sanctions Act. (“CAATSA”) – and providing for the ability to impose sanctions on non-US persons who engage in material transactions with sanctioned parties.

Additional economic sanctions and trade restrictions have been imposed on Russia in response to its alleged use of chemical weapons, including a ban on US banks from participating in the primary market for certain sovereign debt issued by the Russian government (“Sovereign Debt Sanctions”). (See our previous OnPoints here and here).

In addition to sovereign debt sanctions, current economic sanctions include so-called blocking sanctions (“SDN sanctions”), which generally prohibit U.S. persons from transacting with certain Russian entities/persons on the Specially Listed Nationals designated (“SDN list”). ; sectoral sanctions, which prevent U.S. persons from providing certain financing to companies specified on the list identifying sectoral sanctions in the financial, defense and oil sectors in Russia (the “SSI Sanctions”); and certain export restrictions (see our About).

Overview of measures

The DUSA sets out a variety of possible measures, including additions to the SDN list and expanding sovereign debt sanctions, which the US President would be required to impose if it is determined by the President that Russia “is engaged in or knowingly supports a significant escalation of hostilities or hostile actions in or against Ukraine”, compared to the level of hostilities before December 1, 2021, which aims to undermine, overthrow or dismantle the government of Ukraine (a “presidential decision Below you will find an overview of the measures.

Sanctions against Russian government officials linked to operations in Ukraine. DUSA specifies a list of twelve officials, including the President and Prime Minister of Russia, plus a catch-all for other senior military and government officials, who are to be sanctioned following a presidential decision. Sanctions to be imposed would include SDN sanctions and visa bans and revocations.

Sanctions against Russian financial institutions. The president must also impose blocking sanctions on at least three Russian financial institutions (of the 12 listed). A number of these financial institutions are already on the SSI list, but these sanctions still allow US persons to transact with them. The new sanctions would completely prevent Americans from interacting with these institutions.

Sanctions regarding the provision of specialized financial messaging services to sanctioned Russian financial institutions. This measure would effectively cut off sanctioned financial institutions from the SWIFT messaging system, which facilitates global financial transfers, by imposing sanctions on SWIFT (or any other messaging service) if it serves sanctioned banks. This measure is not as severe as the one previously proposed (i.e. the complete blocking of Russian entities from the SWIFT messaging system). Russia has taken a number of steps since 2014 to try to reduce the consequences of a SWIFT shutdown. China has also joined the Russian national version of SWIFT.

Prohibition and sanctions on transactions on Russian sovereign debt. The bill would also prohibit all transactions by U.S. persons in any sovereign debt issued after the bill’s enactment date, including bonds, of the Russian government. Note that this restriction is broader than the current sovereign debt sanctions in that it covers all American persons – not just “American Financial Institutions” as defined in Guideline 1 to Executive Order 14024 – and extends the prohibitions to secondary markets. In addition, the bill contains a provision requiring the President to impose blocking sanctions and travel bans on certain non-U.S. persons who transact in Russian sovereign debt issued on or after the bill’s enactment date. . These non-US persons must have engaged in debt transactions of “at least 10 entities owned or controlled by the government of the Russian Federation”, although the wording is unclear on this point. The bill does not affect trading in debt securities issued prior to its passage.

Sanctions related to Nord Stream 2. DUSA directs the President to impose blocking sanctions and travel bans on those involved in the planning, construction or operation of the Nord Stream 2 pipeline or a successor entity. President Biden has in the past refused to impose additional sanctions on non-Russians involved in the operation of Nord Stream 2, given the possibility that such sanctions would face opposition from Germany, an important ally. of the United States on sanctions.

Sanctions against Russian extractive industries. The bill provides for blocking sanctions against oil and gas, coal, minerals and “any other sector or industry in respect of which the president determines the imposition of sanctions” is in the interest of security national of the United States. The Biden administration is likely to oppose this kind of sweeping sanction given the disruption in the energy supply, which could lead to energy shortages and higher energy prices. In addition, much of Russia’s mining sector is privately owned and therefore not subject to sanctions.

The business landscape in Russia continues to change rapidly. Businesses should continue to stay abreast of legal developments, including US, UK and EU sanctions and export control laws and their impact on their business. As always, Dechert is available to advise on the economic sanctions imposed on Russia as well as the potential impact of proposed new measures.

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OFAC provides advice on sanctions regarding changes to agreements referring to LIBOR – Finance and Banking https://ctxetg.com/ofac-provides-advice-on-sanctions-regarding-changes-to-agreements-referring-to-libor-finance-and-banking/ Thu, 13 Jan 2022 00:26:48 +0000 https://ctxetg.com/ofac-provides-advice-on-sanctions-regarding-changes-to-agreements-referring-to-libor-finance-and-banking/ United States: OFAC provides guidance on penalties for amendments to agreements that refer to LIBOR January 13, 2022 Cadwalader, Wickersham & Taft LLP To print this article, simply register or connect to Mondaq.com. OFAC has published an FAQ stating that “Loans, contracts or other arrangements that use LIBOR as a benchmark rate that are amended […]]]>

United States: OFAC provides guidance on penalties for amendments to agreements that refer to LIBOR

To print this article, simply register or connect to Mondaq.com.

OFAC has published an FAQ stating that “Loans, contracts or other arrangements that use LIBOR as a benchmark rate that are amended to replace that benchmark benchmark rate will not be treated as new debt for the purposes of the sanctions. ‘OFAC, as long as no other material condition of the loan, contract or agreement is modified.

In the new FAQ 956, OFAC noted that in previous guidelines it had indicated that certain modifications to pre-existing loan facilities and other agreements may have the effect of converting existing and eligible debt into a “new one.” debt ”which is prohibited under sanctions (see FAQ 947 (“ Sanctions from Belarus ”), FAQ 553 (“ Sanctions from Venezuela ”) and FAQ 394 (“ Sanctions related to Ukraine / Russia ”)). In FAQ 956, OFAC clarified that the conditions of the LIBOR reference rate in pre-existing agreements can be changed and replaced without triggering any relevant sanction prohibitions, as long as no other material condition of the loan, contract or the agreement is not changed. These benchmark changes will not be treated as “new debt” for the purposes of OFAC sanctions.

Primary sources

  1. OFAC press release: Publication of a new frequently asked questions
  2. OFAC FAQ: sanctions against Belarus – 956
  3. OFAC FAQ: sanctions against Belarus – 947
  4. OFAC FAQ: Sanctions in Venezuela – 553
  5. OFAC FAQ: sanctions related to Ukraine / Russia – 394

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

POPULAR ARTICLES ON: United States Finance and Banking

Update on LIBOR transition

Proskauer Rose LLP

This LIBOR transition update, aimed primarily at private credit lenders, provides a recap of recent trends and reflects new developments on the eve of the LIBOR transition for banks, including the new SOFR

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Puerto Rico bankruptcy judge to approve amended debt plan https://ctxetg.com/puerto-rico-bankruptcy-judge-to-approve-amended-debt-plan/ Tue, 11 Jan 2022 05:31:44 +0000 https://ctxetg.com/puerto-rico-bankruptcy-judge-to-approve-amended-debt-plan/ (Bloomberg) – The judge overseeing Puerto Rico’s bankruptcy has ordered the island’s financial supervisory board to revise its debt restructuring deal by Friday and plans to uphold that recovery plan soon after. Bloomberg’s Most Read United States District Court Judge Laura Taylor Swain detailed the changes she wants the board to make to the debt […]]]>

(Bloomberg) – The judge overseeing Puerto Rico’s bankruptcy has ordered the island’s financial supervisory board to revise its debt restructuring deal by Friday and plans to uphold that recovery plan soon after.

Bloomberg’s Most Read

United States District Court Judge Laura Taylor Swain detailed the changes she wants the board to make to the debt adjustment plan and submit the revised version by Friday 11:59 p.m. 10:59 p.m. Eastern Standard Time, according to an order. filed Monday evening.

This could mean that Puerto Rico’s more than four-year bankruptcy process, the largest ever in the $ 4 trillion municipal bond market, could finally start to come to an end this month. Once the board tabled the revised plan on Friday, Swain would “promptly” submit its confirmation order approving the debt restructuring plan, according to the judge’s order.

The supervisory board is reviewing Swain’s order and intends to file the revised debt plan by Friday, board spokesperson Matthias Rieker said in a statement on Monday following the order. by Swain.

“The supervisory board welcomes this latest progress towards confirmation of the plan, which would significantly reduce the total liabilities of the government of Puerto Rico,” Rieker said in the statement.

The restructuring deal would reduce $ 33 billion in debt and other obligations, including reducing $ 22 billion in bonds to $ 7.4 billion. This would ease Puerto Rico’s annual debt service payments and establish a reserve trust for its bankrupt retirement system, which owes current and future retirees about $ 55 billion.

Swain’s revisions, including the treatment of eminent domain claims allowed as guaranteed, rather than unsecured, and the fact that Puerto Rico must pay the full amount of what a court determines to be the value of those claims, according to the prescription.

Swain’s order included 149 page findings of fact and law and a 93-page confirmation order for the adjustment plan that the court is prepared to file “promptly” once the board submits its plan. revised debt.

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Pay off foreign debt or finance essential imports – Groundviews https://ctxetg.com/pay-off-foreign-debt-or-finance-essential-imports-groundviews/ Sun, 09 Jan 2022 08:43:23 +0000 https://ctxetg.com/pay-off-foreign-debt-or-finance-essential-imports-groundviews/ Photo courtesy of South China Morning Post The country’s available foreign reserves can be used either to repay foreign creditors or to finance imports of essential goods and services required by its citizens. This is the dilemma Sri Lanka faces today. Redeeming the full value of the bond using the limited foreign exchange reserves available […]]]>

Photo courtesy of South China Morning Post

The country’s available foreign reserves can be used either to repay foreign creditors or to finance imports of essential goods and services required by its citizens. This is the dilemma Sri Lanka faces today. Redeeming the full value of the bond using the limited foreign exchange reserves available would provide an exceptional gain to those who currently hold those bonds.[1] But it will come at a great cost to the citizens of the country who will face shortages of essentials like food, medicine and fuel.

Under these circumstances, it is in the best interests of all of its citizens that the government defer payment of the $ 500 million International Sovereign Bond (ISB) due January 18, 2022, until the economy can recover and rebuild completely.

Just as a person with co-morbidities is more likely to develop serious illness if infected with COVID-19 and more likely to require hospitalization and even treatment in an intensive care unit, Sri Lanka was vulnerable to economic shocks though. before COVID-19 hits. The country was already facing several macroeconomic challenges. Moderate economic growth. An untenable budgetary situation. Although a rigorous consolidation program was put in place to put public finances back on a more sustainable path, sweeping tax changes implemented at the end of 2019 reversed this process, with negative consequences for tax collection. Public revenue. Weakness of the external sector due to high repayments of external debt and insufficient foreign exchange reserves to service these debts. COVID-19 has only exacerbated these macroeconomic challenges. And as a patient who gets over the worst of COVID-19 has a long road to recovery; Sri Lanka’s economy faces many challenges getting back on track.

The outbreak of COVID-19 in early 2020 has only worsened an already grim macroeconomic situation. The country has lost the confidence of international markets and the sovereign’s ability to renew its external debt has become difficult, if not impossible. Under these circumstances, there was a strong case for sovereign debt restructuring. But the response from the government and the Central Bank of Sri Lanka (CBSL) was a firm “no”. The argument was that Sri Lanka had never defaulted on its debt and was not going to do so now. The official position was also that the government had a “plan” to repay its debt and therefore there was no reason to engage in a debt restructuring exercise. However, Sri Lanka faced high debt sustainability risks: the debt-to-GDP ratio at 110% was one of the highest in history and interest payments on government revenues at over 70%. % were one of the highest in the world.

Fast forward to 2022. The country’s foreign exchange reserves have declined to $ 3.1 billion.[2] Usable reserves are much lower. CBSL has sold more than $ 200 million of the country’s gold reserves to service its debts. In the first week of 2022, CBSL announced new swap facilities and its commitment to repay the $ 500 million International Sovereign Bond (ISB) due in January. According to Central Bank statistics, in addition to the BSI payment, there are predetermined outflows of foreign exchange reserves amounting to $ 1.3 billion in the first two months of 2022. In addition, on the basis of Based on trade data for the past 5 years, the country has on average a trade deficit of around $ 2 billion to finance in the first quarter of the year (see Table 1). With expected tourism flows threatened by the appearance of the Omicron variant and the continuing decline in workers’ remittances, funding this external current account deficit will add further pressure on available foreign exchange reserves. India, which accounted for around 20% of recent tourist arrivals, is now forcing returnees to the country to self-quarantine. This will probably further curb tourist arrivals.

In this context, the country faces a trade-off between using its limited foreign reserves to repay its debt or using it to finance essential imports. $ 500 million is enough to finance imports of fuel for five months or pharmaceuticals for a year or dairy products for a year and a half or fertilizer for two years.

Table 1: Summary of the performance of the external sector Q1 – 2017 to 2021 (millions $)

Therefore, it is in the best interests of the country and its citizens that the government postpone paying its debt and use its limited foreign reserves to ensure an uninterrupted supply of essential imports. But it requires a plan. To minimize the cost to the economy, the government must immediately engage its creditors in a debt restructuring exercise. This will require a Debt Sustainability Analysis (DSA) by a credible agency to identify the resources needed for debt relief and the economic adjustment needed to put the country back on a sustainable path.[3] This will be essential to bring creditors to the negotiating table and assure them that the country is able and willing to repay its debt obligations in the future.

The cost of not restructuring is much higher. A non-negotiated default (if and when the country runs out of options to service its debt) would result in a greater loss of production, loss of access to finance, or a high cost of future borrowing for the sovereign . It could even spill over into the national banking sector, triggering a banking or financial crisis.

The consequences are clear. What will we choose?

[1] Sri Lankan sovereign bondholders have been anticipating debt restructuring for over a year and a half and the losses have been reflected on the market basis.

[2] Foreign exchange reserves at the end of December 2021 reached 3.1 billion US dollars with the inclusion of the swap with the People’s Bank of China which had been excluded in previous months.

[3] Given that the IMF has just completed its Article IV review, this assessment has likely already been undertaken.

Dr Roshan Perera is a Principal investigator to Advocata Institute and the former director from Central Bank of Sri Lanka. Dr Sarath Rajapatirana is the Chair of the Academic Program of the Advocata Institute and the former Economic Advisor to the World Bank.


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Schumer steps up pressure on Biden to cancel student loans in 2022 https://ctxetg.com/schumer-steps-up-pressure-on-biden-to-cancel-student-loans-in-2022/ Fri, 07 Jan 2022 16:21:14 +0000 https://ctxetg.com/schumer-steps-up-pressure-on-biden-to-cancel-student-loans-in-2022/ The Senate Majority Leader has called on the Biden administration to cancel student loans in a series of Twitter posts in recent weeks. While some borrowers have qualified for a loan discharge through the PSLF program, most debtors have not. (iStock) To kick off the new year, Senate Majority Leader Chuck Schumer say he thinks […]]]>

The Senate Majority Leader has called on the Biden administration to cancel student loans in a series of Twitter posts in recent weeks. While some borrowers have qualified for a loan discharge through the PSLF program, most debtors have not. (iStock)

To kick off the new year, Senate Majority Leader Chuck Schumer say he thinks it’s “a big day” for the Biden administration to write off student debt – something he also said about 20 times on Twitter in December only.

HERE’S WHO QUALIFIED FOR THE STUDENT LOAN REDON UNDER BIDEN

In recent weeks, Schumer has stepped up pressure on President Joe Biden to write off up to $ 50,000 in federal student loan debt using executive action. Although Biden has advocated for broad student debt cancellation as a presidential candidate, he has failed to deliver on his campaign promise since taking office.

While Schumer and several other outspoken progressives have pleaded for Biden to rely on his executive authority to cancel student loans, the White House recently said the president was waiting for Congress to enact legislation to cancel student loans. students.

Read on to learn more about the likelihood of a widespread forgiveness of student loans, as well as your other loan repayment options, such as refinancing. You can see your estimated student loan refinance rates for free on Credible without affecting your credit score.

PUBLIC SERVICE LOAN REMISSION PROGRAM IS JUST EASIER FOR 550,000 BORROWERS

Can Biden forgive student loans with an executive order?

According to the Higher Education Act of 1965, the Secretary of Education has the legal authority to “enforce, pay, compromise, waive or release any right” to collect federal loans, but it is not clear whether this includes widespread debt cancellation.

Although Schumer and other prominent lawmakers like Rep. Alexandria Ocasio-Cortez and Senator Elizabeth Warren have urged Biden to write off student loan debt, not all Democrats agree the president can do it.

Biden himself has questioned his power to cancel student loans – White House press secretary Jen Psaki recently told reporters the president is waiting for a bill from Congress. She also added that Biden’s presidential power to cancel student loans was “under review.” House Speaker Nancy Pelosi has also previously said the president does not have the power to cancel student loans, adding that it “must be an act of Congress.”

Passing a student loan cancellation law through a divided Congress would be a difficult task. Democrats hold a narrow 50-50 majority in the Senate, which means they would need the support of moderates like the Senses. Joe Manchin and Kyrsten Sinema to cancel student debt.

Additionally, the cancellation of federal student loans would not apply to private student loans, which account for 8.4% of all student loan debt, according to the Education Data Initiative. Instead, private student loan borrowers might consider refinancing on Credible when rates are at record highs.

SCHUMER CALLS ON BIDEN TO EXTEND THE PAYMENT BREAK FOR STUDENT LOANS UNDER THE OMICRON VARIANT

3 Ways To Manage Your Student Loan Debt

About 43.2 million Americans have student loan debt, with an average balance of $ 39,351, according to the Education Data Initiative. If you’re having trouble managing your student loans, consider the following debt repayment options:

  1. Income-based repayment plans. Enrollment in income-based repayment (IDR) will limit your federal student loan payments to 10-20% of your discretionary income, depending on the type of loan you have. You can get started on the Federal Student Aid (FSA) website.
  2. Additional federal tolerance. Federal student loans are currently on administrative forbearance until May 2022, but borrowers may be eligible for up to 36 additional months of student loan relief in the event of economic hardship or postponement of unemployment.
  3. Student loan refinancing. It may be possible to lower your monthly student loan payments by refinancing at a lower rate through a private lender. Fixed rates for refinancing student loans are currently at all-time highs, making it a good time to get better terms.

BIDEN’S DEPARTMENT OF EDUCATION CANCELED $ 1.5B IN STUDENT LOANS THROUGH BORROWER DEFENSE

Be aware that refinancing federal student loans to a private loan will make you ineligible for government benefits, including federal student loan payment pauses, IDR plans, and some student loan cancellation programs.

If you don’t plan on taking advantage of these federal benefits – or if you’re one of the millions of borrowers with private student loan debt – student loan refinancing can help you pay off debt faster, lower your monthly payments, and to save money. on interest over time. Browse the current student loan rates in the table below and visit Credible to see the offers that suit your needs.

47K VETERANS AND ACTIVE SERVICE MEMBERS AUTOMATICALLY RECEIVE STUDENT LOAN ALLEGATION

Have a finance-related question, but you don’t know who to ask? Email the Credible Money Expert at moneyexpert@credible.com and your question could be answered by Credible in our Money Expert column.



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Attractiveness of bargains gives hope to Asian debt after loss https://ctxetg.com/attractiveness-of-bargains-gives-hope-to-asian-debt-after-loss/ Tue, 04 Jan 2022 01:18:45 +0000 https://ctxetg.com/attractiveness-of-bargains-gives-hope-to-asian-debt-after-loss/ (Bloomberg) – Fund managers are looking for bargains in Chinese developer dollar bonds, which could help the wider Asian credit market in 2022 after suffering record losses last year. Bloomberg’s Most Read Asian dollar notes of all ratings fell 2.8% last year, their worst performance in a Bloomberg index dating back more than a decade. […]]]>

(Bloomberg) – Fund managers are looking for bargains in Chinese developer dollar bonds, which could help the wider Asian credit market in 2022 after suffering record losses last year.

Bloomberg’s Most Read

Asian dollar notes of all ratings fell 2.8% last year, their worst performance in a Bloomberg index dating back more than a decade. This was mainly the result of a collapse in Chinese real estate bonds, which account for a large chunk of the region’s banknotes. As this segment collapsed, it weakened demand, even for debt from healthier borrowers.

But there have been signs of investors returning, after Beijing stepped up efforts to prevent a housing slowdown from pushing the world’s No.2 economy into a deeper collapse. Bulls are betting Chinese policymakers will put in place stronger fiscal and monetary stimulus this year, helping to relieve a dollar bond market haunted by the prospect of rising global inflation and interest rates .

“Most of the alpha for Asian high yields, and Asian credit as a whole, in 2022 will undoubtedly come from high yielding Chinese real estate given the high valuations at present,” wrote Nomura International (HK) Ltd. analysts, including Nicholas Yap, referencing returns above benchmarks on an investment. “It is ultimately a matter of timing and credit selection.”

Global fund managers, from the Singapore sovereign wealth fund to a former Goldman Sachs Group Inc. banker, are seeing more and more opportunities in Chinese developer debt.

At Goldman, analysts’ baseline scenario is for the default rate on Asian high yield bonds to drop to 6.5% in 2022 from 17.2% in 2021.

However, navigating a risky timetable will not be easy. Chinese real estate companies face a record $ 27 billion in dollar bonds maturing in the first half of this year.

Investors will face any further increase in global yields, with the Federal Reserve set to largely hike interest rates three times this year to fight inflation. Junk debt tends to do better when rates rise, given the larger yield cushion.

“Given the spread situation, higher-grade Asian credits and higher-grade sovereigns are likely to be the most affected by Fed rate hikes,” Jefferies analysts wrote in a note, including Brent Eastburg and Rohan Thakrar.

Some expect it to create more value.

Mark Reade, head of fixed income research at Mizuho Securities Asia, said any Fed-induced drop in Asian dollar bonds could provide a buying opportunity, as pressures on consumer prices s ‘will probably gradually ease.

He predicts that high-quality Asian bonds will return around 3.5% in 2022 and high-yield bonds just over 10%.

Any easing of policy by the Chinese central bank could also help strengthen the credit quality of companies by reducing their domestic financing costs. Given the recent strengthening of the dollar, which is pushing up the cost of servicing debt abroad, this would be a critical area of ​​support.

(Updates with Goldman data in sixth paragraph.)

Bloomberg Businessweek Most Read

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12 personal finance influencers to follow in 2022 https://ctxetg.com/12-personal-finance-influencers-to-follow-in-2022/ Sun, 02 Jan 2022 05:05:35 +0000 https://ctxetg.com/12-personal-finance-influencers-to-follow-in-2022/ Personal finance influencers can inspire, empower, and encourage millions of people around the world to take control of their finances. Bankrate highlighted a few social media influencers and other content creators as part of its inaugural Social Honors Awards to help amplify voices that talk about money in new ways. Along with these awards, we’ve […]]]>

Personal finance influencers can inspire, empower, and encourage millions of people around the world to take control of their finances.

Bankrate highlighted a few social media influencers and other content creators as part of its inaugural Social Honors Awards to help amplify voices that talk about money in new ways. Along with these awards, we’ve handpicked 12 of the top personal finance influencers you should follow in 2022.

1. Delyanne Barros, @DelyanneTheMoneyCoach

Delyanne Barros is a former labor lawyer turned self-taught millionaire on a mission to teach investors how to “kill the stock market”.

It wasn’t until the age of 37 that Barros discovered the power of long-term investing, and although she often expresses how much she wished she had started sooner, she also points out that he is never too late.

Barros is part of the FIRE (financial independence, early retirement) movement and now plans to retire at 45. She attributes her success to consistency with her investment objectives and authentically documents her journey as well as practical advice on her social networks.

Bankrate named Delyanne Barros 2022’s Best Personal Finance Influencer as part of our first Social Honors awards.

2. Dasha Kennedy, @TheBrokeBlackGirl

Dasha Kennedy is a financial activist committed to helping women be their own financial advocates. For her, that means showing women how they can become financially independent.

It was her own past financial struggles that prompted her to share her journey, and through them, she has been able to help thousands of other women get their finances back on track.

When you visit Kennedy’s social media accounts, you won’t find the traditional advice. Instead, you’ll get much more realistic and relevant advice based on her personal experience. For example, common conversations on her feed include how to set financial limits, how to talk to kids about money, and how to develop good financial habits.

Bankrate named Dasha Kennedy 2022’s Best Financial Activist Account for our first Social Honors award.

3. Humphrey Yang, @HumphreyTalks

Humphrey Yang is a personal finance video maker who has a knack for breaking down complex topics, like taxes and investing, in a way that makes it easy for everyone to understand.

When you visit Yang’s social media, you will find that its content is strictly educational and focuses on explaining financial concepts that you may not know much about in a way that is both digestible and easy to understand. entertaining.

4. Parii Bafna, @PariiBafna

  • Follow Bafna on TikTok and YouTube
  • Areas of Expertise: Personal Finance

Parii Bafna sees herself as an information synthesizer and curator who hopes her content will leave her subscribers feeling both educated and entertained.

When the COVID-19 pandemic began, Bafna was a high school student and like many of us, she found herself in a rabbit hole on the internet. Its goal: financial education.

She realized that most of what we learn drives consumers to make decisions that primarily benefit large businesses. Since then, Bafna has been engaged in learning and research, and is dedicated to sharing what she has discovered with others primarily through TikTok.

5. Haley Sacks, @MrsDowJones

Haley Sacks is a self-proclaimed “financial pop star” who uses her financial expertise and pop culture drive to help teach people how to take control of their finances.

Whether it’s comparing a Roth IRA to a boyfriend or using a trending meme to describe the stock market, it’s safe to say that if you thought personal finance was boring, Sacks will make you think otherwise. . Best of all, its shareable content will help you start the conversation about money with your friends and keep you laughing too.

6. Jeremy Schneider, @PersonalFinanceClub

Jeremy Schneider, the founder of @PersonalFinanceClub, is a pro at demystifying investing.

Schneider is like the kid in the class who always got the best grades.

If you are looking to improve your rating in Investing 101 then Schneider is your guy, thanks to his easy to digest infographics. Not only will these infographics help you understand the value of investing, but they’ll also show you how and where to start.

7. Berna, @HeyBerna

Berna is a self-proclaimed financial hypewoman who hopes everyone, regardless of their background, feels out of place in the larger conversation about money.

After noticing that the personal finance community was not very representative of people like her, she decided to be that person for others.

Berna does a fantastic job breaking down complex topics in a way that is easy to understand and understand. She is also the host of the Money Please podcast, where she discusses important financial topics with expert guests.

8. José Rafael Hernandez, @TheJoseRafaelHernandez

  • Follow Hernandez on Instagram
  • Areas of expertise: Investment

Jose Rafael Hernandez is a former wealth management educator and consultant turned financial educator and consultant whose content aims to teach his followers how to build a solid financial foundation and start investing.

Hernandez grew up as an immigrant in a low income household, so when he was surrounded by wealthy people as a financial advisor as a young adult, it opened his eyes to the importance of a good education. financial and the opportunities it can offer.

It was this experience that ultimately inspired Hernandez to launch his own brand on social media and start a financial education business.

9. John Eringman, @JohnEFinance

John Eringman is a personal finance creator whose goal is to provide his followers with the knowledge and resources to make more informed financial decisions.

Eringman majored in finance in college where he learned accounting and corporate finance, but never learned anything about important wealth-building topics like investing, budgeting or how to save for retirement, which ultimately inspired Eringman to delve into these topics and share his knowledge with others.

While everyone has a different starting point, Eringman hopes his content shows others that everyone can achieve financial independence.

10. Anjie and RJ Muhammad, @RichByInention

  • Follow the Muhammads on Instagram
  • Areas of expertise: Building wealth as a couple

Anjie and RJ Muhammad are Money Experts whose content aims to teach people how to build wealth.

Before the couple got married, they knew that money quarrels were one of the main causes of divorce. It didn’t suit them. They didn’t want their finances to be a burden on their marriage, so they decided to take action.

Together, the Muhammads have paid off $ 123,000 in student loan debt and are now helping others reach their financial goals so that finances are not a stress on their relationships either.

11. @ForBetterOrWorth

  • Follow @ForBetterWorth on Instagram
  • Areas of expertise: Investing and creating a generational heritage

A personal finance content creator, the person behind @ForBetterWorth simply goes by “C”. Its content focuses mainly on investing and creating a generational heritage by documenting the journey of his family.

As you scroll down the @ForBetterOrWorth page, you’ll find a mix of memes, personal stories, and updates on net worth progress. By sharing his personal experiences, he shows his followers the steps his family has taken to become debt-free millionaires and how they are creating generational wealth.

12. Steve, @CallToLeap

Steve is a former math teacher whose own financial difficulties led him to become a wealth coach.

Steve’s goal is to help his subscribers achieve financial freedom by enabling them to improve their financial literacy through his educational content. Its content focuses primarily on the power to invest, but it is also good at tackling other important topics, like inflation, that affect our portfolios.



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Chinese real estate debt crisis to intensify in 2022 | chinese economy https://ctxetg.com/chinese-real-estate-debt-crisis-to-intensify-in-2022-chinese-economy/ Fri, 31 Dec 2021 13:50:00 +0000 https://ctxetg.com/chinese-real-estate-debt-crisis-to-intensify-in-2022-chinese-economy/ The crisis engulfing China’s real estate sector looks certain to intensify in 2022 as businesses face debt repayments in the New Year that are double those of the final months of 2021, risking what a Chinese expert calls a systemic crisis for the world’s second-largest economy. Although concerns over stricken giant China Evergrande have subsided […]]]>

The crisis engulfing China’s real estate sector looks certain to intensify in 2022 as businesses face debt repayments in the New Year that are double those of the final months of 2021, risking what a Chinese expert calls a systemic crisis for the world’s second-largest economy.

Although concerns over stricken giant China Evergrande have subsided in recent weeks after a massive state-led restructuring, it missed a $ 255million (£ 190million) bond repayment on Thursday and Debt problems that drove the country’s second-largest developer to default are destroying many other businesses.

In total, Chinese developers owe $ 19.8 billion in offshore dollar-denominated debt in the first three months of 2022, analysts at Nomura said. That’s almost double the $ 10.2 billion they faced in the last quarter of 2021 – a burden that caused Evergrande to default and the threat of default from several other developers such as Kaisa.

There is also no respite in the second quarter of 2022, when they must find an additional $ 18.5 billion.

The burden of paying off bonds threatens to worsen the crisis for developers, who have benefited from a 30-year boom in the Chinese housing market on a business model of cheap credit and endless demand from the market. of the country’s huge upward mobile population.

But Xi Jinping’s anger at the industry’s excesses and his pursuit of “common prosperity” has led to a crackdown that has removed access to unlimited funding, and now key measures are signaling the end of the good times. Prices fell 0.3% in November, the biggest drop since 2015, while the value of home sales plunged 16.31% and new construction starts, as measured by floor area, fell 16.31%. fell 21.03%. Importantly, the Chinese population is shrinking with the number of marriages – and hence the demand for new properties from young couples – down 31% in the six years leading up to 2019.

“Everyone made the same bet”

Michael Pettis, a finance professor at Peking University, says the situation could turn into a systemic crisis that undermines the entire debt-ridden economy – the subject of nightmares for Beijing’s politicians, who desperately seeks to prevent contagion from the real estate crisis that is hitting ordinary Chinese people. .

“Everyone made the same bet on the inexorable rise in property prices, in particular the developers, who leveraged to the end, paid too much for the land at auction and took as many real estate risks as they did. they could take it, ”he said.

“The problem, of course, is that house prices one day stop rising, because everyone has made the same bet, everyone’s balance sheet starts to collapse at the same time, and that immediately becomes a systemic problem. This is what happened in China.

Debts to foreign investors are not the only problem. Developers owe Chinese bondholders billions of yuan but, in addition, Nomura says they must also find 1.1 billion yuan ($ 172 billion) in backdated wages owed to construction workers before the start. of the lunar new year in early February. It has also been reported that workers at Evergrande subsidiaries in states such as Guangxi and Shanxi have gone on strike over unpaid wages.

“Failure to pay deferred wages could be severely punished by both central government and the local governments concerned,” Nomura analysts said. “There is a huge risk to the reputation of developers and builders who could not pay deferred wages in a timely manner, especially if social protests are triggered. “

Evergrande’s woes became evident in September when he admitted he couldn’t meet his most urgent of gigantic $ 300 billion debts or even complete the 1.6 million homes for which he had. already supported the payment. After many maneuvers on the brink, he made some of his payments, but finally slipped into default in early December, which was later confirmed by downgrades from rating agencies.

The prospect of civil unrest over unpaid wages, unfinished houses and the uncertain return of wealth management products put in place by developers is at the center of Beijing’s battle to contain the fallout from the problems in the real estate industry.

“This is a test for China”

Although Evergrande chairman and founder Xu Jiayin this week vowed the company was going “full steam ahead” to complete the homes customers had paid for, Shasha Dai, editor of the credit reporting provider , data and analysis Reorg in New York, said the Chinese government was “deeply involved” in the restructuring of Evergrande and that the number one priority was to maintain “social stability.”

The government “was putting a mold around Evergrande” to make sure its problems didn’t spill over to other developers, she said. The goal was for a “reputable” person to come with access to finance, complete buildings that Evergrande didn’t complete, and put people into homes they paid for.

“Maintaining social stability is the government’s number one priority. They can’t protest with people going to offices demanding a refund – that’s a bad image. Home buyers should get what they pay for.

However, the spiraling nature of the problem could make it impossible even for Beijing, with all its levers of control, to contain given that so many developers could be in trouble. A report released in October by S&P, for example, said that a third of listed Chinese developers could experience liquidity issues over the next 12 months.

As Professor Pettis says, the crisis has deep roots and will not be easily resolved.

“These are not ‘bad apples’ or even bad policies,” he said, “so it cannot be solved by firing the right people, putting some in jail and improving policy responses.”

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The impact will be felt everywhere if the contagion spreads, especially on China’s reputation for sound economic management. Tim Symes, partner at international law firm Stewarts in London and specialist in insolvency and asset recovery, said the restructuring of Evergrande could take years. But the larger question for China was important.

“This is a test case for China and could shape risk appetite globally, affecting foreign investment.

“It’s going to run and run and the fear is that China is favoring its local creditors. Offshore bondholders will feel the loss and it will reverberate around the world. It makes people understand the risks of lending to China.”


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5 money moves to make before the Fed starts raising interest rates to fight inflation https://ctxetg.com/5-money-moves-to-make-before-the-fed-starts-raising-interest-rates-to-fight-inflation/ Wed, 29 Dec 2021 21:30:00 +0000 https://ctxetg.com/5-money-moves-to-make-before-the-fed-starts-raising-interest-rates-to-fight-inflation/ 5 money moves to make before the Fed starts raising interest rates to fight inflation President Jerome Powell (pictured) and other Federal Reserve policymakers have just reiterated after their recent December meeting that they will keep a key interest rate close to zero. But only for now. Officials also said they plan to raise interest […]]]>

5 money moves to make before the Fed starts raising interest rates to fight inflation

President Jerome Powell (pictured) and other Federal Reserve policymakers have just reiterated after their recent December meeting that they will keep a key interest rate close to zero.

But only for now.

Officials also said they plan to raise interest rates thrice in 2022. Central bankers worry about inflation: Prices in November rose 6.8% from the previous year, which is the fastest rate of inflation in 39 years.

For consumers, the impending rate hikes may mean now is the time to splurge – or take out a loan for something practical, like a new car to replace an old pile of garbage that won’t start anymore. Here are five money moves you should make before rates go up.

1. Refinance your home loan

A smiling couple is sitting at the desk, getting ready to sign papers as the man hands over the pen.

G-Stock Studio / Shutterstock

Mortgage rates fell to all-time highs during the pandemic, but more recently they have seen their ups and downs.

While 30-year mortgage rates are still at historically low levels, averaging around 3%, the Mortgage Bankers Association predicts that rates will rise to 4% next year, which means it’s time stop procrastinating if you’re thinking about refinancing.

Chances are, you still need a refi. More than three-quarters of homeowners never refinanced at the low rates available in the first year of the pandemic, according to a Zillow survey.

The same study found that nearly half of those who took out new, cheaper loans are now saving $ 300 or more each month.

2. Work on your credit score

While today’s low interest rates make it easier to get loans, it will cost you more to borrow once rates rise.

Today, it’s easy to take a free peek at your credit score and see if it needs some work.

You may need to pay off existing debt and take other steps to boost your score, to improve your chances of borrowing at favorable rates once the Fed begins to tighten credit.

Raising your credit score by a few hundred points will make you a more attractive borrower to all types of lenders, from credit card issuers to those offering mortgages.

3. Refinance your student loans

mini graduation cap on american money

zimmytws / Shutterstock

Federal student loan payments and interest are now on hold until May 1, and some prominent Democratic lawmakers, including Senator Elizabeth Warren and Senate Majority Leader Chuck Schumer, are still pushing President Joe Biden to grant more up to $ 50,000 in student debt relief and cancellation per borrower.

Meanwhile, Americans in debt with private student loans remained subject to their minimum monthly payments.

If you are in this group, refinancing at a lower rate or for a shorter term could save you thousands of dollars in interest charges and reduce your debt for several years. Student loan refinancing rates have been at or near their lowest in recent weeks.

To maximize your savings, compare loan offers from multiple lenders, then set the lowest refinance rate you qualify for.

4. Consolidate your debt

The pandemic has made it difficult for Americans to travel, eat out, or shop at retail, and many have used the money they did not spend on these activities to increase their savings and pay off debts.

The number of consumers who paid off their credit card balances in full each month reached an all-time high of 35.1% at the end of 2020, according to a report by the American Bankers Association.

Yet many households continue to struggle. If you rely on your credit cards to make ends meet, high interest accumulates quickly.

You might want to consider consolidating your balances into a lower cost debt consolidation loan, which could help you save a substantial amount of interest and even get out of debt sooner.

5. Surf the hot stock market

Close up of a man casually looking at stock charts on a tablet.

NicoElNino / Shutterstock

Interest rates are so low that rates on savings accounts will remain low, even if 2022 brings a trio of Fed rate hikes.

If you feel like taking a little more risk, consider putting some of your savings into investments. Wall Street is going through the year with new historic highs.

If you don’t have a lot of cash to play, you can download a popular app that helps you invest your “spare currency” from your daily purchases and grow your pennies in a diverse wallet.

Or, if you’re still worried about the stock market, you might consider investing in fine art, which is a real physical asset with little connection to the stock market. Contemporary art has outperformed the S&P 500 by 174% over the past 25 years, according to the Citi Global Art Market chart.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.


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This fintech startup allows entrepreneurs to raise capital without diluting their participation https://ctxetg.com/this-fintech-startup-allows-entrepreneurs-to-raise-capital-without-diluting-their-participation/ Tue, 28 Dec 2021 01:15:14 +0000 https://ctxetg.com/this-fintech-startup-allows-entrepreneurs-to-raise-capital-without-diluting-their-participation/ India’s startup ecosystem has been inundated with billions of dollars in funding this year, but many start-ups are still struggling to raise capital on favorable terms despite a business model that generates steady income streams. In this context, the duo of entrepreneurs Abhinav Sherwal and Eklavya Gupta, via their fintech startup Recurrence club, want to […]]]>

India’s startup ecosystem has been inundated with billions of dollars in funding this year, but many start-ups are still struggling to raise capital on favorable terms despite a business model that generates steady income streams.

In this context, the duo of entrepreneurs Abhinav Sherwal and Eklavya Gupta, via their fintech startup Recurrence club, want to rewrite the rules by which founders can raise capital to run their business.

Founded in June this year, based in Delhi Recurrence club is a subscription funding platform that allows businesses with recurring revenues to raise cash much faster without diluting their equity.

The trip

Abhinav and Eklavya, who have been friends since their IIM Calcutta days, were intrigued by the challenges startup founders faced when trying to raise capital.

A graduate and technologist from IIT Delhi, Abhinav, during his career as a product developer, has seen many startups give discounts on their products to retain customers, which has affected their cash flow and hampered their growth plans. This was more pronounced for startups in the SaaS and B2B space.

“We wanted to solve the cash flow problems of startups despite having a stable form of revenue in terms of subscription,” says Abhinav.

The challenges of fundraising

Typically, startup founders have about three fundraising options, and each comes with a challenge.

In the equity financing category, founders would normally have to divest a large portion of their stake to raise funds, while two other avenues, such as risky debt and income-based financing, come with less favorable conditions.

Also, these can be time consuming which can distract startups from their primary focus on the business.

“We wanted to create a platform where it can provide capital to startups without diluting equity or having these restrictive debt terms,” says Eklavya, who is a finance professional.

How it works?

Recur Club has access to income stream data and other relevant information of a company to create a financial product where the subscription is made through its AI and ML models. Following this, a tradable product is delivered to the financial institutions which provide the capital by purchasing this asset.

“Our AI, ML engine secures the profile of clients to give them rankings and awards,” says Abhinav.

For example, if a particular startup obtains Rs 100 as a subscription turnover per month, which amounts to Rs 1200 per year, he can lift almost 90 percent of that amount all at once to a financial institution with repayment made on a monthly basis or as they receive payment from the customer.

In such a transaction, the founder does not lose any capital to raise the required capital and the financial institution also has the opportunity to participate in the growth story of these new businesses, which is not normally the case.

“Our platform provides access to capital in a non-dilutive model, which is founder-friendly and helps these startups grow in a sustainable manner,” explains Eklavya.

The founders believe they have created a new asset class and offer financial investors access to fixed income securities. The startup is also becoming an exchange for recurring income contracts where investors can view the note and bid for it.

Recur Club’s technology platform facilitates the sourcing of such startups, enables funding and also acts as a debt collector. This whole exercise is done digitally.

Areas of intervention

Recur Club mainly focuses on startups in the SaaS and D2C space, which have a constant stream of income. The platform has already activated more than $ 40 million of tradable products with nearly 30 startups raising capital through them.

According to Abhinav, Recur Club claims to have enabled startups with revenues of $ 100.00 of up to $ 40 million to raise capital.

About 70% of its customers are in the SaaS segment and the rest are in the D2C and managed workstation categories. Investors bidding for these contracts are banks, NBFCs and credit funds.

On the competitive side, especially with the presence of other forms of capital raising such as venture capital finance, venture capital debt or income-based financing, Abhinav says: two days. “

The founders believe that startups active on their platform for a longer period of time have the possibility of raising capital on much more favorable terms, particularly on interest rates. This is because investors are more confident in the longevity and stability of these startups, which allows them to offer more money at lower interest rates.

The market

The addressable market for Recur Club is in the billions of dollars given the need for capital from startups. It faces competition from everyone who funds these startups, whether they are venture capitalists, venture credit companies, revenue-based finance entities, although the founders believe that ‘they have no direct competition.

Recur Club has a team strength of approximately 20 people and has already raised $ 2 million in the pre-seed funding cycle. He earns income through the commission charged for his services.

The fintech startup has also created a community network platform for startup founders by bringing in other ecosystem players, who will provide services such as partnerships, sales, advice and even raise capital from of VCs.

“Recur’s mission is to democratize fundraising,” says Abhinav.


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