ETBFSI’s Post

Debt restructurings are taking too long — and the international lending community, especially the global financiers who descended on Washington, D.C., this week for the International Monetary Fund and World Bank spring meetings, is under pressure to fix it. https://lnkd.in/geZybDBz #debt #restructuring #lowincome #countries #international #lending #worldbank #imf

State Bank of Pakistan is set to conduct auctions for the buyback of MTBs on behalf of the Government of Pakistan, highlighting the importance of buyback & exchange of government securities as a crucial tool in the country’s debt management strategy. This approach has gained significance, particularly in current economic challenges, to proactively achieve debt management targets. #StateBankofPakistan #DebtManagement #GovernmentSecurities #EconomicStrategy

NBFCs eye overseas fundraise as RBI tightens regulations on Banks NBFCs will soon explore overseas market for fund raising with RBI restricting Banks investment in them as a pre-caution on the back of run-away Loan /credit off-take. In fact, some of the top-rated NBFCs have already starting tapping into the ECB market With the expected cut in US Fed rate looming, _NBFCs have started increasing borrowing overseas after their cost of capital went up_ ⬆️ Following the RBI decision to raise their risk weightage.Overseas borrowing will help NBFCs to meet their funding requirement amid high Loan/credit demand

Historic T-bill buyback aims to reprofile Pakistan’s debt The State Bank of Pakistan (SBP) will repurchase Market Treasury Bills (MTBs) today for the first time in history—a liability management tool widely used globally in government securities markets to manage refinancing and liquidity risks—with a target of Rs500 billion. Bond buybacks will enable the Government of Pakistan to retire its outstanding debt before its maturity date. This move allows the government to reprofile its debt, potentially benefiting from lower interest expenses in the long run and correcting market distortions. Sohail Mohammed Read the full story at https://lnkd.in/eRnuFBag

Subordinated bonds totalling Tk2,000 crore by five banks to fortify their Tier-2 capital base. ✅ unsecured, non-convertible, floating rate, and fully redeemable terms. ✅ Face value of Tk10 lakh per unit through private placement among institutional investors and high-net-worth individuals. ✅ These initiatives aim to bolster the banks' capital base while providing investment opportunities for institutional investors and high-net-worth individuals. A subordinated bond may be a money related instrument that banks use to raise additional capital. In Banks issue subordinated bonds for a assortment of reasons. https://lnkd.in/g3k8q4_9

EXCERPTS: China’s global systemically important banks (G-SIBs) are on track to meet the minimum total loss-absorbing capacity (TLAC) requirements of 16% of risk-weighted assets (RWA) by January 2025 and 18% by January 2028, according to Fitch Ratings. The ratings company expects ongoing TLAC issuance as the G-SIBs refinance maturing capital instruments, especially given the current profitability pressures, which it believes could be sustained whilst China faces economic challenges. The five G-SIBs have issued about $110.12b in capital instruments annually since 2019. Four of the G-SIBs issued $247.8b of TLAC senior debt in 2024 alone, with another $35.79b in the pipeline.

After a busy several months, 𝗔𝘀𝗶𝗮-𝗣𝗮𝗰𝗶𝗳𝗶𝗰 𝗯𝗮𝗻𝗸𝘀' 𝗱𝗲𝗯𝘁 𝗶𝘀𝘀𝘂𝗮𝗻𝗰𝗲 𝚏̲𝚎̲𝚕̲𝚕̲ to its lowest monthly level for 𝟮𝟬𝟮𝟰 𝗶𝗻 𝗦𝗲𝗽𝘁𝗲𝗺𝗯𝗲𝗿. Few points to note from the article: According to data provided by S&P Global Market Intelligence on a best-efforts basis, banks in Asia-Pacific issued $𝟭𝟱.𝟬𝟯 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 in debt securities in September, 𝘂𝗽 𝗳𝗿𝗼𝗺 $𝟭𝟯.𝟬𝟯 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 the previous year. Although it was greater than in September 2023, the September aggregate was lower than in the previous month, when banks' debt issuance volumes increased by around 18% annually. The expected reason being hitting the lowest in September was to prepare for the redemption or maturity of existing bonds in September, banks issued front-loaded bonds in August. Also, Statistics shows that banks' financial institutions reached their 𝗺𝗮𝘁𝘂𝗿𝗶𝘁𝘆 𝗽𝗲𝗮𝗸 in August and September, which led to a rise in issuance in July and August. Source: S&P Global Market Intelligence Please read the full article here: https://lnkd.in/gYk9ihYv.

FX Rules Series - I Parties can now negotiate interest rates and transaction fees for their debt financing transactions. The elimination of restrictions on all-in-cost ceilings, covering interest rates and fees, is the significant change introduced by the Foreign Exchange Directive regarding foreign loan. This marks a significant step forward in facilitating foreign debt financing transactions, crucial for many private entities and large investments. The Foreign Exchange Directive maintains the existing rule that foreign loans cannot be taken without consulting and registering with the NBE for government entities and obtaining prior approval for other borrowers. This Directive follows the registration and approval procedures outlined in the previous External Loan and Suppliers’ Credit Directive FXD/82/2022. It outlines the process for loan registration and highlights that repayment in foreign currency depends on this registration. The eligible borrower categories and debt-to-equity ratio requirements remain the same. We have outlined the key elements of external loan arrangements as regulated under the Foreign Exchange Directive. Mesfin Tafesse & Associates Law Office (MTA)Mesfin TafesseHaymanot Belay Zeleke #debtfinancing #FX #FDI #Ethiopia

Banks and Mutual Funds increase debt exposure to NBFCs amidst market growth! MFs' debt exposure to Non-Banking Financial Companies, including Commercial Papers (CPs) and Corporate Debt, remained above the ₹2 lakh crore mark for the second consecutive month. Similarly, For nearly six years, the credit extended by banks to NBFCs has exhibited a consistent upward trend, accelerating further with the phased reopening of economies post-COVID-19 pandemic. This growth is primarily attributed to the expansion in the Assets Under Management (AuM) of NBFCs. The robust support highlights the ongoing growth and resilience of #NBFCs in the financial market. To know more: https://lnkd.in/gRuNDaWH #banks #mutualfunds #finance

Credit Extinguishable swaps – part 2 In part 1 of the series, we introduced the concept of the credit extinguishable swap, which was a technique used to reduce the cost of borrowing in local currency. The main derivative components were a cross-currency swap and a credit default swap. What is a cross-currency swap? See the following attachment for a “reimagined” explanation. Looking at the first slide, the IDB lent USD funds to BNDES on a floating rate basis linked to SOFR, probably with a spread attached. The USD proceeds were then exchanged for BRL using a swap transaction with IDB. In slide 2, under the terms of the swap, BNDES receives SOFR from the IDB, which can be used to finance the USD loan. In return BNDES pays the CDI rate, probably minus a spread. In slide 3, the principal amounts are re-exchanged and the USD proceeds from the swap are used to repay the USD loan. Without going into enormous details on the cash flows, on a net basis, BNDES has use of BRL proceeds and pays a local currency interest rate that is lower than their regular domestic cost of borrowing. In part 3, we will look at how a default swap could be embedded to realise a reduced cost of borrowing. #creditdefaultswaps #currencyswaps #financialengineering