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SME eSmart- Powering Your Potential Find out more today by calling: (868)-627-8879 ext. 228 or email: [email protected]
Home Mortgage Bank’s rating reaffirmed at CariA
NCB Financial Group Limited’s initial corporate credit rating assigned at CariA
National Commercial Bank Jamaica Limited’s rating upgraded to CariBBB+
NCB (Cayman) Limited’s initial corporate credit rating assigned at CariA
The Government of the Commonwealth of Dominica placed on Rating Watch – Developing
Dominica AID Bank’s rating downgraded by 1-notch and placed on Rating Watch – Negative
The Government of the British Virgin Islands placed on Rating Watch – Developing
The Government of Anguilla placed on Rating Watch – Developing
NCB Capital Markets Limited’s rating upgraded to CariBBB
Trinidad and Tobago Mortgage Finance Limited’s rating reaffirmed at CariAA-
The National Gas Company of Trinidad and Tobago Limited’s rating reaffirmed at CariAA+
The Government of the Republic of Trinidad and Tobago’s rating reaffirmed at CariAA+
The Government of Saint Lucia’s ratings for its proposed bond issues assigned at CariBBB
OUR UPCOMING WORKSHOPS!
Operational Risk Management in 16 & 17 November 2017 Trinidad
Financial Institutions
Please contact Prudence Charles ([email protected]) or Sita Sonnyram ([email protected]) to register
Benefits of a CariCRIS Rating to a Corporate Entity:
Latest Rating Actions by CariCRIS
Improve relationships with creditors with an independent, objective
assessment of business
Strengthen your governance and hedge against business risk
Attract investors to raise money in capital markets
Detect credit deterioration early and focus your management on
hedging risks
DATE WORKSHOP COUNTRY
Please visit our website at www.caricris.com for the detailed Rationales on these and other ratings
CariCRIS’ credit ratings and daily Newswire can also be found on the Bloomberg Professional Service.
REGIONAL
Trinidad and Tobago
TSTT workers stage protests
Although TSTT has already stated that they will not retrench any employee
when closing their bmobile retail outlets, the Communication Workers
Union (CWU) said they have no faith in the company and is preparing for
war.
T&T, Caribbean companies to benefit from EPA
Minister of Trade and Industry Paula Gopee-Scoon said in spite of some
challenges, the Economic Partnership Agreement (EPA) has the potential
to help local and regional companies penetrate European markets.
T&T Chamber optimistic about tax efficiency under TTRA
The T&T Chamber of Industry and Commerce (TTCIC) is hopeful that when
the T&T Revenue Authority (TTRA) is implemented it will result in a more
efficient processing of VAT returns.
FSO: More financial inclusion needed in T&T
Financial Services Ombudsman (FSO) Dominic Stoddard said the
perception in T&T is that more can be done to increase financial inclusion
in the country.
Jamaica
Jamaican Hotels Bullish On Winter Season, Downplay Business From Storm-
Hit Markets
The damage to property and infrastructure in some sections of the
Caribbean has seen a fall in habitable room inventory, with the result that
vacationers are looking elsewhere for winter travel options.
NCB Bond Hits Target
Shares in NCB Financial Group (NCBFG) have been climbing since the
banking group announced the placement of a new corporate bond to
raise US$105 million ($13.36 billion).
Jamaica Cont’d
Jamaica Producers To Sell Pineapples To Cayman, Other Markets
Jamaica Producers Group Limited (JP), which is currently searching for a
specialist farm manager for pineapple production, said it is now making
headway on plans to expand markets for the fruit.
Jamaica slips three spaces in crucial Doing Business Report
One month after showing improvement on the Global Competitiveness
Report, Jamaica has conversely slipped three places in the prestigious
Doing Business Report 2018 ranking to 70 of 190 countries.
Barbados
Commercial banks forced to hold more Govt paper
With commercial banks currently displaying a low appetite for such
instruments, the Central Bank of Barbados today announced an increase
in the amount of Government paper the banks are required to hold by
law.
Economy grows but foreign reserves fall further
The Barbados economy grew by an estimated 1.4 per cent over the first
nine months of this year but the foreign reserves have taken another hit.
Plunging reserves
With election fever already in the air, Acting Central Bank Governor
Cleviston Haynes is not about to tell the Freundel Stuart administration to
bite the proverbial bullet and agree any International Monetary Fund
(IMF) financing arrangement.
No hike
With this island’s two trade major unions currently persisting with demands
for double digit pay increases for their members, the Central Bank has
issued a fresh word of caution that the economy can ill-afford any such
fiscal strain at the moment
The Bahamas
Port Operator Targets Cruise Ship Expansion
The Nassau Container Port (NCP) yesterday said it plans to allocate $7.5
million to capital projects and debt repayment, as it eyes diversification
into cruise ship services.
The Bahamas Cont’d
Gov't Faces $900m Climate Change Bill
The Government has estimated it faces a $900 million bill to mitigate
climate change under the United Nations (UN) framework, with the
Bahamas facing "accelerated vulnerability" to natural disasters.
Cable Unveils Dividend Restart Within One Year
CABLE Bahamas expects its growth strategy to start paying off for
shareholders in less than a year's time, although it is "not fully satisfied yet"
with the returns generated.
Gov't Pays '3x' Value Of Bob's Toxic Loans
Bank of the Bahamas' (BOB) latest bail-out has cost Bahamian taxpayers
more than three times' the net value of toxic loans purchased from the
stricken BISX-listed bank.
Guyana
Guyana Goldfields generates US$50M in third quarter
Guyana’s biggest gold mine, Guyana Goldfields Inc., announced that it
generated over US$50M for the third quarter alone. The period, July 1st to
September 30, 2017, saw the production of 41,000 ounces of gold.
Haiti
IDB to invest $65 million to improve water and sanitation services in Haiti
Haiti will improve drinking water and sanitation services in the Port-au-
Prince metropolitan area, as well as in rural areas, in particular those
affected by Hurricane Matthew, with a $65 million grant from the Inter-
American Development Bank (IDB).
British Virgin Islands
BVI premier updates Overseas Territories leaders on recovery plans at
Miami meeting
Premier and minister of finance, Dr Orlando Smith, presented an update
on the current status of the British Virgin Islands hurricane recovery and
restoration efforts at a meeting of Caribbean British Overseas Territories
leaders held in Miami over the weekend.
Dominica
Looting deals major blow to private sector says DAIC
Executive Director of the Dominica Association of Industry and Commerce
(DAIC) Lizra Fabien has said the private sector in Dominica has suffered a
major blow because of looting after Hurricane Maria.
INTERNATIONAL
United States
Fed set to hold rates steady ahead of Trump's leadership decision
The Federal Reserve is expected to keep interest rates unchanged on
Wednesday as speculation swirls on who will be its next leader, but the U.S.
central bank will likely point to a firming economy as it edges closer to a
possible rate rise next month.
Futures jump on strong earnings; Fed takes center stage
U.S. stock index futures pointed to a strong opening for Wall Street on
Wednesday, as an upbeat third-quarter earnings season lifted sentiment
while investors waited for clues on future rate hikes from the latest Fed
meeting.
Dollar climbs against yen before Fed decision, Kiwi catapults
The dollar climbed on Wednesday, nearing a 3 1/2-month high against
the yen, as investors focused on a policy decision from the U.S. Federal
Reserve later in the day as well as any progress on President Donald
Trump’s tax reform plans.
U.S. gasoline demand hits record high in August: EIA
U.S. gasoline demand hit a record in August, delivering a strong end to
the summer driving season, according to data released on Tuesday by
the U.S. Energy Information Administration.
United Kingdom
Sterling hits four-and-a-half-month high vs euro on strong factory data
Sterling jumped to a 4-1/2 month high against the euro on Wednesday
after British manufacturers reported robust growth for October, cementing
expectations that the Bank of England will raise interest rates on Thursday.
Europe
European shares start November on a two-year high
European stocks surged to two-year peaks on Wednesday, lifted by
resilient company earnings and record highs set in Asia and New York,
though a 6 percent slump in Standard Chartered shares kept the banking
sector under a cloud.
End of ECB's asset buys will be a "minor issue": Hansson
Winding down bond purchases to zero will be “a minor issue” for the
European Central Bank because of a bulked up balance sheet and a
commitment to keep interest rates low, ECB Policymaker Ardo Hansson
said on Wednesday.
China
China c.bank injects $2.6 bln via MLF, SLF in Oct, down 70 pct from Sept
China’s central bank injected a net 17.1 billion yuan ($2.6 billion) into the
financial system via short- and medium-term liquidity tools in October, 70
percent less than in the previous month.
Japan
BOJ can't exit stimulus when inflation below 1 percent - BOJ Governor
Candidate Ito
The Bank of Japan likely won’t be able to exit its massive stimulus program
while inflation is hovering below 1 percent, Takatoshi Ito, an academic
who is a potential candidate to become the next BOJ governor, said on
Wednesday.
BOJ's new 'cost-push' index suggests price pressures building
A new Bank of Japan indicator that measures the costs of goods and
services not yet passed through to the wider economy showed on
Wednesday price pressures are growing, even as consumer inflation
remains subdued.
India
India jumps to 100th spot on World Bank's Ease of Doing Business list
India jumped into 100th place on the World Bank’s ranking of countries by
Ease of Doing Business for the first time in its report for 2018, up about 30
places, driven by reforms in access to credit, power supplies and
protection of minority investors.
Global
Oil hits highest since mid-2015 as OPEC sticks to supply deal
Oil rose to its highest since mid-2015 on Wednesday as data showed
OPEC has significantly improved compliance with its pledged supply cuts
and Russia is also widely expected to keep to the deal.
Cryptocurrencies' total value hits record high as bitcoin blasts above
$6,500
The aggregate value of all cryptocurrencies hit a record high of around
$184 billion on Wednesday, according to industry website
Coinmarketcap, making their reported market value worth around the
same as that of Goldman Sachs and Morgan Stanley combined.
TSTT workers stage protests Wednesday 1st November, 2017 – Trinidad and Tobago Guardian
Although TSTT has already stated that they will not retrench any employee
when closing their bmobile retail outlets, the Communication Workers
Union (CWU) said they have no faith in the company and is preparing for
war.
Workers at Park Street, Port-of-Spain and St James Street, San Fernando
brushed aside lunch to march outside the company’s compounds, as the
first step in industrial action geared toward saving over 250 jobs, which
includes staff from employment agencies.
“This is a lunchtime demonstration but it is going to be the first step in a
series of actions that are going to take place. This union stands firm that
not one worker must leave within the walls of TSTT,” CWU chairman
Desmond Campbell said yesterday.
Campbell said the CWU foretold this action by TSTT when they protested
at the Cipero Road Work Centre last April.
At that time, the CWU spoke of a dismantling of TSTT as a State-owned
company to be gifted to the private sector.
He said that in May, TSTT announced the acquisition of Massy
Communications for $255 million, yet the country was still unaware of the
details of that purchase.
With TSTT set to close nine of its 10 centres, Campbell said citizens are not
being given a choice and would have to visit dealers to do all
transactions.
“I want the people of Trinidad and Tobago to be mindful that this is not
about money, it is about job security. It is also about the national
patronage. TSTT is 51 per cent owned by the people of Trinidad and
Tobago and has shares divested in NEL. To date, TSTT and the government
of Trinidad and Tobago owe it to the citizenry to come clean on the deal
with Massy and TSTT,” Campbell said.
While the CWU has not received official correspondence of the shutdown
of the branches, a media release last week from TSTT stated that as part of
their analysis, it was found that more than 70 per cent of the transaction
activities at its bmobile retail stores were bill related.
Yesterday, employment agencies, including Regency Recruitment
Resources and Jo-Anne Mouttet & Associates issued a public advisory,
stating that they were alerted by TSTT of their digital transformation.
This transformation includes the use of TSTT’s enhanced online portal,
interconnected kiosks and an expanded bill payment network including
the banks, Sure Pay and dealers.
It was on this ground TSTT, took the decision to close the 10 retail stores.
Though agents’ contracts were expected to expire yesterday, after
discussion between TSTT and the employment agencies, those notices
were rescinded and extensions to employment contracts were issued.
<< Back to news headlines >>
T&T, Caribbean companies to benefit from EPA Wednesday 1st November, 2017 – Trinidad and Tobago Guardian
Minister of Trade and Industry Paula Gopee-Scoon said in spite of some
challenges, the Economic Partnership Agreement (EPA) has the potential
to help local and regional companies penetrate European markets.
“It (the EPA) has the potential to expand market opportunities for the
regional private sector within the European Union (EU) ” she said.
Gopee-Scoon spoke yesterday at the Third Meeting of the CARIFORUM-EU
Parliamentary Committee Meeting at the Hyatt Regency Hotel, Port-of-
Spain.
She said nine years ago this month, the EPA Agreement between the
CARIFORUM states and the EU was signed, ushering a new legal basis for
preferential trade between the two regions.
The purpose of the agreement is to make it easier for people and
businesses from the two regions to invest in and trade with each other and
thus to help Caribbean countries grow their economies and create jobs.
The Caribbean Forum (CARIFORUM) is a subgroup of the African,
Caribbean and Pacific Group of States and serves as a base for
economic dialogue with the EU.
She called on visiting EU parliamentary members who were at the
meeting yesterday to influence the EU Commission in adopting a more
flexible approach in the challenges which CARIFORUM countries face.
“Especially in this time of difficult economic conditions and our
vulnerability to natural disasters.”
She called the EPA a “comprehensive trade and development
agreement.”
“The agreement addresses a number of areas like trade in goods, services
and investment, competition policy, innovation and intellectual property,
transparency in public procurement, environmental and social aspects
and personal data protection. It also pertains an over-arching
developmental co-operation chapter.”
She said while the EPA has not yet come into force it has been
provisionally applied since 2008 by all parties with the exception of Haiti.
She pointed out that there are challenges and referred to the first review
of the EPA and said that market penetration for regional companies has
been very difficult.
Boleslaw Piecha, Member of the European Parliament and Chair of
European Parliament’s Delegation to the CARIFORUM-EU Parliamentary
Committee who also spoke yesterday said that the EU delegation would
visit several local companies who have already entered the EU market
including Angostura and T&T Fine Cocoa.
“The EPA is a very good agreement which provides trade and investment
opportunities,” he said.
<< Back to news headlines >>
T&T Chamber optimistic about tax efficiency under TTRA Tuesday 31st October, 2017 – Trinidad and Tobago Guardian
The T&T Chamber of Industry and Commerce (TTCIC) is hopeful that when
the T&T Revenue Authority (TTRA) is implemented it will result in a more
efficient processing of VAT returns.
The Chamber’s reaction comes after last Monday’s announcement by
the Ministry of Finance that it was proceeding with phase one of the
implementation of the TTRA.
In emailed responses, the Chamber said, it “believes effective
implementation of the TTRA will widen the tax net and result in improved
tax collection.
“We hope this will also facilitate better processing of VAT refunds; the
current lag which in some instances is in excess of a year, is
unacceptable.”
Stating that the implementation of the TTRA was long overdue, the TTCIC
said including the non-compliant businesses with the businesses which are
compliant with paying their taxes will ease the burden of having to
increase taxes further on the businesses which are already compliant.
On the issue of any anticipated changes in the salary/wage bill when the
workers are transferred to the TTRA, the Chamber said it was putting
efficiency on the front burner.
“We recognize there may be some limitations on how the Govt can shift
the required manpower into the TTRA so while we are concerned about
the increased cost, what is more important is an efficient and effective
organisation which can fulfil its mandate.”
Though recongising the role of revenue authorities in strenghtening and
improving tax collection, President of the Public Services Association
Watson Duke said the establishment of the TTRA was “ no panacea” for
many of the tax issues plaguing the country.
<< Back to news headlines >>
FSO: More financial inclusion needed in T&T Tuesday 31st October, 2017 – Trinidad and Tobago Guardian
Financial Services Ombudsman (FSO) Dominic Stoddard said the
perception in T&T is that more can be done to increase financial inclusion
in the country.
Financial inclusion, as defined by the World Bank Group, means
individuals and businesses have access to useful and affordable financial
products and services that meet their needs.
Stoddard was yesterday delivering remarks at the ceremony to relaunch
the Bankers Association of T&T (BATT) Code of Banking practices which
was held at the Scotiabank Hospitality Suite at the Queen's Park Oval in
Port-Of-Spain.
"The evolving financial technologies remains a challenge for many
customers, especially those not as technologically savvy as some of our
up and coming citizens, or maybe those who may not yet trust the safety
and security of online banking." Stoddard said.
Quoting from the Financial Literacy Survey of 2007, he said the unbanked
population was 21 per cent and an updated survey in 2013 found that the
situation did not change since the figure remained the same.
This statistic he said, "speaks to tremenduous untapped economic
potential."
In spite of this, Stoddard said the Office of the Ombudsman reaffirmed its
commitment to the ideals of the Code of Banking practice.
President of BATT, Anya Schnoor said the purpose of relaunching the code
was to enhance the banking community's commitment to customers.
She added that the code resembles the 2003 version and the changes
which were made were not "cosmetic."
"Careful attention has been put into the review and strengthening of
each provision taking into consideration the changing dynamics in our
industry, customer expectations and current global best practice."
Addressing the issue of complaints, she said for many years the public has
criticised member-banks on various issues and as such, "we want our
customers to know that the code makes explicit provision for dispute
resolution and we want them (the public) to avail themselves of this
facility, should the need arise."
Stating specifically what is in place, Schnoor said banks serve as the first
point of call for queries and complaints and the Office of the Financial
Services Ombudsman as the second point of call, if the customer is
dissatisfied with the outcomes of the bank's internal process for resolution.
<< Back to news headlines >>
BVI premier updates Overseas Territories leaders on recovery plans at
Miami meeting Tuesday 31st October, 2017 – Caribbean News Now
Premier and minister of finance, Dr Orlando Smith, presented an update
on the current status of the British Virgin Islands hurricane recovery and
restoration efforts at a meeting of Caribbean British Overseas Territories
leaders held in Miami over the weekend.
Smith joined colleague premiers and chief ministers to discuss progress
being made and to agree collective actions in support of the affected
territories. He also highlighted some of the lessons learned from the series
of unprecedented weather events during the 2017 hurricane season.
The premier explained that in the BVI, Hurricanes Irma and Maria were
preceded by an intense flood event in August, which had already
severely impacted the territory.
Smith expressed thanks and appreciation for the deep level of support
received from his colleagues in the immediate after math of Hurricane
Irma.
He thanked the premiers of the Cayman Islands and Bermuda for their
continued assistance with law enforcement officers and linesmen to assist
in the restoration of electricity supply. The premier further appealed for
additional assistance with linesmen as the restoration of the power supply
is a key component to the BVI’s recovery effort.
Meanwhile, the leaders agreed that hurricane recovery and
reconstruction should be the focus of the annual Joint Ministerial Council
Meeting, due to the significant number of territories affected and the high
level of devastation wrought by the unprecedented 2017 hurricane
season.
The leaders discussed the likelihood for the continuing increase in the
intensity of hurricanes and other severe weather events in the region as a
result of climate change, and identified the need for strong economic
support to sustain their economies to face this challenge. They
recommitted themselves to working together and to ensuring that this
concern would be the focus of the upcoming Joint Ministerial Council
meeting with the British government late next month.
The meeting also highlighted the efforts of Bermuda, the Cayman Islands,
Gibraltar, Montserrat and the Falkland Islands as a reflection of the strong
bond which exists between the people of the territories, which is also
shared with the United Kingdom.
Territory leaders committed to continued support of each other in disaster
management and mitigation strategies; sharing information, expertise and
best practices in communications and physical planning.
The British Overseas Territories in the Caribbean region include Anguilla,
Bermuda, the British Virgin Islands, the Cayman Islands, Montserrat and the
Turks and Caicos Islands. The Joint Ministerial Council is held in London
annually and provides an opportunity for United Kingdom’s Overseas
Territory leaders to discuss matters of concern directly with the British
government.
<< Back to news headlines >>
Looting deals major blow to private sector says DAIC Tuesday 31st October, 2017 – Dominica News Online
Executive Director of the Dominica Association of Industry and Commerce
(DAIC) Lizra Fabien has said the private sector in Dominica has suffered a
major blow because of looting after Hurricane Maria.
She described the matter as ‘the human hurricane,’ saying it will take
some time before businesses rebound.
“The private sector has been affected by the human hurricane which is
the amount of looting, the looting that took place,” she said on state-
owned DBS Radio.
Fabien pointed out that the level of looting has disappointed the private
sector.
“The private sector is quite disappointed with what happened,” she
stated. “This creates a ripple effect for our economy, even greater than
what we could see with our own eyes, things as lack of essential services,
destruction of the food chain, lack of funds for circulation in Dominica.”
She noted that it is important that the private sector sees how it should
move forward as soon as possible and improve the business condition in
Dominica.
Meanwhile, Vice President of the DAIC, Stephen Lander, has expressed
concerns over the ‘ripple effects’ the large amount of layoffs might have
on the economy after Hurricane Maria.
“The more people that get laid off, the less buying power you have in the
economy and that trickles down to those businesses that can open and
serve the public, their businesses may go down because less people are
buying,” he said.
<< Back to news headlines >>
Jamaican Hotels Bullish On Winter Season, Downplay Business From Storm-
Hit Markets Wednesday 1st November, 2017 – Jamaica Gleaner
The damage to property and infrastructure in some sections of the
Caribbean has seen a fall in habitable room inventory, with the result that
vacationers are looking elsewhere for winter travel options.
However, resort managers in Jamaica have mixed views on the possibility
of the fallout impacting occupancy rates in Jamaica in any extraordinary
way.
"I realise everyone is suggesting that the Eastern Caribbean's demise will
lead to higher numbers and visitors for our island. I don't necessarily
agree," said Dimitris Kosvogiannis, general manager of the 225-room Melia
Jamaica Braco Village.
"While I do believe some traffic may be diverted our way, we must
carefully examine the segments and destinations affected ... For example,
guests choosing St Barts as vacation spot, primarily based on its luxury
component and unparalleled culinary choices on that island, will most
likely not chose Jamaica, the land of all-inclusives, with a few notable
exceptions," he said.
Jamaica's tourism market has been growing by around six per cent,
according to the latest numbers to August. In the first eight months
stopover visitors to 1.625 million compared to 1.532 million in the same
period in 2016.
The Ministry of Tourism is itself cautioning against widespread expectation
of new business diverted from storm-hit markets.
"It is important to note that several of the islands worst affected by the
storm don't have comparable resorts to Jamaica, so there is no shift of
business by brand," said Delano Seiveright, senior adviser /strategist to the
Minister of Tourism.
"As for the cruise side of the business we are seeing additional calls given
the disruption of some Eastern Caribbean itineraries," he said.
Seiveright attributes the market gains so far this year to "aggressive growth
initiatives", including the alliance with Airbnb, market outreach to places
like Canada Western Europe, and closer collaboration with cruise
operators.
The outlook for the winter season, which traditionally kicks off on
December 15 annually, is positive, based on advance bookings. Some
properties say some of that business would normally have gone to other
Caribbean destinations.
"Hilton Rose Hall Resort & Spa and the four Jewel Resorts have a positive
outlook for the upcoming season and believe that Jamaica is absolutely
seeing some supplemental short term demand this fall and into the first
quarter of 2018," said Charmaine Deane, area director of marketing and
communications for the Jewels resort group.
Deane said the new business "is from both the group and leisure market
segment along with some business that needed to be relocated from
other Caribbean islands" and that the increase ranged between 5 per
cent and 50 per cent, depending on the property.
"This has been evident from higher call volumes, as well as mostly higher
occupancies year over year within the Jewel Resorts and Hilton Rose Hall
portfolio here on island," she said.
Hurricanes Irma and Maria cut a destructive path through various
Caribbean territories in September. The impacted islands included
Barbuda, Anguilla, St Martin, St Barts, British Virgin Islands, US Virgin Islands,
and Puerto Rico.
St Barts' hotels are expected to be out of commission until the end of 2018.
Kosvogiannis says Melia Braco is itself projecting good business for the
peak season, but insists that any impact on bookings from storm-hit
markets would be minimal.
"We have confirmed buyouts for January, March and April and anticipate
a very full month for February," said the hotel manager. "Our property has
received international recognition and we are confident we will continue
to grow and expand into new markets as we establish the brand in the
North American market."
But he did not expect, he said, that those who had booked vacations for
the islands in the north east will switch en suite to islands such as Jamaica.
"If I am to travel to Cuba, for example, as I wish to visit the history, tradition
and Latin flair offered there, I would be very hard-pressed to choose the
birth place of reggae as an alternative. This would be tantamount to
planning for a steak dinner and going to a seafood restaurant," he
reasoned.
Sandals Resorts International, which operates 15 Sandals and three
Beaches resorts in Jamaica and around the Caribbean, indicates that the
hurricanes have had minimal impact on its properties.
"Sandals resorts across the Caribbean continue to experience robust
occupancy," said Director of Corporate Services Jeremy Jones.
"In the Eastern Caribbean, we had one resort closed on the heels of
Hurricane Irma for previously planned renovations and those guests were
relocated to our other resorts in that region," he said.
<< Back to news headlines >>
NCB Bond Hits Target Wednesday 1st November, 2017 – Jamaica Gleaner
Shares in NCB Financial Group (NCBFG) have been climbing since the
banking group announced the placement of a new corporate bond to
raise US$105 million ($13.36 billion).
NCB Financial hit the fundraising target on Tuesday, but the market
reaction was muted.
For the month of October, up to Monday, the NCBFG stock climbed 23
per cent to $107.02, but on Tuesday the price fell to $105 around midday,
but eventually recovered to $107.03 per share.
The bond, arranged by subsidiary NCB Capital Markets Limited, comes
within the context of a fairly liquid US dollar money market, with investors
seeking lucrative investment options for their money. The bond will pay
interest semi-annually at seven per cent per annum, and matures in five
years in October 2022.
"We can say that we successfully raised the bond today," NCB Capital
Markets CEO Steven Gooden told Gleaner Business.
The banking conglomerate is expected to use the bond proceeds to
finance new deals.
"NCBFG is building its financial arsenal to pursue various investment
opportunities both in the local and regional markets," said President and
Group CEO Patrick Hylton in a full-page press advertisement announcing
the bond offer on October 8.
"With this expansion comes the opportunity to diversify our revenue
streams; it is our intention to continue maximising on our regional interests
through a combination of strategic investments, joint ventures, mergers
and acquisitions that will stimulate further business," Hylton said in the
statement.
Some market analysts have interpreted that to mean that NCB Financial
could seek to increase its stake in Guardian Holdings.
Asked about the possibility of acquiring additional shares in Guardian,
Gooden said the company does not comment on such matters as a
matter of policy.
NCB Financial now owns 29.99 per cent of Guardian Holdings, a regional
conglomerate with operations in 21 markets. It paid $28 billion for
65,547,241 ordinary shares in Guardian last year May.
"If they go after Guardian and fully acquire it, then what you have is a true
regional powerhouse. It would be even larger than Sagicor," said the
head of a local investment house, who commented on condition of
anonymity.
"That would be massive," he said.
The new bond is NCB Financial's second large fundraising this year. The
banking conglomerate previously raised $18.4 billion and that bond was
subsequently listed on the Jamaica Stock Exchange (JSE). It became the
largest debt security to list on the JSE bond trading platform, alongside a
tiny pool of corporate bonds.
<< Back to news headlines >>
Jamaica Producers To Sell Pineapples To Cayman, Other Markets Wednesday 1st November, 2017 – Jamaica Gleaner
Jamaica Producers Group Limited (JP), which is currently searching for a
specialist farm manager for pineapple production, said it is now making
headway on plans to expand markets for the fruit.
Production yields are expected to climb next year by 17 per cent, and
Producers is eyeing other markets as volumes grow.
"The export plans for this year primarily involve regional markets such as
The Cayman Islands, where we are already present with bananas," said
Group CEO Jeffrey Hall.
Hall said the market for pineapples is about 25 per cent of that of
bananas - the company's main produce - but is growing more rapidly. The
main distribution channel for both fruit remains the retail sector, but
tourism continues to grow, he said.
The specialist manager being recruited for JP's pineapple operation is
meant to "support growth in line with international best practices", the
CEO said. The company simultaneously has been working on a cold
storage facility, which is due for commissioning this month.
"It's a $130-million invest-ment," Hall said.
In 2016, JP almost doubled its farm acreages in St Mary for the pineapple
orchard. The fruit takes 14 months from planting to harvest.
"We will have 100 acres of pineapple and 400 acres of banana in
cultivation next year, with 200 full time employees directly engaged in
farming and another 200 engaged in food processing and marketing and
distribution. We expect overall production yields to increase 17 per cent
year over year for 2018," Hall said.
He adds that the company is otherwise doing "a number of bold things" to
modernise its fresh produce operations. The aim, he said, is to keep
abreast of market trends for towards healthy eating and demand for
more convenient access to high-quality fresh produce, and to tap into
expanding channels in the tourism sector and major supermarket chains.
JP's fruit processing divisions secured Global GAP certification - an
internationally recognised set of standards for farm cultivation - in
October. The company will be rolling out a new marketing campaign
highlighting the "natural farm fresh" attributes of JP fresh produce and
positioning them as "the best value" for Jamaican consumers, Hall said.
<< Back to news headlines >>
Port Operator Targets Cruise Ship Expansion Tuesday 31st October, 2017 – Tribune 242
The Nassau Container Port (NCP) yesterday said it plans to allocate $7.5
million to capital projects and debt repayment, as it eyes diversification
into cruise ship services.
Michael Maura, chief executive of port operator, Arawak Port
Development Company (APD), told Tribune Business that had already
"expressed interest" in the Government's plans to redevelop and upgrade
the Prince George Wharf terminal.
He explained that expanding APD's services into cruise ship operations
would also help to mitigate volatility associated with the Arawak Cay-
based port's cargo volumes, the BISX-listed port operator having
projected a 2.5 per cent year-over-year decline for its 2018 financial year
following a record 2017.
APD's twenty-foot equivalent (TEU) container volumes were 13.35 per cent
ahead of budget for the year to end-June, and Mr Maura said the port
was also seeking to partner with Bahamas Customs and the Government
to boost the latter's revenues, crackdown on criminals and improve the
import process.
Subject to government approval, the APD chief said it planned to
develop a Vehicle Terminal as a 'one-stop shop' where imported
automobiles could be licensed and inspected. And the proposed Cargo
Inspection Facility would permit in-depth examinations to take place at
the port, clamping down on smuggling and tax evasion.
Outlining APD's plans to Tribune Business, Mr Maura said: "We plan to
allocate approximately $7.5 million towards the retirement of debt and
planned capital expenditures, with the remainder supporting cash
reserves, potential new business development and shareholder
dividends."
While the APD board has yet to determine the size and timing of a
dividend, Mr Maura said the port operator continued to target new
business opportunities to increase earnings and shareholder value.
"The Ministry of Tourism and the Ministry of Transport have expressed a
desire to make improvements to Prince George Wharf," he told this
newspaper. "APD has expressed its interest in this project and await
project details.
"By diversifying APD's business, and expanding APD operations and
services to the cruise industry, this would serve to reduce the impact on
financial performance resulting from the occasional decline in cargo
imports.
"The addition of a new revenue stream to APD also serves to distribute
APD's cost of operations across both cargo and cruise, which potentially
reduces the tariff on groceries and other core imports. This serves to lower
the landed cost of goods in New Providence."
Mr Maura disclosed that APD's TEU import volumes for the 12 months to
end-June 2017 exceeded projections by more than 8,000, coming in at
70,277 compared to 62,000. They were well ahead of 2016's 61,779.
"The increase in cargo volumes were driven primarily by Hurricane Joaquin
and Matthew-related construction materials; vehicle imports of 16,864
compared to budget of 12,192 and prior year of 11,975," Mr Maura said.
"The remobilisation of the Baha Mar project also contributed to the
increase over prior year. APD budgeted conservatively for 2017 due to
little GDP growth and the stalled Baha Mar project. As a practice we do
not budget for post-hurricane cargo volumes."
Adopting a conservative approach to APD's current financial year, Mr
Maura added: "As we look at 2018, we have budgeted import TEUs of
68,500, which represents a 2.5 per cent reduction in volumes. We will also
not benefit from the Baha Mar bad debt and extraordinary port storage
enjoyed in 2017."
Besides Prince George Wharf, Mr Maura said the port operator was also
examining projects closer to home. "Subject to Government approval and
finalising the details, the company will develop a Vehicle Terminal to
include Bahamas Customs and Department of Road Traffic offices to
provide the import business community - and public - with the ability to
both clear and license vehicles at the port as a 'one-stop-shop'," he
explained.
"Subject to government approval and finalising the details, as part
Bahamas Customs' on-going efforts to combat criminal activities, APD will
construct a Cargo Inspection Facility. This facility will serve as a substantive
component of Bahamas Customs' enhanced risk management
programme.
"Freight containers, vehicles and general cargo designated for a
comprehensive examination will be processed by this facility while
remaining at the Nassau Container Port," Mr Maura continued.
"It is contemplated that this facility will contain modern contraband
detection equipment. The introduction of this facility to the trade process
is intended to eliminate existing delays and procedure for recognised firms
which have a history of compliance and transparency.
"The investments in Customs and Road Traffic facilities directly influence
legitimate trade and enhance Customs' contraband detection efforts.
Combating illegal trade directly supports legitimate business and
economic growth."
Turning to APD's financial performance, Mr Maura said the company beat
2017 budget expectations by 15.2 per cent and 8.1 per cent, respectively.
"Total revenues were $32.5 million compared to budget of $28.2 million
and prior year of $27.1 million, driven by the increase in import volumes
and unbudgeted Baha Mar storage-related revenues of $700,000," Mr
Maura said.
"Total expenses for fiscal year-ended 2017 were $15.9 million compared to
budget of $17.3 million, and prior year of $17.2 million. The reduction in
expense compared to prior year was in large part due to bad debt
recovery of $700,000, directly related to warehouse rent collected from
Baha Mar, and expense reductions compared to prior year of
approximately $370,000 in repairs and maintenance."
Mr Maura said the latter primarily related to the Arawak Cay port's cranes,
plus a fall in legal and professional fees of about $320,000. "In 2016 we
would have incurred consultancy expenses relative to our company ICT
systems, legal work relating to Baha Mar, and tax advisory services," he
explained.
The APD chief also confirmed that the port operator "does not charge for
hurricane relief items shipped to Nassau [that are] consigned to NEMA
and other qualifying relief organisations. The revenues derived from
hurricane-related imports would have been driven primarily by insurance
settlements".
<< Back to news headlines >>
Gov't Faces $900m Climate Change Bill Tuesday 31st October, 2017 – Tribune242
The Government has estimated it faces a $900 million bill to mitigate
climate change under the United Nations (UN) framework, with the
Bahamas facing "accelerated vulnerability" to natural disasters.
The scale of the economic and environmental danger facing the
Bahamas has been laid bare in an Inter-American Development Bank
(IDB) report on a $35 million project designed to develop a system for
managing, and building resilience to, threats to this nation's coastline.
Emphasising that the Bahamas is "highly vulnerable" to hurricanes and
other natural disasters, the IDB paper on the Climate-Resilient Coastal
Management and Infrastructure project warned that such storms were
increasing in severity and frequency. With much of the Bahamas' key
resort assets and public infrastructure located on or near the coast, it
added that climate-related events posed a serious threat to this nation's
economic future and well-being.
The IDB paper added that an emphasis on "engineering solutions", rather
than ones informed by science-related analysis, meant that the Ministry of
Works' efforts to protect the Bahamian coastline were failing in several
Family Island locations.
And natural tourist attractions, together with coastline defences, were
being steadily eroded with the Bahamas thought to have lost more than
50 per cent of "the live coral cover of its reefs".
"The Government of the Bahamas has recognised that future growth and
diversification of its tourism-dependent economy depends on ecosystem
services, maintaining biodiversity and enhancing the resilience of
economic activities to coastal risks, including climate change," the IDB
paper seen by Tribune Business says.
The IDB said that "given the strategic importance of the country's coastal
zone to economic development", the Government had "made several
advances towards climate-resilient coastal management" including its
embrace of the Sustainable Nassau Initiative and National Policy for the
Adaptation to Climate Change.
However, the IDB said most action to-date had been "small scale", and
added: "Recently, the Government of the Bahamas estimated the cost of
implementing mitigation actions related to the Nationally Determined
Contribution (NDC) to the United Nations Framework Convention on
Climate Change (UNFCCC) to be over US$900 million through 2030.
"A recent IDB study indicates that the probable coastal flooding exposed
area in a one-in-a-50-year flood event in New Providence is projected to
expand to 15 per cent by 2050 due to increasing precipitation caused by
climate change.
"Nationally, one metre sea level rise (SLR) would place 36 per cent of
major tourism properties, 38 per cent of airports, 14 per cent of road
networks and 90 per cent of sea ports at risk."
The Bahamian economy remains highly dependent on tourism, whose
$2.4 billion in direct visitor spend was equivalent to 27 per cent of total
GDP in 2015, rendering this nation particularly susceptible to climate
change.
"The tourism sector's potential future growth rests predominantly on
continued investments in tourism infrastructure, and the uniqueness and
health of the archipelago's coastal resources," the IDB added.
"The Bahamas is highly vulnerable to natural hazards, including hurricanes,
which put at risk both economic activities and associated public
infrastructure concentrated along the coast of New Providence and
several of the Family Islands.
"From 1970 to 2016, the country experienced 18 major disasters including
hurricanes, affecting 38,000 citizens. Seven, or 40 per cent, of these 18
major disasters occurred in the last 10 years, signifying that impacts from
disasters have increased at an accelerating rate."
The IDB report said Hurricane Joaquin inflicted an estimated $104.8 million
worth of damage when it struck the sparsely-populated southern
Bahamian islands in 2015, and this was followed by $438.6 million in losses
and damage when Hurricane Matthew hit New Providence and Grand
Bahama one year later.
"These events underscore the socio-economic vulnerability of the
Bahamas, with its small population spread in a large discontinuous area
where informal or isolated settlements, housing and basic services located
along the shore are not designed in accordance to adequate building
codes," the paper added.
Warning that climate change threatens to exacerbate these problems,
the IDB said: "A review of Bahamian coastal engineering structures
constructed previously revealed additional issues such as lack of
understanding of the impact of adjacent coastal construction and
natural habitats on receding stretches of shoreline, and lack of design
guidance for coastal structures under various climate change scenarios.
"Engineering solutions, such as seawalls and causeways, are failing in
several locations in the Family Islands owing to lack of empirical data to
inform science-based designs..... Although the Ministry of Public Works is
currently building coastal engineering structures to protect roads and
other public infrastructure from these risks, empirical data and modelling
on the multiple causes of flooding (tides, wave overtopping, storm surges,
inland flooding) and shoreline instability are needed to design lasting
solutions."
The paper added that the degradation of coastal ecosystems was also
exaggerating the Bahamas' vulnerability, finding: "Based on available
data, the country has lost over half of live coral cover of its reefs.
"Mangrove wetlands of the Bahamas are threatened by land conversion
for development, and estimates in New Providence indicate a 32 per
cent decline in wetlands over the last 30 years. Throughout the Bahamas,
invasive species such as casuarina (Australian Pine) cause sand dune
erosion and inhibit the growth of native vegetation.
"These threats amount to losses in natural coastal protection that,
increasingly, are being recognised as 'natural infrastructure' that, in
suitable locations, has greater adaptive capacity and is often less costly
than conventional solutions."
<< Back to news headlines >>
Cable Unveils Dividend Restart Within One Year Tuesday 31st Octtober, 2017 – Tribune242
CABLE Bahamas expects its growth strategy to start paying off for
shareholders in less than a year's time, although it is "not fully satisfied yet"
with the returns generated.
The BISX-listed communications provider told investors in its newly-released
2017 annual report that dividend payments, currently suspended, will
resume during its 2019 financial year - which begins on July 1 next year.
Anthony Butler, Cable Bahamas' chairman and chief executive, yesterday
told Tribune Business that some shareholders - especially retail investors -
needed to be patient and understand that the company was investing
for future gain, with key initiatives still in start-up mode.
Cable Bahamas' accounts for the 18 months to end-June 2017 revealed a
$51.727 million net loss, driven by the 'red ink' associated with start-up and
infrastructure build-out costs incurred by the Aliv mobile operator and its
Florida investments.
The Florida operations lost $27.281 million, and Aliv $55.538 million,
although Cable Bahamas' 48.25 per cent equity stake in the latter meant
that itself - and its shareholders - incurred less than half that sum. Despite
the $22.986 million loss suffered by Cable Bahamas' shareholders, Mr Butler
reassured investors that the BISX-listed operator was on track with the
execution of its 2014 growth strategy.
"We're doing fine," he told Tribune Business. "We are where we are. A lot of
people don't understand the start-up [stage], and are looking for the
returns. We stopped the dividend to conserve the cash, and are using
and investing it wisely."
Cable Bahamas' losses over the past two financial years have seemingly
unnerved some shareholders, with the dividend suspension exacerbating
their concerns.
This was alluded to by Gary Kain, Cable Bahamas' chairman, in the
annual report where he said that the company's share price had
"experience some unusual fluctuation" over the past 18 months.
"This was in large part due to individual shareholders who suffered
hurricane damages liquidating their position, and concerns over the entry
of competition in the video sector [BTC]," Mr Kain suggested.
However, dividend suspensions are relatively routine for companies
seeking to conserve capital for investment opportunities assessed as
generating even greater future returns. With Aliv and the Florida
operations now starting to emerge from start-up mode, the key now is for
Cable Bahamas to execute and ensure increased revenue drops to the
bottom line.
"We're executing the strategy we put in place in 2014, when the plan was
to move into the mobile business," Mr Butler told Tribune Business. "We're
happy with the execution of the plan. Florida is doing well, Cable
Bahamas is continuing to generate earnings, and Aliv is growing market
share."
Mr Kain said the BISX-listed communications provider has yet to achieve its
investment return targets, but indicated it was making progress by
announcing a timeline for the resumption of dividend payments.
"We are confident in our strategic direction, and our EBITDA growth
continues to improve," he wrote in the annual report. "However, we are
not yet fully satisfied by the returns that we are achieving on the
substantial investments that the group has made in recent years.
"However, overall, the Board remains confident of the group's cash
generation ability, and its forecast return on capital. This confidence will
be reflected in our imminent review of the dividend policy, which was put
on hold in July 2016 to preserve cash during initial stages of the mobile
build-out and the fixed-line expansion programme in Florida. The
company recently announced that these dividend payments will resume
in financial year 2019."
Cable Bahamas, which has management and Board control at Aliv, said
it was targeting a 30-35 per cent market share for the Bahamas' second
mobile operator by year-end 2017.
Suggesting that it had obtained a 20 per cent share by end-June 2017,
with 78,000 subscribers, Cable Bahamas said Aliv had produced almost
$13 million in revenues during the seven months following its November
2016 launch.
"In less than eight months of operations, ALIV has completed an extremely
successful finance capital fundraise, which resulted in $60 million of note
payable debt financing for the company," Cable Bahamas said. "The
offer was 100 per cent oversubscribed and fully financed.
"Therefore, coupled with the shareholders' investment of $135 million, and
$35 million from vendor partner funding, Aliv has a total of $230 million in
capital funding. This greatly contributes to our financial stability within the
market.
"Our network and investments of $144 million is comprised of infrastructure
and equipment for our Family Island roll-out, which offers the platform for
the most advanced network and supporting systems in the country."
Emphasising Florida's earnings and diversification potential, Cable
Bahamas said its wholly-owned Summit Broadband affiliate had added
5,483 residential customers over the 18 months to end-June 2017.
"Summit continued to see growth as revenue increased by 71 per cent to
reach $84 million," Cable Bahamas said. "Over the last four years, total
revenue grew by approximately $77 million or over 1,043 per cent. The
largest contributing factors to this growth were revenues from residential
subscribers (an increase of 33,656 subscribers in the four-year period).
"Residential revenue contributed approximately $53 million or 63 per cent
of total revenue, and acquired 5,483 net new subscribers in 2017,
representing a 17 per cent growth over the past 18 months. We expect to
significantly grow over the next five years in residential and commercial
revenue."
Cable Bahamas said its Hurricane Matthew recovery costs totalled $8
million, as a result of having to restore communications services to 60,000
homes and businesses, with more than 200,000 phone calls fielded.
"A significant part of the Grand Bahama outside plant network, which
sustained the most damage, was rebuilt to the tune of nearly $6 million.
An additional $2 million in cost was expensed during the financial year as
a result of the storm not relating to the rebuild," the annual report
disclosed.
<< Back to news headlines >>
Gov't Pays '3x' Value Of Bob's Toxic Loans Tuesday 31st October, 2017 – Tribune242
Bank of the Bahamas' (BOB) latest bail-out has cost Bahamian taxpayers
more than three times' the net value of toxic loans purchased from the
stricken BISX-listed bank.
The full-year 2017 accounts, released yesterday, reveal that the
Government paid $162 million to acquire non-performing credit worth just
a net $49 million as part of the bank's August 'rescue'.
The accounts, audited by the KPMG accounting firm, reveal that the $113
million "difference" will be written back into Bank of the Bahamas' balance
sheet as 'special retained earnings', boosting its net equity and helping to
largely erase a $140.498 million accumulated deficit.
Explaining the implications of BOB's most recent bail-out, the financials
said: "A portfolio of non-performing loans with principal amount of $131
million, and accrued (unpaid) interest receivable of $31 million, with a
total net book value of approximately $49 million was derecognised.
"$162 million in unsecured promissory notes [government bond or IOUs]
was received for these loans and was recognised as an asset.... The net
difference of approximately $113 million between the Notes received and
the net book value of the derecognised assets was recognised directly in
equity as 'Special Retained Earnings', and is considered to be a part of the
bank's regulatory capital."
The gulf between the sum paid by the Government/Bahamian taxpayers
to rescue an essentially insolvent Bank of the Bahamas, and the net value
of the 'toxic' loans acquired by the Bahamas Resolve bail-out vehicle, has
never previously been disclosed.
The August 2017 transaction copied the model established by the first
Bahamas Resolve 'rescue', which injected $100 million worth of
government paper into BOB in exchange for 'bad' loans worth a net $45
million.
However, the latest bail-out represents a far greater transfer of liabilities
from BOB to the Bahamian taxpayer. For the sum paid by the Government
is 230.6 per cent, or more than three times' higher, than the $49 million net
worth assigned to Bahamas Resolve's latest toxic loan portfolio. The ratio
for the first 'rescue' was just 122 per cent.
That $49 million valuation is also open to question, given that James Smith,
Bahamas Resolve's inaugural chairman, previously revealed to Tribune
Business that the first $45 million portfolio was worth half that amount once
all the loan security/collateral was properly assessed.
The two bail-outs are a massive transfer of liability from BOB, and its
shareholders, to the Bahamian taxpayer, given that it is the Government -
through Bahamas Resolve - that now has responsibility for collecting on
these 'toxic' loans - a process that could last decades.
The Government is also redeeming the $100 million worth of bonds
injected into BOB through the first Bahamas Resolve transaction, a process
that will be completed via four payouts this fiscal year.
This raises the possibility that the Government will, at some stage, also
have to redeem the $162 million involved in the latest transaction and
replace them with hard cash - something that represents the most
significant potential drain for taxpayers.
But BOB's financial statements for the year to end-June 2017 reveal that
the Minnis administration had little choice but to effect a second 'bail-out',
given that an astonishing 55 per cent - more than half - of the bank's loan
portfolio was rated non-performing.
The bank's continued deterioration was highlighted by the fact that non-
performing loans, as a percentage of BOB's total credit portfolio, had
increased from 46.07 per cent at year-end 2016 to 55.11 per cent just one
year later.
This meant that $246.973 million, out of a net $448.125 million portfolio, was
90 days or more past due at end-June 2017. In particular, 79.4 per cent or
$44.038 million of BOB's $55.487 million commercial mortgage portfolio was
deemed 'impaired' at the year-end date.
Some 57.8 per cent, or $103.494 million of BOB's $179.101 million
commercial loan and overdraft segment, was also branded as 'non-
performing' at year-end 2017.
The scale of the latest Bahamas Resolve transaction was meant to cure
this, and BOB's continued non-compliance with four out of five key
regulatory capital ratios set by the Central Bank of the Bahamas.
"It is expected that this transaction will restore all of the bank's regulatory
capital ratios to compliance," BOB's 2017 financial statements said of the
latest 'bail-out'.
"As of June 30, 2017, and 2016, the bank was not in compliance with
regulatory minimum requirements for the following [four] ratios primarily
due to the significant net losses recorded by the bank and the
consequential accumulated deficit position.
"The Central Bank is aware of these regulatory deficiencies, and has
imposed certain supervisory interventions on the bank. The bank continues
to report to the Central Bank on its progress. Effective September 30, 2016,
the Central Bank increased the minimum capital requirement for the ratio
on total capital to total risk weighted assets to 18 per cent for the bank."
The extent to which the Government continues to prop up BOB is further
highlighted by the fact that, at end-June 2017, the Public Treasury and
other government agencies accounted for 37.4 per cent - more than
one-third - of the bank's total deposits.
The impact from the Bahamas Resolve transaction was not included in
BOB's 2017 financials, given that the 'rescue' occurred two months after its
year-end. The BISX-listed bank's net loss almost doubled, from $23.296
million in 2016 to $46.3 million, almost entirely due to a more than-100 per
cent increase in loan loss provisions.
These grew from $24.499 million to $51.957 million for the year to end-June
2017, highlighting the extraordinary weakness of BOB's credit portfolio.
KPMG, pre-bail-out, warned shareholders that there was a "material
uncertainty" over BOB's ability to continue as a 'going concern' given the
heavy, consistent losses incurred by the bank since its 2014 financial year.
"The bank has experienced continuing operating losses for the last several
years, and was also non-compliant with certain of its externally imposed
regulatory capital requirements as at June 30, 2017, and 2016," KPMG
said.
"These events and conditions, along with other matters as set forth,
indicate that a material uncertainty exists that may cast significant doubt
on the bank's ability to continue as a going concern.
"Management does not expect that the continued operating losses or
regulatory capital deficiencies will impact the bank's continuing ability to
operate as a going concern. Our opinion is not modified in respect of this
matter."
In a separate development, Tribune Business understands that Anthony
Allen, formerly Scotiabank's top Bahamian executive, has resigned from
his post as BOB's deputy chairman for unspecified "personal reasons".
<< Back to news headlines >>
IDB to invest $65 million to improve water and sanitation services in Haiti Tuesday 31st October, 2017 – Caribbean News Now
Haiti will improve drinking water and sanitation services in the Port-au-
Prince metropolitan area, as well as in rural areas, in particular those
affected by Hurricane Matthew, with a $65 million grant from the Inter-
American Development Bank (IDB).
The funds will help improve the sanitary situation in Port-au-Prince and rural
communities by supplying them with drinking water and sanitation
services and enhancing hygiene practices, including menstrual hygiene,
and focusing on the needs of the population living in the areas affected
by the latest hurricane.
The project will also strengthen the ability of the Port-au-Prince
metropolitan region’s Technical Service Center (CTE-RMPP, after its French
initials) to improve the company’s financial sustainability, as well as the
capabilities of the Regional Drinking Water and Sanitation Office of the
West (OPERA West) and of the National Drinking Water and Sanitation
Agency (DINEPA).
Hurricane Matthew has caused major damage to drinking water systems
in the departments of Nippes, Sud and Grand ‘Anse. Total losses caused
to the sector by climate events have been estimated at $20.6 million,
including $14.2 in damages caused in rural areas, where some 700,000
people have been left without access to drinking water. Some 60 drinking
water facilities have been severely damaged or totally destroyed.
This third operation will help take the number of household water
connections from 45,000 to 100,500 and the number of kiosks from 185 to
280, while 12,000 new condominium connections will be added. All in all,
this will raise the share of the population with access to drinking water
services from 44 percent now to 60 percent.
<< Back to news headlines >>
Commercial banks forced to hold more Govt paper Tuesday 31st October, 2017 – Barbados Today
With commercial banks currently displaying a low appetite for such
instruments, the Central Bank of Barbados today announced an increase
in the amount of Government paper the banks are required to hold by
law.
Saying the move was “appropriate”, Acting Governor Cleviston Haynes
announced that “effective December 1, 2017, commercial banks will be
required to hold 18 per cent of their domestic deposits in stipulated
securities, and from January 1, 2018 the banks will be required to hold 20
per cent of their deposits in stipulated securities.
“This is the second increase for the year and complements the fiscal
initiatives introduced by the Minister of Finance in his Financial Statement
and Budgetary Proposals earlier in the year,” Haynes said, while pointing
out that “the cash reserve requirement for commercial banks remains
unchanged at five per cent and the reserve requirement for deposit-
taking trust and finance companies and merchant banks also remains
unchanged”.
In his May review the acting governor had announced that commercial
banks would be required to hold 15 per cent of their domestic deposits in
stipulated securities, up from ten per cent. That took effect from June 15,
2017.
Over the past year in particular a number of commercial banks have
backed away from taking on Government debt out of fear that when it
becomes due, Government may not be able to repay, given its dwindling
reserves, which now stand at 8.6 weeks of imports or $549.7 million, and its
soaring national debt of 144 per cent of gross domestic product.
However, in defence of the further tightening of the domestic monetary
policy, Haynes pointed out that the securities reserve requirement had
been as high as 20 per cent in the past, while suggesting that as the
economic situation improves it would likely fall back down to the ten per
cent level, which existed for the last seven years.
“We believe that as we work through our economic challenges that it is
important for all of the players in the system to contribute towards helping
to restore confidence and growth in the system. And therefore we believe
that it is appropriate at this time to increase the securities reserve
[requirement],” Haynes said.
“It is our belief that once we are able to address the economic
challenges which we face at present, that we will be able in the future to
bring those ratios back down to levels that we consider to be appropriate.
But this is a measure that is necessary at this point to contribute towards
the overall economic stabilization for which we aspire,” he said.
However, the acting governor said what was now critical was for
Government to put the necessary fiscal policies in place to restore overall
confidence in the economy.
For the first half of the 2017-2018 financial year, the deficit was again
financed domestically, with commercial banks providing 76 per cent of
the funding “principally because of the requirement for banks to increase
their holdings of Government securities”, according to the latest Central
Bank report.
“The banking sector continued to exhibit a trend of high excess liquidity,
improved asset quality and high levels of capitalization. The excess cash
reserve ratio declined to 15.1 per cent, well above the historical norm
even after the impact of the monetary policy decision to raise the
commercial bank’s requirement ratio in June 2017,” Haynes added.
<< Back to news headlines >>
Plunging reserves Tuesday 31st October, 2017 – Barbados Today
With election fever already in the air, Acting Central Bank Governor
Cleviston Haynes is not about to tell the Freundel Stuart administration to
bite the proverbial bullet and agree any International Monetary Fund
(IMF) financing arrangement.
However, during a press conference today called to review the country’s
performance for the first nine months of this year, Haynes made no bones
about saying that the island’s foreign reserves position was currently out of
whack.
And while staying clear of taking a definite position on whether
Government should go the IMF route, he warned that assistance from
international development partners, including the Development Bank of
Latin America, would not “address the overall issues we have in terms of
the demands and supply of foreign exchange”.
However, he said some hard political decisions would have to be made in
terms of state spending, while suggesting that divestment of some
Government assets should be a key consideration.
“It goes without saying that we are concerned about the direction in
which the reserves have been going,” Haynes said, while reporting that
the economy grew by a modest 1.4 per cent during the first nine months
of this year, led by tourism, which expanded by four per cent.
But this was simply not enough to erase the country’s worrying deficit,
which was estimated at $279 million for the last six months, a $115 million
improvement over the same period in 2016.
Equally worrying was the state of the country’s international reserves
which plummeted further below the 12 weeks benchmark to reach just 8.6
weeks of import or $549.7 million at the end of September, putting more
pressure on the stability of the Barbados dollar.
“Despite moderate economic growth and policy-induced reduction in
the fiscal imbalance, the Barbadian economy continues to face
significant economic challenges. In particular, strengthening of the
international reserves is needed to ensure that the reserve buffer remain
adequate in order to protect the fixed exchange rate peg,” the acting
governor stressed.
At the same time, he reported Government’s overall debt has climbed to
144 per cent of gross domestic product, with current expenditure
increasing by $13.9 million, largely due to an increase in grants to public
institutions.
During the first half of the year, the deficit was largely financed by local
sources, with commercial banks providing 76 per cent of the funding and
Central Bank assistance “contained to $46.1 million”.
Following the presentation by Minister of Finance Chris Sinckler back in
May of a $542 million austerity package that included a 400 per cent
increase in the National Social Responsibility Levy (NSRL), there has been a
slight improvement in the fiscal position over the last nine months, with
Haynes reporting that tax revenues increased by $98.6 million, due in part
to a $48.8 million boost in receipts from the controversial NSRL.
In addition, excise taxes rose by $46.4 million, resulting from higher excise
duties on fuel and improved chargeable values on imported goods.
Corporate taxes also rose by $35.5 million, but the Central Bank said there
were smaller gains in the collection of Value Added Tax and personal
income taxes as the overall revenue outturn was dampened by weaker
import duties and a fall in withholding tax.
In this context, Haynes said while it was “understandable” that a lot of the
focus this year has been on tax measures, there was a need for stronger
focus by the Freundel Stuart administration on addressing the expenditure
side, even though he acknowledged that the situation could not be fixed
overnight.
“Political decisions will have to be taken as to where they want to effect
such cuts and what the nature of those cuts will be. When I say cuts in
expenditure it could come in different forms . . . but the bottom line is that
we have to reduce the size of the fiscal deficit,” Haynes stressed.
“The fiscal outlook underscores the need for expenditure restraint in the
short term to supplement the recently introduced revenue measures, as
Government seeks to place the public finances on a sustainable path
and reduce the debt overhaul,” he added.
With elections constitutionally due here by the middle of next year and
political parties already in full campaign mode, the acting governor
further warned that “the scale of fiscal and debt imbalances now require
significant structural reforms, related to the public sector financial
management and improved tax administration”.
He said while the economy was expected to record between one per
cent and 1.5 per cent growth for the current financial year, this was highly
dependent on the execution of some large tourism-related projects.
The growth, which is higher than the revised 0.9 per cent projected by the
IMF, is also dependent on the amount of revenue earned from the
recently announced tax measures, as well as the level of financial
investment to help “offset some of the reduction in domestic demand
arising from the fiscal measures”.
<< Back to news headlines >>
No hike Tuesday 31st October, 2017 – Barbados Today
With this island’s two trade major unions currently persisting with demands
for double digit pay increases for their members, the Central Bank has
issued a fresh word of caution that the economy can ill-afford any such
fiscal strain at the moment.
Just last week the National Union of Public Workers (NUPW) issued a
warning to the Freundel Stuart administration that it was fast running out of
time to get the stalled public sector wage negotiations back on track.
NUPW President Akanni McDowall revealed to Barbados TODAY at the
time that the union had written to the Ministry of Civil Service demanding
a return to the bargaining table by today for talks on a proposed 23 per
cent wage hike for its members who have not had a pay increase for
nearly a decade.
However, in a brief statement this afternoon, the NUPW said to date no
acknowledgement has been received from the ministry; therefore the
union was prepared to take whatever action was necessary to bring the
parties to the table.
Amid rising domestic cost of living, the Barbados Workers’ Union has also
been pressing for a 15 per cent salary hike for its members.
However, based on the outcome of a performance review of the
controversial National Social Responsibility Levy (NSRL) at the end of
September, the Freundel Stuart administration is yet to say whether it can
afford to meet the unions’ demands.
Asked by Barbados TODAY to comment on the situation during his nine-
month review of the country’s economic performance, Acting Governor
Cleviston Haynes maintained the position he had taken back in May that
a wage increase was not affordable at this time, given the delicate state
of Government’s finances.
“On a net basis we cannot be looking at increasing expenditure.
“When you talk about increasing wages, given our overall fiscal situation,
we need to be looking therefore at savings elsewhere because when you
increase your wages bill, you don’t increase the amount of resources
available to finance it. And one of the fundamental issues we face at
present is our ability to adequately finance our expenditures,” Haynes
explained.
“So from the Central Bank’s perspective we would not want to see
anything done that would impact on the Government’s ability to finance
the expenditures that become due,” he added.
According to the latest Central Bank report, domestic inflation rates
jumped to over three per cent due mainly to increases in food prices late
last year and earlier this year. Today the bank also cautioned of the
increasing likelihood of above average inflation due to rising economic
instability.
“Taking our overall macroeconomic perspective [into account], we
would not want any shocks that represents a worsening in the fiscal
situation as we go forward,” the Acting Governor said while
acknowledging that the proposed wage hike was a matter for
Government and the trade unions to decide upon.
<< Back to news headlines >>
Economy grows but foreign reserves fall further Tuesday 31st October, 2017 – Nation News
The Barbados economy grew by an estimated 1.4 per cent over the first
nine months of this year but the foreign reserves have taken another hit.
This was among the information contained in the Central Bank of
Barbados’ Economic Review for the January to September period.
It was issued this morning ahead of Acting Governor Cleviston Haynes’
later Press conference.
The review said economic growth “moderated” in the third quarter of the
year.
“Tourism output, which fuelled the stronger growth performance over the
first half of the year, fell during the third quarter, due to a reduction in the
average length-of-stay of visitors and hurricane-related disruptions to
tourist arrivals in September,” the bank said.
The institution pointed out that improved tourism performance for the first
nine months of the year enabled the external current account to stabilise.
However, external debt service, and a lack of major foreign inflows to
offset those payments, contributed to a further decline in the level of
international reserves. At the end of September, they had declined by
$133.9 million to $549.7 million, the equivalent of 8.6 weeks of import
cover.
The reserve loss was greater than that of 2016, principally due to a decline
in net short-term private inflows that offset a modest improvement in net
public sector flows.
Meanwhile, the Central Bank said Government made some progress in
reducing the fiscal deficit but there was a need for more to be done.
“The on-going financing constraint and the weakening of the foreign
reserves position underscore the need for continued strengthening of the
fiscal accounts, so as to restore the reserves to desired levels and create a
platform for sustainable economic growth over the medium term,” it
recommended.
Over the period, activity in the tourism sector grew by 4.1 per cent
compared to 2.8 per cent in the corresponding period in 2016.
While September arrivals fell by 3.3 per cent, data for the January to
September period of 2017 showed a cumulative growth in long-stay
visitors of 6.2 per cent, compared to the same period in 2016.
Read the full report here.
Cruise passenger arrivals for the first nine months of the year rose by 17.6
per cent but this was tempered by a 21.3 per cent decline in arrivals
during the third quarter.
This was attributed to a falloff in cruise calls as cruise lines adjusted their
September itineraries following the impact of unfavourable weather
conditions.
The bank concluded that despite moderate economic growth and tje
reduction in the fiscal imbalance, the Barbadian economy continues to
face significant economic challenges.
“In particular, strengthening of the international reserves is needed to
ensure that the reserve buffer remains adequate in order to protect the
fixed exchange rate peg.
“Current forecasts are for a moderate recovery in reserves by the end of
the current fiscal year, but higher capital inflows, including those
associated with public sector divestment, remain central to this outturn,” it
said.
<< Back to news headlines >>
Guyana Goldfields generates US$50M in third quarter Wednesday 1st November, 2017 – Kaieteur
Guyana’s biggest gold mine, Guyana Goldfields Inc., announced that it
generated over US$50M for the third quarter alone. The period, July 1st to
September 30, 2017, saw the production of 41,000 ounces of gold.
The Canadian-owned gold miner is now targeting more than 160,000
ounces for this year, higher than what was projected.
“Gold production totaled 41,000 ounces during the current quarter; with
higher grades expected in the fourth quarter, the Company expects full
year production for 2017 to come in at the low end of guidance of
160,000 – 180,000 ounces,” the company announced yesterday.
Operating costs (including depreciation and royalty) were US$940 per
ounce.
“September was a very strong month with gold production of 18,900
ounces with operating cash costs before royalty of US$544 per ounce…”
Cash generated from operations, before working capital adjustments, of
$20.4M, the company said.
The Company’s balance sheet remains strong with a cash balance of
$64.2 million versus a debt balance of $63.9 million as at the quarter’s end.
According to the Guyana Goldfields, looking forward, Greenfield
exploration drilling has commenced at the Company’s Wynamu and
Iroma properties, with drill results expected in the fourth quarter.
“Significant capital investments made through the first three quarters of
2017 in the mining fleet, bulk emulsion delivery system and logistics
haulage fleet, is expected to generate significant operating cost savings
moving forward as all equipment is in-country and has been
commissioned.”
The company said it continues to have an excellent health, safety and
environmental track record with over 4,000,000 employee hours worked
without a lost-time incident.
Scott Caldwell, President & CEO stated: “The Company reported a strong
and significantly improved third quarter of 2017 primarily driven by
increased mill feed grades due to mining activity reverting to the central
diorite ore body at Rory’s Knoll. September was a very strong month and
this strong performance has continued into October. We expect to finish
the year with our strongest quarter yet, and at the low end of annual
guidance, with ore being sourced primarily from the high grade diorite ore
at Rory’s Knoll.”
For the month of October 2017, operational and cost performance
trended favourably, as expected, and gold production from mining
operations is estimated to be approximately 17,100 ounces.
Gold mining has been boosting the extractive sector as the biggest
foreign currency earner for Guyana, despite a recorded sloth in others.
This year, Guyana is again expected to top the 700,000 ounces mark
despite some poor weather.
Starting up over two years ago, the company has been employing local
service providers and taking up the slack from where Omai Gold Mines
Limited left off.
<< Back to news headlines >>
Jamaica slips three spaces in crucial Doing Business Report Wednesday 1st November, 2017 – Jamaica Observer
One month after showing improvement on the Global Competitiveness
Report, Jamaica has conversely slipped three places in the prestigious
Doing Business Report 2018 ranking to 70 of 190 countries.
The country also fell one place back in its rank among Caribbean
neighbours, holding second position in respect of doing business behind
Puerto Rico. Jamaica however maintained its overall spot at sixth in the
Latin American and Caribbean region.
New Zealand, for the second- consecutive year, ranked first on the ease
of doing business, while at the other end of the chart stood Somalia. A
high ease of doing business ranking means the regulatory environment is
more conducive to the starting and operation of a local firm.
Jamaica's 2018 ranking follows rapid ascension for the island after it
placed seven spots above its 2015 ranking to 65 in 2016, but fell to 67 for
2017.
Last year, however, the World Bank noted that 2017 rankings cannot be
directly compared with those for 2016 “due to adjustments in its
methodology.”
Despite the downward movement in ranking, Jamaica did manage to
record some improvements, including its distance to frontier score, which
helps to assess the absolute level of regulatory performance over time.
The country moved to 67.27 for the year 2018 compared to 66.70 a year
earlier.
According to the World Bank, the improvement in the country's score for
this area was led by swift implementation of reforms, so much that
Jamaica was featured as the third country in the Latin America and
Caribbean region for having implemented the most reforms over the last
15 years.
In a round-table interview with the Jamaica Observer yesterday, World
Bank country manager for Jamaica, Galina Sotirova, had a positive view
of the rankings.
“This is another positive message. It means Jamaica has a lot of good
trends and that the country can be on the top of the indicators when
there is commitment and when there is a will to implement the reforms,
but other countries are doing better than Jamaica,” she said.
“I keep saying we are in the land of Usain Bolt and we should do better so
that next year we are ahead of the other economies rather than other
economies taking over by being more forceful on other reforms,” she
warned.
To date, Jamaica — under the guidance of the International Monetary
Fund, the World Bank and other agencies — has implemented a total of
25 reforms, following closely to Mexico with 26 reforms and Colombia with
34 reforms.
The latest reforms being undertaken by the Government of the Jamaica
are the public sector transformation programme and the pension reform.
However, the country was recognised for reducing the time to start a
business, improved reliability of electricity supply, resolving insolvency, and
improved trading across borders.
More specifically, Doing Business found that Jamaica ranked among the
best globally in the area of starting a business — with a rank of 5 — taking
just three days to register a business, compared to 31 days 15 years ago.
The country was also recognised among the top 20 countries in the
getting credit indicator for its comprehensive credit reporting system.
Having received thumbs down last year, Jamaica beefed up investment
in the distribution network for the supply of electricity in Kingston, including
the installation of smart metres and distribution of automation switches,
which also contributed to the country's improved Doing Business ranking.
Additionally, implementation of the web-based customs data
management platform, ASYCUDA World, saw Jamaica getting closer to
global best practices in business regulations.
Nonetheless, the World Bank noted that one of the biggest challenges for
the region is the time it takes to pay taxes. On average, tax payment
takes 332 hours per year in Latin America and the Caribbean, compared
to the average of 161 hours per year in the OECD high-income
economies.
The region also underperformed in the areas of registering property,
dealing with construction permits and starting a business. It takes on
average 63 days to transfer property in the region, which is significantly
more than across OECD high-income economies where it takes 22.5 days.
“Looking at the indicators, there are areas that Jamaica really needs to
focus on and policy reforms in these areas could make a huge
improvement in the overall ranking. More importantly, the overall ease of
doing business in Jamaica helps investors and helps local businesses to
expand,” Sotirova said.
<< Back to news headlines >>
Futures jump on strong earnings; Fed takes center stage Wednesday 1st November, 2017 – Reuters
U.S. stock index futures pointed to a strong opening for Wall Street on
Wednesday, as an upbeat third-quarter earnings season lifted sentiment
while investors waited for clues on future rate hikes from the latest Fed
meeting.
The Federal Reserve ends its two-day policy meeting later in the day and
will release its statement at 2:00 p.m. ET (1800 GMT).
The central bank is expected to keep interest rates unchanged as
speculation swirls on who will be its next leader, but will likely point to a
firming economy as it edges closer to a possible rate rise next month.
The White House has said President Donald Trump will announce his Fed
pick on Thursday. Trump is expected to choose Fed Governor Jerome
Powell, who is seen as more stock-market friendly, sources have told
Reuters.
Investors were also keenly watching developments around a U.S. tax-cut
plan. Legislation expected on Wednesday has been delayed by a day as
lawmakers try to resolve differences.
October ended on a strong note on Tuesday, with the major Wall Street
indexes recording their best monthly gains since February, supported by
technology and consumer staple stocks.
Brent crude futures LCOc1 jumped 1 percent to $61.58 per barrel, its
highest since mid-2015, as data showed OPEC has significantly improved
compliance with its pledged supply cuts and Russia is also widely
expected to keep to the deal.
ADP National Employment report due at 8:15 a.m. ET will likely show
private employers added 200,000 jobs in October, up from 135,000 in
September.
The data comes ahead of Friday’s non-farm payrolls report for October.
The data will reveal if the labor market has strengthened after a
hurricane-ravaged September.
A separate report from the Institute for Supply Management is likely to
show its national manufacturing index slipped to 59.5 in October from 60.8
in September. The report is due at 10:00 a.m. ET.
Among early movers, US Steel (X.N) jumped 8 percent after reporting
better-than-expected profit and sales.
Facebook (FB.O) was up 1.3 percent ahead of the social media giant’s
earnings report after market.
Electronic Arts (EA.O) dipped more than 1 percent after the videogame
publisher’s revenue forecast for the holiday shopping quarter narrowly
missed estimates.
Estee Lauder (EL.N) gained 1.52 percent after the cosmetics maker’s sales
beat estimates.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)
<< Back to news headlines >>
Oil hits highest since mid-2015 as OPEC sticks to supply deal Wednesday 1st November, 2017 – Reuters
Oil rose to its highest since mid-2015 on Wednesday as data showed
OPEC has significantly improved compliance with its pledged supply cuts
and Russia is also widely expected to keep to the deal.
Brent crude futures LCOc1 were up 59 cents at $61.53 per barrel at 0905
GMT, having hit a session peak of $61.70 earlier, the highest since July
2015.
U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 a barrel, up
74 cents.
The oil price gained 7 percent in October, marking the fourth consecutive
month of gains.
“The bulls have it and momentum is strong,” Saxo Bank Senior Manager
Ole Hansen said.
“We know how oil can easily run ahead of what is fundamentally justified
and we’ve seen that in both directions in the last couple of years,” he
said. “We really need to see demand growth pick up even more strongly
than what is currently expected for the bullish outlook for to be
maintained.”
Optimism has been fueled by an effort this year lead by the Organization
of the Petroleum Exporting Countries (OPEC), Russia and other producers
to hold back about 1.8 million barrels per day (bpd) in oil production to
tighten markets.
OPEC’s October output fell by 80,000 bpd to 32.78 million bpd, putting
adherence to its pledged supply curbs at 92 percent, up from
September’s 86 percent.
Analysts and traders expect Russia to stick to its agreement to curb its oil
output by 300,000 bpd from 11.247 million bpd reached in October 2016.
Saudi Arabia and Russia are considering extending the agreement to
potentially cover all of next year.
Should participants after that return to full capacity and U.S. output also
grow, a supply glut could return.
“We could rapidly ... go from a predicted deficit of around 260,000 barrels
to a surplus of close to 1.5 million barrels. Prices would undoubtedly
collapse,” said Matt Stanley, a fuel broker at Freight Investor Services.
Another factor will be U.S. output, which has risen by almost 13 percent
since mid-2016 to 9.5 million bpd.
“U.S. crude oil production is 410,000 bpd below the April 2015 peak of 9.62
million bpd. We expect production to surpass this level before year-end,”
Barclays bank said.
(Additional reporting by Henning Gloystein in Sinagpore; Editing by Louise
Heavens)
<< Back to news headlines >>
Cryptocurrencies' total value hits record high as bitcoin blasts above
$6,500 Wednesday 1st November, 2017 – Reuters
The aggregate value of all cryptocurrencies hit a record high of around
$184 billion on Wednesday, according to industry website
Coinmarketcap, making their reported market value worth around the
same as that of Goldman Sachs and Morgan Stanley combined.
The new peak came as the biggest and best-known cryptocurrency,
bitcoin, hit a record high of more than $6,500. That took its own “market
cap” - its price multiplied by the number of coins that have been released
into circulation - to a record high just shy of $110 billion.
The latest surge in bitcoin - which has seen an eye-watering increase of
almost 800 percent in the past 12 months - was driven by news on Tuesday
that CME Group, the world’s largest derivative exchange operator, would
launch bitcoin futures in the fourth quarter of the year.
The announcement was seen as a major step in the digital currency’s
path toward legitimacy and mainstream financial adoption.
The second-most valuable cryptocurrency Ether - sometimes known as
“Ethereum”, after the project behind it - was trading slightly down on the
day at $302 per coin, having hit a record high of more than $410 in June.
(Reporting by Jemima Kelly; Editing by Dhara Ranasinghe)
<< Back to news headlines >>
Dollar climbs against yen before Fed decision, Kiwi catapults Wednesday 1st November, 2017 – Reuters
The dollar climbed on Wednesday, nearing a 3 1/2-month high against
the yen, as investors focused on a policy decision from the U.S. Federal
Reserve later in the day as well as any progress on President Donald
Trump’s tax reform plans.
The U.S. central bank is expected to leave interest rates unchanged at the
end of its meeting later in the day. Investors will be watching for
confirmation the Fed will resume raising rates next month and the timing
of any moves in 2018, but they do not expect the decision to produce a
large market reaction.
Markets will also be watching other developments in Washington, where
later on Wednesday Republican lawmakers may introduce a bill to cut
taxes and the Treasury Department will release its refunding plans.
The dollar climbed as much as 0.4 percent to 114.06 yen, close to last
week’s high of 114.45 yen, tracking U.S. Treasury yields higher.
“As tax reform expectations continue to rise – which we expect them to
over the next month – that should be consistent with U.S. yields continuing
to rise and dollar/yen pushing higher,” said Sam Lynton-Brown, a currency
strategist at BNP Paribas in London.
“We target a move to a 115 to 116 (yen) range in the near term,” he said.
The dollar index, which tracks the U.S. currency against a basket of six
major rivals, added 0.1 percent to 94.680, though it remained shy of
Friday’s three-month high of 95.150.
The euro edged down to $1.1642.
Strategists said investors would be eying ADP U.S. jobs data later in the
day, before Friday’s all-important non-farm payrolls report.
Investors will also be searching for clues on who might be the next Fed
chair. President Donald Trump is expected to announce his choice on
Thursday, with news reports tipping Fed Governor Jerome Powell as likely
to be nominated to take over when Janet Yellen’s term expires in
February.
The New Zealand dollar was the biggest mover among major currencies,
rising as much as 1.2 percent to a one-week high of $0.6931 after data
showed the country’s jobless rate had sunk to a nine-year low of 4.6
percent.
The kiwi had come under pressure in recent weeks on fears of the new
Labour-led coalition government’s left-leaning policies, including a
clampdown on foreign investment and migration.
“The kiwi was oversold on fiscal uncertainty and about what the Labour-
led government would be enacting, so the market was short, and prone
to squeezes,” said Sue Trinh, head of Asia FX strategy at RBC Capital
Markets in Hong Kong.
Bitcoin, which has more than doubled in price since mid-September
alone, hit another all-time high, hitting $6,591 on the European Bitstamp
exchange, boosted by bets that it could enter the financial mainstream
after CME Group said it would launch bitcoin futures trading.
(Reporting by Jemima Kelly and Polina Ivanova; Additional reporting by
Lisa Twaronite in Tokyo; Editing by Larry King)
<< Back to news headlines >>
U.S. gasoline demand hits record high in August: EIA Tuesday 31st October, 2017 – Reuters
U.S. gasoline demand hit a record in August, delivering a strong end to
the summer driving season, according to data released on Tuesday by
the U.S. Energy Information Administration.
U.S. gasoline demand rose by a modest 0.9 percent, or 83,000 barrels per
day (bpd) to 9.77 million bpd in August compared to the same month last
year, the data showed. The level was the highest on record, according to
the EIA’s data.
It was the fourth increase in the past five months, EIA data showed.
The strong demand came ahead of much of the historic hurricane activity
this year.
Overall, U.S. gasoline demand January through August was relatively flat
compared with the same stretch last year, largely due to a poor first
quarter, but it could decline in the months ahead as data is released that
takes into account the demand decline from the series of hurricanes that
hit the United States.
U.S. gasoline demand, which accounts for 10 percent of global
consumption and hit a record high last year, has risen each year since
2012.
U.S. crude oil output fell slightly in the month to 9.20 million bpd in August
from 9.23 million in July, according to the data. Production has been in a
range of 9.07 million bpd to 9.23 million bpd since February, according to
the data.
U.S. distillate demand remained strong, rising 2.9 percent year-on-year to
3.99 million bpd in August, the data showed.
Total oil demand was down 0.6 percent year-on-year, or 114,000 bpd, to
20.16 million bpd in August, the data showed.
Motor travel data suggests strong driving numbers, but experts have said
greater fuel efficiency has taken hold and helped tamp down gasoline
demand.
U.S. motorists logged 0.8 percent more miles on the road in July than they
did in the year-ago month, keeping 2017 on pace to break last year’s
record of total miles driven, according to U.S. Department of
Transportation data.
Motorists drove 1.5 percent more miles on U.S. roads through July than in
the same period last year, the data shows. August numbers will be
released later this month.
(Reporting by Jarrett Renshaw; Additional reporting by Jessica Resnick-
Ault; Editing by Peter Cooney and Chris Reese)
<< Back to news headlines >>
Sterling hits four-and-a-half-month high vs euro on strong factory data Wednesday 1st November, 2017 – Reuters
Sterling jumped to a 4-1/2 month high against the euro on Wednesday
after British manufacturers reported robust growth for October, cementing
expectations that the Bank of England will raise interest rates on Thursday.
Though the market is almost completely priced in for a rate rise decision
from the BoE this week, investors are watching closely for any signs that it
could spell the start of a longer-term tightening cycle.
Wednesday’s survey showed UK factories reporting stronger growth than
expected last month, as well as rising inflation pressures.
The manufacturing purchasing managers’ index (PMI) from IHS
Markit/CIPS rose to 56.3 in October, from an upwardly revised 56.0 in
September. This was above its long-run average and bucked economists’
forecasts in a Reuters poll for a slight fall.
“The three-month average was the highest of the year so far... so the
pound rallied,” said Stephen Gallo, European head of foreign exchange
strategy at BMO Capital Markets.
Against the euro, sterling hit highs not seen since mid-June, reaching 87.37
pence after the data release. It eased back slightly to 87.49 pence, still up
0.3 percent on the day.
The pound also climbed against the dollar, hitting a two-week high of
$1.3321, up from $1.3283 before the data.
Figures from mortgage lender Nationwide earlier in the day showed British
annual house price growth edge up to a three-month high in October,
although the outlook for the housing market remained subdued.
Bank of England Governor Mark Carney is expected to announce the
interest rate decision at 1230 GMT on Thursday, with the market pricing in
an 88-percent chance of a rate hike, according to analysts.
“Although a hike cannot be guaranteed - Mark Carney is famously
referred to as the unreliable boyfriend - it is highly likely that the Bank will
hike rates otherwise its credibility could be on the line,” said Kathleen
Brooks, Research Director at City Index.
Signs of progress in Brexit talks have also given a boost to sterling this
week, including comments by the European Union’s Chief Brexit
Negotiator Michel Barnier, who said on Tuesday he was ready to move
onto the next stage of talks.
“Behind the scenes in London things are still simmering though as the
government still does not seem to agree about its future course. As a result
I would treat the current sterling rally with great caution,” Antje Praefcke,
an analyst at Commerzbank, wrote in a note to clients.
(Reporting by Polina Ivanova; Editing by Janet Lawrence/ Jeremy Gaunt)
<< Back to news headlines >>
European shares start November on a two-year high Wednesday 1st November, 2017 – Reuters
European stocks surged to two-year peaks on Wednesday, lifted by
resilient company earnings and record highs set in Asia and New York,
though a 6 percent slump in Standard Chartered shares kept the banking
sector under a cloud.
At 1000 GMT, the pan-European STOXX 600 rose 0.6 percent to 397.43
points, a level last seen in August 2015.
Some of that was down to Germany's DAX .GDAXI index which, playing
catch-up after Tuesday's holiday, jumped 1.3 percent to hit a fresh record
high.
Markets continued to brush off concerns over Catalonia's independence
bid, pushing Spain's IBEX .IBEX up 0.5 percent.
The European benchmark is enjoying its fifth straight day of gains and rose
almost 2 percent in October, having also taken a cue from global markets
which have been propelled higher by hopes of U.S. tax cuts, economic
recovery and a robust tech cycle.
“Economically everything looks good at the moment,” said Jonathan Bell,
chief investment officer at Stanhope Capital.
Bell cautioned, however, that while investors were riding the rising wave,
markets could be vulnerable to monetary policy changes.
The day’s top performer was British drugmaker Indivior (INDV.L) which
soared 11.5 percent after U.S. authorities recommended approval for an
opioid addiction drug. The stock has risen about 24 percent already this
week.
“On our view (the recommendation) substantially increases the
probability of approval ... which is material given its importance to future
growth prospects,” analysts at Jefferies told clients, rating the stock a Buy.
Fellow drugmaker, Denmark’s Novo Nordisk, lost 2.8 percent after
publishing third-quarter results and warning that new legislation in some
U.S. states could hurt business in its key market.
Still on the earnings front, forecast-beating third quarter results drove up
shares in Finnish tyre maker Nokian Tyres by some 6 percent, while British
bookmaker Paddy Power (PPB.I) jumped 4 percent to three-month highs.
Of the STOXX600 firms which have reported third quarter results, almost
half have beaten forecasts, according to Thomson Reuters I/B/E/S, which
also predicts average earnings to increase 3.5 percent over the same
2016 quarter.
But the latest earnings season has rekindled some worries for Europe’s
banking sector.
While BNP Paribas (BNPP.PA) shares extended the previous day’s 2.7
percent fall due to disappointment in its fixed income trading operations,
Standard Chartered (STAN.L) was Wednesday’s biggest loser, with its
biggest daily fall in three months.
While the Asia-focused lender posted a 78 percent rise in pre-tax profit,
this was overshadowed by higher expenses and flat revenues, dashing
investors’ hopes for dividend payments.
Shares in Austria’s Raiffeisen (RBIV.VI) bank also fell 2.1 percent.
Also bringing up the bottom of the index was British clothing retailer Next
(NXT.L) which sank 6 percent after results fell short of analysts’
expectations.
(Reporting by Julien Ponthus and Sujata Rao; Editing by Alison Williams)
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End of ECB's asset buys will be a "minor issue": Hansson Wednesday 1st November, 2017 – Reuters
Winding down bond purchases to zero will be “a minor issue” for the
European Central Bank because of a bulked up balance sheet and a
commitment to keep interest rates low, ECB Policymaker Ardo Hansson
said on Wednesday.
The ECB agreed last week to halve bond buys from next year but also
extended the scheme by nine months, arguing that stubbornly low
inflation requires continued stimulus, even if growth continues to
outperform expectations and policymakers were somewhat more
optimistic.
“How we move in the future ... to zero, is actually a very minor issue in the
context where the stock of accumulated purchases is already in the
trillions of euros,” Hansson told Reuters. “So the question about 10 billion
euros there or the precise phasing, I think is not really a material issue.”
The comments suggest that the ECB will continue taking the emphasis off
the purchases, focusing instead of other tools, including conventional
measures such as interest rates, and preparing markets for winding down
quantitative easing after nearly three years and bond purchases
exceeding 2 trillion euros.
They came just days after ECB Executive Board member Benoit Coeure
said he ‘hoped’ the bank had extended the bond buys, designed to
boost inflation, for the last time.
Hansson, Estonia’s central bank chief, called the euro zone’s growth
momentum fantastic and argued that the output gap or the difference
between actual and potential output, is closing “very quickly”.
In a potential victory for policy hawks, the bond buys may be skewed
more towards the private sector next year, with the share of corporate
and covered bonds rising, even if purchase volumes will not go up.
“I don’t think anyone is talking about ramping up (private sector buys), so
it is just maintaining the significant purchases and therefore the share of
the private sector element can grow,” Hansson said on the sidelines of a
news conference.
“I have always been a rather big fan of corporate sector bond buying,”
Hansson said. “So getting the mix in that direction is positive because ...
money directly from the central bank to enterprises rather than moving
from indirectly through portfolio rebalancing via government bonds, is a
much more potent channel to use.”
The ECB has not said how it will divide purchases between public and
private sector debt next year with more detail on the composition of buys
likely announced in December.
(Reporting by David Mardiste; Writing by Balazs Koranyi; Editing by
Francesco Canepa/Jeremy Gaunt)
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BOJ can't exit stimulus when inflation below 1 percent - BOJ Governor
Candidate Ito Wednesday 1st November, 2017 – Reuters
The Bank of Japan likely won’t be able to exit its massive stimulus program
while inflation is hovering below 1 percent, Takatoshi Ito, an Academic
who is a potential candidate to become the next BOJ governor, said on
Wednesday.
“What’s important is for inflation to accelerate, which would give (the
BOJ) quite some flexibility in guiding monetary policy,” Ito, a Columbia
University professor, told a seminar in Tokyo.
The BOJ has already laid the groundwork for normalizing monetary policy
by revamping its policy framework last September and gradually slowing
its bond purchases, though raising its yield targets would be some time
away, he said.
“While inflation is hovering below 1 percent, it would be hard for the BOJ
to exit (from ultra-loose monetary policy),” said Ito, who is considered a
candidate to succeed BOJ Governor Haruhiko Kuroda when his five-year
term ends in April next year.
(Reporting by Leika Kihara and Chris Gallagher; Editing by Minami
Funakoshi)
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BOJ's new 'cost-push' index suggests price pressures building Wednesday 1st November, 2017 – Reuters
A new Bank of Japan indicator that measures the costs of goods and
services not yet passed through to the wider economy showed on
Wednesday price pressures are growing, even as consumer inflation
remains subdued.
The BOJ’s “cost-push” indicator, published in a central bank report,
measured around 0.4 percent in August, according to the central bank’s
latest outlook report on the economy and prices.
The figure suggests that the year-on-year consumer price inflation
excluding fresh food and energy, which was 0.2 percent in August, would
accelerate by 0.4 of a percentage point in six months to 0.6 percent.
“Firms have been making efforts to absorb a rise in labor costs by
increasing labor-saving investment and streamlining their business process,
while limiting wage increases ... mainly to wages of part-time employees,”
the BOJ said in the report.
“However, the upward pressure on prices stemming from the rise in firms’
costs has been increasing steadily,” it said, citing the uptrend in earnings
for part-timers and higher input costs resulting from a weaker yen.
The BOJ remains confident it will achieve its target of 2 percent consumer
inflation, including energy costs, by the fiscal year starting in April 2019,
even as it remains well off the mark.
The central bank kept policy steady on Tuesday and Governor Haruhiko
Kuroda said there was no change to its stance of maintaining strong
monetary easing to hit the price target at the earliest possible date.
(Reporting by Chris Gallagher; Editing by Sam Holmes)
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India jumps to 100th spot on World Bank's Ease of Doing Business list Wednesday 1st November, 2017 – Reuters
India jumped into 100th place on the World Bank’s ranking of countries by
Ease of Doing Business for the first time in its report for 2018, up about 30
places, driven by reforms in access to credit, power supplies and
protection of minority investors.
The report, based on data from the capital New Delhi and the financial
hub of Mumbai, ranked India among the top 10 “improvers” globally,
having done better in eight out of 10 business indicators.
“Today’s result is a very clear signal from India to the rest of the world that
not only has the country been ready and open for business, as it has been
for many decades, it is now competing as the preferred place to do
business globally,” Annette Dixon, World Bank’s vice president for South
Asia, told reporters in New Delhi.
“Starting a business is now faster,” Dixon said, adding that India had
strengthened access to credit system and made it easier to secure to
procure construction permits.
However, the agency noted that India lags in areas such as “starting a
business”, “enforcing contracts” and “dealing with construction permits.”
The report excluded the impact of Prime Minister Narendra Modi’s shock
withdrawal of high-value banknotes last year and the implementation of
a nationwide multi-rate goods and services tax (GST), steps that affected
businesses and dragged the economy to a three-year-low in the April-
June quarter.
“In the case of GST, we know that this is a very complicated reform,”
Dixon said, adding that the agency would observe the GST for the next
two or three years to see its full implementation.
This month Modi eased tax rules for small and medium-sized companies in
a bid to address growing criticism of his stewardship of Asia’s third-largest
economy.
The World Bank report, covering the period from June 2 last year to June 1
this year, ranked India top among the South Asian nations.
“This year’s remarkable results are the culmination of efforts that have
taken place over the past three years, so you can extrapolate forward
and see that steps that are taken this year may take 2-3 years to show up
in the results,” Dixon said.
(Reporting by Neha Dasgupta; Edited by Krishna N. Das and Hugh
Lawson)
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China c.bank injects $2.6 bln via MLF, SLF in Oct, down 70 pct from Sept Wednesday 1st November, 2017 – Reuters
China’s central bank injected a net 17.1 billion yuan ($2.6 billion) into the
financial system via short- and medium-term liquidity tools in October, 70
percent less than in the previous month.
While net injections through those tools fell sharply in October, the
People’s Bank of China (PBOC) during the month injected a net 830 billion
yuan via its reverse repurchase agreements, compared with a net drain of
30 billion yuan in September, according to Reuters calculations based on
central bank data.
Recently, the central bank has stepped up cash injections in response to
rising bond yields amid worries about a renewed crackdown on riskier
lending even as the economy showed signs of slowing.
In a statement on Wednesday, the PBOC said it lend 498 billion yuan to
financial institutions via its medium-term lending facility (MLF) in October.
Outstanding MLF was 4.4125 trillion yuan at the end of October,
compared with 4.354 trillion yuan at the end of September, implying a net
injection of 58.5 billion yuan last month.
The PBOC extended 24.95 billion yuan of loans to local financial institutions
in October via its standing lending facility (SLF), it said.
The total outstanding amount of SLF loans was 22.32 billion yuan at the
end of October, compared with 63.68 billion yuan a month earlier,
implying a net drain of 41.36 billion yuan.
HIGH-QUALITY GROWTH
The PBOC uses the MLF and the SLF as tools for managing short- and
medium-term liquidity in China’s banking system.
At China’s recently-concluded Communist Party Congress, President Xi
Jinping said the country would pursue high-quality over high-speed
growth. He reinforced a pledge to win the war on pollution and clamp
down on riskier types of lending.
China’s annual economic growth rate eased to 6.8 percent in July-
September from 6.9 percent in the second quarter, as the property sector
cooled while a government campaign against riskier lending pushes up
borrowing costs.
Still, the economy is seen on track to beat the government’s annual
growth target of around 6.5 percent this year.
In late September, the central bank cut the amount of cash that some
banks must hold as reserves (RRR) for the first time since February 2016.
The move, effective in January, offers an earnings boost to banks if they
lend more to struggling smaller firms and the private sector.
$1 = 6.6129 Chinese yuan
(Reporting by China monitoring desk, Kevin Yao and Winni Zhou; Editing
by Richard Borsuk)
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Fed set to hold rates steady ahead of Trump's leadership decision Wednesday 1st November, 2017 – Reuters
The Federal Reserve is expected to keep interest rates unchanged on
Wednesday as speculation swirls on who will be its next leader, but the U.S.
central bank will likely point to a firming economy as it edges closer to a
possible rate rise next month.
The Fed has raised rates twice since January and currently forecasts one
more hike by the end of the year as part of a tightening cycle that began
in late 2015.
Investors have all but ruled out a move at the end of this week’s two-day
policy meeting. The Fed is due to issue its latest policy statement at 2 p.m.
EDT (1800 GMT).
Markets will look to it for confirmation the central bank is on track for a
December rate hike, though attention will quickly turn to who will be in
charge of monetary policy at the end of Fed Chair Janet Yellen’s first term
in February 2018.
President Donald Trump, who has interviewed Yellen, Fed Governor
Jerome Powell and three others for the top Fed job, is likely to announce
the nomination on Thursday.
Powell, a soft-spoken centrist who has supported Yellen’s gradual
approach to raising rates, is seen as having a lock on the position.
“The bottom line is the meeting is probably going to be a somewhat
boring event for markets, overshadowed by the expected Fed chair
decision,” said Torsten Slok, Chief International Economist for Deutsche
Bank.
INFLATION WORRIES
Fed policymakers have been buoyed in recent months by a strengthening
U.S. economy and further tightening in the labor market, although inflation
has continued to remain below the central bank’s 2 percent target.
The economy unexpectedly maintained a brisk pace of growth in the
third quarter, increasing at a 3.0 percent annual rate, the Commerce
Department reported last week.
A decline in hiring in September also has largely been dismissed as a blip
caused by the temporary displacement of workers due to Hurricanes
Harvey and Irma. That jobs report also showed wages growing at an
encouraging pace and the unemployment rate falling to more than a 16-
1/2-year low of 4.2 percent.
A strong rebound in job gains is anticipated when the Labor Department
releases its October nonfarm payrolls report on Friday.
Inflation is the main concern for Fed policymakers who are wondering
about the causes and duration of the current weakness. The Fed’s
preferred measure of inflation sits at 1.3 percent after retreating further
from target for much of the year.
Nevertheless, Yellen and other key policymakers have said the Fed, which
unveiled a plan this year to cut its balance sheet starting in October, still
expects to continue to gradually raise rates given the economy’s strength.
That is not expected to change on Wednesday.
“If we get what we expect to get, which is basically more of the same of
what we saw in the September statement,” said Sam Bullard, a senior
economist at Wells Fargo, “then yes, their gradual policy tightening plan is
in place and all signs point to a December hike.”
(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
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