With interest rates softening and credit demand easing, banks have revived their interest in asset securitisation. According to sources, public sector banks (PSBs) are receiving offers from private banks keen to sell a part of their portfolio through the securitisation route.
Recently, Icra had rated about Rs 1,800-crore securitised paper of ICICI Bank, which had personal loans as its underlying asset. This is the largest pool of personal loan securitised by a bank in the Indian market.
“Most banks have booked loans at very good rates. Going forward, if rates soften or even if they remain stable, securitisation market will gain momentum,” said Prasad Koparkar, head of structured finance at Crisil. “Besides, yields on a ‘AAA’ securitised paper are 50-75 basis points higher compared with other ’AAA’ paper,” he added.
Read more in The Economic Times
Friday, July 27, 2007
Securitisation market makes a comeback
NSE may reintroduce pre-opening session
The National Stock Exchange (NSE) is considering the reintroduction of the pre-opening session for order matching after rectifying loopholes that had led to its discontinuation earlier.
Pre-opening session has a specified duration and, as the name suggests, takes place before trading for the day commences. A questionnaire sent to the exchange did not elicit any response.
NSE used to have a pre-opening session where weighted average price of bids placed by traders would form the basis for opening prices of those stocks. However, the exchange discontinued the practice, and brokers feel this could have been triggered by the feeling that some players were availing of the facility to manipulate opening prices by making artificially high or low bids.
Read more in The Economic Times
Investment bankers pay heavy price for China’s broking pie
Overseas banks keen for a piece of China’s red-hot brokerage sector will have to swallow some rich prices to buy into domestic securities firms, which are in no hurry to make deals as they focus on their own share listings. But for investment banks such as Citigroup and JPMorgan, a strategic partnership with a local securities house is a must in the long run, if they want to cash in on China’s rapidly growing stock markets, whose capitalisation has reached nearly 20 trillion yuan ($2.65 trillion), exceeding Hong Kong.
Besides Citi and JPMorgan, banks including HSBC and Credit Suisse are shopping for Chinese partners. Even Morgan Stanley, which launched China’s first such investment banking joint venture in 1995, is eyeing its second deal, banking sources said. “You cannot ignore China if you want to explore new profit streams in emerging markets,” said Philip Leung, a Shanghai-based partner for Ernst & Young.
Mainland China is on track to overtake Hong Kong, as Asia’s biggest centre for initial public offerings this year. Analysts have said, they expected fund-raising by Chinese firms via domestic IPOs to hit 400 billion yuan this year, up from 165 billion yuan in 2006 as Beijing encourages more Hong Kong-listed firms to sell shares at home. Most overseas banks will miss out on the current IPO boom — except for Goldman Sachs, UBS and Morgan Stanley, which established partnerships in China when the industry was still mired in a severe downturn.
Read more in The Economic Times
ADB in talks with India on currency swap
The Asian Development Bank (ADB) is in talks with India about a currency swap that would help fund infrastructure projects without adding to the inflows that are complicating monetary policy, senior officials said on Thursday.
Officials from the Manila-based ADB told the media on a visit to Mumbai a dollar-rupee currency swap could help fund India's infrastructure development needs, now estimated at $475 billion over five years, without currency risk to the end-user.
India's strong rate of economic growth and soaring stock market is attracting billions of dollars in direct and portfolio foreign investment, pushing up the rupee and causing a monetary policy headache for the Reserve Bank of India (RBI).
Read more in The Economic Times
ONGC’s Q1 net rises 11.9%, beats forecast
India's top oil producer, Oil and Natural Gas Corp, said on Wednesday quarterly net profit rose 11.9 per cent, beating forecast, as lower discounts to state-run refiners offset the impact of a stronger rupee. State-run ONGC said net profit rose to 46.1 billion rupees (USD 1.1 billion) in the fiscal first quarter to end-June, from 41.2 billion rupees reported in the same period a year ago. A Reuter’s poll had forecast a net profit of 38.7 billion rupees.
The company has been weighed down by discounts it is forced to give state-run refiners to keep local fuel prices low.
Since ONGC bills its customers in US dollars, a stronger rupee that has gained about 10 per cent so far this year also squeezed earnings.
Shares in ONGC, India's second-most valuable listed company at USD 48 billion, rose 2.7 per cent during the June quarter, lagging the benchmark BSE index's 12.1 per cent gain and its sector index, which rose 19 per cent.
RBI's hands-off strategy irks IT industry
India's IT industry, the flag bearer of a resurgent economy, wants the government to step in and check the rupee's unprecedented rise to nine-year highs in an effort to protect their earnings.
The rupee has gained almost 10 per cent this year and 14 per cent over the past 12 months against the dollar, denting the earnings of an industry that gets two-thirds of its 50 billion dollars in annual revenue from the US.
"It's not a market driven by market forces alone," said Kiran Karnik, president of the National Association of Software and Services Companies (NASSCOM), in an interview here. "These are not normal times."
Read more in The Economic Times
Re closes at 40.34/35 vs dlr
The rupee on Thursday closed barely steady at 40.34/35 against the US dollar in a two-way movements on alternate bouts of buying and selling.
In active trade at the Interbank Foreign Exchange (Forex) market, the Indian currency opened at 40.34/35 per dollar but recovered in late morning deals to a high of 40.27 a dollar on firm equity markets where the benchmark Sensex was up by nearly 113 points in early trade.
However, dollar purchases by state-run banks on behalf of the Reserve Bank of India (RBI) after afternoon pulled the rupee down to close at the opening level of 40.34/35 a dollar, barely steady against Wednesday's close of 40.35/36 a dollar.
Read more in The Economic Times
Oil Prices Rise Above $75 a Barrel
Oil prices rose Friday, reversing some losses from the previous session when crude fell nearly $1 a barrel on worries a slowing U.S. economy would cut petroleum consumption.
Light, sweet crude for September delivery rose 60 cents to $75.55 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.
The contract had dropped 93 cents to settle at $74.95 a barrel Thursday as global stock troubles deepened. Street suffered one of its worst losses of 2007 amid worries about the U.S. mortgage and corporate lending markets, and the Dow Jones industrials closed down more than 310 points.
Some analysts said the market was concerned that the plunge could hurt oil demand.
Read more in Financial Express
Asian Investors Rattled by Dow's Plunge
Most Asian markets tumbled Friday in the wake of one of Wall Street's biggest drops of the year, although European markets rebounded modestly from sharp losses the previous day.
Japanese stocks fell to nearly three-month lows, Philippine stocks marked their steepest decline in 10 years, and South Korea's benchmark index - which had hit a record Wednesday - sank 4.1 percent, its biggest slide in more than three years. Chinese stocks, however, ended the day flat.
Investors in Asia were rattled after U.S. and European markets plunged Thursday amid worries over the U.S. mortgage and corporate lending markets. Those woes could cause global liquidity to dry up as international investors pull out of riskier assets, including Asian emerging markets, analysts said.
Read more in Financial Express
ITC Q1 net profit up 20%, beats forecast
Country's top tobacco firm, ITC Ltd, reported on Friday a 20 percent rise in quarterly net profit on the back of higher cigarette prices and robust growth in its packaged foods and hotels businesses.
ITC, 31.7 per cent owned by British American Tobacco Plc, has entered personal care, apparel, retail and snack foods recently, but cigarettes make up two-thirds of revenues.
The Kolkata-based company said net profit rose to 7.83 billion rupees ($193 million) in the fiscal first quarter to end-June from 6.52 billion a year earlier, beating a Reuters forecast of 7.10 billion.
A value-added tax of 12.5 per cent imposed on cigarette sales from April has pushed up prices, and ITC has said it was concerned taxes and tight regulations can affect revenues.
ITC shares, valued at $15.6 billion, gained 3 per cent in the quarter, trailing a 12 per cent rise in the main index and a 5 per cent rise in the sector index.
Ranbaxy ends patent dispute
Ranbaxy Laboratories Ltd has won 180 days of exclusive rights to sell a generic form of GlaxoSmithKline’s Valtrex in the United States after resolving a patent row, sending its shares up as much as 10 per cent on Thursday.
The country’s biggest drug maker by sales expected strong gains after resolving the patent litigation with Glaxo, and also expected to win similar exclusive rights for at least one drug every year for the next four years, chief executive officer Malvinder Singh said.
“There is a very big upside. It is a $1.3 billion product today and growing at the rate of 20%,” Singh said of Valtrex, which is used to treat herpes infections.
Read more at Financial Express
Sensex sheds over 380 points at open
The Bombay Stock Exchange benchmark Sensex tumbled over 380 points on Friday on heavy selling by funds, triggered by weak global markets.
The BSE-30 shares index, which closed 76.98 points up on Thursday, lost 380.13 points at 15,396.18 in the first five minutes of trade.
Similarly, the National Stock Exchange's Nifty toppled 139.20 points at 4,480.60.
The selling was sparked by reports of a major slide in leading global markets. All the index related stocks in Nifty and Sensex were in red.
Inflation rises to 4.41 per cent
Wholesale prices-based inflation rate increased to 4.41 per cent for the week ended July 14 from 4.27 per cent the previous week mainly on higher prices of fruits and vegetables, ragi, wheat, jowar, condiments and spices.
The inflation numbers are still within the five per cent annual target of the Reserve Bank, which is due to review the monetary policy on July 31.
The annual rate of inflation was 4.62 per cent in the corresponding week last year.
Among the primary articles, prices of vegetables rose sharply by 7 per cent during the week, while those of cereals rose by 0.9 per cent.
In the non-food articles category, prices of fibre rose by 2.2 per cent.
Read more at Financial Express