Lagarde thanks EU leaders after ECB confirmation

FRANKFURT, Oct 18 — Incoming European Central Bank (ECB) chief Christine Lagarde tweeted her “sincere thanks” to EU leaders today, after the European Council made official her appointment as next president of the Frankfurt institution. “My…

Global shares slip on weak China growth, dollar suffers weekly mauling

LONDON, Oct 18 — World stocks slipped after China posted its weakest growth rate in nearly three decades today, while the dollar was set for its worst week in almost four months having been pummelled by pound and euro Brexit rallies. China’s…

Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

SINGAPORE: Cathay Pacific Airways Ltd has shelved plans for its first U.S. dollar debt deal in 23 years, the airline said on Friday, after sources told Reuters that global investors had baulked at the pricing due to civil unrest in Hong Kong.

The airline, the biggest corporate casualty of widespread anti-government protests in the Asian financial hub, on Friday lowered its second-half profit expectations, citing “incredibly challenging” conditions in its home market.

Cathay had started meeting investors in Hong Kong and Singapore on Sept. 24 after it mandated four banks to explore carrying out a U.S. dollar denominated bond, according to a term sheet issued at the time, seen by Reuters.

It would have been the first U.S. dollar debt deal for Cathay since 1996 and had been touted as a landmark transaction for the airline given all of its debt is denominated in Hong Kong dollars.

The issuance was to be unrated, and two sources with knowledge of the matter said that Cathay was willing to pay 200 basis points over the U.S. Treasuries rate to secure three-year or five-year funding, with the size and term of the placement dependent on demand.

However, investors demanded a higher price of at least 300 basis points over U.S. Treasuries, which made the deal more expensive for Cathay, said the sources, who were not authorised to speak publicly about the matter.

Cathay’s term sheet had said the transaction would be reliant on market conditions. A Cathay spokesman on Friday said the Hong Kong dollar private placement market was providing more funding opportunities and a debt issuance in that market was completed last month. “We will continue to monitor the U.S. dollar bond market in future,“ he said in a statement.

Dealogic data showed that Cathay raised $102 million in October and $64 million in May through Hong Kong dollar denominated deals.

The airline has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

Cathay had mandated Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank and HSBC to work on the shelved U.S. dollar bond deal. – Reuters

Australia, NZ dollars rally on rate view and China relief

SYDNEY: The Australian dollar touched a four-week high on Friday as the market scaled back bets on a near-term cut in local interest rates, while Chinese data showed some resilience in September activity even as third-quarter growth slowed.

The Aussie dollar was firm at $0.6835 after jumping jumped almost 1% on Thursday alone as a break of major resistance at $0.6810 sparked a wave of short-covering.

The New Zealand dollar followed to its highest in five weeks at $0.6376, climbing 0.9% overnight.

The rally began when Australian jobs data showed an unexpected dip in unemployment in September, which dimmed speculation the Reserve Bank of Australia (RBA) would cut interest rates again soon.

It got a further lift when RBA Governor Philip Lowe told a conference in Washington that lower rates were working to improve the economy and a move to negative rates was “extraordinarily unlikely”.

The futures market responded by paring back the probability of a November rate cut to just 14%, compared with 34% a week ago. The chance of an easing in December dropped to 52%, after rising above 80% last week.

The central bank has already cut rates three times this year to a record low of 0.75% and is fast running out of room to ease more.

“The September labour report is likely to be good enough for the RBA to hold back and not follow through with another interest rate cut in November,” said Peter Dragicevich, a market strategist at Suncorp.

“But given the still sluggish domestic growth backdrop, external risks, trend of lower global interest rates and excess capacity that remains in the labour market, it still looks like a matter of when, not if, the RBA provides more support.”

As a result, the market is almost fully priced for an easing to 0.5% by March next year.

For now, the diminished chance of near-term easing weighed on bond futures. The three-year bond contract eased another 1.5 ticks to 99.250, the lowest in more than a month and some way from the recent all-time top of 99.460.

The 10-year contract slipped 1 tick to 98.8850, away from its recent peak of 99.1550.

The Aussie was unfazed by a mixed bag of Chinese data that showed economic growth slowed to 6.0% in the third quarter, just missing forecasts of 6.1%.

Yet industrial output beat estimates with an increase of 5.8% in September, while retail sales growth picked up to an annual pace of 7.8%, offering hints that stimulus was supporting activity to some extent.

“The numbers could have been worse. If anything there was some fear it might drop below 6% but that didn’t happen,” said Mitul Kotecha, senior emerging markets strategist at TD Securities in Singapore.

“The industrial production numbers highlight that there is a bit of a glimmer of hope on the manufacturing side and some hope that trade progress will help further,” Kotecha added. – Reuters

China Q3 GDP grows 6pc, slowest pace in almost three decades

BEIJING, Oct 18 — China's economic growth slowed more than expected to 6 per cent year-on-year in the third quarter, the weakest pace in almost three decades, hit by soft factory production amid a bruising Sino-US trade war and lacklustre demand…

Cagamas concludes RM800m combined bond issuance before Budget 2020 announcement

KUALA LUMPUR, Oct 18 — Cagamas Bhd today announced the issuance of its multi-tenured RM500 million Islamic Medium Term Notes (IMTN), multi-tenured RM100 million Conventional Medium Term Notes (CMTN) and RM200 million three-month Conventional…

US stocks gain on upbeat earnings, geopolitical news

NEW YORK, Oct 18 — Wall Street advanced yesterday as investor sentiment was buoyed by a string of corporate earnings beats and encouraging geopolitical developments. A broad-based rally led all three major US stock averages to moderate gains….

Stocks, sterling rise on long-awaited Brexit deal

LONDON, Oct 17 — A deal on Britain’s departure agreed with the European Union sent sterling to a five-month high today and hoisted European stocks to a year-and-a-half peak before doubts about UK parliamentary support hauled them back. Wall…

‘Merger of DFIs will not affect their ratings’

PETALING JAYA: RAM Ratings opined the proposed merger of four development financial institutions (DFIs) will not affect their ratings.

Budget 2020 discloses plans for a two-stage restructuring of DFIs involving Bank Pembangunan Malaysia Bhd (Bank Pembangunan), Danajamin Nasional Bhd (Danajamin), Export-Import Bank of Malaysia Bhd (MEXIM) and the Small & Medium Enterprise Development Bank Malaysia Bhd (SME Bank).

“The proposed exercise is not anticipated to affect the respective AAA/Stable/P1 financial institution ratings of Bank Pembangunan and MEXIM, nor have any impact on Danajamin’s AAA/Stable/P1 insurer financial strength ratings or the ratings of Danajamin-guaranteed issues.”

“The rating assessments for Bank Pembangunan, MEXIM and Danajamin already consider the solid backing of the Government of Malaysia, anchored by each entity’s strategic role in fulfilling the nation’s developmental goals,” the rating agency said in a statement.

The four entities have a combined asset base in excess of RM45 billion and an aggregate guarantee portfolio of about RM6 billion.

RAM said with a larger market impact, the merged DFI’s strategic importance is expected to remain well preserved.

“The DFI’s credit profile and the ratings of debts that may be transferred to it will continue to benefit from a strong likelihood of government support if required.”

It also highlighted that the integration of resources, cultures and systems is critical to a merger of this scale.

“If well implemented, the proposed realignment of the strategic mandates of DFIs will support the nation’s aspirations in a new global digital economic landscape.”

“Bank Pembangunan provides medium to long-term financing to sectors vital to the nation’s socio-economic development, while MEXIM supports and promotes Malaysia’s external trade.”

As the national financial guarantee insurer, Danajamin is tasked with developing the debt capital markets through credit enhancements for bond and sukuk issuances.

Meanwhile, SME Bank nurtures and serves the financing needs of SMEs – a segment which accounts for more than a third of the country’s gross domestic product.

Morgan Stanley profit beats estimates on bond trading strength

NEW YORK, Oct 17 — Morgan Stanley beat estimates for quarterly profit today, buoyed by higher revenue from bond trading and M&A advisory fees. Net income attributable to the company rose marginally to US$2.17 billion (RM9 billion), or US$1.27…