Vital Financial Updates Credit – Is it good or bad?

Seadrill’s Beaten-Up Stock Is Worth a Look, Despite Dividend Fears

Since reaching a high in June of $40.44, SeaDrill has lost almost 40% of its value, and the shares are off 39.6% year to date, compared with a 6.3% gain for the Samp;P 500
(SPY) .

Investors want to know if it is time to buy back in, especially becauseSeadrill pays a strong yield of 16.1%, according to Yahoo! Finance.

But that yield may no longer be sustainable, according to FBRanalystsThomas Curran and Daniel Martins.

As is the case with other offshore drillers Diamond Offshore
(DO) andTransocean
(RIG) , Seadrills soaring cost of credit protection, in the form of credit-default swaps, puts its dividend at risk, the analysts contend.

This is the case even though Seadrills management recently affirmed that the company will maintain its dividend paymentsthrough 2016.

In a report, the analysts wrote: While at or very near oversold levels, the stocksshould next spend a lengthy period range-bound, not sustainably reverse course. That, as well as the potential for a game of chicken over older rig withdrawals… and, as suggested by soaring CDS spreads, dividend decreases, keep us on the sidelines.

In other words, the analysts think thatinvestors should wait before buying these shares. This strategy, however, contradicts their suggestion that the stock is oversold. But assuming that drilling demandimproves only moderately, Seadrill shares should command a fair market value of $32 in the next 12 to 18 months, a 30% premium.

Must Read: Seadrill Bulls Look for a Bounce in the Offshore Driller

Foreign banks in Myanmar will bide time to reap returns

YANGON/SINGAPORE – Myanmar has thrown open the door to foreign banks, but weak credit protection and tight restrictions on lending mean its not a warm welcome, at least not yet.
Nine banks have been given the first licences to operate in the Southeast Asian nation, but the government is still to lay out a roadmap on more reform, including setting up a bankruptcy law and a stronger legal framework for the financial sector.
For now, the banks must hope their presence in the frontier economy will prove to be a windfall when institutional safeguards emerge and the restrictions on foreign lenders are eased. Myanmar is slowly opening up to foreign investment after decades of military rule, but both political and economic reform have been slower than initially hoped when a quasi-civilian government took over in 2011.
Nevertheless, with growth forecast at an annual 8.5 per cent over the next few years, according to the International Monetary Funds latest projections, and an economy where bank loans comprise just 19 per cent of GDP, Myanmar represents a huge opportunity for regional and international banks. Comparative numbers in the region are 36 per cent in Cambodia and 108 per cent in Vietnam. Singapores United Overseas Bank (UOB), which was granted one of the Myanmar licenses, said it plans to use the opportunity to start booking onshore loans to foreign companies but cautioned there are limits to how much it can grow.
As you know there are limits and constraints on the ground, so it is very important for us to work very closely with local stakeholders, such as the local financial institutions, said Ian Wong, head of international banking at UOB.
He said a number of Asian clients were keen to expand in Myanmar. UOB will work with local banks to help them grow in trade finance and project finance businesses, Wong added.
We have a pipeline of investments from our regional clients that is going into Myanmar.
Rival Oversea-Chinese Banking Corp published a full-page advertisement in Singapores Business Times newspaper saying it was planning to use its licence to support Myanmar companies.
The banks awarded the licences last week also include Australias ANZ and Asian heavyweights such as Japans Mitsubishi UFJ Financial Group and the Industrial and Commercial Bank of China Ltd.
The strict licence terms cap operations to one branch for each bank. Despite having a domestic presence, the licence also limits the newcomers to offer foreign currency loans to only non-Myanmar firms. The foreign banks will also be allowed to lend to local banking institutions – cooperation which is expected to encourage domestic banks to expand operations.
Myanmar is one of the most under-banked countries in the world – a United Nations study released in May found that only 4 per cent of citizens surveyed had savings accounts in their own names, while a 2013 report by the International Finance Corporation estimated that less than 20 per cent of the 51 million people have access to financial services. We have to get our banking industry to international standards, said Kyaw Myint, an economist and adviser to Myanmars Myawaddy Bank.
LOW LOAN RECOVERY RATES
A 2014 World Bank study showed resolving insolvency in Myanmar can take up to 5 years, against 2.8 years in East Asia and Pacific and 1.7 years in developed countries belonging to the Organisation for Economic Co-operation and Development. The recovery rate for a loan is 14 cents to a dollar in Myanmar versus 30.7 cents for East Asia Pacific and 70.6 per cent for OECD countries.
Moreover, there is not yet a precedent for a bankruptcy or a foreign firm seeking recourse from an indebted local partner in Myanmar. Myanmar has no specific bankruptcy law. The laws regarding recognition of security and enforcement of security are very under-developed in Myanmar, said Jake Robson, a Singapore-based partner at U.S law firm Morrison amp; Foerster LLP.
It is the traditional risk every bank faces when it goes into a frontier market. For now, according to bankers involved, the foreign lenders will mainly use their Myanmar presence to build ties with the countrys local banks and emerging corporate sector while they await more financial reforms. Credit-hungry Myanmar corporates have to go overseas for foreign currency loans, and have to prove international bona fides to make the cut.
Last week, Yangon-based Pan Asia Majestic Eagle Ltd – which is rolling out telecommunications towers in Myanmar – said it had obtained the countrys first cross border loan from an offshore consortium. Its sponsors have built a similar network in Indonesia and had an established relationship with the bankers.
A senior executive at ING, which was part of the consortium that lent $85 million to the Myanmar firm, said banks allowed to operate in Myanmar would likely use their onshore presence to develop client relationships that would then lead to businesses for their regional networks.
I suspect many of the financings may still be structured as cross-border offshore financing to start with, before onshore lending takes off in a big way, said Krishna Suryanarayanan, a managing director for structured finance at ING.
The sectors most likely to benefit from access to services provided by foreign banks are power, infrastructure and real estate, said Edwin Vanderbruggen, a partner at VDB Loi, a law firm with offices in Yangon.
But the restrictions on foreign banks represented a lost opportunity for Myanmar as they restrain the ability of these banks to fund new and innovative firms. Easier financing for these firms could lead to better overall growth prospects, he and other experts said. The restrictions on foreign banks will block this source of capital, said Sean Turnell, an expert on Myanmars economy at Australias Macquarie University. They can lend to local banks – but thats back to square one, since locals still need to access these banks and mostly they cannot, he said. Restrictive regulations, mostly still in place, severely limit banks ability to engage in normal lending.

Director resigns from Repco Home Finance Ltd

Shri. C. Thangaraju has resigned from the directorship of Repco Home Finance Ltd with effect from October 08, 2014.

Shares of REPCO HOME FINANCE LTD. was last trading in BSE at Rs.444.75 as compared to the previous close of Rs. 439.65. The total number of shares traded during the day was 8254 in over 876 trades.

The stock hit an intraday high of Rs. 450 and intraday low of 434.3. The net turnover during the day was Rs. 3640836.

Credit Karma Tops $1 Billion Valuation For Personal-Finance Tools

Hoping to do for personal finance what Expedia and other sites did for travel, Credit Karma Inc. has raised $75 million in growth funding from major late-stage investors at a valuation of more than $1 billion.

Previous investors Google Capital , Tiger Global Management and Susquehanna Growth Equity contributed to Credit Karma’s new financing.

Investors have poured money into services like LendingClub, Prosper, SoFi, LendUp and Avant Credit that offer new ways for consumers to obtain loans online. Unlike these peer-to-peer and alternative loan providers, San Francisco-based Credit Karma helps consumers figure out which financial institutions offer the best terms.

The company provides free credit reports and helps consumers search for favorably priced financial products, such as credit cards, loans or mortgages. US consumers topped $3 trillion in debt last year, according to the Federal Reserve.

Less than a year ago, the company raised $85 million in a Series C round of funding led by Google Capital, a late-stage investment vehicle launched last year by Google Inc. The new investment brings Credit Karma’s total venture funding to $193.5 million.

Credit Karma Chief Executive Ken Lin described the company as “Expedia for financial services products,” recalling a time when it was difficult for travelers to book a trip online with confidence they were getting a good deal.

Credit Karma also provides its users with tools to track their finances, and educational materials to help them understand everything from how to improve their credit scores to what their options may be for a student or auto loan given their current income.

“People want the ability to borrow and consume. We want them to be more educated around how credit works and to lower the cost of borrowing,” Mr. Lin said.

Instead of charging consumers for these services, Credit Karma makes money through partner sponsorships with financial institutions. Financial institutions pay Credit Karma only when its members actually buy one of their products.

“We understand a financial institution’s credit requirements and complex underwriting algorithms. We also understand what consumers need and what will bring them the best value,” the CEO said.

Founded in 2008, Credit Karma works with dozens of major banks including nine out of the top ten in the US, Mr. Lin said, and increasingly a range of alternative credit providers such as Lending Club and Prosper. It does not work with so-called payday loan businesses, which Mr. Lin said are predatory.

The company claims to have about 32 million users. It does not sell user data or send its users frequent emails or advertising. All promotions that users receive are opt-in.

The company has never suffered a data breach, Mr. Lin said. However a vendor that Credit Karma no longer works with once temporarily disabled an encryption feature of its mobile apps, leading to a complaint and settlement with the Federal Trade Commission over privacy risk concerns.

The company now does its mobile development and user management in-house.

Tiger Global declined to comment. Google Capital and Susquehanna didn’t immediately respond to requests for comment.

Write to Lora Kolodny at lora.kolodny@wsj.com. Follow her on Twitter at @lorakolodny

Home Depot Offering Credit Protection Following Security Breach: Here’s How …

No matter where the security breach might be — the latest is Home Depot — the advice is always the same: guard your personal information, change passwords if youve shopped at the retailer recently and monitor your credit report.

Heres information released Wednesday by the state Department of Consumer Protection and the attorney generals office:

JC Penney Credit Protection Balloons, High Yield Bonds Fall On Weak Sept. Sales

JC Penneyshares dropped more than 13% and the company’s bonds tumbled after the department store chain cut its same-store sales forecast following weaker-than-expected September sales.

The 8.125% notes due 2019 tumbled five points to 94.5/95.5, according to sources. That’s a fresh low for the $400 million issue of non-call notes, which were sold at par on Sept. 10 and traded up to 101 on the break that afternoon.

Credit protection ballooned. Five-year CDS in the name gapped out roughly 66% this morning, to 12/13.5 points upfront, according to Markit. That makes protection in the name essentially $500,000 more costly than before the meeting and news, with a roughly $1.3 million upfront payment, in addition to $500,000 payments annually, to protect $10 million of the issuer’s corporate debt.

On Tuesday, investors were purportedly reducing risk in JC Penney in order to position for news ahead of the company’s analyst day on Wednesday, sources said.

JC Penney predicts same-store sales for the third quarter to be in the in low-single-digit range, from original guidance of mid-single digits, the company said in a press release today.

The company reaffirmed all other guidance for the third quarter and full fiscal year 2014. -Staff reports

Follow Rachelle Kakouris on Twitter for more distressed debt news and insights.

Offshore Drillers: Are Dividends in Danger?

By Ben Levisohn

FBR&’s Thomas Curran and Daniel Martins note that offshore drillers like Diamond Offshore Drilling (DO), Transocean (RIG), Ensco (ESV) and Noble (NE) are oversold. That doesn&’t mean they&’re willing to step in and buy. The reason: The soaring cost of credit protection, in the form of credit-default swaps, suggests that their dividends could be at risk. Curran and Martins explain:

Associated Press

While at or very near oversold levels, the stocks should next spend a lengthy period range-bound, not sustainably reverse course. That, as well as the potential for a &“game of chicken&” over older rig withdrawals (SPS spending versus stacking) and, as suggested by soaring CDS spreads, dividend decreases, keep us on the sidelines&…

CDS spreads have surged over recent weeks, approaching heights last hit in the wake of the Macondo catastrophe and, in our judgment, chiefly expressing rising expectations of dividend cuts and/or credit rating downgrades. Notably, spreads for Diamond Offshore and Transocean closed yesterday at 148.5 and 290.2, respectively, up 175% and 97% year over year and just 28% and 22% below their global recession highs. By leveraging its balance sheet, Diamond Offshore has managed to, and may for a bit longer, defend its total dividend payout. But, we have held and maintain that, at some point in this downturn, it will slash the recurring special dividend.

Ensco, meanwhile, has seen its cost of protection rise 43% from a year ago, while Noble&’s is up 25%.

Shares of Diamond Offshore Drilling have have fallen 0.6% top $33.33 at 10:32 a.m., while Transocean has slid 1.9% to $30.46, Ensco has dropped 1.4% to $39.05 and Noble is off 0.7% at $20.94.

ASIA CREDIT CLOSE: Poor sentiment hits Indonesia and China credits

SINGAPORE, Sep 29 (IFR) – Asian credits widened today due to
weak sentiment attributable to a number of factors, including
the intensifying Hong Kong protests, the worse-than-expected
China industrial profits and Indonesias new law that ends
direct regional elections.

Chinese and Indonesian bonds were worst hit with
credit-protection costs rising 6bp and 11bp, respectively. Asia
ex-Japan IG iTraxx widened 3.5bp.

It was a confluence of factors today that pushed the market
wider, especially high-beta credits, like Indonesian bonds,
said a Singapore-based trader.

Indonesias long-end sovereign bonds dropped 1.5 points,
while the 10-year went down 0.75 points. Quasi-sovereign
credits, such as Pelindo, saw its freshly printed bond also fall
0.75 points to 99.

In China, the dollar tranche of BoComs newly issued Tier 2
widened another 8bp today to yield a spread of 303bp/300bp.

The sentiment is likely to stabilise towards the middle of
this week and then people will be watching the non-farm payroll
on Friday, the trader said.

Trading volume, however, is likely to remain low throughout
the week as China, Hong Kong and India will be on holidays for
certain days this week.

In the high-yield segment, cash prices also dropped 0.25 to
0.5 points. Chinese property paper saw some retail selling ahead
of Chinas Golden Week holidays beginning Wednesday.

Berau Coals 2015s were marked down another 2-3 points today
on deepening concerns of the Indonesian coal miners ability to
refinance the paper. There was little trading on the credit,
according to another Singapore-based trader.

Lianting.tu@thomsonreuters.com

Repco Home Finance to recruit graduate trainees

Repco Home Finance Ltd has invited applications for recruitment of Graduate Trainees on retainer basis for one year contract period

The engagement is purely as a Trainee and it will not entitle the trainee to any permanent employment / regular job in this Company during or after completion of contract period or to any of the benefits/ privileges available to the regular staff members of the Company

However, after completion of training, if the performance is found satisfactory, trainee will be given suitable opportunity for regularization under suitable cadre under the extant rules amp; regulations of the Company.

Vacancies:
Graduate Trainee
Job Location: Andhra Pradesh
Age not exceeding 25 years as on September 01, 2014

Any graduation, preferably B. Com, in 10+2+3 format through regular classroom course from a UGC recognized university.

Graduates from Open University will not be considered and preference will be given for relevant prior experience in operations/sales/retail credit.

Fluency in Telugu besides English is a must

How to Apply:

Eligible candidates are requested to apply at the location as given below on or before
September 18th, 2014.

Mr. Chitti Satyanarayana Branch Manager
Repco Home Finance Ltd
D.No. 48-14-44,
1st Floor, Anand Towers
Rama Talkies Road, Aseelmetta,
Visakhapatnam – 530016

Important Dates:
Last date to apply: September 18

Aussie Personal Finance Startup Pocketbook Hits 100000 Users

Most people usually neglect keeping track of their personal finances. With multiple bank and credit card accounts, bank fees get all too much for us to handle. To put us back in control of our money, Aussie FinTech startup, Pocketbook has come to the rescue with an intuitive mobile app.

By syncing with all your financial accounts, Pocketbook users are able to monitor how their money is being used or even misused. By automatically categorizing your daily spending habits into areas like food, groceries and fuel – budgeting and goal tracking becomes much easier. Its clever notification system tells you when a bill is due or when a bank fee is charged, which can often be a surprise or a mistake. Pocketbook is able to sync data with 80% of major financial institutions in Australia, including the big 4 banks.

By solving a real need for many people, the app has been heavily adopted in the Australian market. It now has over 100,000 users of which about 35% are monthly active. The app hit this milestone twice as fast as it reached 50,000 users and it achieved this mark within ten months of an initial AUD$500,000 in funding. To further propel their growth and expansion, Pocketbook is actively raising an AUD$2.5 million Series A round of funding from strategic investors in Australia. Pocketbook plays in the same space as Mint.com, which was acquired for US$140 million back in 2009 by Intuit Intuit.

According to AppAnnie, Pocketbook currently sits at number 21 for Finance apps in the iOS store in Australia and number 729 overall. It has an average of 4.5 stars over 1086 ratings across all versions.

Pocketbook is free to use and the team has no immediate plans to monetize it, as growth is the current primary objective. However, as it grows over time, Pocketbook is generating compelling insights from its data collection and analysis. By completely making its data anonymous and rolling it up to an aggregate level, Pocketbook has been able to glean some fascinating consumer spending trends.

Based on their analysis, Pocketbook discovered that Australian’s pay 31.44% more than Americans for Ikea products. This has convinced Pocketbook that it is cheaper for a small business buying Ikea office furniture to buy and ship it from America. Another piece of analysis shows that Netflix Netflix, which isn’t even officially available yet in Australia, is the second most popular paid content-media (after Foxtel) with 27% market share.

Alvin Singh and Bosco Tan founded Pocketbook just eighteen months ago. After transitioning from working at a large company to a small company, Singh wanted a way to make sure he was in healthy financial shape. “I tried everything but all the tools were really complicated. Most were accounting based products, which I didn’t need. Being an engineer I built something myself. I showed some friends and everyone wanted it and that’s when I realized it could be a thing,” said Singh. One of those friends he showed was Bosco, a long time high school friend. Impressed by the app, Bosco wanted in on the action so they joined forces to launch the company.

The duo believes that there is a mass-market appetite for a product that can help users be more financially aware and in control. With a relatively unstable economy, falling real wages and asset prices rapidly rising; the younger generation needs all the money management help they can get. Pocketbook is still early on its journey to greatness, but the outlook is bright if their current level of traction continues. “One of the litmus tests we have is when we’re on the bus or train and see people with their Pocketbook open,” said Tan.

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