Latest News

Dollar, Oil Surge Hurt Emerging Importers, Stocks Dip Published: 02 October 2018

A strong dollar and a surge in global oil prices above $85 a barrel sent emerging market currencies broadly lower on Tuesday, while Hong Kong led a fall in stocks over worries about a slowdown in Chinese manufacturing. Oil prices rose almost 3% on Monday to hit a four-year high, raising the prospect of higher inflation and more pressure on growth in countries which have to buy in their fuel supplies. Manufacturing activity in countries from China to Russia this week has also turned investors’ minds back to the issues of growth and capital outflows that drove a sell-off in several major emerging markets earlier this year.

IMF Approves $290M in Funding for Barbados with $49M Upfront Published: 02 October 2018

  • The IMF in a release on Monday, October 1st announced their approval of a $290Mn extended fund facility for Barbados.
  • Approval of the program allows for the immediate disbursement of about US$49 million with the remainder becoming available upon successful completion of 7 semi-annual reviews.
  • Key element of the authorities’ home-grown economic reform program include an upfront fiscal adjustment, reform of state own enterprises and structural reforms to support growth.
  • The IMF supported program aims to help Barbados: restore debt sustainability, strengthen the external position, and improve growth prospects.

Source: IMF

U.S. second-quarter GDP growth unrevised at 4.2 percent Published: 28 September 2018

US economic growth accelerated in the second quarter at its fastest pace in nearly four years as previously estimated, putting the economy on track to hit the Trump administration’s goal of 3 percent annual growth. Gross domestic product increased at a 4.2 percent annualized rate, the Commerce Department said on Thursday in its third estimate of GDP growth for the April-June quarter. The economy grew at a 2.2 percent pace in the January-March period. The economy expanded 3.2 percent in the first half of 2018. Growth in the second quarter was driven by the Trump administration’s $1.5 trillion tax cut package, which boosted consumer spending after it almost stalled early in the year. Source (CNBC)

Sterlng Considers Stock Split and Rights Issue Published: 28 September 2018

(JSE) The company announced Extraordinary General Meeting for October 8, to consider an increase in authorized share by adding 1,850,000,000 ordinary shares and to issue up to 2,000,000,000 of un-issued ordinary shares by way of a rights issue. The company will also be considering a 5 for 1 stock split. 

Fed hikes interest rates, raises its economic outlook and drops 'accommodative' language Published: 26 September 2018

  • Federal Open Market Committee increased the fed funds rate 25 basis points to a range between 2 percent and 2.25 percent.
  • The FOMC continued to project one more hike before the end of the year and three in 2019.
  • Wednesday's statement dropped language saying that "the stance of monetary policy remains accommodative."
  • Fed officials collectively estimated gross domestic product to rise 3.1 percent in 2018, an upward revision from the 2.8 projection back in June. The forecast for 2019 also moved higher by 0.1 percentage points to 2.5 percent.

Source: CNBC

Jamaica 'B/B' Ratings Affirmed; Outlook Revised To Positive From Stable On Improved External Position Published: 26 September 2018

  • On Sept. 25, 2018, S&P Global Ratings revised its outlook on Jamaica to positive from stable. At the same time, S&P Global Ratings affirmed its 'B' long- and short-term foreign and local currency sovereign credit ratings, and its 'B+' transfer and convertibility assessment on the country. 
  • The positive outlook reflects the at least one-in-three likelihood of an upgrade if, in the next 12 months, Jamaica further strengthens its external liquidity position while maintaining tight fiscal policy and high primary surpluses. The combination of modest GDP growth and better external liquidity, as reflected in improvement in gross external financing needs to less than 100% of current account receipts (CAR) plus usable reserves could boost the sovereign's credit rating. [S&P] expect that the government will continue to meet strict fiscal targets, and maintain its commitment to a gradual reduction in its debt and interest burdens. [S&P] also expect that the government will continue advancing toward a more effective monetary policy framework for the central bank, including a more flexible exchange rate. 
  • [S&P] could raise the ratings in the next year if Jamaica continues improving its external liquidity such that the economy becomes more resilient to potential external shocks, including possibly higher oil prices. In addition, over a longer period, sustained economic growth at higher levels would strengthen Jamaica's economic profile, potentially resulting in a higher rating.[S&P] could revise the outlook to stable during the same period if the recently improving trajectory of Jamaica's external position reverses and begins to weaken, or the government misses fiscal targets, leading to an increase in debt and interest burdens.

 Source: S&P

Rating Action: Moody's reviews Petrotrin's B1 ratings for downgrade Published: 26 September 2018

 

  • Moody's Investors Service (Moody's) placed Petroleum Co. of Trinidad & Tobago's (Petrotrin) B1 corporate family rating and senior unsecured debt ratings on review for downgrade. This rating action was based on the lack of clarity regarding Petrotrin's new business profile and strategy as well as increasing liquidity risk related to the approaching maturity of the 2019 bonds. Outlook, was also changed to ‘Rating Under Review From Stable’ 
  • Petrotrin has a weak financial condition, reflected in its high adjusted debt leverage of 6.2 times and low adjusted interest coverage of 2 times in March 2018. In addition, the government recently announced that it will close Petrotrin's refinery and the company will focus on its upstream exploration and production business. Petrotrin's new business profile and strategy is still unclear, which put to question its medium-term financial prospects. In 2017, the company's oil and gas production was 49,084 boe, which is considered small in the universe of exploration and production companies. 
  • Petrotrin also faces increased liquidity risk related to $850 million in global bonds that mature in August 2019. Petrotrin's total adjusted debt in March 2018 amounted to close to $2 billion, out of which about $600 million was short term debt. Although Moody's believes that the level of implicit government support to the stateowned company has not changed and continues to be very high, Petrotrin's weak financial condition and liquidity, combined with uncertainties regarding the viability of its business transformation, raise questions about its intrinsic credit profile. 

Source: Moody’s Investors Service

IMF Sees Trinidad Emerging From ‘Deep Recession’ This Year Published: 26 September 2018

  • IMF executive board send statement on Trinidad and Tobago by email.  Economy “slowly recovering from a deep recession” with positive growth seen returning this year .Recovery in energy and non-energy sectors seen, underpinned by strong gas production; construction, financial services and trade seen as weak
  • GDP contracted 6.1% in 2016 and 2.6% last year. Debt continues to rise, despite fiscal consolidation; Government debt approaching 65% of GDP.  Economic outlook expected to improve in medium-term, still heavily dependent on energy sector
  • FX shortages affect market confidence; FX imbalance “must be addressed on an urgent and sustained basis” Government has significant financial buffers, including sovereign wealth fund.

Source: Bloomberg

Fed expected to raise interest rates and signal more hikes are coming Published: 26 September 2018

  • The Fed is likely to sound hawkish when it announces an expected rate hike Wednesday and releases its new economic outlook and interest rate forecast.
  • The 2-year Treasury note, which most reflects Fed policy, rose to a new 10-year high Monday, ahead of the meeting.
  • The Fed is expected to sound more confident about the economy, raising its forecast for growth and removing language from its statement that described its policy as easy.

Source: CNBC

Argentina's central bank chief resigns amid IMF bailout talks Published: 26 September 2018

 

  • The president of Argentina's central bank has resigned amid negotiations with the International Monetary Fund (IMF) to bail the South American country out of its volatile economic crisis. The resignation comes as President Mauricio Macriis negotiating additional IMF funding, three months after securing a $50bn loan from the international lender to stabilise Argentina's economy.

 

  • Argentina's weak economy has been hit by a sharp depreciation of its peso currency and high inflation, forcing the government to reach out to the IMF for help. After a crisis of confidence beginning in April saw the peso plunge, Argentina negotiated a $50bn bailout loan from the IMF that included an initial $15bn tranche in June.

 

  • The pesos is down  about 50% year to date. Macri responded by announcing new, and unpopular, austerity measures including halving the number of government ministries and restoring taxes on grain exports.  The central bank also hiked interest rates to a world-high 60 percent and the peso has remained largely stable since its sudden crash in August.

Source:  Aljazeera