Fitch Ratings affirmed on Thursday the local long-term and short-term ratings of four major financial firms in Colombia, despite rising risks to the banking sector caused by the spread of the coronavirus.
Local lenders Bancolombia, Davivienda and Banco de Occidente, along with the Colombian division of Spanish bank BBVA and the insurance firm Grupo Bolívar, all maintained their AAA(col) long-term ratings on the local scale.
The four banks have adequate liquidity, but they are likely to see profits fall and loan portfolios deteriorate in the wake of the coronavirus crisis, Fitch said, adding that their capitalization ranges from weak (Bancolombia) to adequate (Banco de Occidente and Davivienda) and robust (BBVA).
The Inter-American Development Bank (IDB) sold AUD50 million ($34.3 million) worth of 10-year sustainable development bonds (SDB) in a private placement on Thursday, marking the bank's third debt sale in a week for a total of $4.34 billion.
With Daiwa Capital Markets America as lead, the 2030 Australian dollar-denominated bonds sold with a coupon of 1.285%, IDB said. The sole investor was Mitsui Sumitomo Aioi Life Insurance Company.
This issuance is a part of the bank's $12 billion emergency lending program to support countries in their response to the COVID-19 pandemic and its consequences.
The New York Federal Reserve’s planned launch on Tuesday of a bond-buying facility could help ease the potential stigma for companies of asking for help and create an important framework for what the central bank steps in to purchase, analysts and investors said.
The Federal Reserve said that starting Tuesday it would buy corporate bonds directly through its secondary market corporate credit facility (SMCCF), one of several emergency programs recently instituted by the central bank to improve market functioning in the wake of the coronavirus pandemic.
The Bank of Japan (BOJ) kept monetary policy steady on Tuesday and stuck to its view that the economy will gradually recover from the damage caused by the coronavirus pandemic, signalling that it has taken sufficient steps for now.
As widely expected, the central bank maintained its pledge to guide short-term interest rates at -0.1% and the 10-year government bond yield around 0% by a 8-1 vote. The BOJ said it expects to pump around 110 trillion yen ($1 trillion) to the economy via its market operations and lending facilities aimed at combating the hit from the health crisis.
The European Union (EU) has approved a grant of €10.00Mn to finance a project, titled, ‘Health System Strengthening Programme’, which is expected to bolster Jamaica’s health sector.
This disclosure was made by Head of the EU Delegation to Jamaica, Ambassador Malgorzata Wasilewska, at the recent opening of a Maternal and Neonatal High-Dependency Unit (HDU) at the St. Ann’s Bay Regional Hospital in St. Ann. She explained that the EU will co-finance an ongoing Inter-American Development Bank (IDB) loan with the grant, which will focus on the rehabilitation of 10 health centres across the island. This temporary measure is part of a suite of policy initiatives implemented by the GOJ, to make accessing loans from the SLB, and by extension obtaining a tertiary education, more feasible and attainable.
“The European Union recognises the importance of a strong national health system as one of the most important public goods of a nation and is continuing to support Jamaica and the Caribbean to achieve this end,” she said.
She informed that the EU, in partnership with the Caribbean Public Health Agency (CARPHA), has also mobilised a total amount of €8.00Mn to cater for the most urgent needs of Caribbean countries in managing the fight against COVID-19.
All application and processing fees for loans from the Students’ Loan Bureau (SLB) will be waived for the 2021 academic year.
This was announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, during his contribution to the debate on the First Supplementary Estimates of Expenditure during the sitting of the House of Representatives on Wednesday (June 10).
He noted that the waiving of the fees is part of the Government’s commitment to ensuring tertiary education “remains affordable and accessible to all Jamaicans".
He said that as a result of the coronavirus (COVID-19) pandemic, fewer students have been seeking to borrow funds from the SLB, as they cannot afford the fees to access and process the loans. Dr. Clarke noted that the temporary measure is in addition to the already announced waiving of late fees and a moratorium on all monthly payments to the SLB for three months as a response to COVID-19.
The Inter-American Development Bank said Tuesday that it granted a $250 million loan for El Salvador "to address the health and economic crisis caused by COVID-19."
The Salvadoran government will use the money for cash transfers to low-income earners and provide liquidity to cash-strapped companies, IDB said in a press release.
El Salvador's Finance Ministry said in a statement that the 20-year loan carries an interest rate of 2.11% per year. The new loan adds to a seven-year facility for $250 million that IDB provided to El Salvador last month at a rate of 115 basis points over Libor.
Guatemala will experience a sizeable recession in 2020, as public health restrictions and falling remittance inflows weigh on private consumption and reduced external demand leads to a contraction in exports.
Fitch has revised down its 2020 real GDP forecast from -2.1% y-o-y to -2.9%, as the economic impact of Covid-19 has worsened in recent weeks. Economic activity is expected to rebound to 3.5% growth in 2021.
The possibility of a second wave of infections in H220 poses downside risks to Fitch’s outlook for the Guatemalan economy.
The U.K. posted the biggest monthly fall in GDP (gross domestic product) on record in April, according to the Office for National Statistics.
GDP fell by 20.4% compared to the previous month, a sharper contraction than the 18.4% expected by analysts polled by Reuters. This represented a 24.5% decline from April 2019, as lockdowns necessitated by the coronavirus pandemic hammered economic activity.
In the three months up to the end of April, the economy contracted by 10.4% compared to the previous three-month period, the ONS also confirmed, again falling below analyst expectations of a 10% decline.
International trade is set to plunge by 27% in the second quarter and by 20% for the year, as major sectors including the automative and energy industries collapse from the effects the pandemic, a United Nations agency said on Thursday.
“Assuming persisting uncertainty, UNCTAD forecast indicates a decline of around 20% for the year 2020,” the U.N. Conference on Trade and Development (UNCTAD) said in a report. “Trade in the automotive and energy sector collapsed while trade in agri-food products has been stable.”
