long term – Beacon at Bangsar http://beaconatbangsar.com/ Sat, 19 Mar 2022 10:32:18 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://beaconatbangsar.com/wp-content/uploads/2021/03/cropped-icon-32x32.png long term – Beacon at Bangsar http://beaconatbangsar.com/ 32 32 Buy now, pay later Loans will soon appear on credit reports https://beaconatbangsar.com/buy-now-pay-later-loans-will-soon-appear-on-credit-reports/ Sat, 19 Mar 2022 10:32:18 +0000 https://beaconatbangsar.com/buy-now-pay-later-loans-will-soon-appear-on-credit-reports/

Image source: Getty Images

If you use buy now, pay later loans, account activity may soon show up on your credit report.


Key points

  • The three credit bureaus plan to include data on buy-now-pay-later loans in consumer credit reports.
  • This change could help consumers who use BNPL’s services improve their credit.
  • With this news, consumers should consider how their BNPL account activity could positively and negatively impact their credit.

Buy now, pay later (BNPL) loans are growing in popularity because they provide a convenient way to pay for larger expenses over time. These loans have not previously been reported on consumer credit reports. But that is about to change.

Buy now, pay later loans are attractive. Some of these loans offer a 0% interest rate for a limited period, while others offer low interest rates. Consumers can pay off debt in regular installments and spread the cost of expensive purchases.

Since many BNPL services do not apply for firm credit for approval, this is a great loan option for people with minimal credit history. It may be more difficult for these consumers to obtain approval for other financial products, such as credit cards.

We conducted a survey to examine the popularity of BNPL services. We have found that over half of Americans have used BNPL loans and these services continue to grow in popularity.

Typically, these loans do not show up on credit reports. However, the three credit bureaus recently announced plans to include buy now, pay later, payment and account data, and activity on consumer credit reports. But it won’t be an overnight change.

Here’s why BNPL loan data wasn’t released sooner

BNPL’s service activity has generally not been reported in credit reports, as this type of data does not integrate well with the current system, which analyzes revolving credit and long-term loans such as mortgages. and car loans.

Because BNPL services are installment loans, some consumers take out multiple BNPL loans per year. With most current credit models, taking out multiple BNPL loans could be considered risky. For this reason, including such activity in credit reports could penalize consumers.

But industry experts believe that consumers should be able to benefit from BNPL’s services and have the opportunity to improve their credit by making responsible choices with these loans. This includes regular and one-time payments and repayment of BNPL loan balances.

Although the credit bureaus will soon be reporting this data, they want to take steps to protect consumers from the immediate potential negative impact on credit of including this data without first adjusting the current system.

It will take time for the industry to adapt and make room for BNPL loans – so consumers should not expect instant changes.

What to expect from the three credit bureaus

Eventually, all three credit bureaus will report some BNPL data, but how they process that data will vary. Here’s what we know so far:

Experian

Experian plans to launch its own product, The Buy Now Pay Later Bureau™, in the spring of 2022. This product will include essential BNPL account data. Initially, BNPL data will be stored separately from Experian’s central credit bureau data and may be requested by lenders.

Equifax

During the first quarter of 2022, Equifax will formulate a standard process for including BNPL data in traditional consumer credit reports. This includes the implementation of a new commercial industry code used to classify industry. The long-term plan is to include this data in regular consumer credit reports.

Trans Union

TransUnion recently launched its own new BNPL credit reporting service, called Point-of-Sale Suite Solutions. The credit bureau will include BNPL data in its reports. This data will appear on a separate part of credit reports and will be made available to lenders.

What this means for consumers

If you use BNPL’s services, you can expect relevant data to appear on your credit file very soon. Although it won’t happen right away, it will eventually become a reality.

For consumers who are new to establishing credit, including BNPL on their credit file could offer a way to establish credit and improve their credit score. But to benefit, consumers will need to make responsible choices, such as making payments on time.

Whatever personal finance tools you use, it’s important to choose wisely and be careful. Do your best not to ignore your debts, make late payments or miss payments.

BNPL loans can be beneficial, but they can cause you financial stress if you are not careful. Only take BNPL loans if you can afford to make regular payments without ignoring your other financial obligations. Always consider the impact of your actions on your financial well-being.

If you’re looking for tips and advice on how to improve your finances, check out our personal finance resources.

The Ascent’s Best Personal Loans for 2022

The Ascent team has scoured the market to bring you a shortlist of the best personal loan providers. Whether you’re looking to pay off debt faster by lowering your interest rate or need extra money to make a big purchase, these top picks can help you reach your financial goals. Click here for the full rundown of The Ascent’s top picks.

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Need to declare cryptocurrency on your taxes? Here’s how to use Form 8949 to do it https://beaconatbangsar.com/need-to-declare-cryptocurrency-on-your-taxes-heres-how-to-use-form-8949-to-do-it/ Fri, 11 Mar 2022 15:56:41 +0000 https://beaconatbangsar.com/need-to-declare-cryptocurrency-on-your-taxes-heres-how-to-use-form-8949-to-do-it/

With the explosive rise and fall in the price of Bitcoin and other cryptocurrencies over the past year, you can be sitting on huge capital gains or losses. You’ll need to report them to the IRS when you file your taxes each year, and Form 8949 is the starting point.

You will have to pay capital gains tax on all profits, although you may be able to take a deduction for losses you have realized, which reduces the taxes you owe. Although you may think crypto transactions are untraceable, some companies report your transactions to the IRS on Form 1099. If you don’t report your earnings, the IRS will come knocking on your door asking for their share of the action. .

“Cryptocurrency is an area the IRS continues to focus on for enforcement,” says Brian R. Harris, tax attorney at Fogarty Mueller Harris PLLC in Tampa, Florida. He points out that even if you don’t receive a 1099 or other statement from your exchange, you still need to report the income.

Here’s what to know about reporting your gains and losses and how to use Form 8949.

Who should use Form 8949?

It is important to understand that you will not owe any cryptocurrency tax if you have not made a taxable gain. Unlike other types of investments, however, you can make a profit on cryptocurrency in two ways:

  • Buy and then sell crypto for profit in a taxable account
  • Exchange crypto for goods or services that are worth more than what you paid for

If one of these cases applies to you, you have a taxable capital gain and you must legally declare it.

However, if you have made a gain in a tax-efficient account such as an IRA, you do not need to report your transactions. That’s not a taxable Gain. However, crypto is not widely available in IRAs.

Finally, if you have incurred a loss while trading crypto, it is worth reporting that as well, as you may qualify for a deduction and reduce your tax bill. It might be cold consolation for losing money, but you’ll get tax relief for doing so.

How to report your cryptocurrency earnings

Before filing Form 8949, you will need to report that you have transacted in cryptocurrency near the top of Form 1040. The IRS requires all filers to indicate whether they have received or transacted in digital currency during of the tax year concerned.

When reporting your realized gains or losses on cryptocurrency, use Form 8949 to understand how your transactions are treated for tax purposes. Then you will enter this information on Schedule D, which totals your net capital gains and losses.

On Form 8949, you will indicate when you bought the cryptocurrency and when you sold it, as well as the prices at which you did so. The dates of purchase and sale are important, because the length of time you own your cryptocurrency determines the amount of your taxes.

If you’ve owned your cryptocurrency for less than a year, any gains will be taxed at short-term capital gains rates, which are the same as your regular income rates. These rates can be as high as 37%, so they may be higher than what you would pay if you qualified for long-term rates. Short-term sales are reported in Part 1 of the form, like the one below.

If you’ve held the property for more than a year, however, it’s considered a long-term investment and is eligible for more favorable treatment. The long-term capital gains tax rates are 0%, 15% or 20%, depending on your income level.

Sales of long-term investments are reported in Part 2 of the form, which looks almost like Part 1 above.

It should also be noted that if you generate income from cryptocurrency staking, you are also required to report this. But that income will be reported elsewhere on your tax return.

Provide details of your crypto gain/loss on Form 8949

After determining whether your gain or loss is short-term or long-term, you will need to enter the details of the transaction in the appropriate section of Form 8949. Each transaction requires the same information, entered in Part 1 (for transactions term) or Part 2 (for long-term transactions), in the corresponding column.

For most transactions, you will complete:

(a) The name or description of the asset you sold

(b) When you acquired it

(c) When you sold it

(d) At what price you sold it

(e) The cost of the asset or other basis

(h) Gain or loss

Once you have itemized all of your transactions on Form 8949, total your entries, then transfer the information to the corresponding sections of Schedule D. On Schedule D, you subtract your cost base from the total proceeds to arrive at your total capital gain. or loss. From there, Schedule D will determine the amount of tax you owe or the type of deduction you receive.

What to do if you don’t receive 1099 from your crypto exchange?

All brokers and some crypto exchanges provide detailed information about your transactions on a 1099 form each year. The tax form usually provides all the information you need to complete the 8949 form. However, many crypto exchanges do not provide a 1099 , leaving you with Work to do.

“Most crypto exchanges don’t do 1099 reports, and they aren’t required to do so yet,” Harris says. He notes, however, that laws are already in place that require crypto exchanges to report transactions in the 2023 tax year to file in 2024. Until then, it is up to traders to determine their liability. to tax.

Without these reports, it is a little more difficult for traders to calculate their potential gains and losses.

“It will be up to you to establish your holding period, your cost basis and your product,” Harris says.

That means digging through your transaction records, noting dates of purchase and sale, product, and whatever else is required on the 8949 form. That’s not the idea of ​​a fun Saturday afternoon, but it can get even more complex due to so called ordering rules.

Ranking rules govern which tax lots are sold at what time, meaning they determine whether a given sale is a short-term or long-term investment.

For example, imagine you bought 100 bitcoins in January, 100 in February, and then another 100 in December. Then, in March of the following year, you only sold 250 at a profit. You will have both a short-term gain (for assets held for less than a year) and a long-term gain (for coins held for more than a year). But how do you divide the tax between the short and the long term?

Harris says that unless you can identify a specific individual bitcoin unit, you should use what’s called “first in, first out” accounting. This means that you will count the oldest purchases first, until you have counted all the parts sold.

Continuing the example above, you will register a long-term gain on the first 100 coins purchased in January and the second 100 from February. The next 50 coins would be counted as a short-term gain since they were only held from December to March of the following year.

You will need to split transactions this way and report them by their holding period on Form 8949.

How do you report earnings on the cryptocurrency you have spent?

As mentioned above, trading cryptocurrency is not the only way to rack up a taxable gain. Under IRS rules, you can also spend your way to a cryptocurrency profit, a fact that makes cryptocurrency difficult to use as real money.

“If you spend cryptocurrency, that’s selling or trading cryptocurrency and it could be a taxable event,” Harris says. “For example, if you trade crypto for a pizza, you will have a gain or loss relative to the fair market value of that pizza.”

You will need to determine the fair value of your purchase (in dollars) and then compare it to your cost base (what you paid for the cryptocurrency). Next, to determine your holding period, you will need to identify when you purchased the crypto and the date you spent it.

Total the gains and losses from these types of purchases and enter them into Form 8949 as if you were otherwise trading cryptocurrency.

At the end of the line

Form 8949 helps you report realized capital gains and losses, ensuring that your taxable gains are properly recorded and that you are not taxed more than you should be. It also ensures that if you have made a loss, you can claim any taxable benefit to which you are entitled.

Finally, although you will not receive a statement of your taxable income from an exchange, this does not absolve you of the responsibility to report and pay your tax liability.

Learn more:

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Cars, SUVs and trucks that reach 200,000 miles https://beaconatbangsar.com/cars-suvs-and-trucks-that-reach-200000-miles/ Sun, 06 Mar 2022 19:22:07 +0000 https://beaconatbangsar.com/cars-suvs-and-trucks-that-reach-200000-miles/

(iSeeCars) – The most reliable and durable cars are a mix of vehicle types led by full-size SUVs.

  • Truck-based SUVs make up the majority of the list
  • Toyotas represent 6 of the top 10 vehicles with Land Cruiser and Sequoia dominating the competition
  • Avalon and Prius are the only passenger cars to make the list
  • Nine SUVs make up the top 15 list which also includes three pickup trucks, two minivans, a sedan and a hybrid sedan.

Toyotas and full-size SUVs are the longest-lasting vehicles that are most likely to get 200,000 miles or more, according to a new study by automotive research firm and car search engine iSeeCars.com.

iSeeCars analyzed over 14.9 million cars sold in 2021 to determine the most reliable models based on their long-term reliability with the highest percentage of cars reaching 200,000 miles.

“With new and used car prices at record highs, many consumers are likely to keep their vehicles on the road for an extended period of time or are looking to purchase a reliable vehicle to get the best return on investment,” Karl said. executive analyst at iSeeCars. Brauer. “Toyotas represent the majority of the ten most durable vehicles, confirming the brand’s reputation for building durable and reliable vehicles.”

Top 15 most sustainable cars: Toyota Land Cruiser wins first place

The top 15 durable models identified each have more than 3.0% of their vehicles (more than two and a half times the global average) reach 200,000 miles and include a mix of vehicle types with 9 SUVs (including one hybrid), three pickup trucks, a sedan, two minivans and a hybrid sedan.

The Longest Lasting Cars, SUVs and Trucks to Reach 200,000 Miles – iSeeCars Study
Rank Vehicle % of cars over 200,000 miles
1 Toyota Land Cruiser 18.2%
2 Toyota Sequoia 14.2%
3 Chevrolet Suburban 6.6%
4 GMC Yukon XL 5.2%
5 Toyota 4Runner 4.6%
6 Ford Expedition 4.5%
7 Chevy Tahoe 4.4%
8 Toyota Tundra 4.0%
9 Toyota Avalon 3.9%
ten Toyota Prius 3.9%
11 Toyota Highlander Hybrid 3.8%
12 GMC Yukon 3.7%
13 Honda Ridgeline 3.7%
14 Honda Odyssey 3.2%
15 Toyota Siena 3.2%
Average for all vehicles 1.2%

Two Toyota full-size SUVs occupy the top spots, including the first Toyota Land Cruiser and the second Toyota Sequoia. These truck-based body-on-frame SUVs comfortably take the top spots, with the Sequoia twice as likely to hit 200,000 miles as the next ranked car on the list. “The iconic and indestructible Toyota Land Cruiser is designed to last at least 25 years, even in the toughest driving conditions, as it is used in many developing countries where off-road driving is the norm,” said Brauer. “And like the Land Cruiser, the truck-based Toyota Sequoia has the durability of a pickup truck chassis with three full rows of seating for up to eight passengers, making it a capable family hauler that stands up to heavy use. demanding while towing heavy loads.”

Five American full-size SUVs make the list, including the third-placed Chevrolet Suburban, fourth-placed GMC Yukon XL, sixth-placed Ford Expedition, seventh-placed Chevrolet Tahoe, and twelfth-placed GMC Yukon. “All made by General Motors, the Chevrolet Suburban, GMC Yukon, GMC Yukon XL and Chevrolet Tahoe share a common platform and many common parts, confirming why these popular family vehicles are all likely to last 200,000 miles. “Brauer said.

Toyota has two midsize SUVs that make the list of most durable vehicles, including the Toyota 4Runner at number five and the Toyota Highlander Hybrid at number eleven. “The truck-based, off-road capable Toyota 4Runner offers ample cargo space and has an optional third row for those looking for a rugged family hauler,” Brauer said. “The Toyota Highlander Hybrid crossover offers three rows of seating to provide a more fuel-efficient alternative to traditional gas-guzzling family vehicles, and owners have an added incentive to drive the car further to take full advantage of its fuel savings, offsetting thus the initial cost of hybrid technology.

Second hybrid, the Toyota Prius wins the tenth position. “The Prius appeals to practical buyers who keep their vehicle on the road as long as possible to take advantage of its low maintenance costs and high fuel efficiency,” Brauer said.

Ranked ninth is the Toyota Avalon, which represents the only sedan on the list. “The Toyota Avalon is consistently at the top of its class for vehicle quality and reliability, which is why people are keeping them longer than ever,” Brauer said. “The Avalon offers a spacious interior and is a capable, comfortable alternative for those looking for a reliable family hauler but who don’t need the ample cargo space of a large SUV or minivan.”

Two pickups make the list, including the Toyota Tundra at number eight and the Honda Ridgeline at number thirteen. “Known for being indestructible, the Toyota Tundra offers the quality and reliability of the Toyota brand,” said Brauer. “The Honda Ridgeline’s unique unibody design gives it the function of a pickup truck with the ride comfort and fuel efficiency of a crossover SUV, making it one of the most flexible multi-purpose vehicles you can buy. “

Two minivans make the list – the Honda Odyssey in fourteenth place and the Toyota Sienna in fifteenth place. “Minivans generally offer more cargo space, better gas mileage and additional convenience features compared to family SUVs, but most of them lack all-weather performance. exception of the Toyota Sienna with available all-wheel drive,” Brauer said. “The Honda Odyssey consistently earns the distinction of being at the top of its class due to its handling, excellent functionality and safety features, which help it rack up mileage as a trusted family hauler. “

Refer to our most durable cars study for a list of the most reliable pickup trucks and our guide to the most trusted car brands.

Methodology

iSeeCars.com analyzed over 14.9 million used cars sold in 2021. Models that were not in production as of model year 2021, heavy-duty vehicles, and low-volume models were excluded from further analysis. For each model, the percentage of the number of cars with at least 200,000 miles was modeled mathematically.

About iSeeCars.com

iSeeCars.com is a car search engine that helps shoppers find the best car deals by providing key information and valuable resources, like iSeeCars’ free VIN check reports and Best Cars rankings. iSeeCars.com has saved users over $325 million so far by applying big data analytics powered by over 25 billion data points (and growing) and using proprietary algorithms to analyze , rate and objectively classify millions of new and used cars.

More iSeeCars:

This article, The Longest Lasting Cars, SUVs and Trucks to Achieve 200,000 Miles and Beyond, originally appeared on iSeeCars.com

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Solid Liquidity Boosts Wabtec (WAB) Amid High Capital Expense – March 1, 2022 https://beaconatbangsar.com/solid-liquidity-boosts-wabtec-wab-amid-high-capital-expense-march-1-2022/ Tue, 01 Mar 2022 15:41:24 +0000 https://beaconatbangsar.com/solid-liquidity-boosts-wabtec-wab-amid-high-capital-expense-march-1-2022/

We recently updated a report on Westinghouse Air Brake Technologies Corporation (WAB free report).

The company ended the fourth quarter of 2021 with cash and cash equivalents of $473 million, significantly above the current debt of $2 million. This indicates that the company has enough cash to meet its current debts. Moreover, its current ratio (a measure of liquidity) at the end of the December quarter stood at 1.32, higher than the reading of 1.20 at the end of 2020.

Wabtec forecasts 2022 sales in the range of $8.3 billion to $8.6 billion. Total sales recorded in 2021 were $7.82 billion. Factors such as favorable mining fundamentals, higher railcar construction and improving industrial end markets contributed to the better projection.

Wabtec reports $52 million in capex in the fourth quarter of 2021. For 2021, capex would be $131 million (above the $120 million forecast). High capital expenditures could hurt the company’s already weak bottom line. Due to higher operating expenses (up 12.5% ​​in the fourth quarter), the operating ratio (operating expenses, as a percentage of revenues) deteriorated by 170 basis points compared to the figure for the prior year quarter at 18.7%.

Zacks Ranking and Stocks to Consider

Wabtec currently carries a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some higher ranked stocks within the broader Zacks Transportation sector are JB Hunt Transport Services, Inc. (JBHT Free Report), Union Pacific Corporation (UNP Free report) and Triton International Limited (TRTN Free report) .

The expected long-term (three to five years) EPS growth rate for J.B. Hunt is set at 15%. JBHT benefited from solid performances in all its segments. While the Dedicated Contract Services (DCS) unit is aided by improved fleet productivity and an increase in the average number of revenue-generating trucks, the Integrated Capacity Solutions (ICS) unit benefits from a combination favorable customer freight rates as well as higher contract and spot rates. .

JBHT’s measures to reward shareholders are encouraging. Driven by tailwinds, the stock has risen 34.7% over the past year. JB Hunt currently sports a Zacks rank #1 (strong buy). You can see the full list of today’s Zacks #1 Rank stocks here.

The expected long-term (three to five years) EPS growth rate for Union Pacific is set at 10%. With the acceleration of economic activity, freight revenues (representing the bulk of turnover) are improving. Freight revenue increased 11% year-over-year in 2021. By segment, freight revenue in 2021 increased 12%, 11% and 11% in bulk, industrial and premium units, respectively.

Driven by tailwinds, the stock has risen 17.6% over the past year. UNP currently wears a Zacks Rank #2 (Buy).

The expected long-term (three to five years) EPS growth rate for Triton is set at 10%. The gradual increase in trade volumes and container demand bodes well for the company. With the easing of coronavirus-related restrictions in the United States and Europe, the company saw a strong rebound in business in the third and fourth quarters of 2020 as well as each of the four quarters of 2021.

Driven by tailwinds, the stock has risen 13.6% over the past year. TRTN currently wears a Zacks Rank #2.

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Four common investment misconceptions https://beaconatbangsar.com/four-common-investment-misconceptions/ Mon, 28 Feb 2022 16:37:42 +0000 https://beaconatbangsar.com/four-common-investment-misconceptions/

One of the biggest misconceptions I come across in the financial advice industry is that as you get older you need to reduce your equity allocation. While this philosophy may be based on some truth, it oversimplifies reality. Many people unnecessarily choose an asset allocation that they believe is safe, but which could actually jeopardize their future goals.

The foundation of this argument is based on the principle of the investment time horizon. The simplified thought is this: as we age and have fewer years to live, our time horizon must shorten. Although we all have an expiration date, our assets do not. When it comes to investment assets, time horizon and life expectancy are not necessarily the same thing. And even when they are, many continue to misallocate assets based on an erroneous assessment of risk.

Here are four common investment misconceptions.

Age equals time horizon

The time horizon should be the most important determining factor in choosing the percentage of stocks, bonds (or CDs) and cash that make up your investment portfolio. Rather than relying on the adage “your age should equal your bond allocation,” investors should look at their likely future cash needs in tranches.

• First bucket: immediate needs. This includes withdrawals that are expected to occur within the next 12-18 months. These assets should be invested in money market accounts or current (chequing/savings) accounts with little or no market volatility.

• Bucket two: intermediate needs. Money that you expect to withdraw in more than two years, but in less than eight to ten years. Funds for tuition, vehicles and major home repairs are examples. The timing of these expenditures is reasonably foreseeable. These funds should be invested in higher-yielding, time-limited investments, such as high-quality bonds or bank CDs. The maturity date should roughly coincide with the scheduled withdrawal date.

• Bucket three: Long-term needs. You don’t expect to need this money in the next eight to ten years. These funds should be invested in stocks and other risky assets. These assets have higher expected returns, but they come with greater short-term volatility.

The stock market is very risky

When we talk about risk in financial terms, we usually refer to volatility, or how much an investment can gain or lose value. From quarter to quarter or year to year, the value of stocks can go up and down dramatically. However, if we look at returns over longer holding periods – like five and 10 years – the volatility drops dramatically. This happens because stocks historically tend to sell off dramatically, recover over time, and eventually reach new highs before the cycle repeats itself. Historically, these cycles take seven to ten years to fully unfold.

• Diversification is important here because a stock is a small piece of ownership in a company. Some companies never recover, and the stock price reflects that; but as an economy recovers, the market not only participates, but generally leads the way.

• Long-term equity returns are nearly double those of bonds. According to the NYU Stern Database, the S&P 500 stock index has an average annualized return of around 10%, dating back to when the index had only 90 stocks in 1928. US Treasuries have yielded a just under 5% over the same period.

Government bonds are less risky than stocks

Unlike stock returns, bond returns are limited by mathematics. A bond is simply a $1,000 chunk of a much larger loan. Once the loan is created, the terms of the loan do not change. The “total return” of a bond comes from the interest paid (the coupon payment), plus or minus any change in price. The price of a bond will change as prevailing interest rates change. When rates fall, the bond becomes more valuable because it has to pay a higher coupon than the prevailing market interest rate. Therefore, as prevailing interest rates fall, existing bonds gain in value; as rates rise, existing bonds lose value.

• Bonds cannot repeat their historical performance. Over the past 50 years, bonds have experienced a prolonged period of systemic decline in interest rates. Interest on a US Treasury bill fell from 16.3% in May 1981 to 0.03% in December 2008. During this period, US Treasury bills earned an annualized return of 9.77%. Most of this performance can be attributed to the steady decline in market interest rates.

• With current market interest rates at zero, historical yields are no longer relevant to future return expectations — if we assume that rates cannot fall well below zero. This means that as the Fed raises rates to fight inflation, the prices of existing bonds will fall, crippling future bond yields and virtually guaranteeing that they will struggle to keep up with inflation.

You cannot lose cash

With the rise of cryptocurrency and alternative assets, we need to rethink our definition of money. Technically, money is simply a store of the value of our labor. It has taken many forms throughout history, but its purpose has always remained the same. We earn it when we work and keep it until we want to exchange it for something of value.

• If the storage unit of our currency decreases in value, it will take more units to buy the goods we want in the future. It’s inflation. In 2021, the consumer price index increased by 7%. This means that the work we did in early January 2021 bought 7% less goods by the end of the year. If we assume a working year of 250 days, that means we lost 17.5 working days due to inflation. Holding cash can and does lead to loss of money.

Ah, making decisions…

Armed with this knowledge of important misconceptions, what decisions should investors make? Here are three suggestions:

• Invest for your needs, not for your age.

• Think carefully about your projected expenses and use the “bucket” methodology. This should be the basis for the award decision.

• Resist changing your allocations based on market conditions. Market timing is incredibly difficult because it requires two perfectly synchronized decisions: when to exit and when to return.

The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation.

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Fairfax stock is a buy after reporting its best year https://beaconatbangsar.com/fairfax-stock-is-a-buy-after-reporting-its-best-year/ Mon, 21 Feb 2022 09:14:00 +0000 https://beaconatbangsar.com/fairfax-stock-is-a-buy-after-reporting-its-best-year/

Welcome Inside/iStock via Getty Images

Fairfax (OTCPK: FRFHF) was one of my top holdings for almost four years, and during that time it was a lousy investment. Prem Watsa, the once-legendary value investor, had to clean up some stupid mistakes, but Fairfax still couldn’t regain investor confidence.

Figure 1 shows the strong underperformance of FRFHF against the S&P 500 index measured during my early purchases of the company.

Fig. 1

Fairfax stock price performance against the S&P 500

BAML and author’s calculations

The guilty? Poor investments and a difficult interest rate environment.

blackberry (NYSE:BB), Greece, inflation hedges, short markets, new African consumer banks. They have all eaten away at the insurance company’s book value, while its portfolio of fixed-income assets continues to languish at rates near zero.

Figure 2 presents the investment performance of FRFHF broken down over several time periods. In the early days of the business, it can be seen that the investments performed well. But in recent years, performance has been mediocre at best.

Figure 2

Growth in book value per share, average combined ratio, investment performance

Fairfax Annual Report 2020

Over the past decade, FRFHF has struggled to reach 5% on its investment portfolio, while the S&P 500 has steadily hit new highs, fueled by growth and technology stocks. This led to below-average growth in book value well below its self-imposed target of 15% per year.

This year, however, Fairfax posted record performances for its 36-year history on nearly every key metric:

  • $26.5 billion in revenue up 34% over the previous year
  • 3.4 billion USD in net profit up almost 15 times from the previous year
  • 15 billion USD in equity, up 20% compared to the previous year
  • Consolidated combined ratio: 95% less than 97.8% the previous year

The real question now is: what is the next step? Does this performance mark the long-awaited turning point for stocks or another false start for this Berkshire (NYSE: BRK.A) desire? Let’s first look at the core business of the company: insurance to better understand the management of tomorrow.

The driving force: insurance

Fairfax has spent years building a global insurance platform and creating a conservative underwriting culture. From 1985 to 2021, global premiums grew at a compound rate of 23% to nearly $23 billion or $1,000 per share.

At the same time, the average combined ratio of its insurance portfolio continued to decline. In Figure 2, from 1986 to 1990, the company had an average consolidated combined ratio of 106.7%. Over the past five years, its average consolidated combined ratio has been 98.7% with a median of 97.3%.

Combined ratios are a key measure of the profitability of insurance companies. They measure expected insurance losses plus underwriting costs relative to earned premiums. The lower the combined ratio, the more profitable the insurance company.

They are also an important indication of whether insurance float or premiums collected but not yet paid have a cost. Profitable underwriting for insurance companies, as in the case of Fairfax, means that the returns on investment all go to shareholders.

Figure 3

2017-2021 annual combined ratios for Fairfax Insurance

Fairfax Annual Reports

We can see in Figure 3 that Fairfax has significantly improved its combined ratio from 106.6% in 2017 to 95% in 2021. The difficult market conditions, when insurance companies have the power to raise prices , certainly helped. Gross written premiums at Fairfax increased 25% to $23.9 billion in 2021 from a year ago.

Expect these conditions to persist in the form of social inflation or a tendency for juries to award higher amounts to plaintiffs; disasters crowd out weak carriers; and rising general inflation to conspire for a hard market.

Despite these positive developments, Fairfax investors should beware of some difficult to quantify risks.

Climate change and its impact on weather conditions can put pressure on (re)insurance companies. The view that there will be more frequent, severe and unexpected weather disasters cannot be ignored. For example, Fairfax’s explosive year included another $1.1 billion in catastrophe losses, reducing its combined ratio by 7.2 points; excluding catastrophes, the combined ratio would have been 87.8%!

But that’s why a cautious and adaptive underwriting culture is needed, and I haven’t seen anything to suggest that Fairfax won’t adapt to these new climate realities. Investors, however, should take note of the progress the company has made here.

In addition, the ongoing conflict between Ukraine and Russia could negatively impact Fairfax’s European insurance business. In 2020, the company wrote gross premiums of USD 144 million in Ukraine and USD 114 million in Poland. Brit, which is a UK-based insurer, paid 13% of gross premiums that year.

Inflation will be good for Fairfax

Inflation has been an afterthought in the developed world for more than a decade, but the global pandemic has raised concerns among central bankers about runaway prices. Self-imposed lockdowns and workers reluctant to re-enter the labor market have put enormous pressure on global supply chains, causing consumer prices to rise rapidly.

The US consumer price index, for example, rose 7.5% year-on-year in January, the biggest 12-month increase since 1982. Wall Street, therefore, is forecasting up to seven rate hikes by the US Federal Reserve, while the Bank of Canada could quickly follow suit.

The insurance industry has long suffered from low rates, as their portfolios typically have a large portion of bonds to cover claims. But in a prescient move, Fairfax kept its portfolio short-term by keeping about 50% of its $43 billion in assets invested in cash and short-term instruments.

This means that as rates rise, his portfolio will be more resilient to changes in market value, as longer-dated fixed income instruments are discounted relative to better-priced ones.

Short duration assets do not face the same volatility in rising rate environments. Fairfax may also use its cash to purchase bonds and fixed income instruments when rates better reflect the credit risk being taken. A significant development since interest and dividends represented 28% of (re)insurance operating income in 2021.

Is Mr. Watsa finally giving the floor on share buybacks?

Mr Watsa has been chipping away at the company’s share count since 2018, reducing outstanding shares by an unimpressive 6% through 2020. But in a surprising year-end move, Fairfax launched a buyout of $1 billion primarily using proceeds from a sale of a minority stake in his wholly owned insurance unit of the Odyssey Group.

It was a decision Watsa had been hinting at for a while.

In his 2018 annual letter he wrote about Teledyne’s late great Henry Singleton (NYSE: TDY) fame, which retired 90% of Teledyne shares and generated a 3,000% return for shareholders during this period. Clearly, Watsa still has a long way to go to equal that record, but a stock cut of around 7% isn’t a bad start!

But the transaction was interesting beyond the mere merits of the takeover. It also gave watchful shareholders a window into the company’s undervaluation.

For $900 million, the Canada Pension Plan Investment Board and OMERS purchased a total of 9.99% or 4.995% each of Odyssey Group, the reinsurance and specialty insurance business of the Stamford, CT-based company.

This valued the unit at over $9 billion, or 1.83 times what Fairfax held for the Odyssey Group in 2020 ($4.9 billion in equity attributed to Odyssey).

How does this compare to the set?

Fairfax total common shareholders’ equity was $15 billion at the end of 2021, and the market capitalization of the entire company traded at $13.4 billion recently. The true value of the Odyssey Group was then a startling 60% of book value and 67% of market value.

When you consider Fairfax’s other attractive insurance properties, private business interests and controlling positions in Fairfax India and Africa, it is clear that the intrinsic value of the company is far greater than where the shares are listed today. today.

In sum

It can be silly to predict where the stock price will go next. I certainly didn’t have a crystal ball four years ago when I created my job at Fairfax and prices were languishing. But I continue to hold my stocks and buy on the downside taking comfort in Benjamin Graham’s mantra:

In the short term, the market is a voting machine but in the long term, it is a weighing machine.

Fairfax has been in the best shape for years.

The company’s (re)insurance operations are profitable, improving and thriving in a tough market that looks set to continue. Higher interest rates will allow the team to improve its interest income, a long thorn in investment performance. And it seems clear from the sale of the Odyssey Group’s stake that the Fairfax pieces aren’t getting the credit they deserve.

I suspect Mr. Watsa is closing the intrinsic value gap with accretive buyouts and creative financing that “weight” will be on the rise as the market begins to realize the value of this undervalued company.

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A modern tax system can generate more resources https://beaconatbangsar.com/a-modern-tax-system-can-generate-more-resources/ Sun, 20 Feb 2022 18:00:10 +0000 https://beaconatbangsar.com/a-modern-tax-system-can-generate-more-resources/

Ahead of the 2022-23 budget, the National Board of Revenue (NBR) has entered into discussions with various business and trade organizations, as in previous years. The Ministry of Finance does the same. The objective of the BNR is mainly to seek tax proposals from stakeholders. This is a commendable practice, which gives companies and organizations the opportunity to suggest not only how various sectors can get a break from the tax burden, but also how to improve revenue mobilization by improving the collection system. It is widely discussed that despite Bangladesh’s impressive growth, domestic resource mobilization is too low. Unfortunately, the NBR has not yet succeeded in bringing all eligible employees under the tax net. It is hoped that through these regular consultations between BNR and stakeholders, a better tax system will emerge in the near future.

The NBR plays the most important role in creating fiscal space for the government to undertake its activities. However, the goal imposed on it has not been achieved in recent years. Indeed, the objectives seem unrealistic and exceed the capacities of the BNR given its current institutional framework. It may be recalled that, in the budget for the fiscal year 2021-22, tax revenue – which includes both tax and non-tax revenue – was set at 11.3% of GDP. Of the total revenue target, tax mobilization is the highest at around 85%. In addition, for FY22, the revenue growth target was set at 27%. But the revenue growth trend in July-October FY22 indicates that achieving this goal will require more aggressive efforts, as revenue mobilization is expected to increase by 30.7% over the remainder of the fiscal year.

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Although several infrastructure projects are financed by foreign loans, the mobilization of domestic resources is crucial to achieve the short, medium and long term objectives of the government. With domestic resources, the government can prioritize its spending in line with political priorities. But the continued lack of national resources creates a real challenge for the government in delivering on these promises. At the current level of domestic resource mobilization, the implementation of its political commitments is difficult.

As Bangladesh is poised to become a developing country by 2026, greater mobilization of domestic resources will become even more important. As a developing country, we will not be eligible for foreign aid and concessional loans. Of course, the image of the country will be enhanced and the strength of our economy will help us to supply ourselves on the world market. But it can be expensive because we have to pay market interest rates to get such loans. This could increase the country’s debt burden. As the size of the economy increases, the need for additional financing will continue to increase. With the current tax collection effort, it is not possible to meet resource requirements.

It was reported in the FY22 budget speech that the number of taxpayers in Bangladesh was only 2.5 million. In a country of over 165 million people, that number is surprisingly low. There are many reasons for tax evasion. Some people feel that once they have a tax identification number (TIN), they are stuck forever and have to pay taxes even if their income is below the threshold. Some feel that it is pointless to pay taxes since they are not receiving the service expected of the government as citizens. Some think that since they have to pay bribes at government levels to do their jobs, they shouldn’t have to pay extra money in the form of taxes. So while there is a lack of awareness regarding the responsibility to pay taxes as a citizen of the country, there is also a strong argument for not doing so. It is therefore incumbent on the government to eliminate these perceptions by providing hassle-free services to citizens. Policy makers will also need to ensure that taxpayers’ money is not wasted in the name of development or siphoned off through corruption. Good governance in the implementation of development projects and economic and social programs is therefore essential to the mobilization of greater domestic resources.

As for the BNR, a number of specific measures should be taken to increase revenue mobilization. One is the implementation of electronic governance. Technology can help establish a simple procedure for tax collection and increased compliance as well. It can also be used to track people’s lifestyle to determine their tax rates. Often, there is a mismatch between people’s reported incomes and their spending habits. This is known to the NBR. With a modern system, more human resources and higher skills, the efficiency of NBR can be improved in this regard.

A number of reform measures proposed a few years ago have yet to be completed. Among the measures proposed are the upgrading of the automated customs data system (ASYCUDA), the consolidation and integration of the integrated budget and accounting system (iBAS++), the electronic filing of declarations, the electronic withholding tax (e- TDS), automated customs risk management, and the introduction of an authorized economic operator system. These measures could contribute to bring a lot of efficiency in tax management. Given that the BNR is formulating revenue measures for various sectors in the national budget for the financial year 2022-23, the operationalization of reform measures, some of which are already on the table, should not be ruled out.

Dr Fahmida Khatun is executive director of the Center for Policy Dialogue (CPD). The opinions expressed in this article are those of the author.

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Trade and Development Bank — Moody’s changes outlook on TDB to stable from negative; affirms Baa3 ratings https://beaconatbangsar.com/trade-and-development-bank-moodys-changes-outlook-on-tdb-to-stable-from-negative-affirms-baa3-ratings/ Fri, 18 Feb 2022 21:39:06 +0000 https://beaconatbangsar.com/trade-and-development-bank-moodys-changes-outlook-on-tdb-to-stable-from-negative-affirms-baa3-ratings/

Rating Action: Moody’s changes outlook on TDB to stable from negative; affirms Baa3 ratingsGlobal Credit Research – 18 Feb 2022London, 18 February 2022 — Moody’s Investors Service (“Moody’s”) has today changed the outlook on Trade and Development Bank (TDB) to stable from negative and affirmed the Baa3 long-term issuer and senior unsecured debt ratings and the (P)Baa3 senior unsecured MTN programme rating.The change in outlook to stable takes into account TDB’s improved liquidity position and increasingly diversified funding sources. It also reflects the resilience of TDB’s capital position despite a challenging operating environment aggravated by the pandemic.Moody’s affirmation of the Baa3 ratings reflects TDB’s moderate capital adequacy and expectations that the bank’s leverage metrics will remain broadly stable in the medium term. The bank has a solid track record of profitability and its shareholder base has expanded continuously. The affirmation also reflects TDB’s credit risk mitigation instruments that offer a degree of protection to adverse scenarios impacting its balance sheet from the financial stress experienced by some of its borrowers. While TDB’s shareholders’ ability to support is constrained by their own predominantly weak credit profile, TDB benefits from a mid-term credit risk mitigation instrument that improves the bank’s overall creditworthiness by effectively increasing the likelihood of timely equity injection in the event of a call on additional capital by the bank.RATINGS RATIONALERATIONALE FOR CHANGING THE OUTLOOK TO STABLETDB’S LIQUIDITY POSITION HAS STRENGTHENED, SUPPORTED BY THE BUILD-UP OF LARGE BUFFERSThe first driver for stabilizing the outlook is TDB’s improved liquidity profile supported by large buffers and increasingly diversified funding sources. TDB’s total liquid assets at the end of 2021 (according to unaudited financials) consisted of cash deposits amounting to about $1.4 billion held with entities rated at or above Baa3. The quality of liquid assets has also improved, with the share of liquid assets rated A2 or higher at $1.2 billion as of December 2021 from $0.9 billion as of December 2020.Moody’s considers a stress scenario in which the Multilateral Development Bank (MDB) loses market access, and compares the stock of high-quality liquid assets to estimated net cash outflows over the coming 18 months. Based on TDB’s liquid asset position and estimated net outflows at the end of 2021, in such a scenario its liquid asset coverage would exceed 170% at end-2021, up from 79% at end-2020, and well above the median of Baa-rated peers which stood around 55% at end-2020. While some of this liquidity improvement is temporary due to lower disbursements in the aftermath of the coronavirus shock, Moody’s expects the liquidity buffers to remain adequate and stronger than pre-pandemic.Moreover, liquidity remains supported by access to committed facilities from development institutions. Unutilized long-term credit lines exceeded $700 million as of December 2021. TDB’s access to funding has proved resilient in the past two years. Since the outbreak of the pandemic, it has secured new facilities from a broadening pool of bilateral and multilateral development institutions, including concessional loan facilities for on-lending as well as guarantees on commercial loans, helping TDB to contain the cost of funding despite more challenging market conditions in the early months of 2020. In 2021 TDB issued a $650 million seven-year eurobond at a reduced cost compared to early 2020.RESILIENT CAPITAL ADEQUACY AMID CHALLENGING OPERATING ENVIRONMENTMoody’s decision to change the outlook from negative to stable is also driven by the demonstrated resilience of TDB’s capital position, reflecting stable leverage and asset performance, the latter despite deteriorating credit conditions in several of its countries of operations.TDB’s leverage ratio has remained broadly stable at 4.2X as of June 2021 (per published financial accounts), compared to 4.1X in 2020 and 4.2X in 2019. This was mainly the result of increasing usable equity although loan growth moderated compared to previous years. TDB is among the MDBs with consistent and strong profitability, with return on assets and return on equity estimated at above 2% and 10% in 2021, respectively. Paid-in capital also increased by an estimated 4% last year, albeit at a slower pace compared to 2020. Moody’s expects that the bank’s equity will continue to expand thanks to its current capital mobilization initiative. In late 2020, shareholders approved a $1.5 billion capital increase, which comprises $1 billion allocated to new Class C shares aimed at new types of investors, in particular global impact investors.In a similar vein, TDB’s asset performance has remained broadly stable over the past two years, despite the challenging operating environment in Eastern and Southern Africa. Non-performing loans (NPLs) stabilized at 2.9% of gross loans as of end-2021 in line with June 2021 and December 2020, while the share of loans to selected borrowers whose terms have been modified to provide temporary pandemic-related relief declined to about 2% of total loans as of end-2021 from about 4% as of end-2020.Portfolio concentration has also declined, with the top 10 exposures accounting for an estimated 62% of the total at end-2021, down from about 70% in 2019 and 2020.RATIONALE FOR AFFIRMING THE Baa3 RATINGSMoody’s affirmation of TDB’s ratings at Baa3 is underpinned by the expectations that TDB’s capital adequacy will remain broadly stable at current level, as growth in equity – supported by continued relatively strong profitability and planned capital increase – will allow to pursue its managed growth strategy tied by the maintenance of capital adequacy and asset quality metrics.Moody’s expects pressures on asset performance to persist over the next two years, although NPLs are expected to remain at a manageable level. Moody’s notes that the credit quality of TDB’s borrowers has further weakened from an already low position over the past year and exposure to countries rated in the Caa rating category or lower account for about 60% of total loans. That said, TDB extensively uses collateral and insurance policies to limit the risks stemming from the very weak borrower credit quality of large exposures and also benefits from a risk participation program to share risks with a number of institutions. In 2021, the bank had more than $700 million in both funded and non-funded risk participation agreements with highly rated institutions. Nevertheless, exposure to Zambia’s Ministry of Finance in particular accounts for 7% of TDB’s total loan portfolio as of December 2021 and the rating agency expects that TDB will be involved in the negotiations for the restructuring of Zambia’s (Ca stable) debt under the Common Framework.Moody’s expects that the bank will continue to proactively implement measures aimed at mitigating the risks inherent to its difficult operating environment, protecting its asset performance, through further portfolio diversification, use of credit enhancements such as insurance and risk participation agreements, and by implementing initiatives to expand its shareholder base.Moody’s assessment of strength of member support remains constrained by the low credit quality of most of the bank’s shareholders with an average weighted shareholder rating at B3 and relatively weak contractual support based on the ratio of callable capital to total debt of 28%. At the same time, the mid-term credit risk mitigation instrument introduced in 2017 continues to support its creditworthiness by effectively increasing the likelihood of timely equity injection in the event of a call on additional capital by the bank.ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONSTDB’s credit impact score is moderately negative (CIS-3), reflecting a negative but limited impact on the current rating from ESG risks, given its adequate governance profile supported by a strengthening risk management framework, with greater potential for future negative impact over time in light of moderate exposure to environmental risks, and low exposure to social risks.TDB’s environmental issuer profile score is moderately negative (E-3), reflecting moderate exposure to physical climate risks and moderate risks arising from carbon transition due to exposure to the oil and gas sector. The latter may over time affect the demand for certain financial products. While exposure to physical climate risk is relatively high for many of TDB’s borrowers, we expect the impact on TDB’s asset quality to remain contained.TDB’s social issuer profile score is neutral to low (S-2), reflecting good relations with member countries, that have supported its increasing relevance in the region, an inclusive and diverse workforce, and emphasis in the bank’s strategy on responsible production and societal trends.TDB’s governance issuer profile score is neutral-to-low (G-2), reflecting sound governance principles and a risk management framework that has progressively strengthened in recent years through staff increases in key risk management functions and by adopting tools to measure risks more accurately.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward rating pressure would likely arise from prospects of a significant strengthening of the capital base, accompanied by further diversification of the lending portfolio that considerably reduces credit risk.Moody’s would likely downgrade the ratings due to a material weakening of its assessment of capital adequacy, due for example to significant deterioration of asset performance or borrowers’ credit quality, and failure of the risk mitigants to perform as expected. Furthermore, a marked erosion of liquidity buffers and/or increased liquidity pressures which impact the bank’s access to funding sources would also likely be credit negative. Any development that leads to an early termination of the mid-term credit risk mitigation instrument for callable capital, or a failure to perform as expected when triggered, would also likely result in a downgrade.The principal methodology used in these ratings was Multilateral Development Banks and Other Supranational Entities Methodology published in October 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1232238. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Daniela Re Fraschini Vice President – Senior Analyst Sovereign Risk Group Moody’s Investors Service Ltd. One Canada Square Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Marie Diron MD – Sovereign Risk Sovereign Risk Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody’s Investors Service Ltd. 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Freshfel Europe asks for support for the fruit and vegetable industry in the face of the embargo on Belarus https://beaconatbangsar.com/freshfel-europe-asks-for-support-for-the-fruit-and-vegetable-industry-in-the-face-of-the-embargo-on-belarus/ Sun, 13 Feb 2022 23:25:26 +0000 https://beaconatbangsar.com/freshfel-europe-asks-for-support-for-the-fruit-and-vegetable-industry-in-the-face-of-the-embargo-on-belarus/

Freshfel Europe has urged European Union authorities to support the fresh produce sector due to the continuing restrictions resulting from the Belarusian embargo.

The embargo began at the beginning of the year, with no less than 500,000 tonnes of exports compromised, including 300,000 from Poland, and between 10,000 and 60,000 tonnes from Spain, Belgium, the Netherlands Bas, Greece and Italy. Belarus is the second country in terms of fresh produce exports for the EU behind the United Kingdom.

“This embargo is added to the Russian embargo not yet recovered, representing a loss of companies worth 2.5 billion euros, while the Algerian embargo represents a commercial loss of 200 million euros “, said Philippe Binard of Freshfel. “The fruit and vegetable sector is frustrated at being the spectator and the bargaining chip in a geopolitical dispute. In total, 3 billion euros of fresh produce activity must be repositioned each year.

In a recent statement, Freshfel noted the enormous challenges of market diversification as well as difficulties in refocusing planning around long-term orchard investments as well as business operations. Officials said companies with ties to Belarusian importers have “specific products and varieties” that are significantly affected.

Binard said Freshfel had passed on a plan to help protect the sector in the meantime.

“We have identified and submitted to the European Commission five different areas of activity and a total of 12 measures where mechanisms need to be introduced,” he said. “These cover EU market stability support, renewed efforts to open new markets, specific aspects related to Belarusian and Russian embargoes as well as specific issues related to customs procedures for re-export and transit”.

Freshfel said he will continue to monitor the embargo and will work closely with the commission as it tries to overcome the challenges.

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Moody’s downgrades SJM Holdings on concerns over financial and liquidity management https://beaconatbangsar.com/moodys-downgrades-sjm-holdings-on-concerns-over-financial-and-liquidity-management/ Sun, 13 Feb 2022 20:14:24 +0000 https://beaconatbangsar.com/moodys-downgrades-sjm-holdings-on-concerns-over-financial-and-liquidity-management/

Moody’s Investors Service downgraded the corporate family of Macau’s casino concessionaire SJM Holdings, as well as the senior unsecured ratings of bonds issued by the company, due to delays in executing refinancing plans.

Moody’s said in a statement late last week that it had downgraded SJM’s family of companies rating – which assesses a family of companies’ ability to meet all of its financial obligations – from Ba1 to Ba2. The senior unsecured ratings of bonds issued by SJM’s subsidiary, Champion Path Holdings Limited, were downgraded from Ba2 to Ba3.

The revised ratings relate to SJM’s efforts to execute new HK$19 billion (US$2.4 billion) secured loan and revolver facilities to refinance its existing facilities, which mature on February 28, 2022. The execution of these new facilities remains delayed due to pending regulatory approvals.

While Moody’s expects SJM to be able to extend the maturity of existing loans by one year given the quality of its assets in Macau, and possibly execute approvals for its new banking facilities, l Analyst Sean Hwang said the delay “raises some concern about its finances and liquidity“. management.

“The downgrade review reflects the fact that SJM’s refinancing risk will remain elevated until its near-term maturities are fully refinanced. Further downgrading is possible if SJM fails to secure long-term funding to meet maturities in a timely manner.

The rating action also reflects growing operational uncertainties due to the slow recovery of gaming revenue in Macau due to COVID-19, Moody’s observed.

The agency said it had lowered its 2022 forecast for Macau’s mass-market GGR to about 50% of pre-COVID levels, which will in turn lead to a slower ramp-up of Macau’s Cotai integrated resort. 39 billion HK dollars (45 billion US dollars) of SJM, Grand Lisboa Palace, opened in July 2021.

“Based on these assumptions, Moody’s expects SJM’s Adjusted Debt/EBITDA to be approximately 4.0x in 2023, which positions SJM more appropriately in the Ba2 rating category,” Moody’s said.

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