Backdoc» September 11th, 2015, 12:03 am
AS WE WATCH THE WORLDS FINANCIAL MARKETS NOW SHOWING MORE ADVANCING SIGNS OF MELTDOWN,
WE CONTINUE TO WATCH FOR A TRIGGER MECHANISM THAT WILL SHIFT THINGS INTO HIGH GEAR!
NO DOUBT BETWEEN NOW AND MONDAY WE MAY HAVE MORE ANSWERS!
ALL I CAN SAY IS I'M GLAD I'M SHORT THE MARKET. THE NEXT FEW WEEKS SHOULD PROVE QUITE PROFITABLE FOR ME! NOW IS THE TIME TO BE REWARDED FOR ALL MY TEAMS HARD WORK!
NO, I'M NOT TALKING ABOUT THE CURRENCY RATE OR DATE! I'M TALKING ABOUT WHAT I BELIEVE WILL HAVE PRECEDED IT!
A MARKET MELTDOWN!
SORRY I LIKE TO TRADE! REMEMBER I TOLD YOU THAT OIL WOULD PLUNGE AND IT DID? RIGHT! WELL, GET READY FOR A FAST RIDE DOWN IN THE MARKETS!
SOMEWHERE IN THAT PROCESS OR AFTER THE REAL REWARD WE ALL HAVE BEEN WAITING FOR WILL OCCUR!
GOD ONLY KNOWS!
I ALSO TOLD YOU THAT THE OIL SUPPLY ISSUE WOULD HAVE TO BE SOLVED POLITICALLY FOR OIL TO COME BACK TO NORMAL LEVELS SO THAT COUNTRIES CAN REBOOT THEIR ECONOMIES!
IF WE SEE A RATE VERY SOON YOU CAN BE ASSURED THAT THE PROCESS HAS PROVED SUCCESSFUL. I WILL SAY I'M VERY EXPECTANT FOR A GOOD OUTCOME!
FIRST COMES LOVES, THEN COMES MARRIAGE, THEN COMES BABY IN THE BABY CARRIAGE! HEE HEE
WELL, FIRST COMES THE STRATEGY, THEN COMES THE DEAL, THEN COMES THE PROFIT!
Thunderhawk » September 10th, 2015, Backdoc Alert
Brazil Credit Rating Cut to Junk by S&P Amid Budget Strain
Brazil’s sovereign rating was cut to junk by Standard & Poor’s, taking away the investment grade the country enjoyed for seven years, as President Dilma Rousseff’s struggles to shore up fiscal accounts amid a faltering economy.
The country’s rating was reduced one step to BB+, with a negative outlook, S&P said in a statement after markets closed. Brazil’s largest U.S. exchange-traded fund tumbled 6.6 percent in late trading along with American depositary receipts for Petrobras, the state-controlled oil company.
The downgrade, and S&P’s warning that another cut is possible, puts pressure on the economic team led by Finance Minister Joaquim Levy to win passage of measures that would shore up the country’s fiscal situation by cutting spending or raising taxes. Rousseff has been unable to find support for her initiatives amid an investigation into corruption at the state-controlled oil company that allegedly occurred while she was its chairman, sending her popularity to a record low and generating calls for her impeachment.
“The downgrade could be a wakeup call but the political situation is so bad that it’s difficult to resolve, so its a dark path ahead,” Daniel Weeks, the chief economist at Garde Asset Management, said from Sao Paulo. "Markets will take this as a negative, and it will probably drag down emerging markets at a global level.”
Puerto Rico Faces Higher Hurdles in Debt Restructuring Plan
Now comes the hard part for Puerto Rico after the commonwealth unveiled a long-awaited proposal that calls for bondholders to accept less than they’re owed as the island seeks to halt a more than a decade long economic slide.
Puerto Rico says it has $13 billion less than it needs to cover debt payments over the next five years, even after taking into account proposed spending cuts and measures to raise revenue. The commonwealth’s advisers plan to present investors with a debt-exchange offer in a few weeks, as well as seeking a moratorium on principal payments.
Getting all the parties to the table quickly will be key. The island is set to run out of cash by the end of the year unless it can refinance debt. It also faces a $500 million shortfall in June, right before a $805 million payment to general-obligation bondholders comes due July 1.
“They have a real solvency issue,” said Peter Hayes, who helps oversee $116 billion as head of municipal debt at New York-based BlackRock Inc. “They have a liquidity crisis on their hands that grows very dire by the end of the year.”
Governor Alejandro Garcia Padilla in June said the island was unable to repay all of its obligations on time and in full and directed his administration to analyze how it can ease its debt load. Puerto Rico is unable to use traditional methods for reducing debt. Its municipalities cannot file for Chapter 9 bankruptcy protection and a local debt-restructuring law enacted in June 2014 was thrown out by a federal judge in San Juan.
The parties may still find themselves in court. Puerto Rico defaulted last month when its Public Finance Corp. skipped a $58 million principal and interest payment after lawmakers failed to allocate the funds because of a budget crunch. It also missed a Sept. 1 interest payment.
“I’m wondering if a debt service missed payment like they did on PFC will become more the norm for some of these other entities,” Hayes said. “Perhaps as a negotiating tactic or perhaps as just a way to maintain solvency.”
Puerto Rico officials estimate that the island will have only $5 billion of available funds to repay $18 billion of debt service on $47 billion of debt, excluding obligations of its electric and water utilities.
The plan made public Wednesday and crafted by Garcia Padilla’s top officials, called the Working Group, paints a dire picture of Puerto Rico’s finances and the consequences to the island’s 3.5 million residents. The projected debt-funding shortfall is after anticipated savings from the consolidation of 135 public schools, reductions in health-care spending, additional subsidy cuts and reductions in payroll expenses.
The plan indicated that the commonwealth may have trouble paying off its general obligation bonds and has authorized its advisers to begin working on a voluntary exchange offer. “Available resources may be insufficient to service all principal and interest on debt that has a constitutional priority,” the report said.
That means that holders of general-obligation bonds, which Puerto Rico’s constitution says must be repaid before other expenses, and investors of sales-tax bonds, which are repaid through a dedicated revenue stream, may be forced to take losses.
“There’s been a real suspension of disbelief about the risk in those credits, so any kind of loss of more than a few percent for more than a few months would be a very big loss for those securities,” said Matt Fabian, a partner at Concord, Massachusetts-based Municipal Market Analytics.
Prices on some Puerto Rico securities fell after the Working Group released its report. General obligations with an 8 percent coupon and maturing July 2035 traded Wednesday at an average 73.2 cents on the dollar, down from an average 75.5 cents the day before, according to data compiled by Bloomberg. The average yield was 11.5 percent.
The commonwealth has a wide range of creditors it will need to persuade to accept losses on their investments. About 50 percent of U.S. muni mutual funds hold Puerto Rico securities, down from 77 percent in October 2013. Hedge funds hold as much as 30 percent of Puerto Rico’s debt, Barclays Plc municipal-debt strategist Mikhail Foux estimates. Bond insurers would also need to accept any changes to existing debt.
“They need to get acceptance from the creditors and that’s not likely to come easy,” Hayes said.
VIDEO: A `Grexit' Would Make Economic Sense for Greece: Stei
Feb. 12 -- Oxford Economics Asset Management Director Gabriel Stein discuss Greece's fiscal crisis with Bloomberg's Mark Barton and Anna Edwards on "Countdown."