PIMCO stated that a “void in lending markets” has been created, allowing private capital to intervene, as banks have become more cautious about lending because of decreased liquidity and regulatory scrutiny.

The report suggested further that private investors should push for tighter covenants and wider spreads, as well as seize expanding chances to directly refinance companies with more flexible capital structures and buy senior corporate loans at a discount.

“As private credit investors, this is the environment we’ve been waiting for, portfolio managers at PIMCO said in a note. The next few years will be great vintages, we believe, across the private opportunity set for a wide range of investor objectives,” PIMCO remarked, as reported by Zawya.

PIMCO, which oversees USD 18 trillion in assets, started to penetrate markets that were previously dominated by regional banks in 2023. The bond market player has increased the amount of private financing that it offers to failing companies from which banks have withheld credit. All these have happened in a year, when the world’s largest economy saw the downfall of five regional banks, including the likes of First Republic Bank, Signature Bank and Silicon Valley Bank.

PIMCO further anticipates that the reduced liquidity climate will, in particular, present opportunities for private credit investors in senior corporate loans, commercial real estate, and speciality finance, or loans to consumers and small businesses based on collateral.

The asset manager identified specific areas of specialty finance, including aircraft leasing, equipment financing, solar and home improvement loans, and residential mortgage credit, where the private investors will witness growth.

According to PIMCO, there will be chances for private credit to offer this kind of funding to banks and non-bank lenders in addition to borrowers directly.

Furthermore, it stated that ‘investors won’t need to take large risks to generate compelling returns’ because the demand for capital is greater than the supply.

Not only PIMCO, but even the leading global investment firm Kohlberg Kravis Roberts (KKR) sees investing in Asian private credit offering a premium over similar deals in Europe and the United States.

In its latest report, KKR estimated that the ratio of the private equity to private debt assets under management is 30.8 times for the Asia-Pacific region compared with 5.2 times for the US and 3.5 times for Europe.

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Flanked by bodyguards, Kim Kardashian lured hundreds of executives to the SuperReturn industry event and said she wanted to learn the secrets of investing after starting her own fund last year.

In an event, speaking about her goals, Kim Kardashian, whose empire includes skincare and clothing, said she was looking for creators of businesses that her fund, which has not yet made an investment, could support who have what she called the “magic sauce.”

Experts noted that private equity is currently going through one of its roughest periods since its emergence in the 1980s. The funding that supports the industry is becoming increasingly scarce and expensive due to the rapid increases in interest rates to battle inflation.

Since borrowing costs have been at historically low levels for more than a decade, investors have been able to purchase businesses using sizable loans before reselling them to other investors who are similarly encouraged by low credit costs, experts stated.

Now, euro-zone data shows banks are cutting off credit after the European Central Bank hiked interest rates by the highest rate in its 25-year history.

The value of private equity-funded mergers and acquisitions in Europe over the five years was about $46 billion.

According to data from Refinitiv, sales in the months to the end of May are 74% lower than the same period in 2022. The technology sector saw the highest number of deals globally, while healthcare deals reached $16 billion.

“It has been easier in the past, deal flow is reduced significantly…we have to pedal harder,” said Jose Pfeifer, who leads Investcorp’s European private equity group, on the sidelines of SuperReturn.

On the other hand, corporates are also driving some activity in Europe by streamlining portfolios and selling non-core assets.

The post Kim Kardashian seeks secret of private equity success amid rising interest rates appeared first on International Finance.

A significant improvement in credit volumes in the Kingdom, loan growth recovery in Turkey and strong volume in Egypt are contributing factors to UAE banks’ loan growth this year.

Loans might increase by 7 percent in the Kingdom compared to 6 percent last year. Its retail mortgages will continue to fuel credit on the back of 31 percent year-on-year expansion in the third quarter of 2019.

Dubai’s Expo 2020 comprising more than 190 countries will benefit lending in the UAE.  JPMorgan Chase analyst Naresh Bilandani, told Bloomberg in an email, “Expo 2020 is a key catalyst — which can offer a boost to both corporate and consumer spending — and provide impetus to tourism.”

Also, the UAE banks’ regional expansion will help to increase their revenue, especially with a government-led mortgages programme in the Kingdom driving home loans, the media report said.

According to Bloomberg compilation, the UAE’s economic growth forecast is expected to increase to 2.5 percent from 1.6 percent last year.

Last year non-performing loans in the UAE climbed to their highest level in more than five years, despite slowdown in property prices. The slowdown is mainly attributed to the oversupply in the UAE’s property market. Mortgage Finder noted that there has been a 59 percent increase in property enquiries between 2018 and 2019.

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Escalating trade tensions between the US and its trade partners, along with a major decline in the Turkish lira, has taken a heavy toll on emerging market currencies.

These strains pushed the dollar index to 96.984 last Wednesday– its highest since June 2017.

However, the dollar’s advance halted right ahead of lower-level trade talks between Chinese and Uso fficial in Washington, which were scheduled for Tuesday and Wednesday. Receding worries over the Turkish lira’s late plunge on Friday reduced the risk aversion in the broader markets –which lifted the euro.

Yukio Ishizuki, senior currency strategist at Daiwa Securities, stated:  “The U.S.-China negotiations…will not be between high level officials and are therefore unlikely to produce immediate results. However, the markets will be hoping that the talks pave the way for negotiations at a higher level,”

“As for the lira, the currency could cause less of a buzz as Turkey is headed for a long holiday, and with credit downgrades done swiftly and now out of the way.” He added.

The Turkish financial markets will be closed for national holidays during August 21-24.

Standard & Poor’s cut Turkey’s sovereign credit rating by one notch to B+ from BB- on Friday, sending it deeper into “junk” territory, citing the extreme volatility of the lira, and forecasting an upcoming recession next year.

The Turkish lira had snapped a three-day rebound On Friday, sliding more than 5 % against the dollar on fears the US would impose further economic sanctions– unless Turkey handed over detained American pastor Andrew Brunson.

The euro managed to bounc back on Friday, after sliding to a 13-month low early last week amid concerns that the Turkish crisis could hurt European banks.

The single currency rose 0.55 % on Friday and last stood little changed at $1.1436.

The offshore Chinese yuan was effectively flat at 6.838 per dollar after gaining about 0.4 % on Friday, when it pulled further away from a 19-month low of 6.9585 brushed on Wednesday.

The dollar remained unchanged at 110.51 yen after shedding 0.35 % on Friday.

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“We are disappointed that there appears to be another delay in securing the passage of the comprehensive credit reporting legislation. It is ironic that that this legislation is being derailed and delayed by some consumer advocates, when consumers will be the overall beneficiary,” Mr Kitschke said.

“Had this law been in place, some of the horror stories being heard at the banking Royal Commission would have been avoided. Access to credit, and an obligation by lenders and providers of credit to consider all the relevant information about a person’s ability to meet the obligations of a loan or line of credit should be seen as a good outcome in light of some of the poor practices being uncovered.

“Under the government’s proposed framework, earmarked to begin from 1 July 2018, major banks will be required to have 50% of their credit data ready for reporting by September 2018, increasing to 100% a year later. ”

Mr Kitschke said that concerns by some consumer advocates that access to a comprehensive set of information about a consumer’s credit history would lead to inequality and unfairness were misplaced and he called on the consumer movement to offer alternative solutions instead of calling for a further delay.

“We are sympathetic to the views of consumer advocates who don’t want access to credit to be unfair or restricted based on historical information that may not be relevant or where it is not considered properly.  However, it seems nonsensical that some consumer advocates are asking for categories of information to be removed from the requirements that would weaken the rules.

“It’s entirely perverse that the delay is being championed by some consumer advocates, seeking changes that would weaken the laws, while standing in lock step agreement with the big banks and others who perpetrated the kinds of misdeeds that this legislation seeks to prevent.

“Rather than suffer yet another delay, or take another year to rehash the same issues, it would simply be appropriate for those consumer advocates to offer solutions that would enable the passage of the bill. It’s not good enough to simply throw stones and highlight problems at this late stage.”

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The increase will add about $260 (£200) to the cost of mortgages of around 3.5 million people, the rise will be welcomed by savers –as it nets then an extra $32 (£25) in interest each year—for every $13,000 ( £10,000) they have in the bank.

Mark Carney, the Bank’s governor, said there would be further “gradual” and “limited” rate rises to come. “In May, we said that if the economy performs broadly as we expect, then we would need to reduce the amount of support we are providing to make sure inflation returns sustainably to the 2% target. “Since then, the economy has developed broadly as expected. So we have removed a little of the support, raising interest rates from 0.5% to 0.75%.” the Bank said in a statement.

Following this decision, a lot of prominent executives in the country offered their opinions on how it would affect their operations – and Britain’s economy as well.

Sarah Megginson, Business Development Manager at ClearScore, stated: “The Bank of England’s decision to increase the base rate today means that consumers may see borrowing become more expensive. This won’t mean that mortgages and credit cards will jump up overnight – in fact, we’ll probably see product rates change gradually over time.” She also predicted that there will be a decrease in promotional offers availible to consumers and fewer offers on credit cards and cash back.

She added : “The longer you wait to take action, the less likely you are get a good deal. It’s important to take note when any introductory offers on credit cards and mortgages end, so you can take action before you drift onto the lenders standard rate, which is often much higher.”

This move was scrutinised by some as being too close to Brexit.

“Today’s hike and messaging from the MPC was more or less what markets expected heading into this pivotal policy meeting.” said Timothy Graf, head of macro strategy EMEA at State Street Global Markets. “With rates now out of the way as a market talking point for the next few months, focus is likely to return to the ever-changing nature of Brexit. We suspect sterling will likely become even more correlated to headline risk.” he added.

Barry McAndrew, ‎fixed income senior portfolio manager at State Street Global Advisors, EMEA, also offered his opinion: “With today’s hike, the committee will certainly be hoping a hard Brexit can be avoided. They will be watching negotiations closely from the sidelines given guidance of roughly a once-a-year pace of hikes.”

Quilter Investors portfolio manager, Hinesh Patel predicted that that Mark Carney, Governor of the Bank of England, will still be jittery on this recent move, which comes during the time when Brexit continues to stifle UK corporates. He said : “Mark Carney will still be nervous tonight about curbing a source of stimulus while Brexit continues to stifle investment among UK corporates. Although some decent manufacturing survey numbers were posted yesterday, the UK is the only developed economy currently exhibiting GDP growth that is under potential and the MPC will have their fingers crossed that today’s rate rise is not viewed in hindsight as a drag on growth.”

Carney on his part though, remained headstrong.

“There are a variety of scenarios that can happen with Brexit … but in many of those scenarios interest rates should be at least at these levels and so this decision is consistent with that,” he said.

“In those scenarios where the interest rate should be lower, well then the MPC which meets eight times a year would, I’m confident, take the right decision to adjust interest rates at that time.” Added Carney.

The post Bank of England’s MPC votes to increase interest rates appeared first on International Finance.

Recent contactless statistics suggest that around £4 billion per month is currently spent using contactless cards, representing around a third of all plastic card transactions. More than half of all transactions with a value of £30 or less are now made using contactless technologies, suggesting that consumers increasingly find them to bea convenient and easy-to-use form of payment. And with retailers increasingly eager to deploy contactless terminals, which will further drive uptake, many see contactless as the key next step in the development of the payments infrastructure.

Contactless transactions appeal because consumers want to use payment mechanisms which are fast and easy, reduce the need to source and carry cash and, increasingly,allow the rapid updating of online account information. At the same time, merchants – central to the contactless story, as they are needed to provide the payment terminals in their stores which are necessary to take payments – want payment mechanisms that are quick to use, cheap to implement and offer the potential to improve customer and transaction insight.

The success of contactless transactions has, thus far, been largely driven by three key developments. Firstly, updating the plastic cards of existing bank customers, to make them ‘contactless capable’ was a smart way to quickly build a user base of millions; secondly, by initially limiting contactless payments to £20 or less (now £30), users could gain confidence in the system without fear of significant financial loss; and, thirdly, by encouraging retailers to deploy terminals rapidly (around half a million terminals have now been rolled out), users were assured of easy access to a wide-range of outlets where contactless payments could be made.

Of course, contactless transactions do not appeal to everyone. According to Which?, the technology allows thieves to steal money too easily, while the head of the City of London Police has recently said that the transaction limit of £30 should be retained to limit fraud.

In contrast, the payments industry argues otherwise. It believes that the technology is more secure than carrying cash; that each individual payment is protected by unique cryptograms; and that transactions are limited, both by value and by the number that can be made before the user is asked to verify their identity by inserting a PIN into a payment terminal.

A further security feature of contactless cards is that transaction data is ‘pushed’, rather than ‘pulled’. ‘Pull’ payments, the system which most plastic card transactions use, permit the merchant to access the payee’s card details so that a payment can be debited from his account and credited to the merchant’s. This means that payees are trusting the merchant – and other parties in the payment cycle – not to abuse their account details. In contrast, ‘push’ payments, as used by the contactless industry, mean that the payee uses tokens to send the correct amount of money to the merchant’s account, thereby making the transaction less susceptible to fraud.

So, where is the contactless industry going from here?

Firstly, the growth in contactless transactions will continue. Two key drivers will ensure this –consumers will use this payment option more frequently (Barclaycard expects contactless transactions to grow by more than 300% over the next four years) and more retailers start to accept contactless payments (around half of all retailers have yet to adopt the technology, including some of the largest and best known such as John Lewis).

Secondly, contactless payments will be move beyond plastic cards. Already, such payments can be made using mobile ‘phones, and further options are on their way. Fitbit, the exercise tracker, has launched Fitbit Pay, with a payment chip being embedded in an exercise band. Garmin has announced a partnership with Visa, which will allow wearers of its smartwatch to make payments. And DS Automobiles, part of the Peugeot-Citroen group, is working with Barclaycard to embed a payment chip in car keys.

Thirdly, fears about security will continue, although perhaps no more than affect other parts of the financial services industry. One area of concern surrounds the payment terminals used. Industry standards currently specify a maximum magnetic-field strength for card readers of 5 cm, yet the media has reported that some have been found capable of reading cards at three or four times this distance. We fully expect the industry to continue its programme of improving and strengthening the underlying technology so as to address any areas of perceived weakness.

As bank customers – both personal and business – further recognise, and value, the ease and convenience of contactless payments, the proliferation in transaction volumes will continue. Thus, contactless payments will be an increasingly important feature in the British payments landscape. As a result, such payments are set to be increasingly entwined within our daily lives.

Anthony Duffy is Director of Retail Banking, Fujitsu UK and Ireland

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AFEX, one of the world’s largest non-bank providers of global payment and risk management solutions, has announced a partnership with TradeRiver, the alternative finance provider for SMEs.

The partnership sees AFEX, via its API, embed international payment and foreign exchange capabilities directly into the TradeRiver trade credit platform. TradeRiver clients are now seamlessly able to execute foreign exchange at the same time as initiating their trade credit related payment, providing improved efficiency and transparency to the process.

AFEX clients are also able to benefit from TradeRiver’s cross border trade credit platform to ease cash flow pinches and take advantage of opportunities in the market. TradeRiver offers up to £5million in unsecured growth working capital to businesses provided though a quick and easy online paperless application process.

“This partnership combines our payments and FX expertise with TradeRiver’s trade finance expertise giving clients access to the best possible advice and service with transparent pricing to meet their international working capital needs,” said Stuart Holmes, General Manager EMEA, AFEX. “We are delighted to be partnering with TradeRiver, which shares our commitment to supporting UK SMEs as they look to trade internationally.”

“The strategic corporate partnership with AFEX marks a very significant step for TradeRiver in terms of both improving and expanding our product offering,” said Richard Fossett, Chief Executive Officer, TradeRiver. “In a challenging environment for British businesses this partnership can help give them an edge against their competitors by providing extremely competitive fixed-margin rates for overseas payments.”

Commenting on the API integration, AFEX’s Head of Integrated Solutions for Europe, the Middle East and Africa, Ramnath Ramhit, said, “Like AFEX, TradeRiver is a technology-led financial services company. Their offering is fully online, providing a straight-through service and experience to clients. Our API complements that, enabling its client-base to benefit from AFEX’s extensive payment and foreign exchange capabilities within the TradeRiver ecosystem.”

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The funding comprises an initial tranche of $70 million from the principal behind a Saudi Arabian family office. Additional tranches from a consortium of investors in Saudi Arabia and the United Arab Emirates are expected to be completed later in 2017, subject to regulatory approvals, giving Divisa Capital over $100 million in cash to fund its long-term expansion plans.

Divisa Capital will use the new funds to boost its Prime Brokerage relationships and other bilateral partnerships offering clients enhanced liquidity along with introducing new products and services.

Mushegh Tovmasyan, CEO of Divisa Capital, said, “Over the past eight years, Divisa Capital has established itself as the brokerage of choice for a diverse range of institutional and professional clients. We are now ready to expand our capital base in readiness for the next phase of the company’s journey. Our ability to attract investment of this scale speaks volumes for Divisa Capital’s market position and future outlook”.

Established in 2008, Divisa Capital provides bespoke Forex and contracts for difference (CFD) liquidity to institutions and professional traders, and has a track record in the space of FinTech and innovation. It has registered offices in the UK, US, New Zealand and Armenia, and is the official Foreign Exchange Partner of the Premier League’s Watford Football Club.

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January 19, 2017: Global alternative asset manager The Carlyle Group (NASDAQ: CG) announced on January 16 that it has agreed to acquire a significant stake in Africa’s largest credit rating agency Global Credit Ratings (GCR) from the management, founders and German development financial institution DEG. Following the transaction, Carlyle will be the largest shareholder, with around half the equity in the company while management and DEG will remain invested in the business.

Funding for this investment will come from the Carlyle Sub-Saharan Africa Fund. The transaction is expected to close in early 2017, subject to regulatory approvals.

With its headquarters in South Africa and operations across the continent, GCR is Africa’s largest provider of credit ratings. The company serves 400 customers across 20 countries and is the only rating agency to have a strong presence in multiple geographies across the continent.

GCR provides a range of analysis and rating services to its customers, which include many household names and blue-chip organisations. It caters to four key sectors – insurance, financial institutions, corporate & public sector entities, and structured finance.

Eric Kump, co-head of the Carlyle Sub-Saharan Africa team, said, “We are excited to invest in GCR and work alongside CEO Marc Joffe and a top-class management team and staff.  Over the past 20 years, the management team have worked hard to grow the business into the highly-respected and pan-African organisation it is today. We will work with the management to continue the impressive growth they have achieved in recent years.  We are delighted to be able to bring our strong African experience while also leveraging our global expertise in this sector, through our investment in DBRS, an international credit ratings agency headquartered in Toronto, Canada, to assist with further geographic expansion.”

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