Discover and read the best of Twitter Threads about #DEBT

Most recents (24)

"Up #debt creek without a paddle"
#Iraq's budget’s structural imbalance between current & investment expenditures, as ever-increasing current expenditures will overtake revenues, needs debt to fund this gap.

Data in chart: 2010-2024 IMF estimates & projections.

1/10
#Iraq has been fortunate that higher oil prices & exports led to a budget surplus of over $27.5bn by end of Jul 2019. Revenue-expenditure gap is pushed forward in time. But, it is only a matter of when, not if, expenditures will overtake revenues.



2/10
This structural imbalance needs time be addressed, in the meantime there will be an urgent need to finance both.

The social contract, re-public employment, cannot be broken without creating the conditions for private sector growth to absorb an ever-growing labour force.

3/10
Read 10 tweets
The double Ds - demographic & debt - & how that leads to the triple Ds - DEFLATION.

Ready?
#demographics World population growth rates are expected to slow, w/ contraction in many places (think Europe, East Asia - Japan, China, South Korea, etc).

We will grow at the slowest pace than anytime since 1950. Growth rate peaked in 1965-1970 👈🏻
#demographics Breaking this down into regions - very clear that Asian population peaking & will fall.

Look at Sub-Saharan Africa. Note that this is a projection & we shouldn't take anything beyond 2050 too seriously. The UN revises this very often but still useful for trends.
Read 25 tweets
Corporate Bond Market in India - A snapshot

Corporate Bond Market comprises of all the debt fund-raising/ financing/ fund mobilisation activities by Corporates through debt capital market instruments - Debentures or Bonds. Read on to know more about this market. Thread 1/12
As per SEBI data, the total outstanding corporate bonds in India aggregate to ~ Rs. 30.63 lakh crore.

This is about one third the size of the G-Sec market as well as the aggregate of Bank credit (i.e. total outstanding loans of banks). 2/12
The accumulated value of all the Corporate Bonds outstanding is only about 16% of the GDP.

In comparison, the size of the US corporate bond market to GDP is ~124%. It shows that the corporates in India rely heavily on banks. 3/12
Read 18 tweets
State Government Debt Risk - a history that repeats too often!

As the work on building Amravati, the new capital city AP, comes to a grinding halt, concerns emerge about Amravati (APCRDA) bonds held by Franklin MF (~Rs. 1000 Cr) and Birla MF (Rs. ~300 Cr). Thread 1/11
During the Chandrababu Govt, Amravati received political as well as financial patronage. Now, with Jagan Reddy being incharge of the state, the project is in shambles. World Bank & ADB pulled out of the project and the Government is looking for reasons to scrap it. 2/n
The bonds issued to support the financing needs of the project were subscribed by Franklin MF and Birla MF. The bonds are guaranteed by the AP Govt but it's not sure if the Govt would keep servicing the bonds. The risk of lending to a state govt has again come to the fore. 3/11
Read 19 tweets
1/6 As Powell puts in his recent speech, we are “in a world of slow global growth, low inflation, and low interest rates…" and "fac[ing] heightened risks of lengthy, difficult-to-escape periods in which our policy interest rate is pinned near zero.”
2/6 CF40 member Miao Yanliang mentioned in his book that, under a #fiscal policy framework, the #demographic change and pessimistic anticipation collectively contribute to the world characterized by LOW #inflation, LOW #growth and LOW interest rate.
mp.weixin.qq.com/s/6q8SJ9RHmrKh…
3/6 After the global financial #crisis in 2008, major developed countries faced pressure to reduce #deficits, #debt, and private sector #deleveraging. In this context, the macro-policy has shifted from the former #monetary dominance to #fiscal dominance. #macroeconomics
Read 6 tweets
After the buildup and the crash-course in my last post, here is my post analysing Promoter Financing market in India. The analysis attempts to explain the slowdown in promoter financing in India and brings out some interesting facts. Read on to know more. Thread 1/12
As per BSE data, the aggregate value of promoters' pledged shares was ~1.85 lakh crore as at Aug 23, 2019. In comparison, the value of promoters' pledged shares stood at ~Rs 2.5 lakh crore as at Aug 30, 2018. The fall in pledge levels indicate slowdown in promoter financing. 2/12
An ET article (July 22), observed that 'pledging of shares by promoters of NSE companies dropped to a six-year low'. Another ET article (Aug 15), noted that 'interest rates on loans against shares (LAS) have surged by about 300 basis points in the past 3 months'. 3/12
Read 18 tweets
This post is a crash course on promoter funding, which serves as a bedrock for my next post.

Promoter funding/ financing, is the colloquial term used for raising of debt funds by Promoters of companies usually against the security/ comfort of shares. Thread 1/13
A promoter, many a times, needs money for (a) equity infusion in a new/ growing business, (b) personal use (c) enhancing stake in established business (d) family settlement etc.

If he doesn't have enough cash at his disposal, he borrows from finance firms. 2/13
The most liquid and widely accepted collateral/ security for these borrowings are shares of established (usually listed) companies.

These shares are pledged to the financing firm (or a trustee) to avail of the debt facility. 3/13
Read 18 tweets
Rana Kapoor's Grandstanding

The Economic Times, today, on its front page, carried a news item proclaiming 'Rana Kapoor holding companies pre-pay part of loans'. Nothing can be more misleading than the use of word 'pre-pay'. Thread 1/8

m.economictimes.com/markets/stocks…
The article quotes Mr. Kapoor's statement that bonds issued by promoter hold cos - Yes Capital and Morgan Credits, have been pre-paid ahead of maturity dates i.e. Oct 2020 and Apr 2021 respectively. 2/8
The clever use of 'maturity date' to imply voluntary prepayment hides the fact that these facilities were probably pre-paid owing to the pressure of fund managers (Franklin and Reliance MF) on account of failure of these hold cos to meet the obligations under the facility. 3/8
Read 12 tweets
Today I cover the Government Securities (G-Secs) market. G-Secs, in short, are debt instruments through which Government borrows from the public (banks, financial institutions etc.). This post covers the size, type of lenders, and other broad contours of G-Sec market. Thread 1/8
The total size of the G-Sec market is approx. 92.86 lakh crore. In comparison, the size of the listed equity market (total market capitalisation of all listed stocks) was 141.47 lakh crore in July, 2019. (2/8)
Out of the total borrowing of Rs. 92.86 lakh crore, ~ Rs. 64.49 lakh crore borrowing is from Central Govt and the remaining Rs. 28.37 lakh crore borrowing is from State Govts i.e. of the the total borrowings 69.45 % is from Central Govt and 30.55 % is from State Govts. (3/8)
Read 11 tweets
I am revisiting the topic of Public Issue of Non-Convertible Debentures (NCDs) covered a couple of days back. Only this time, I am focusing on Subordinated (Tier II) NCDs that are slipped in (sometimes slyly) along with senior secured NCDs of NBFCs. Thread (1/9)
Refer to the picture, below (the pic is representative only). A subordinated NCD (circled in red) appears as one of the many maturity options. A naive investor may think that it is similar to other NCDs on offer, just that it has a longer maturity. (2/9)
What many investors are unaware of is the fact that subordinated NCDs are paid after senior NCD holders in-case the company goes into liquidation i.e. subscribers to option I to VIII NCDs, in the pic above, would be paid before payments are made to option IX to XI NCDs. (3/9)
Read 13 tweets
There have been a flurry of public issue of NCDs lately. These issues are primarily from NBFCs who are finding it tough to raise funds though banks and MFs. Here, I explain why the public issue NCDs are not in the interest of retail investors. Thread (1/9)
A) There is a common misconception that public issue NCDs are akin to Fixed Deposits (FDs). FDs of PSU banks are covered under the umbrella limit of 1 lakh deposit insurance. NCDs are not. A case in point is the expected loss to retail investors in DHFL public issue NCDs. 2/9
B) The rate offered by these NBFCs in public issue is much lower than what they offer in privately placed deals. Further, a substantial fee is cornered by brokers for selling these NCDs to retail investors. 3/9
Read 13 tweets
Vacation time 🙂I'm currently in beautiful Oregon, US. Been flying, rafting, hiking, eating and playing with the kids - great time! Now - small break to update myself on the markets. Stay tuned for some #HZupdates
Where the #USD goes, rest of the market follows! Getting the direction of USD right is key. This is how I see #DXY short term. Further downside to develop - with target ~95.0. This is likely a major bottom - before DXY explodes higher #HZupdates
Following the ST weakness in #DXY, I think we will see much higher levels coming , as the shortage of USDs in the financial system becomes very clear. The target remains 107-109 - pot. higher to be reached some time around Mid-2020 #HZupdates
Read 19 tweets
Good morning all! 🙂 Morning in Copenhagen - listening to Ludovico while I'm updating analyses and family sleeps. Fantastic piece of music: #AllisGood
Time for some #HZupdates. Let's take a look at the market from the way I see it. Where is that deflation, I have been forecasting? Did CBs succeed to do their magic and eliminate that threat? What about the Kondratiev's winter - over/done? Stay tuned! 🙂
AUDUSD is inflation gauge. Rally=inflation up; Decline=inflation down. LT perspective looks like this. Decline in 2008 = wave A. Rally up to 2011 = wave B. We have since been in wave C. Wave 5 will take us to ~0.5. Note the horizontal line. When this goes -->free fall #HZupdates
Read 28 tweets
I'm supporting a neighbour through #ESA assessment #dwp #maximus homevisit denied despite written medical evidence he has #agorophobia severe anxiety chronic depression #mentalheath
If he can't go all #benefits stopped he has young children #poverty
#classwar #dwpmurders #JC4PM
Thanku everyone for your lovely replies I'll update u soon just nipping to sit with Barry while his partner goesmto go as she is I'll with the stress of it all
I appreciate all your support xxxx
Gp not go x
Read 69 tweets
#UniversalCreditUncovered Week 3: this is what the DWP’s ad campaign says people should do while waiting for #UniversalCredit. But an advance is a loan that has to be repaid. It’s not the solution to the wait - in fact, repaying it can push people further into hardship. 1/5
We're working with debt charity @StepChange as part of the #5WeeksTooLong campaign so this week we’ve joined forces to highlight why so many people are forced into needless #debt because of the 5-week wait. Read our new joint briefing here: 2/5 trusselltrust.org/wp-content/upl…
Why is repaying an advance a problem? People’s ability to afford repayments isn’t taken into account; even small deductions have a big impact when people are living on a knife edge; & people can be hit by multiple repayments. This can push people further into #poverty. 3/5
Read 6 tweets
1) It’s #BibleStudyCoffeeTime.
Parshas Behar (Leviticus 25:1-26:2; supplemental reading Jeremiah 32:6-32:27)

May 25, 2019
2) The focus of this portion is on restraining our greed.
3) We learn about the concept of Shemittah, the Sabbatical year; every 7 years we stop working the land and let it be free of human intervention.
Read 29 tweets
Great talk by @martinwolf_ at the 46th Economics Conference @oenb @suerf_org on escaping the #trap: secular #stagnation, monetary #policy and financial fragility
Before the outbreak of the global financial crisis @martinwolf_ saw himself as an orthodox economist - now suggests to read Minsky, Godley et al.
'Everything depends on everything else' - eternal truth by @martinwolf_
Read 9 tweets
Hi #fintwit 😎 We are approaching a watershed moment in markets. Final deflationary phase of Kondratiev's winter is about to play out. Huge implications for #EUR, #Gold, #SP500, #DXY etc. I have some new interesting followers - hence something extra in this week's #HZupdates
#Kondratiev's winter is a period where #Velocity of Money drops which creates a disinflationary economic environment, where growth is subdued due to #debt levels. Since ~2000 we have been in this winter - and are still to see a range of "major economic events" unfold #HZupdates
In fact, we have never left the #Financial #Crisis. We have only been bouncing in the great "Financial and Sovereign Debt Crisis" of this #Kondratiev's winter. This can be observed from the #Deflation Gauges #Copper, #XAU, AUD, EUR. We are about to see wave C develop #HZupdates
Read 21 tweets
Amidst the #JetAirwaysCrisis that we are in today, some timely wisdom from Herb Kelleher (co-founder at Southwest Airlines) on debt, profitability, market share, and running an airline.
Southwest Airlines has never had a loss for a full year since 1972 and never furloughed an employee when the rest of the industry up until now has probably furloughed about a million-and-a-half employees throughout the world.
"Basically we looked at history and said this is a very dicey business to be in. So we may be flamboyant from the marketing standpoint but we're going to be very conservative from the fiscal standpoint" - Herb Kelleher
Read 9 tweets
Thread on the @KotakMF #FMP saga; Attn: @IndiaSebi

Highlight is on an #AMC which, in an FMP, considers it #prudent to reduce the risk, of an asset, by accepting a riskier asset as #security; knowing, the first asset shall mature with the FMP, giving no time to act if defaulted.
We reserve further comment. We shall just answer few questions raised by #investors.

1. FMP has a #fixedhorizon, at the end of which investors expect their money back. Also, they expect not to lose money. Knowing these expectations, who decided to launch the FMP?
Ans:Kotak AMC
2. A high #yield #portfolio may be made in many ways. Risk can be protected by structuring deal in many ways. Who made a portfolio of high #coupon/yield (11%) #debt instruments by lending upto 40% to #borrowers against security of their companies #equity #shares?
Ans: Kotak AMC
Read 23 tweets
#Panel discussion on "What is the new normal for #CESEE?"
@wiiw_news #wiiwSpringSeminar
Vizek: "Very strong public sector, lot of informal economy. Croatia experienced slow growth before, so new normal not really new. But political willingness to reform very low."
Zubovic: positive trends in #Serbia: - rapid #growth in #IT sector over last 3/4 years w/ 3% to 6% share of GDP - Huge Chinese #investments, but with #externalities - Macroeconomic #stability, no fiscal #deficit anymore - foreign #debt declining - Substantial growth of #GDP
Read 14 tweets
Key findings from our new report on #AutoDebt, with @uspirg frontiergroup.org/reports/fg/dri…
1. Owning a car is the price of admission to the economy and society in much of America -- the result of generations of public policy.
2. Owning a car is expensive and drives millions of households to take on #debt.
Transportation is the 2nd biggest expenditure for American households, behind only housing. Today, more Americans carry auto debt, and they owe more on their loans, than ever before.
3. Auto borrowing varies by income, age and location across the United States.
Over the last decade, auto debt per capita has been growing fastest among the oldest Americans (those age 70 and older).
Read 6 tweets
To move rightward, is about the desire to conserve, hence #conservative. In order to want to conserve, you have to have something you want to conserve. If all you have is debt and more #debt, what the heck do you have to conserve? @sapinker
The progression to more right with age is a historically temporary #American phenomenon born out of the fact that #boomers acquired increasing affluence because of the society in which they found themselves as a result of the #NewDeal & #progressive policies which they inherited
Having been born on third base and believing they had hit a triple, as a generation, they decided to slow this #wealth distribution thing down a little and now we find ourselves where we find ourselves. The move rightwards requires something to conserve.
Read 6 tweets

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