Archive for December 28, 2015

Distressed loan buyers muddy India’s bad debt picture

MUMBAI Dec 22 Set up over a decade ago to
absorb Indias mountain of distressed loans, asset
reconstruction companies have done little to recover cash or
relieve a debt-choked banking system.

Instead, at a time when regulators are pressing the banking
sector to clean up balance sheets, the so-called ARCs are
striking mostly paper deals that help lenders extend
provisioning by years, camouflaging the scale of their woes.

Banks are the risk takers of last resort. Its a vessel
that contains all the risk and it has no outlet – that is a
problem, said Harsh Vardhan, partner with Bain Co.

You have to create an outlet which allows at least part of
the risk to flow to ARCs.

Indias central bank has set a clean-up target for the
banking sector of March 2017, and has already started cutting
off what it calls forbearance, a sort of benevolent regulatory
tolerance, when it comes to bad debts and

That has placed under close scrutiny any measures or tools
seen to allow extra wriggle room for banks.

That includes the ARCs, originally designed to foster a
much-needed market for distressed debt in India, critical to
lowering the cost of capital and boosting investment. The market
remains in its infancy, as even ARCs face restrictions on
selling on bad loans.

ARCs make money from management fees and recoveries. They
typically pay 15 percent of the loan purchase price in cash,
with the rest funded by IOUs issued to the bank. The required
cash portion was increased by the central bank last year from an
initial 5 percent, in an effort to make ARCs more accountable
and control a spurt of overpriced bad loan sales.

As the bank finances 85 percent of the deal, the risk
remains with the bank – in its investment portfolio rather than
its loan book – a fact that also encourages lenders not to take
a hit to book value when selling loans.

At the same time, ARCs themselves have been choked by
restrictive ownership rules that have made them less attractive
investments, and kept them poorly capitalised. Their assets
under management more than a decade after they were created
amount to a paltry $8.3 billion, less than 10 percent of Indias
over $110 billion stressed loan mountain.


If little is recovered from the errant borrowers, ARCs will
struggle to make a return on their investment.

But banks, who have already moved the loans off their main
books, will have been allowed a period of up to eight years to
write them down: attractive for the bosses of Indias state-run
banks who rarely stay longer than three years and have little
incentive to take the pain.

(Under) normal provisioning norms … within a four-year
period you have to write off an entire (non-performing) asset,
said Anjali Sharma, who works with the Finance Research Group at
Mumbais Indira Gandhi Institute of Development Research, which
worked on Indias new bankruptcy code.

If you sell it to an ARC and you invest in the security
receipt of that same asset, you can get a much longer period to
write it off. It enables delayed provisioning on banks books.

ARCs, stung by regulatory demands for higher cash payments
upfront, say they can no longer afford what Birendra Kumar,
chief executive of International Asset Reconstruction Co, called
the luxury of accruing management fees to eternity, and are
being more careful.

Kumar, whose backers include KKR Co LP, estimated
400 billion to 500 billion rupees ($6 billion to $7.54 billion)
of bad debt was brought to auction by banks between April and
December: I dont think more than 15 pct will have been sold.

Thats bad news for lenders and Indias central bank, which
this month said it would encourage more foreign investment into
ARCs – but is struggling to get banks to take the hit of a
correctly priced loan sale.

Arcil, the oldest ARC, reports an internal rate of return of
low single digits – too low to secure a sustainable profit.

Its just that what is being traded in the market is being
looked at with two different pairs of eyes, said Vinayak
Bahuguna, chief executive at Arcil.

ARCs have, of course, been able to recover debt from some

Despite this, we believe that the recovery experience has
been below the expected potential of the industry, said Pawan
Agrawal, chief analytical officer at Crisil.

(Reporting by Devidutta Tripathy; Editing by Sam Holmes)

Why Credit Suisse Says Now Is Time to Buy BHP Billiton

Finding good news in the commodities sector has been more than just difficult of late. So, how about news that is simply less bad? BHP Billiton Ltd. (NYSE: BHP) was raised to Outperform from Neutral by Credit Suisse on Tuesday. The firms European Metals amp; Mining analyst is Liam Fitzpatrick, and this call is somewhat based on valuation and somewhat on upcoming action expected by the company. Credit Suisse revised estimates and target prices lower. Again, it is less bad rather than outstanding news.

Fitzpatricks take is that greater supply-side action is needed by BHP Billiton. With the global mining sector reaching multi-decade lows across a range of performance and valuation metrics, Credit Suisse predicts another year of weak Chinese demand in 2016.

Money: How To Get Cash With A Poor Credit Rating


We all know how difficult it can be to obtain funding when you have a poor credit rating. In the US, reporters claim that around forty-five million Americans have no credit score at all.

So, it’s become a real issue for the average person in this country. Today, we’re going to show you that all is not lost. Anyone can get the capital they require if they think outside of the box. Even those with the worst credit scores possible should manage to raise a few thousand dollars. Of course, you need to be extra careful because sometimes the repayment schedules aren’t feasible.

Specialist credit cards

Presuming you only need a small amount of cash, you could apply for specialist credit cards. Most major banks and card companies now offer those products to people with bad credit. The only issue is they always present a higher level of interest than other customers pay. So, you need to bear that in mind when considering this option. At the end of the day, you don’t want to get into a worse situation due to mounting debts. That said, those specialist credit cards can help to improve your score. You just have to meet the repayment deadlines and make sure you always send the money on time. Late payment charges could cost you hundreds of dollars.

Government-backed refinancing

Homeowners should consider HARP 2.0 refinance deals when looking to raise some extra cash. That program was designed to help people in financial hardship to get the money they need. The scheme is backed by the Department of the Treasury and Housing and Urban Development. That means it’s above board and a great solution to all your money worries. You could use the money to renovate your home or get your life back on track. Successful applicants could have the cash in their bank within only a couple of days.

Short-term loans

Short-term loan companies get a lot of bad press these days. That is because the interest rates offered to customers is very high. However, the deals aren’t that bad if you always meet the repayment schedule. Also, those firms offer a much-needed service to people who have no other options. Thanks to strict government regulations, there is a now a cap on the level of interest those companies are allowed to charge. It means borrowing $100 should never leave customers with a $50,000 debt. That did happen in the past.

The only other thing you might like to consider relates to your valuables. It’s not a good idea to sell any family heirlooms, but there are sure to be items you wouldn’t miss. For instance, some people might have started a memorabilia collection when they were young. Now could be the perfect time to sell all those rare products and get some extra cash. You might even consider downsizing your home and reducing your monthly outgoings.

No matter how dire your situation might seem, there are always solutions just waiting to be discovered. Use the advice on this page, think outside of the box, and you’ll get the funding you require.

Just make sure you always read the small print and understand how much you will have to pay back.


Bicapital Updates Finances in Most Recent IPO Filing

Bicapital has filed an amended Form F-1 with the US Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). No terms were given in the filing, but the offering is valued at up to $345 million. The company intends to file on the New York Stock Exchange under the symbol BICA.

Merrill Lynch and Citigroup are global coordinators and joint bookrunners for the offering, while JPMorgan is only a joint bookrunner.

Discover Financial’s Strong Card, Loan Portfolio Look Good

We issued an updated research report on Discover Financial Services (DFS – Analyst Report) on Dec 22, 2015.

The company remains focused on enhancing its card sales volumes. The partnership with Creditcall Financial during the last reported quarter is worth mentioning in this regard. This is because the deal helped to expand Discover and Diners Club cards acceptance worldwide. In terms of global expansion, Discover Financials earlier acquisition of Diners Club Italy and its wholly owned subsidiary, the alliance with Vietnam-based Smartlink Card Service JSC, and collaborations with Credit Mutuel-CIC Group and deserve mention.

Additionally, inorganic growth initiatives have helped the company boost its loan portfolio, which grew in the first nine months of 2015. Also, the divestiture of businesses like Home Loans and mortgage origination should help Discover Financial focus on core capabilities. The company also boasts a strong financial position that helps it deploy capital efficiently.

However, the companys huge expense burden and a weak Payments Service segment raise caution. Additionally, the company faces many litigation issues that might tarnish its goodwill. At the same time, these lawsuits might require the company to dish out a large sum of money, which will weigh heavily on the financials.

Last month, the company reported third-quarter 2015 earnings that surpassed the Zacks Consensus Estimate but decreased year over year. The year-over-year decline mainly stemmed from sluggish card sales, weak loan growth, and expenses associated with the closure of the Home Loans business.

Discover Financial currently holds a Zacks Rank #2 (Buy). Other financial services providers that deserve mention include Credit Acceptance Corp. (CACC – Snapshot Report), First Cash Financial Services Inc. (FCFS – Snapshot Report) and Cash America International, Inc. (CSH – Snapshot Report). While Credit Acceptance sports a Zacks Rank #1 (Strong Buy), First Cash Financial and Cash America hold the same Zacks Rank as Discover Financial.

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Mother in need of quick cash loan scammed

ST. LOUIS, MO (KTVI) – A St. Louis mother says she needed some quick cash and thought the online offer she got was legitimate; until a number of red flags popped up that left her angry and disgusted.

Orlanda Jackson says she went online earlier this month to get an emergency loan to help her daughter. That`s where Jackson found a company called Cash America. She says they promised to give her a $4,000 loan, but she had to pay a $185 fee up front through MoneyGram. When things got sketchy Jackson reversed the wire, but says the company kept calling and convinced her to try again. When the money didn`t show the second time around she realized it was a scam. The Better Business Bureau says loan fee scams are common and prey on those who need money the most especially during the holidays.

FOX 2 also reached out to Cash America international`s corporate office in Texas and found a warning on their website about someone falsely using their name to scam consumers. The BBB also says you should never pay an upfront fee for any loans online.

The BBB offers the following advice when looking for a personal loan:

  • Be wary of applying for online loans through unfamiliar businesses or websites. Many of these online application sites are run by scammers or by people who sell your information to scammers.
  • Understand that any business operating by phone and charging insurance or other fees in advance of making a loan is operating illegally.
  • Do not do business with anyone who cannot give you an address that you can confirm as legitimate.
  • Read any contract carefully and make sure you understand all requirements before entering into any agreement.
  • Official-looking loan documents and sophisticated looking websites are easy to copy or fake. Just because a business appears legitimate, doesn`t mean it is.

Check for a BBB Business Review by going to or call 314-645-3300.


Looking Forward to 2016: Rough Start Expected

This is usually the time of year when we look forward with hope to a new beginning, and people like me write positive things about the year to come. This year, though, that is a bit of a problem for me. While I am usually of a fairly optimistic mind and have offered the advice to buy the dips on many occasions in the last four years I find myself going into 2016 with a distinctly gloomy outlook, at least for the first quarter.

I am fully aware that the US economy is still grinding through a recovery. Even worrying collapses such as that in August was something I saw as a buying opportunity. It is a recovery that is disappointing for many, but for a recovery from a credit crisis, it is actually quite good. Credit crises are rare in economic history, but typically take decades rather than months or years from which to recover. In that context, 2.5 percent growth is not that bad.

I know that, and I know that the employment picture is looking healthier, but what has me worrying about the next quarter is not really the US economy. That recovery has been domestic in nature, but has been supported by recovery elsewhere. Admittedly the recovery in Europe has been stuttering at best, but it has been sputtering along in the background as China and other emerging markets continued to grow.

Essar Steel repays IRRRB loan, but state still owed $66 million

Essar Steel Minnesota has repaid a 2004 loan to the Iron Range Resources and Rehabilitation Board but still has no agreement to repay $65.9 million the company owes the state of Minnesota for not building an iron and steel facility on the Iron Range.

IRRRB officials confirmed Monday that Essar repaid the $6 million loan, with about $750,000 interest, on Dec. 16.

The loan was made in 2004 as an incentive for the company to build its $1.9 billion taconite plant in Nashwauk as well as an iron nugget and steelmaking facility. The IRRRB loan had been extended multiple times in recent years at Essars request as construction on the project slowed, stopped and restarted several times.

The money goes back into an IRRRB economic development fund to be used for future projects.

The IRRRB loan, like another $65.9 million for the state, was an incentive for Essar to build not just the states first new taconite mine and processing plant in nearly 40 years, but also build an iron and steelmaking facility at the Nashwauk site.

The company is building the taconite plant, in fits and starts, but now has no plans to build the iron ore steel operations.

Essar continues to negotiate with state officials over how much and when to repay the incentives that were in the form of grants to Itasca County and Nashwauk to extend roads, railroads and utilities to the Essar site. The incentives have to be paid back because no jobs were created in steelmaking by the October 2015 deadline as stipulated in the grants.

Rhode Island Housing Company Welcomes Those with Bad Credit

New Era Estates, LLC is pleased to announce that part of their Rhode Island real estate services new initiatives, is a quality First-Time Homebuyers Program. One particular group of people looking for the right Rhode Island housing may have enough capital to purchase, but are unable to show adequate strength in their credit history to obtain a traditional mortgage from a bank or lender. Another segment of first-time buyers may have good credit, but want to speed the buying process by paying cash for the purchase. In each instance, the professionals at New Era Estates can provide the kind of assistance that can get the transaction done.

Looking for homes for sale in Rhode Island, can seem overwhelming to some. There are loan approvals, searching for listings, placing an offer and other documentation which can be frustrating and even disappointing if it doesnt result in an approved mortgage. With the knowledge and experience of the New Era professionals in real estate, Rhode Island buyers will have an experience that is second to none.

If you are the more luxurious docile type, Newport, Rhode Island real estate is available in a range of housing styles and at prices to fit most budgets. If youre more suited for the urban life, the professionals at New Era can help you look for Rhode Island real estate in any city across the beautiful Ocean State. Although price is an important element for most home buyers, there are other factors which must be taken into consideration if a buyer does not want to be caught off guard.

A potential homeowner may not know all the things to look out for when searching for the right listing. Identifying the number of bedrooms, bathrooms and style is the easy part. Professionals can provide guidance about property taxes, school districts and shopping opportunities nearby. The team at New Era even arranges for property inspections and title checks as part of the home buying process.

Another common error with first-time home buyers is getting the elements of the transaction in the wrong order. A logical progression of steps in the purchase of a new home is important. Working with real estate professionals will help to ensure that pre-approval for funding is in place before a purchase offer is in place, for instance. New Era would be more than happy to help you avoid these home buying pitfalls, and emphasizes building strong relationships with customers on the pillars of trust and results.


Contact: Media Relations

Address: 2130 Mendon Road Suite 3-243, Cumberland, RI

Telephone Number: (401) 244-7444 Ex.101

Fax Number: (401) 889-4495


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Media Contact
Company Name: New Era Estates, LLC
Contact Person: Media Relations
Phone: (401) 244-7444 Ex.101
City: Cumberland
State: Rhode Island
Country: United States

Council tables Word Industries loan

Mayor Hank Ross said he is still confident the loan, and the subsequent relocation of the company to Chickasha, will happen.

Word Industries currently manufactures out the Tulsa Area and has a facility at the Port of Catoosa industrial park. The company is interested in moving to Chickasha and is set to occupy the Justin C building on Choctaw Avenue, just across from the Grady County Fairgrounds in Chickasha.

A $250,000 revolving loan was approved by both the Economic Development Council and the EDC Sales Tax Oversight Committee earlier this month to provide Word Industries with moving expenses.

Guard said the companys attorney expressed to him that they understood that deal would also include extra incentives. Specifically, they thought it would include an option for a building at the planned Airport Industrial Park as well as real estate in the area.

Hes under the understanding that there are additional components, Guard said.

This is not ideal, Guard said, since the best thing is to keep those incentives separate from a loan deal. If they are together, he continued, it might put the City of Chickasha in a bad spot depending on how the Airport Industrial Park project works out.

Im uncomfortable with that, Guard said. If we are unable to go forward with that project in the way it is setup right now, and those things are tied together, the Council could be held liable.

Guard said he, City Attorney Tom Fraley and EDC President Christy Elkins will sit down with Word Industries to get everything straightened out in the next two weeks.

We still think this is a good deal, Guard said. It can bring good jobs to Chickasha.

The citys wish to delay the loan approval came just a few hours before a specially called City Council session on Monday.

The loan was agreed for a 24-month repayment period at two-percent, with six months of collateralized interest. Word Industries is providing land as collateral.

CEO and principal owner of Word Industries, Tom Word, is also willing to sign a personal loan guarantee, according to Guard.

After opening with 30 jobs, Word Industries will employ up to 175 people at full operation.

Council will be asked again to approve the loan at a future meeting.