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Headliners | 06 March 2009
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By: David Lee
Articles (57) Profile

SGX Implements New Fund-Raising Rules From March 24

Under new Singapore Exchange (SGX) rules taking effect on March 24, companies must announce the use of funds once the money is being ‘materially disbursed’ and whether it is used as intended. If there is a material deviation in the use, the company must explain the reason. Such information would also be disclosed in the companies’ annual reports.

Previously, companies only need to disclose in their prospectuses how the funds are intended to be used but nobody knows if they are going to make use of the funds or not. The new rules will make the system fairer and more transparent to the public.

Moody’s Lowers Ratings For CapitaCommercial Trust

Moody’s Investors Service yesterday downgraded CapitaCommercial Trust’s (CCT’s) corporate family rating to Baa2 from Baa1 and senior unsecured ratings to Baa3 from Baa2. And the outlook for both ratings is negative.

The downgrade reflects the company’s strained credit metrics, particularly Debt to EBITDA leverage and EBITDA/Interest coverage, which are in excess of 10 times and around 2.5 times respectively. Furthermore, Moody’s expects it will be difficult for CCT to improve these metrics over the intermediate term, as its operations will likely continue to be impacted by the slowing economy and constrained capital markets, which could be further exacerbated by upcoming new office completions from 2009 onwards.

The outlook, however, could return to stable if CCT is able to deleverage while successfully navigating the current economic downturn so that its EBITDA/Interest coverage improves to three times and Debt/EBITDA drops below seven times on a sustained basis.

OCBC, UOB & DBS On Global Safe Banks List

Singapore’s OCBC and UOB, together with DBS Group made it to the Global Finance list of the world’s 50 safest banks. New York-based Global Finance magazine is publishing a mid-year update of the listing for the first time because of the turmoil in the world’s banking industry. The magazine ranked 500 banks globally based on their long-term credit ratings by agencies such as Fitch Ratings, Standard & Poor’s, as well as Moody’s. The ranking also took the banks’ asset size into account.

UOB and OCBC joined the list at 37th and 38th position respectively. About 10 positions higher was DBS at 28th place. Investors are however, urged to view the ranking with caution, given how the rating agencies have rated some of the sub-prime assets and some major corporate failures in the past. Investors are advised to look at metrics such as tier-1 capital ratio, the quality of the assets, vis-à-vis the asset cycle and the structure of cost-income ratios other than just credit ratings.

Fourth-quarter results from all three banks have fallen short of analysts’ estimates and analysts are expecting higher provision charges for soured loans. Banks that dropped off from last year’s list include Royal Bank of Scotland, which was at 19th place, Citigroup, which was ranked 31st in 2008, and Bank of America. The latter was formerly at 44th place.

Palm Oil May Fall 15% In 3-6 Months

Investors should take profits on shares of plantation companies including Wilmar International, the world’s largest palm oil trader, as prices of the commodity are poised to drop, Goldman Sachs said.

The price of crude palm oil may fall as much as 15% in the next three to six months, halting a rally that’s helped plantation stocks beat their local benchmarks, analysts Patrick Tiah and Nikhil Bhandari said in a report.

Palm oil futures have risen 9% this year as output in Malaysia enters a seasonal production low, and on signs that an increase in exports this year from the world’s second-biggest producer of the commodity will continue even amid the recession. ‘While long-term fundamentals have improved, we believe the recent rally has priced in too much, too soon, and is vulnerable to a short-term correction,’ the analysts wrote.

CapitaLand Commercial Trust  2.070 +0.02 +0.98%   
Business: Co is a real estate investment trust in the office space.

Insight: Apr-19, 1Q19 gross revenue and NPI rose 3.5% and 3... Read More
Oversea-Chinese Banking Corp  10.740 -0.11 -1.01%   
Business: [FY18 Turnover] Global corporate/investment banking (35%), global consumer/private banking (34.8%), OCBC Wing Hang (11.5%), insurance (11%), global treasury & mkts (7.7%).

Insight: May-19, 1Q19 total income rose 14.7% driven by str... Read More
United Overseas Bank  25.820 -0.20 -0.77%   
Business: [FY18 Turnover] Group retail (43.3%), group wholesale (43.2%), global markets & investment management (5.1%), others (8.4%).

Insight: May-19, 1Q19 total income rose 7.8% to $2.4b due t... Read More
DBS Group Hldgs  24.780 -0.16 -0.64%   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More
Wilmar Int'l  3.590 +0.03 +0.84%   
Business: Co's integrated agribusiness model encompasses the entire value chain of the agricultural commodity processing biz, from origination and processing to branding, merchandising and distribution of a wide range of agricultural pdts.

Insight: May-19, 1Q19 revenue fell 6.2% to US$10.4b driven ... Read More

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