Port Klang Authority (PKA) is a statutory corporation under the purview of the Ministry of Transport (MOT) where its chairman and board members are appointed by MOT. PKA assumes the role of trade facilitator, regulator, landlord and free zone authority in Port Klang. The PKFZ project was initiated and endorsed by the government with the objective of elevating the status of Port Klang into a national load centre and regional transhipment hub.
MARC has removed its AAA and MARC-1/AAA ratings on Port Klang Free Zone (PKFZ)-related debt issuances from MARCWatch Negative where they were first placed on July 1, 2009. Concurrently, MARC has attached a negative outlook to the ratings. The rating actions affect the following issues:
1. Special Port Vehicle Berhad’s (SPVB) RM1,310 million Asset-Backed Serial Bonds;
2. Transshipment Megahub Berhad’s (TMB) RM1,095 million Fixed Rate Serial Bonds (FRSB) and up to RM360 million Commercial Papers/Medium Term Notes (CP/MTN);
3. Valid Ventures Berhad’s (VVB) RM510 million FRSB and up to RM85 million CP/MTN; and
4. Free Zone Capital Berhad’s (FZCB) RM410 million FRSB and up to RM70 million CP/MTN.
MARC’s rating actions follow Port Klang Authority’s (PKA) apparent lifting of its announced moratorium on payments due in the months of June and July 2009 to Kuala Dimensi Sdn Bhd (KDSB) for the purchase of land and development of PKFZ.
All corresponding payments due to SPVB, TMB, VVB and FZCB in the months of June and July have been received in full, enabling all four entities to meet their respective obligations under the rated issuances. SPVB, which had earlier failed to meet its scheduled funding payments into its Finance Service Reserve Account due on June 30, 2009, subsequently made full and timely payment of principal and interest due on July 30, 2009. The next scheduled principal and interest payments for TMB, VVB and FZCB are due in November 2009.
The negative ratings outlook increased event risk arising from a weakening in support from the Government of Malaysia in respect of the deferred obligations of PKA to KDSB and/or reduced willingness on the part of PKA to honour its obligations. MARC believes this could arise as a result of the ongoing politically charged debate over the legal implications of the letters of support issued by the Transport Ministry to facilitate the financing of the PKFZ and the contention surrounding the manner in which the development contract was awarded and the contract sums.
The outlook also incorporates uncertainty regarding the potential credit implications for the rated issuances arising from the eventual recommendations of the task force and committees that have been charged with the responsibility of finding a solution for PKFZ. MARC will reassess the currently high government support that is factored into the ratings of the four issuances after obtaining sufficient clarity on PKA’s intended course of action. If this results in a change in our rating assumption of the government’s intention to protect the position of existing bondholders notwithstanding the absence of an explicit guarantee for the rated issuances, MARC will likely lower the ratings.
Source : Malaysian Rating Agency report
Sunday, August 9, 2009
Unemployment in the US Falls as Recession Eases
Job losses
The pace of U.S. job losses slowed more than analyst forecasted last month and the unemployment rate dropped for the first time in more than a year, the clearest signs the worst slump since the Great Depression may be ending.
The overall payrolls fell by 247,000 (9.4%), down from 443,000 (9.5%) loss in June, the Labor Department said yesterday in Washington.
The positive report on payroll data has sent stock indexes soaring to their highs for the year and 10-year Treasuries to their worst week since 2003. The White House warned the jobless rate is still likely to reach the 10 percent rate as forecasted earlier, with companies such as Boeing Co., Verizon Communications Inc.and Emerson Electric still continuing in cut costs strategy, any rebound in hiring is expected to come in 2010.
President Barack Obama, speaking at the White House hours after the jobs report, said the unemployment numbers indicate “the worst may be behind us” for the recession.
The average losses of 331,000 in the past three months are less than half the pace of decline in the first quarter of this year given job losses peaked to 741,000 in January 2009, the most since post world war II.
According to survey by Bloomberg, the overall payroll rate may top 10 percent by early next year and an average at a rate 9.8 percent for 2010.
The manufacturing-factory payrolls fell 52,000, the fewest in a year compared to a decrease of 131,000 in the prior month. That drop came even as the automobile industry added 28,200 jobs as return of workers at General Motors Co. and Chrysler Group LLC, which have exited bankruptcy.
For the service industries, which include banks, insurance companies, restaurants and retailers, subtracted 119,000 workers, an improvement from a loss of 220,000 in June. Retail payrolls fell by 44,100.
Government payrolls rose by 7,000 after falling 48,000.
Consumer Spending
Even so, economists predict consumer spending, which accounts for 70 percent of the economy, will be slow to gain speed. Wages and salaries fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960, according to Commerce Department data issued Aug. 4.
Companies like Verizon and Boeing are still curtailing their expenses. New York-based telephone carrier Verizon last month said it may slash more than 8,000 jobs in the second half.
Chicago-based Boeing, which is planning to job cuts of about 10,000 workers, or 6 percent of its labor force, has agreed to allow some machinists to volunteer for a “layoff with benefits” to help mitigate job cuts, the International Association of Machinists and Aerospace Workers said July 28.
Emerson Electric Co., a maker of industrial equipment, will cut an additional 5,000 to 6,000 positions in the next few quarters, after it posted its third straight drop in quarterly earnings, the longest stretch since 2002. The company has already eliminated 20,000 jobs to date.
The unemployment rate may not peak until the second half of 2010, Treasury Secretary Timothy Geithner said on ABC last week, even as the economy shows signs of improvement.
The pace of U.S. job losses slowed more than analyst forecasted last month and the unemployment rate dropped for the first time in more than a year, the clearest signs the worst slump since the Great Depression may be ending.
The overall payrolls fell by 247,000 (9.4%), down from 443,000 (9.5%) loss in June, the Labor Department said yesterday in Washington.
The positive report on payroll data has sent stock indexes soaring to their highs for the year and 10-year Treasuries to their worst week since 2003. The White House warned the jobless rate is still likely to reach the 10 percent rate as forecasted earlier, with companies such as Boeing Co., Verizon Communications Inc.and Emerson Electric still continuing in cut costs strategy, any rebound in hiring is expected to come in 2010.
President Barack Obama, speaking at the White House hours after the jobs report, said the unemployment numbers indicate “the worst may be behind us” for the recession.
The average losses of 331,000 in the past three months are less than half the pace of decline in the first quarter of this year given job losses peaked to 741,000 in January 2009, the most since post world war II.
According to survey by Bloomberg, the overall payroll rate may top 10 percent by early next year and an average at a rate 9.8 percent for 2010.
The manufacturing-factory payrolls fell 52,000, the fewest in a year compared to a decrease of 131,000 in the prior month. That drop came even as the automobile industry added 28,200 jobs as return of workers at General Motors Co. and Chrysler Group LLC, which have exited bankruptcy.
For the service industries, which include banks, insurance companies, restaurants and retailers, subtracted 119,000 workers, an improvement from a loss of 220,000 in June. Retail payrolls fell by 44,100.
Government payrolls rose by 7,000 after falling 48,000.
Consumer Spending
Even so, economists predict consumer spending, which accounts for 70 percent of the economy, will be slow to gain speed. Wages and salaries fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960, according to Commerce Department data issued Aug. 4.
Companies like Verizon and Boeing are still curtailing their expenses. New York-based telephone carrier Verizon last month said it may slash more than 8,000 jobs in the second half.
Chicago-based Boeing, which is planning to job cuts of about 10,000 workers, or 6 percent of its labor force, has agreed to allow some machinists to volunteer for a “layoff with benefits” to help mitigate job cuts, the International Association of Machinists and Aerospace Workers said July 28.
Emerson Electric Co., a maker of industrial equipment, will cut an additional 5,000 to 6,000 positions in the next few quarters, after it posted its third straight drop in quarterly earnings, the longest stretch since 2002. The company has already eliminated 20,000 jobs to date.
The unemployment rate may not peak until the second half of 2010, Treasury Secretary Timothy Geithner said on ABC last week, even as the economy shows signs of improvement.
Thursday, August 6, 2009
Where is the airline Industry is heading ? Part Two
Lufthansa, one of Europe's largest aviation player has assessed a weak industry outlook coupled with its success in pushing through its acquisition of Austrian Airlines (AUA) has analysts split on whether to buy or sell the company's stock.
Lufthansa last week looked set to win approval from European Union for the AUA acquisition, the last in a string of recent purchases, including Britain's BMI and Brussels Airlines.
However, the company also gave a gloomy outlook for the rest of 2009, upon earlier assessment of the economic crisis and an exodus of premium seat passengers had all but wiped out first-half operating profit.
Lufthansa has launched a EUR1 billion euro (USD$1.4 billion) cost-cutting programme to counter the downturn, as well as rising fuel costs, aiming to post an operating profit for this year.
With the industry environment looking set to remain weak in the short term, is it time to dump Lufthansa's stock or should investors snap it up as long as the carrier remains the financially strongest among its peers?
According to analyst, based on its superior financial strength and its anti-cyclical approach to acquisitions, analyst expect Lufthansa to emerge as a long-term winner from the current global economic crisis.
Elsewhere from Europe, Britain is aiming to replace short-haul aviation with high-speed rail travel and plans for such a network are well advanced, Transport Secretary Andrew Adonis told the Guardian newspaper.
The paper said in its Wednesday edition that the government plans to publish by the end of the year a route from London to Birmingham, which could be funded with a public-private partnership and which could be extended to Scotland.
There are also plans to run high-speed trains on the existing network, which could reduce journey times from London to Scotland to three and a half hours.
Cathay Pacific Airways warned of strong headwinds ahead, with concerns over high fuel prices dimming immediate prospects for a pick-up in demand.
The company has reported it had swung back to profit in the first half and said it had enough cash to fund aircraft purchases, but announced no interim dividend payment and did not rule out the possibility of tapping the equity markets further down the track.
Cathay Pacific continues to take delivery of new, more efficient aircraft, with two more Boeing 777-300 ER aircraft entering the fleet in the first half and the last of six Boeing 747-400 extended range freighters arriving in April.
LOW-END OF FORECAST
Cathay, Asia's No.4 carrier since being overtaken by Japan's All Nippon Airways, reported a net profit of HKD$812 million (USD$104.8 million) for January-June, compared with a loss of HKD$760 million a year earlier.
It booked fuel hedging gains of HKD$2.1 billion, while turnover fell 27 percent to HKD$30.9 billion.
The six-month result fell in the lower end of analysts' forecasts, which stretched from a low of HKD$400 million to a high of HKD$3 billion due to widely varied estimates for hedge gains.
Cathay's fuel hedging contracts in the first six months yielded mark-to-market gains of HKD$2.1 billion, compared with a loss of HKD$7.6 billion for full year 2008, the company said in the statement.
Rival Singapore Airlines, the world's second largest airline by market value, announced its first quarterly loss in six years, and warned that it could post an annual loss if adverse conditions continued.
Cathay Pacific is also assessing whether to adjust its structure if changes such as a further weakening in its premium travel business turn out to be cyclical or structural in nature.
Lufthansa last week looked set to win approval from European Union for the AUA acquisition, the last in a string of recent purchases, including Britain's BMI and Brussels Airlines.
However, the company also gave a gloomy outlook for the rest of 2009, upon earlier assessment of the economic crisis and an exodus of premium seat passengers had all but wiped out first-half operating profit.
Lufthansa has launched a EUR1 billion euro (USD$1.4 billion) cost-cutting programme to counter the downturn, as well as rising fuel costs, aiming to post an operating profit for this year.
With the industry environment looking set to remain weak in the short term, is it time to dump Lufthansa's stock or should investors snap it up as long as the carrier remains the financially strongest among its peers?
According to analyst, based on its superior financial strength and its anti-cyclical approach to acquisitions, analyst expect Lufthansa to emerge as a long-term winner from the current global economic crisis.
Elsewhere from Europe, Britain is aiming to replace short-haul aviation with high-speed rail travel and plans for such a network are well advanced, Transport Secretary Andrew Adonis told the Guardian newspaper.
The paper said in its Wednesday edition that the government plans to publish by the end of the year a route from London to Birmingham, which could be funded with a public-private partnership and which could be extended to Scotland.
There are also plans to run high-speed trains on the existing network, which could reduce journey times from London to Scotland to three and a half hours.
Cathay Pacific Airways warned of strong headwinds ahead, with concerns over high fuel prices dimming immediate prospects for a pick-up in demand.
The company has reported it had swung back to profit in the first half and said it had enough cash to fund aircraft purchases, but announced no interim dividend payment and did not rule out the possibility of tapping the equity markets further down the track.
Cathay Pacific continues to take delivery of new, more efficient aircraft, with two more Boeing 777-300 ER aircraft entering the fleet in the first half and the last of six Boeing 747-400 extended range freighters arriving in April.
LOW-END OF FORECAST
Cathay, Asia's No.4 carrier since being overtaken by Japan's All Nippon Airways, reported a net profit of HKD$812 million (USD$104.8 million) for January-June, compared with a loss of HKD$760 million a year earlier.
It booked fuel hedging gains of HKD$2.1 billion, while turnover fell 27 percent to HKD$30.9 billion.
The six-month result fell in the lower end of analysts' forecasts, which stretched from a low of HKD$400 million to a high of HKD$3 billion due to widely varied estimates for hedge gains.
Cathay's fuel hedging contracts in the first six months yielded mark-to-market gains of HKD$2.1 billion, compared with a loss of HKD$7.6 billion for full year 2008, the company said in the statement.
Rival Singapore Airlines, the world's second largest airline by market value, announced its first quarterly loss in six years, and warned that it could post an annual loss if adverse conditions continued.
Cathay Pacific is also assessing whether to adjust its structure if changes such as a further weakening in its premium travel business turn out to be cyclical or structural in nature.
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