Connect with us

Economy

Debt write-off implies downgrade, Moody’s says, as governments lose control – O Jornal Económico

Published

on

Debt write-off implies downgrade, Moody's says, as governments lose control - O Jornal Económico

Rating agency Moody’s argues that a downgrade for countries seeking to write off debt is inevitable, because the decision to restructure is made by a committee of creditors, regardless of the government’s will with respect to individuals.

In an interview with Lusa, Marie Deeron, director of the sovereign risk analysis group at Moody’s, explained that when a country adheres to the Common Debt Management Framework besides the Debt Servicing Suspension Initiative (DSSI), it abandons the decision on which lenders will participate in restructuring, the final word rests with the creditors’ committee.

“Although the Ethiopian government was very clear about its willingness to continue to honor its obligations to private creditors and use the Common Framework only to increase liquidity, when they signed up, they agreed with a paragraph that says that all creditors will be treated equally, which means a loss control, since the decision goes to the creditors’ committee, ”explained Marie Deeron, answering the question whether it is possible to adhere to the Common Framework and not tolerate a drop in the rating.

“The decision is made by a committee of creditors, and while the government may intend to maintain financial commitments to the private sector, it is the committee that decides how to proceed with the restructuring,” said the director of Moody’s, which ceased to exist this month. rating “Ethiopia after delayed meetings with creditors.

“The rating was B2 in March, pending to downgrade and there has been no major change in the meetings since then, so we dropped to Caa1, two notches down because the committee needs time to“ Meet and agree on restructuring, this suggests that the risk of losses for private lenders has increased, ”the analyst explained.

See also  Delta Air Lines to furlough 1,941 pilots in Oct: memo

Regarding the inevitability of a rating downgrade after joining this method of debt restructuring, Marie Deeron said that this will not happen only if the rating is already so low that it already takes into account the likelihood of losses for creditors.

“If the rating is high, it will probably force us to update our opinion on credit quality, but if it is low, it already includes a level of uncertainty about payments to lenders,” he said.

The DSSI is an initiative launched by the G20 last April that guaranteed a moratorium on debt payments from the heavily indebted countries to more developed countries and multilateral financial institutions, with an initial deadline of December 2020, but which has been successively extended until the end of this year.

This initiative only encouraged countries to seek debt relief from the private sector, while the General Framework approved by the G20 in November argues that reaching out to private creditors is mandatory, even if it does not explicitly state what will happen if there is no agreement. between the debtor and the creditor.

Three African countries (Chad, Ethiopia and Zambia) have applied for membership in this Framework, but several analysts believe there will be more countries that will have to join due to their dire financial situation, despite opposition from countries that they will automatically downgrade their rating if they continue to restructure their private debt, which will make it difficult to access the market and finance the development of their economies.

The proposal, presented by the G20 and the Paris Club in November, is the second phase of the DSSI, launched in April and widely criticized for not requiring individuals to participate in the effort, as it will pave the way for debtor countries not to pay creditors and bilateral ( countries and multilateral financial institutions) and continue to service private debt.

See also  MEO remains the operator with the fewest complaints

This framework aims to recruit all debt agents, including private and public banks in China, which have become the largest lenders to developing country governments, including Africans.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Economy

Europe ends the session in green. Oil is on the rise. Interest Weakens – Minute Markets

Published

on

Europe ends the session in green.  Oil is on the rise.  Interest Weakens - Minute Markets

Europe recovers from worst day in three weeks and accelerates growth

The main markets of Western Europe opened weekly trading in positive territory, investors are closely watching the companies’ quarterly earnings and losses. It comes after the underlying Stoxx 600 recorded its worst day in three weeks on Friday under pressure from the tech sector, which fell more than 2%.

The core index of the Old Continent added 0.76% to 439.04 points, with all sectors trading in positive territory. The oil and gas sector recorded the largest growth, followed by the mining sector and utilities (water, electricity, gas). On the other hand, food, media and telecommunications traded with gains below 0.5%.

“Markets have proven resilient in recent weeks,” Esty Dweck, an analyst with Flowbank, explains to Bloomberg. “Europe continues to surprise with growth, but growth prospects remain negative, suggesting that recent good performance is unlikely to last until the end of the year.”

Among the main indexes in Western Europe, the German Dax rose 0.98%, the Spanish IBEX 35 added 0.91%, the French CAC-40 and the Dutch AEX added 0.71%. Britain’s FTSE 100 added 0.61%, while the Portuguese PSI jumped 0.74%.

Italy’s FTSEMIB added 0.81% even after rating agency Moody’s downgraded the “forecast” of the country’s economic growth.

See also  Waiting for emissions cuts to start this year punishes Wall Street - Stock Exchange
Continue Reading

Economy

Russian weapons depend on hundreds of Western components, report condemned

Published

on

Russian weapons depend on hundreds of Western components, report condemned

More than 450 foreign-made components were found in Russian weapons found in Ukraine, providing strong evidence that Russia acquired important technology from companies in the US, Europe and Asia years before the invasion, Royal United said in a report on Monday. RUSI), a defense-related think tank.

Since the start of the war five months ago, the Ukrainian military has been seizing or returning undamaged or partially damaged Russian weapons from the battlefield. After dismantling, 27 of these weapons and military systems, from cruise missiles to air defense systems, turned out to be predominantly Western components, the most detailed assessment published to date of the role of Western components in Russia’s war against Ukraine. .

According to RUSI, about two-thirds of the components were manufactured by US companies based on weapons seized from Ukraine. The products of Analog Devices and American Texas Instruments account for almost a quarter of all Western weapons components. Other components were supplied by companies from countries such as Japan, South Korea, the UK, Germany, Switzerland and the Netherlands.

“Russian weapons, which are critically dependent on Western electronics, have resulted in the deaths of thousands of Ukrainians,” Jack Watling, RUSI’s ground warfare expert, told Reuters.

While many foreign components are found in everyday items such as microwave ovens that are not subject to export controls, RUSI assured that tightening export restrictions and enforcement could make it difficult for Russia to replenish your arsenal of weapons such as cruise missiles.

In one case, the Russian 9M727 cruise missile, one of the country’s most advanced weapons capable of maneuvering at low altitude, evading radar and hitting targets hundreds of kilometers away, contained 31 foreign components. The parts were made by companies including US-based Texas Instruments and Advanced Micro Devices (AMD), as well as Cypress Semiconductor, now owned by Germany’s Infineon AG.

See also  Waiting for emissions cuts to start this year punishes Wall Street - Stock Exchange

In another case, the Russian Kh-101 cruise missile that was used to attack Ukrainian cities, including the capital Kyiv, also had 31 foreign components, with parts made by companies such as US-based Intel Corporation and AMD Xilinx.

When asked how their chips ended up in Russian weapons, the companies assured that they were complying with trade sanctions and stopped selling components to Russia. Analog Devices noted that the company closed its business in Russia and instructed distributors to stop deliveries to the country. Texas Instruments said it complies with all laws of the countries in which it operates and that parts found in Russian weapons are for commercial products. Intel stated that it “does not support or condone our products being used to violate human rights.” Infineon has expressed “deep concern” if its products are used for purposes for which they were not intended. AMD has stated that it strictly follows all worldwide export control laws.

Many foreign components cost only a few euros, and Russian companies could have purchased them online through national or international distributors before the invasion of Ukraine because they could be used for non-military purposes.

However, more than 80 Western-made microchips have been subject to U.S. export controls since at least 2014, meaning they would need a license to ship to Russia, RUSI reported. for the Russian military or for military use, according to RUSI.

The investigation revealed that the Russian military remains dependent on foreign microchips for everything from tactical radios to drones and long-range precision-guided munitions, and that Western governments have been slow to restrict Russia’s access to these technologies, especially after the invasion of Russia. President Vladimir Putin in 2014.

See also  Delta Air Lines to furlough 1,941 pilots in Oct: memo

According to the National Security and Defense Council, in the first five months of the war, Russian troops fired more than 3,650 missiles. These include 9M727 and Kh-101 missiles. Currently, Russia is looking for new ways to provide access to Western chips, condemned RUSI. Many components are sold through distributors operating in Asia, such as Hong Kong, which acts as a gateway for electronic components entering the Russian military or companies acting on its behalf, RUSI has found, ensuring that the Russian military is constantly undermined. if Western governments tighten export controls, succeed in shutting down clandestine procurement networks in the country, and prevent the production of sensitive components in states that support Russia.

Continue Reading

Economy

Gasoline today falls to pre-war prices: a liter has fallen in price by almost 40 cents in less than 2 months

Published

on

Gasoline today falls to pre-war prices: a liter has fallen in price by almost 40 cents in less than 2 months

The sharp drop in oil prices has sent fuel prices down nearly 40 cents a liter in less than two months, about ten of which are today. But it is the tax cut that allows prices to be lower than they were before the war.

Monday, August 8, half the country on vacation, a little heat is predicted on the beaches … and at gas stations. Fuel prices are currently benefiting from a sharp drop, estimated at about a dime a litre.

Refilling a 50-litre tank today can cost almost five euros less than yesterday. And a trip of 300 km (in a car that consumes about six liters per 100 km) today can cost almost two euros less.

Accounts are the result of evaluation 10 cents reduction for gasoline and 9 cents for dieselwhich will come into force today, although they will not be officially confirmed until tomorrow.

At the heart of this decline are the prices of petroleum products, both refined products and raw materials: last week ended with the international price of oil (measured by the Brent index) just above $94, which in dollars is similar to what took place on February 23, the day before Russian invasion of Ukraine. However, the euro value remains more expensive, as the European currency has depreciated by about 9% against the US dollar since the start of the war.

The fall in oil prices is partly due to the prospects for a cooling economy. But it removed some of the tension that existed over the oil.

Gasoline prices fell nearly 40 cents in less than two months

Simple 95 gasoline should now be sold at an average price below 1.8 euros per liter, the lowest price since the beginning of February, that is, even before the war.

See also  Waiting for emissions cuts to start this year punishes Wall Street - Stock Exchange

This means that since the peak in Portugal on June 10 (when it was selling at an average price of 2,188 euros per litre), the price of 95 regular gasoline has fallen by almost 40 cents.

The fall in the price of diesel fuel, which today should be sold at a price approaching 1.75 euros per liter (the lowest since the end of February), was slightly less pronounced, but faster.

Since the record high price on June 23 (when a liter cost an average of 2,111 euros), the average selling price of diesel fuel has decreased by a total of almost 35 cents per liter.

This means that, for example, filling a 50-liter diesel tank in a car today costs about 17 cents less than a month and a half ago.

Oil workers still earn more

This decline in final prices, however, does not mean that fuel prices are identical to those in February.

This equalization of prices with respect to February is possible only because the state now levies less taxes than then. Otherwise, gasoline today would be 32.1 cents per liter more expensive, and diesel 28.2 cents per liter.

If the state receives less, and the Portuguese pay almost the same as in February, then other components of the price are more expensive: who sells raw materials, who processes them and who sells them. Including oil companies, which have increased their profits around the world in recent months. António Guterres, UN secretary general, last week criticized oil and gas companies’ “immoral profits”.

Continue Reading

Trending