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

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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.

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.

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.

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Economy

What factors impact financial markets?

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The global financial markets are now hugely complex, with traders and analysts around the world looking closely for signs of movement. What are some of the most important factors to be aware of that impact the financial markets?

Geopolitical events

With news breaking from different countries throughout the day, many different stories could affect the markets on any given day. For instance, economic indicators such as the European Central Bank’s inflation rates and gross domestic product numbers released by each country can determine which direction the markets take. Stocks, currencies and other financial instruments can all vary depending on these areas.

Major events such as war breaking out, natural disasters and elections also have an effect. When we look at the commodities market, climate change is an issue to bear in mind, with unusual weather sometimes causing scarcity or abundance of a certain product.

An interesting aspect of the modern financial world is the way that the different markets are linked. This means that any important event or news story that affects one area could easily affect another, even if the link isn’t obvious at first sight. We can also see how local shocks and events can quickly have an effect at a global level.

The financial crisis of 2008 is a good example, as it started with a serious downturn in the US housing market. Although this appeared to be a localized issue at first, it soon revealed some major issues with the global banking setup that caused problems around the planet affecting millions of people and diverse industries.

Speculation and investment trends

The previous factors all point toward the markets changing, and there’s no shortage of traders around the world waiting to see what happens next and how they can benefit. This means that we need to take into account other issues such as speculation and investment trends in the markets.

Armed with a variety of tools, including candlestick charts, traders try to identify trends such as support and resistance levels. They use the information they glean from the charts to make their moves, which can influence the general market if enough people make the same moves or if the amounts involved are significant.

Once an investment trend begins, it can have a knock-on effect that would have been impossible to predict at the outset. The example of Bitcoin and other cryptocurrencies shows how something that starts small can grow impressively. Cryptocurrencies have now gained enough mainstream appeal to influence and disrupt many industries, from healthcare to gaming and banking.

It’s important to understand how the leaders of a company operate and how they have faced challenges in the past. If we look at banking and the Bank of New York Mellon in particular, we can see that its history can be traced back to 1784, so it has overcome all the major events that have occurred since then. With some of the biggest names in the business world making up its key institutional investors, this is a company that we would expect to react effectively to changing markets.

Regulatory changes and company results

Just about every industry represented in the financial markets has laws and regulations that govern it. This means that the fear of harsher new laws is an almost constant threat. Meanwhile, the hope that beneficial changes to the regulations help businesses prosper is the other side of this matter that investors keep a close eye on.

Let’s not forget the role played by the profit and loss results produced by major companies. It’s clear that these results have an almost immediate effect on their stock prices. However, we should also bear in mind that this effect can reach other areas of the economy. A surprising set of results for a large business can produce shock waves that travel around the market.

What impact do they cause?

From the wide variety of examples that we’ve looked at here, it’s clear that the impact isn’t going to be the same in every case. While one set of circumstances might snowball and cause a huge impact, another might cause a limited impact before the news disappears as other events overtake it.

Having said that, one of the key issues that they cause is a higher degree of market volatility. We can see how this works by looking at an area such as the COVID-19 pandemic in 2020. The markets became a lot more volatile as the different aspects of the pandemic became clear. Streaming companies, healthcare companies and video conferencing technology firms made huge profits, while airlines and hotels were among those to lose out massively.

Working out the overall impact of a particular situation is almost impossible to do now. With so many traders looking over the latest news stories and numbers with advanced tools, the original impact can quickly grow or simply disappear. Therefore, the key for investors is to understand emerging trends and react to them before it’s too late.

These details reveal how complex the global financial market is now. It’s a fascinating world, and with more information at our fingertips than ever before, it’s something that anyone can start to research and understand in their own way.

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Economy

Everything has been delivered. 10 Bugatti Centodieci are already in the hands of the owners

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Everything has been delivered.  10 Bugatti Centodieci are already in the hands of the owners

OAll Bugatti Centodieci have been delivered, the Molsheim-based brand said on Monday. Cristiano Ronaldo received the number 07 in October this year. and Bugatti has now revealed that the latest unit – #10 – is already in the possession of its owner.

“The Centodieci combines all the values ​​of the Bugatti brand in an extraordinary package: rarity, innovation, heritage, craftsmanship and unrivaled performance. The production batch of 10 units was so in demand by our customers that it was sold before the Centodieci. was even officially presented,” said Christophe Piochon, president of Bugatti.

This latest example is finished in Quartz White with carbon fiber trim on the bottom and matte grilles. The brake calipers are painted in Light Blue Sport, as is the logo on the rear that refers to the EB110, the iconic Bugatti model that inspired this Centodieci. Inside, the predominant color is also blue, as you can see in the images above.

This block is powered by the same block as the other nine instances. The 8.0-liter W16 with four turbines is capable of developing 1600 hp. In terms of performance, this allows the Centodieci to hit 100 km/h in just 2.4 seconds and reach a top speed of 380 km/h.

Recall that each unit costs the owners eight million euros before taxes.

Read also: We already know when the Bugatti Centodieci fell into the hands of Ronaldo.

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Economy

The first Dacia hybrid. “The cheapest hybrid family on the market”

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The first Dacia hybrid.  "The cheapest hybrid family on the market"

BUT Dacia revealed this Monday that the hybrid engine has been available since March on the Jogger, the Romanian brand’s model known to be available with a seven-seat variant.

The Jogger Hybrid 140, Dacia’s first hybrid, will hit dealerships in March, but customers can expect and order it as early as January.

The price has been revealed by Dacia and since it’s only available in the seven-seater SL Extreme, it starts at €28,800. The brand claims it is “the most affordable hybrid family car on the market.”

Available in six existing colors to celebrate the launch of this hybrid, there will be a slate gray version, as you can see in the images above.

Equipped with a 1.6 liter four-cylinder petrol engine with 90 hp, the Jogger is also powered by two electric motors (a 50 hp engine and a high-voltage starter-generator). The total power is 140 horsepower. The electric transmission is automatic, four-speed, connected to an internal combustion engine, and two speeds are connected to an electric motor. This combined technology was possible, according to Dacia, only due to the lack of clutch.

Combined with the energy recovery levels of the 1.2kWh (230V) battery pack and the efficiency of the automatic transmission, regenerative braking delivers all-electric traction on 80% of urban journeys and saves up to 40% of fuel compared to a combustion engine vehicle.

Read also: Dual-fuel Dacia Jogger Eco-G. We tried 5 seater and LPG…

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