China’s reforms not enough to arrest mounting debt: Moody’s

In announcing the downgrade, Moodys Investors Service also changed its outlook on China from negative to stable, suggesting no further ratings changes for some time.

China has strongly criticized the downgrade, asserting it was based on inappropriate methodology, exaggerating difficulties facing the economy and underestimating the governments reform efforts.

In response, senior Moodys official Marie Diron said on Friday that the ratings agency has been encouraged by the vast reform agenda undertaken by the Chinese authorities to contain risks from the rapid rise in debt.

However, while Moodys believes the reforms may slow the pace at which debt is rising, they will not be enough to arrest the trend and levels will not drop dramatically, Diron said.

Diron said Chinas economic recovery since late last year was mainly thanks to policy stimulus, and expects Beijing will continue to rely on pump-priming to meet its official economic growth targets, adding to the debt overhang.

WAITING FOR IMPLEMENTATION

Moodys also is waiting to see how some of the announced measures, such as reining in local government finances, are actually implemented, Diron, associate managing director of Moodys Sovereign Risk Group, told reporters in a webcast.

China may no longer get an A1 rating if there are signs that debt is growing at a pace that exceeds Moodys expectations, Li Xiujun, vice president of credit strategy and standards at the ratings agency, said in the same webcast

If in the future Chinas structural reforms can prevent its leverage from rising more effectively without increasing risks in the banking and shadow banking sector, then it will have a positive impact on Chinas rating, Li said.

But Li added: If there are signs that Chinas debt will keep rising and the rate of growth is beyond our expectations, leading to serious capital misallocation, then it will continue to weigh on economic growth in the medium term and impact the sovereign rating negatively.

China may no longer suit the requirement of A1 rating.

Li did not give a specific target for debt levels nor a timeframe for further assessments.

Moodys expects Chinas growth to slow to around 5 percent in coming years, from 6.7 percent last year, compounding the difficulty of reducing debt. But Diron said the economy will remain robust, and the likelihood of a hard landing is slim.

After Moodys downgrade, its rating for China is on the same level as that on Fitch Ratings, with Standard amp; Poors still one notch above, with a negative outlook.

On Friday, Fitch said it is maintaining its A+ rating. Andrew Fennel, its direct of sovereign ratings, noted Chinas strong macroeconomic track record, but said that its growth has been accompanied by a build-up of imbalances and vulnerabilities that poses risks to its basic economic and financial stability.

STIMULUS SPREE

Government-led stimulus has been a major driver of Chinas economic growth over recent years, but has also been accompanied by runaway credit growth that has created a mountain of debt – now at nearly 300 percent of gross domestic product (GDP).

Some analysts are more worried about the speed at which the debt has accumulated than its absolute level, noting much of the debt and the banking system is controlled by the central government.

UBS estimates that government debt, including explicit and quasi-government debt, rose to 68 percent of GDP in 2016 from 62 percent in 2015, while corporate debt climbed to 164 percent of GDP in 2016 from 153 percent the previous year.

5 Zombie Stocks Coming Back From the Dead

Approach Resources stock also plunged more than 90% at one point in the oil market downturn. However, the company managed to stay afloat by cutting spending and reducing debt, which put it in the position to receive a lifeline late last year after agreeing to a strategic alliance and deleveraging transaction. That agreement enabled the company to pay off a significant amount of debt, which slashed interest expenses. Because of that, Approach Resources can reallocate that cash flow toward drilling high return wells in the Permian Basin instead of sending it to creditors, which should start creating value for investors.

Alliance Creative Group (ACGX) Reduces Another $100000 of Debt Since End of Q1’17

CHICAGO, IL–(Marketwired – May 24, 2017) – Alliance Creative Group, Inc. (AllianceCreativeGroup.com) (OTC PINK: ACGX) is pleased to announce that it has reduced another $100,000 of debt since the end of the 1st quarter (March 31, 2017) and continues to negotiate with debt holders to reduce more by the end of the 2nd Quarter (June 30, 2017).

Paul Sorkin, COO and General Counsel, said, Now that we have achieved certain internal goals we have to continue and increase our aggressive pursuit of executing our business plans, reducing debt, and increasing overall shareholder value for everyone.We understand the OTC Markets are very volatile and unpredictable and come with a lot of potential risks and rewards so we will continue to focus on building a solid company while reducing our debt to position the Company for continued growth and let the market determine our value.We are also still in discussions with multiple parties about potential mergers and/or acquisitions and hope to find another good fit to help accelerate our growth.We will continue to share news via social media and by press releases as things progress.

About Alliance Creative Group, Inc.

Alliance Creative Group, Inc. (Stock Symbol: ACGX) is a full-service product-development agency that since 1997 has been helping clients connect their products and services to their customers. ACG focuses on creative and design services, printing and packaging, brand and product development, fulfillment, logistics and transportation, strategic consulting, digital marketing and engagement, and software development. For more information, visit www.AllianceCreativeGroup.com or www.ACGX.us.

About PeopleVine

PeopleVine is a software platform combining CRM, marketing, CMS, and sales into a single, seamless customer engagement suite.PeopleVine was started in 2014 with the vision of providing a consolidated platform for businesses to better connect and engage their customers.

PeopleVine is a turn-key platform providing 60+ out-of-the-box pages and experiences to further engage with consumers.PeopleVine users can either leverage the out-of-the-box experience or customize it by making a few design tweaks to building their own experience on the same APIs we used.Flexibility is key to ensuring a consistent and unique branded experience, but also saves developers time by not having to start from scratch.

Together with our fully integrated marketing and automation engine PeopleVine is able to ensure continuous engagement all tracked and managed from a single platform.To date over 200 companies across 15 industries have used PeopleVine to power their websites, text campaigns, ecommerce, memberships, and more. Whether launching a loyalty program or your entire website, our tools make it easy to get going — and growing — quicker.For more information www.PeopleVine.com

About Primary Trucking

Primary Trucking is an asset based carrier located in Chicago, IL.We specialize in truckload freight outbound from Chicago.We have over 30 years of experience in the transportation industry and we have the tools to be your primary source for transportation. We customize transportation solutions based on our customers needs.If you need to move your freight locally or coast to coast, we have you covered.No job is too big or too small. We can handle anything, from moving a few pallets to moving an entire warehouse.Primary Trucking is your Primary source for transportation needs.

For more information go to www.PrimaryTrucking.com

About Rapid Freight Solutions

Rapid Freight Solutions (Rapid) provides domestic shipping services nationwide, quickly and safely moving products across the country. Rapid specializes in LTL, air freight, hot shot, trade-show, flatbed, intermodal, over-dimensional, step-deck, and refrigerated trucking. Thanks to our teams 30 years of experience, we have relationships with more than 140 carriers nationwide, helping ensure our customers quality service with competitive pricing. For more information, go to www.RapidFreightSolutions.com

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks described in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements that may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Exclusive: Petrobras turnaround could yield first dividend in years in 2017

It is likely we will reach that target … before 2018. I hope, but I dont know. he said.

He is targeting reducing Petrobras debt to 2.5 times its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from 5.1 times EBITDA at the end of 2015. At the end of the first quarter the ratio stood at 3.24.

Even if he hits that target, Parente has no plans to stop reducing debt or to let up on asset sales.

Were not going to stop our plan… This is not yet a healthy leverage level for Petrobras, he said.

A more appropriate level that would put Petrobras in line with global oil majors would be around 1.5 EBITDA, he said. He has no plans, for now, to make that a new target.

Investors have rewarded Parente for the turnaround. The firm achieved an interest rate of below 5 percent this week on a five-year bond for the first time since the crisis, Parente said. At the worst point, the rate was around 13 percent.

Parente said he would consider serving as chief executive beyond the end of next year if the government that is elected in 2018 wants him to continue in the post. A full cycle of management at the company would be four years, he said.

AUCTIONS

Petrobras has yet to decide whether it will participate in three government auctions this year for oilfields, he said. If it does, it will be go for deepwater fields, as operating there is Petrobras strength, he added.

3 things I didn’t know I didn’t know about buying my first home

People will try to photobomb every stage of your house-buying experience. Most of them arent necessary. If youre willing to make a spreadsheet, do some research and attend a lot of open houses yourself, you dont have to assemble a whole team of experts just to make a purchase.

My husband and I hired a top-notch real estate lawyer and otherwise we did everything ourselves: Found the right apartment, found the right mortgage and so on. We managed.

With a little preparation, and the willingness to learn from the mistakes of others, you probably can too.

FII betting on leverage play! Top 10 stocks which have given up to 120% return in last 1 year

Companies which have high debt on the books but have done reasonably well include names like Raymond, Sterlite Technologies, Sintex Industries, Apollo Tyres, GE Shipping, Reliance Infrastructure, Piramal Enterprises, Tata Steel, Reliance Industries, and Astra Microwave.

These 10 stocks hold special important because FIIs have raised their shareholding in the last 4 quarters which makes them ‘jewels in the leveraged space’.

For example, FIIs raised stake in MRF which has more than doubled investors’ wealth in the last one year. According to Capitaline data, the shareholding data as on June 2016 was 8.47 percent which was then raised to 10.07 in the March quarter.

However, not every company did well where FIIs raised stake, Hence, due diligence should be done before putting money into any of these stocks.

“Plenty of growth stories, which are built on debt, die rapidly. Companies who have been very diligent on reducing debt or being prudent with using debt create long-term success stories. Therefore, the given stocks might have provided significant returns to shareholders,” Tushar Pendharkar, Head of Research, Right Horizons Investment Advisory Services told Moneycontrol.

“Few sectors such as road construction, power, heavy engineering, telecom, etc. operate on huge debt burden, because they don’t have a choice and it is the nature of their business. So, these are exceptions,” he said

He further added that there are few other exceptions such as Motherson Sumi Systems, Apollo Tyres, etc. who raised debt on balance sheet; however, that was foreign debt and thus interest burden on Pamp;L statement was very low

Leverage is the use of borrowed funds to increase the potential return of an investment. Debt is the total amount of borrowed funds it owes and the equity is the value of shares issued by the company.

Debt equity ratio is calculated by dividing company’s total liabilities by shareholder’s equity. It is used to measure company’s leverage. It indicates home much debt the company is using to finance the assets.

The optimum debt-to-equity ratio is under 0.5 while for capital intensive industries this ration may go up to 2. But, for comparison, D/E should not be the only measure to compare the companies.

Experts suggest that D/E around 0.75x is manageable. More than 1.00x D/E reduces interest coverage ratio which impacts the bottom-line. It leaves a very limited cushion to bottom-line in the case of fluctuation in operating margins.

“Debt for expansion in business is good, which Motherson Sumi Systems, Tata Motors, Apollo Tyres etc. did in past; however, that should not come at the cost of the very limited margin of safety,” said Pendharkar.

Here’s what brokerage have to say on these 6 stocks:

Astra Microwave

Defence product related companies with net debt to equity position of less than 1x in our view are in a comfortable zone. In this context, Astra Microwave balance sheet seems not leveraged as FY17 DE stands at 0.28x which is quite reasonable as the net Debt/EBITDA also stands at 0.19x.

“Going forward, Astra to remain in this comfortable zone to service debt as it has over 1x bill-to-book ratio with stable margins negating any surprise to its earnings in the next two years,” De Arul Kaarthick of Karvy Stock Broking Limited told Moneycontrol.

Sintex Plastic Technology

As per Composite Scheme of Arrangement and subsequent to the approval received, Sintex Plastics Technologies Limited which will be carrying Custom Moulding and Infrastructure business has been demerged on 12th May 2017. The other entity namely Sintex Industries Limited will be carrying the business of textiles comprising of yarn and fabrics.

“As regards existing debt allocation between these two entities, the clarity is still awaited. The management has been reiterating that Sintex Plastics Technologies Limited will be debt free from day one of demerger; as a business it covers is high capacity, low utilization and have high margin,” Kiran Shankar Prasad of Karvy Stock Broking Limited told Moneycontrol.

“The total debt figure is somewhere around Rs. 7000 million that putting together both entities owes. The fact is that Textile division has been at the centre of debt. Nonetheless, the way business is being ramped up for both entities, time is not far away when debt may not be bothering point for the investors to invest in the company,” he said.

GE Shipping Company

GE Shipping Company is largest private sector shipping company and has a history of delivering a great result. It has two main business segments including Shipping and offshore.

However, of late, its performance has been marred by a slowdown in global economies in general and Chinese economy in particular. The management is positive on offshore business on the back of pick up in crude oil price.

Besides, crude and product tankers demand is likely to catch up in view of steadiness in crude price and likely pick up in refinery production. “GESCO, being a major global player in the shipping industry, with more than six decades of industry experience is well placed to capitalize on emerging opportunities,” said Prasad of Karvy.

“The company initiatives of selling existing assets and buying new ones with the objective of benefiting from fluctuations in asset prices and staying young to meet its customers demand in the face of tough competition and utilizing its assets in spot market instead of letting them idle in face of low demand reflects to intelligence of the management,” he said.

Raymond

Raymond has been at the receiving end of Q3 as it saw demand contraction across business channels in its branded textile business coupled with curtailed wedding expenses due to DeMo.

We expect a recovery in Q4 in all its 4 Power Brands=Raymond, Parx, Park Avenue and Colorplus is driven by EBO and LFS channels, store refurbishing and focus on young consumers. Cost Optimisation, Rationalisation of Product Mix and Operational Efficiencies shall begin to yield positive traction, LKP Securities said in a note.

Focus on Exports, Business Transformation of non-core business, Real Estate Monetisation and Strategic Initiatives to bring down net debt to equity from present levels of 1:1 shall be key monitorable going forward, it said.

Sterlite Technologies

Sterlite Technologies is poised to benefit from its leadership in the optical fiber/cable while its presence in the service segment would enable it to exploit opportunities in the NFS/Smart Cities space.

The current capacity expansion announcement brings in additional revenue opportunity of Rs1000 crore at full capacity (from FY21 onwards). This would, in turn, be margin accretive, ICICI Securities said in a note.

Given the robust growth potential (topline, earnings CAGR of 25.7%, 25.3%, respectively, in FY17-19E), we ascribe a target price of Rs175/share, based on EV/EBITDA multiple of 10x on FY19E EBITDA, it said.

Tata Steel

Tata Steel’s Q4FY17 EBITDA at Rs 70 billion(highest since Q2FY09) surpassed consensus owing to strong EBITDA at domestic operations (Rs13,586/t) and turnaround in European operations.

“We are upbeat on the likely improvement in quarterly EBITDA run rate and key concerns on UK pensions amp; deleveraging being allayed to a significant extent. The stock is trading at 5.4x FY19E EBITDA,” Edelweiss said in a report.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

CFPB and FTC confirm scrutiny of ancillary products

At the Auto Finance Risk and Compliance Summit held this week, Calvin Hagins, CFPB Deputy Assistant Director for Originations, stated that the CFPB is increasingly asking lenders about ancillary product programs during examinations, particularly about the percentage of consumers buying these products.

In June 2015, when the CFPB released its larger participant rule for nonbank auto finance companies, it also issued auto finance examination procedures in which ancillary products, like GAP insurance and extended service contracts, received heavy attention. We commented that by giving so much attention to these products, the CFPB was signaling its intention to give lots of scrutiny to these products in the auto finance market. Mr. Hagins’s comments confirm that the CFPB is in fact looking closely at these products in exams.

Speaking at the Summit as a member of a regulatory panel, Mr. Hagins indicated that companies should expect to get questions from CFPB examiners about ancillary products. He indicated that the CFPB specifically looks at how the product is offered to the consumer, when in the contracting process is it offered, how disclosures are being provided to the consumer, and the acceptance rate. As an example, he indicated that a 95% acceptance rate would cause CFPB examiners to raise questions about how the rate was achieved.

At the Summit, Colin Hector, an FTC attorney, indicated that the FTC is also interested in ancillary products, particularly whether there is a potential for consumer deception in how they are sold. He commented that, in its enforcement work, the FTC has focused on ancillary product sales that occur at the end of the sales process when consumers may be led to believe they must purchase the products to obtain financing and the seller has increased leverage because the consumer is more invested in completing the transaction.

Mercedes Slashes Lease Cost of B250e Electric

Beyond the physical limitations, the B250e only has a range of 85 miles, which pales in comparison to the 238 mile range of the Chevy Bolt and the 200+ mile range of the Tesla Model 3.

With these obvious fundamental challenges with the B250e, the question evolves from “Why did Daimler cut the price?” to “What is Daimler going to do with so many competitors working on 200+ mile range EVs?” To answer that second question to its shareholders and its customers alike, Daimler has two primary avenues of attack in the works.

First, it is bringing EV production in-house. Buying components from Tesla was an early strategy to buy Daimler time to sit back and watch how customers would respond to electric vehicles without having to make an all-in investment to the tune of several billion dollars like Nissan did with the LEAFand BMW did with the i3 and i8.

This move comes at a time when lithium-ion cells have dropped in price significantly, allowing for range that meets customer expectations. With batteries comprising the majority of the expense of electric vehicles, this brings the cost equation down to the point where building and selling electric vehicles starts to make sense, especially for a premium brand like Mercedes-Benz. Daimler announced plans to build its own battery production facility last March.Construction thenstarted in October 2016.

Second, Mercedes has been hard at work on its EQ brand which promises to bring EVs with 300 kilometers and 500 kilometers of range to market. This is clearly the long-term play for Daimler as it seeks to regain the market share it has lost to Tesla over the last few years.

With such deep roots in internal combustion vehicles, stemming from the partnership between the first two men to build an internal combustion vehicle in Germany, the challenge of changing the foundational corporation culture for Mercedes-Benz is real. Pivoting away from its foundations towards completely new technologies rooted in batteries and motors is a change that, until recently, it seemed the brand was not fully invested in. Now that it has finally taken meaningful steps towards EVs (and seems set to take more), time will tell whether Daimler can compete with Tesla let alone regain the market share it has lost.

Source: Push EVs| Image Credit: Kyle Field | CleanTechnica and Mercedes

Why Student Loan Debt Is A Women's Issue

One of AAUWs key policy recommendations to reducing debt-based financial aid is safeguarding and strengthening the Federal Pell Grant program for low-income undergraduate students. The grants are predominantly issued to students whose families earn less than $20,000 per year and, unlike student loans, they do not always require repayment.

Conquering fear of credit cards

“One of the reasons why millennials are afraid of credit cards is because many of them watched their parents get in trouble during the Great Recession,” says Beverly Harzog, author of several books on credit cards, consumer credit and managing debt, including “The Debt Escape Plan.”

“Fear partly comes from the unknown, from not having used a credit card,” says Mikel Van Cleve, personal finance advice director for financial services firm USAA.

Here are five common questions and answers that can help credit newcomers understand credit cards and conquer their fears.

WHY GET A CREDIT CARD AT ALL?

Using a credit card is the fastest and simplest way to build a credit history. And you don’t have to go into debt to do it. Use the card to buy only what you can afford — what you would otherwise pay for with cash — and then pay off the balance in full every month.

“Don’t think about debt. Think of a credit card as a tool to build credit,” Harzog says. “You want to build a credit history because it will help you throughout your life.”

Your credit score is a gauge of how much you can be trusted to borrow money: Do you spend within your means? Repay the money on time? Using a credit card responsibly demonstrates your ability to meet your financial obligations and builds your score. A good credit score can make the difference between loan approval and rejection, and it will get you better interest rates.

AREN’T THERE RISKS?

Just as using credit cards responsibly can build your credit, using them irresponsibly can damage it. Piling up debt, maxing out the card, paying late or missing payments hurts your score. Fear of these things is what drives fear of credit cards, but these things don’t have to happen: Carrying a credit card doesn’t mean going into debt or buying things you can’t afford.

IF YOU HAVE NO CREDIT, CAN YOU GET A CARD?

Newcomers to credit have a couple of options. One is a secured credit card . With these, you make a refundable security deposit — say, $200 or $500 — and this becomes your credit line.

“Each month, you make a payment that gets reported to the credit bureaus,” Van Cleve says. In time, with responsible use, you’ll be able to move up to a regular, unsecured card that offers rewards or other benefits.

Another way to get started is to become an authorized user on someone else’s credit card, such as a parent’s. But not all issuers report authorized-user activity. “As long as the history is being reported, you’ll get credit for it,” Harzog says.

HOW MUCH WILL INTEREST COST ME?

Credit card interest rates are called APRs, or annual percentage rates. The bad news: Your first card is likely to have a high APR. The good news: “If you’re paying your balance in full, you won’t have to worry about your APR,” Harzog says.

DON’T CREDIT CARDS HAVE A LOT OF FEES?

Most credit card fees are avoidable, including late fees and cash-advance fees. Many cards don’t charge an annual fee, so look for one of those if you’re anti-fee. Rewards cards often charge an annual fee, which can be worth paying if you get sufficient benefits back.

Avoid cards that charge monthly maintenance fees or that require an application or processing fee before your account is even open.