Don’t F*** With the Fed. Last week, with yet another .75% interest rate hike, US central bankers delivered on the anti-inflation stance of Fed Chairman Jerome Powell (see NL 39), who had warned that these efforts “would also bring some pain to households and business
I agree, RBI should follow the Fed. Nonetheless, I think Rupee could end up at 90 by year-end. Do you know how much of corporate foreign debt is publicly guaranteed?
I don't know how much corporate overseas debt is guaranteed - but i doubt its significant. The more worrisome data point is that only about 50% of these commercial borrowings are hedged.
Some may be 'naturally' hedged, because the borrowers are exporters, and I dont have that granular data, but the vulnerability is substantial.
My concern is about foreign currency bonds issued by large corporates (not short term loc type guarantees.) These are usually publicly guaranteed to get investment grade. RBI or BIS should have this data. I don’t have access anymore since I retired.
It will give you an idea of the additional exposure GOI has in the debt market. Latin Am countries got into sovereign debt problems mainly due to defaulting on publicly guaranteed corporate borrowings. This is usually the portion of debt iceberg hidden underwater.
If you are investing for the long run - which is the only way to invest in equities - you need to do little. Just sit tight and wait for the turbulence to abate. But don't buy the dip yet. It is very likely that it will become much deeper, more a pit than a dip.
If you have spare cash now, put it into liquid funds, or ultra-short term debt funds, or even FDs.
Sir, for the recent posts , I am not able to comment on the articles because it has been disabled and is saying that you have to be a paid subscriber to post comments.
But it's not showing any paid options for subscriptions. So, do you know what is going on.
I agree, RBI should follow the Fed. Nonetheless, I think Rupee could end up at 90 by year-end. Do you know how much of corporate foreign debt is publicly guaranteed?
I don't know how much corporate overseas debt is guaranteed - but i doubt its significant. The more worrisome data point is that only about 50% of these commercial borrowings are hedged.
Some may be 'naturally' hedged, because the borrowers are exporters, and I dont have that granular data, but the vulnerability is substantial.
My concern is about foreign currency bonds issued by large corporates (not short term loc type guarantees.) These are usually publicly guaranteed to get investment grade. RBI or BIS should have this data. I don’t have access anymore since I retired.
Veeru,
I will see what data I can get.
It will give you an idea of the additional exposure GOI has in the debt market. Latin Am countries got into sovereign debt problems mainly due to defaulting on publicly guaranteed corporate borrowings. This is usually the portion of debt iceberg hidden underwater.
I read somewhere that equity downfall always starts with Bonds going down.
Write on this Sir Ji.
Thanks for this.
Liked the sentence bye bye 18000 Nifty.
Many old patterns of predictability have broken down as a result of 2 decades of cheap money. One has to think on one's feet.
So what do you suggest Sir, how should an equity investor plan his investment looking at this grim view.
If you are investing for the long run - which is the only way to invest in equities - you need to do little. Just sit tight and wait for the turbulence to abate. But don't buy the dip yet. It is very likely that it will become much deeper, more a pit than a dip.
If you have spare cash now, put it into liquid funds, or ultra-short term debt funds, or even FDs.
Thank you very much for the advice sir.
Sir, for the recent posts , I am not able to comment on the articles because it has been disabled and is saying that you have to be a paid subscriber to post comments.
But it's not showing any paid options for subscriptions. So, do you know what is going on.
Ritik,
I have not enabled paid subscriptions, so I don't know what is going on.
Let me get to the bottom of this, thanks.
Thank you very much sir