Brazil on Wednesday came out in support of the United States' candidate to lead the Inter-American Development Bank (IDB), putting the intended nominee, Mauricio Claver-Carone, in a strong position to take over the region's largest lending institution and only its fifth president since its founding in 1959.
Claver-Carone is the the senior director for Western Hemisphere affairs at the US National Security Council and leads the US government's América Crece program to promote private-sector investments in energy and infrastructure projects in Latin America and the Caribbean.
Claver-Carone's nomination was seconded by Ecuador. Brazil had been expected to put forth its own candidate. Argentina and Paraguay were also mulling nominees of their own. The US government owns 30% of IDB's shares, while Brazil has 11.4% and Ecuador has 0.61%. Argentina, meanwhile, has 11.4%, followed by Mexico with 7.3%.
The Bank of England on Thursday added another £100 billion to its quantitative easing program in a bid to shore up the U.K. economy amid the fallout from the coronavirus crisis.
The additional bond purchases will take the total value of the central bank’s Asset Purchase Facility (APF) to £745 billion.
The Bank resisted taking interest rates into negative territory, a decision being closely watched by investors, instead opting to hold its main lending rate steady at 0.1%. Rates have been reduced twice from 0.75% since the beginning of the coronavirus pandemic.
The International Energy Agency said that it expects the fall in oil demand this year to be the largest in history, but believes there are signs the market could reach “a more stable footing” over the coming months.
Oil prices have tumbled around 40% year-to-date, as lockdown measures designed to slow the spread of the coronavirus created an unparalleled demand shock in energy markets.
The IEA said oil demand in the second quarter, which saw the greatest impact from lockdown measures, was 17.8 million barrels per day lower when compared to the same period last year. That level of demand reduction was slightly less than the group had previously expected, although still unprecedented.
According to Fitch, Jamaica’s fiscal balance will decline to -2.6% of GDP in FY2020/21, down from 0.9% in FY2019/20 (April 2019 – March 2020), as contracting economic activity weighs on revenues and spurs the government to increase expenditures. If this materializes, it will be Jamaica’s largest fiscal deficit since FY2012/13.
Fitch forecasts real GDP for Jamaica will contract by 5.1% y-o-y in 2020 as the coronavirus pandemic severely undercuts export demand and private consumption. The recession will undermine income tax and the General Consumption Tax (GCT) receipts, which accounted for an estimated 28.0% and 35.2% of total government revenues in FY2018/19.
In addition, Fitch expects government expenditures on public health will increase, with total expenditures climbing 1.5% y-o-y in FY2020/21.
While it is expected that Jamaica’s public debt load will head higher, to 96.9% of GDP by end-2020, a longer-term commitment to debt reduction will bring government debt to 74.0% of GDP by 2025, Fitch says.
Net profit at for the 6 months ending April 20, 2020, totaled $4.02Bn (EPS: $1.29), down 28.4% (or $1.60Bn) relative to $5.61Bn (EPS: $1.80) reported for the corresponding period in 2019.
An 8.4% (or $1.74Bn) decrease in net operating income was the primary contributing factor to the decline in the company’s bottom line. This was supported by, fees and commissions income, net interest income after expected credit losses, net gains on financial assets and other revenue which declined 16.2% (or $665.35Mn), 10.0% (or $1.09Bn), 21.4% (or $78.96Mn) and 90.7% (or $183.63Mn), respectively.
Scotia’s stock has declined 19.5%% since the start of the year, and closed trading at $44.68 on Monday. The stock currently trades at a P/B of 1.24x, which is below the Main Market Financial sector average of 1.78x.
Fitch Ratings affirmed on Thursday the local long-term and short-term ratings of four major financial firms in Colombia, despite rising risks to the banking sector caused by the spread of the coronavirus.
Local lenders Bancolombia, Davivienda and Banco de Occidente, along with the Colombian division of Spanish bank BBVA and the insurance firm Grupo Bolívar, all maintained their AAA(col) long-term ratings on the local scale.
The four banks have adequate liquidity, but they are likely to see profits fall and loan portfolios deteriorate in the wake of the coronavirus crisis, Fitch said, adding that their capitalization ranges from weak (Bancolombia) to adequate (Banco de Occidente and Davivienda) and robust (BBVA).
The Inter-American Development Bank (IDB) sold AUD50 million ($34.3 million) worth of 10-year sustainable development bonds (SDB) in a private placement on Thursday, marking the bank's third debt sale in a week for a total of $4.34 billion.
With Daiwa Capital Markets America as lead, the 2030 Australian dollar-denominated bonds sold with a coupon of 1.285%, IDB said. The sole investor was Mitsui Sumitomo Aioi Life Insurance Company.
This issuance is a part of the bank's $12 billion emergency lending program to support countries in their response to the COVID-19 pandemic and its consequences.
The New York Federal Reserve’s planned launch on Tuesday of a bond-buying facility could help ease the potential stigma for companies of asking for help and create an important framework for what the central bank steps in to purchase, analysts and investors said.
The Federal Reserve said that starting Tuesday it would buy corporate bonds directly through its secondary market corporate credit facility (SMCCF), one of several emergency programs recently instituted by the central bank to improve market functioning in the wake of the coronavirus pandemic.
The Bank of Japan (BOJ) kept monetary policy steady on Tuesday and stuck to its view that the economy will gradually recover from the damage caused by the coronavirus pandemic, signalling that it has taken sufficient steps for now.
As widely expected, the central bank maintained its pledge to guide short-term interest rates at -0.1% and the 10-year government bond yield around 0% by a 8-1 vote. The BOJ said it expects to pump around 110 trillion yen ($1 trillion) to the economy via its market operations and lending facilities aimed at combating the hit from the health crisis.
The European Union (EU) has approved a grant of €10.00Mn to finance a project, titled, ‘Health System Strengthening Programme’, which is expected to bolster Jamaica’s health sector.
This disclosure was made by Head of the EU Delegation to Jamaica, Ambassador Malgorzata Wasilewska, at the recent opening of a Maternal and Neonatal High-Dependency Unit (HDU) at the St. Ann’s Bay Regional Hospital in St. Ann. She explained that the EU will co-finance an ongoing Inter-American Development Bank (IDB) loan with the grant, which will focus on the rehabilitation of 10 health centres across the island. This temporary measure is part of a suite of policy initiatives implemented by the GOJ, to make accessing loans from the SLB, and by extension obtaining a tertiary education, more feasible and attainable.
“The European Union recognises the importance of a strong national health system as one of the most important public goods of a nation and is continuing to support Jamaica and the Caribbean to achieve this end,” she said.
She informed that the EU, in partnership with the Caribbean Public Health Agency (CARPHA), has also mobilised a total amount of €8.00Mn to cater for the most urgent needs of Caribbean countries in managing the fight against COVID-19.
