BQuick On Dec. 11: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Cabinet Decisions: Partial Credit Guarantee Tweaked, IBC Amended
The Union Cabinet has approved changes to the Partial Credit Guarantee Scheme introduced in the Budget 2019-20 to allow state owned banks to buy lower rated assets of non-bank lenders.
- The cabinet chaired by Prime Minister Narendra Modi has cleared the proposal to allow public sector banks to buy ‘BBB+’ rated assets of non-banking financial companies against ‘AA’ rated assets earlier.
- This comes after banks had suggested the finance ministry to tweak the guidelines of the scheme to allow pooled assets of NBFCs having 'investment grade' to be considered under the credit guarantee scheme.
The criteria for NBFCs to avail the scheme has also been changed.
The Cabinet also approved changes to the insolvency law, including provision to ringfence successful resolution applicants from criminal proceedings with regard to offences committed by previous promoters of a company.
- The amendments to the Insolvency and Bankruptcy Code are aimed at removing certain difficulties being faced during insolvency resolution process to realise the objects of the Code and to further ease doing of business, an official release said.
- The IBC (Second Amendment) Bill, 2019, seeks to change various sections as well as insert a new section in the law.
The amendments are expected to remove bottlenecks, and streamline the resolution process.
The Cabinet also authorised the National Highway Authority of India to set up an Infrastructure Investment Trust to monetise national highway projects.
- National highways that have been collecting toll for at least a year can now be monetised by NHAI.
- NHAI will have the right to levy toll on the identified highway.
NHAI's InvIT may hold assets directly or through an special purpose vehicle.
2. Reliance Jio Outbids Airtel For RCom Assets
Mukesh Ambani-owned Reliance Jio Infocomm Ltd. has submitted the highest bid for the telecom tower and optic fibre assets of Reliance Communications Ltd. under the insolvency process, according to two people familiar with the matter.
- Reliance Jio has offered an upfront payment of Rs 3,600 crore, the two people quoted above said on the condition of anonymity.
- This implies a 52 percent haircut for lenders on the existing debt against these assets.
- Bharti Airtel Ltd. has bid an amount of Rs 2,500 crore for the tower and optic fibre assets.
Two other bidders have also submitted their bids. The decision will be taken in a few weeks.
3. Airtel, Jio Or Vodafone Idea: Who’s The Cheapest?
India’s private telecom operators increased tariffs by an average 30 percent last week as they struggle to pay thousands of crores in pending statutory dues. Still, Reliance Jio Infocomm Ltd. continues to offer the cheapest plans in most categories.
- Bharti Airtel Ltd. and Vodafone Idea Ltd. offer 1 GB-a-day prepaid plan for Rs 219 each with a validity of 28 days.
- It’s 29.6 percent costlier than similar plans they offered earlier.
- Reliance Jio doesn’t have a comparable plan as it offers 1 GB a day for Rs 149 but caps the validity at 24 days.
- Reliance Jio is the cheapest as its users will pay Rs 6.2 for every GB compared with Rs 7.8 charged by its peers.
But that’s just for 1 GB a day. What about other higher data plans? Find out the complete comparison here.
4. Yes Bank CEO Says ‘Don’t Panic’ As Brokerages Sound Alarm
Yes Bank Ltd. shares tumbled the most in two months after its board deferred an announcement on new investors, prompting a warning about the risks to the Indian financial system if the lender is unable to quickly bolster its capital.
- The bank’s board didn’t make a final decision on investment from Citax as it is expecting one more investor to commit in the next few days, Yes Bank’s Chief Executive Officer Ravneet Gill told Bloomberg on Wednesday.
- The lender wants to club both those deals together to raise more than $500 million at the same time, he said.
My message to the market is don’t believe that the message that we have in the disclosure was a tactic to buy time. We are not buying time. There is no reason to panic at all.Ravneet Gill, CEO, Yes Bank
The bank is in advanced talks with “well-capitalised” financial institutions for a strategic stake sale, Gill said.
Gill’s comments came after the delay in fundraise prompted at least two large brokerages to raise questions about the future of the lender.
- The unavailability of capital “raises questions on the going-concern status of the bank,” said Nomura Global Markets Research in its note dated Dec. 11. Risks to the ‘going concern’ status of the bank will likely have an implication on the sector, it added.
- Macquarie Research in a note titled ‘Nationalisation Looms?’ said, “In our view, if the bank is unable to raise money in the next six months, it poses a grave danger to the financial system”.
Here are the key points highlighted by brokerages this morning.
5. Indian Stocks Rebound Late But Bonds Slide
Indian stocks rose Wednesday, recovering from a four-week low touched in the last session, as some investors felt the decline to be excessive.
- The S&P BSE Sensex climbed 0.4 percent, the most in a week, to 40,412.57, with most gains coming in the last leg of the session.
- The gauge had slipped to its lowest level since Nov. 13 on Tuesday and was 2 percent below its record high touched last month.
- The NSE Nifty 50 rose 0.45 percent to close at 11,910.15.
- Nine out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
S&P Global Ratings warned it may cut India’s sovereign ratings if economic growth doesn’t recover, pulling down the nation’s bonds that are already the worst performers among Asian peers this month.
- The yield on the benchmark 10-year note rose 5 basis points to 6.76 percent.
- The rating company expects the nation’s economy to gradually recover over the next few years with correspondingly higher growth, according to its statement.
If this recovery does not materialise, and it becomes clear that India’s structural growth has significantly deteriorated, we could lower the rating.Andrew Wood, Analyst, S&P
Any downgrade would take India into the so-called junk grade status.
6. Saudi Aramco Soars On Debut, Fed Decision Day
Saudi Aramco shares surged after the oil producer’s initial public offering, valuing the company at a record $1.88 trillion in the culmination of a four-year effort by the kingdom to list its crown jewel.
- The stock jumped the daily 10 percent limit to 35.20 riyals when trading began at 10:30 a.m. in Riyadh as Aramco board members, Saudi officials and invited guests cheered at a ceremony at the Fairmont Hotel in the kingdom’s capital.
- Aramco raised $25.6 billion in the biggest-ever IPO, selling shares at 32 riyals each and valuing the company at $1.7 trillion, overtaking Microsoft Corp. and Apple Inc. as the most valuable listed company.
- The start of trading in Riyadh marks the end of a saga that’s been intertwined with Crown Prince Mohammed bin Salman’s rise to global prominence and his Vision 2030 plan to reform the Saudi economy.
Saudi officials pulled out all the stops to ensure that the stock traded higher.
While Jerome Powell is expected to reinforce the signal that policy is on hold at the central bank’s meeting on Wednesday, some of his colleagues may be looking ahead to when they should hike again.
- The Federal Reserve chairman looks all but certain to keep rates unchanged after reductions at the previous three gatherings as insurance against slowing global growth and trade disputes.
- The Federal Open Market Committee will release a statement and updated quarterly forecasts at 2 p.m. in Washington with Powell holding a press conference 30 minutes later.
- Powell is likely to repeat his recent comments that both monetary policy and the economy are “in a good place” and that it would take a “material reassessment” of the outlook to prompt a chance in rates.
The FOMC’s rate forecast through 2022 will be closely watched.
7. Qatar To Buy 25% Stake In Adani Transmission
Qatar Investment Authority is investing about $450 million for a 25.1 percent stake in a unit of Adani Transmission Ltd., the Indian company said in a filing.
- The deal includes a subordinated debt investment by QIA, according to the filing, which said the two sides have signed a definitive agreement.
- The transaction is expected to be completed in early 2020 after obtaining regulatory approvals, it said.
The deal will help Adani deleverage its balance sheet, while aiding Qatar in diversifying assets.
8. India’s Best Governed Companies
Cipla Ltd., Dr. Reddy’s Laboratories Ltd. and Tata Power Company Ltd. have made it to the top 10 on the Indian Corporate Governance Scorecard for the first time as India Inc. looks to improve governance standards.
- Hindustan Unilever Ltd., Housing Development Finance Corporation Ltd., Infosys Ltd. continued to be among the best-governed companies, according to a report titled ‘Stability Despite Headwinds’, put together by proxy advisory firm Institutional Investor Advisory Services India Ltd., BSE and International Finance Corporation.
- Overall, the governance standards of BSE 100 companies, aggregating to 72 percent of the total market capitalisation, have seen an incremental increase.
- The institutionalisation of governance practices has led to greater stability of scores for the larger listed companies.
Here’s how India Inc. has fared across various governance themes from board effectiveness to audit.
9. What You Must Absolutely Know About The Personal Data Protection Bill
India may soon join the league of nations having a full-fledged data privacy law. The government has released a copy of the Personal Data Protection Bill, 2019, which aims to protect privacy and rights of an individual and regulate the processing and transfer of their personal data.
- Personal data is defined in the bill as the data about or relating to a natural person who is directly or indirectly identifiable.
- It can relate to a person’s characteristic, attribute or any other feature of his identity.
- The bill confers three broad rights to individuals in relation to their personal data—the right to be forgotten, right to correction and erasure and right to access data.
- The bill, which will be tabled in the ongoing session of Parliament, will become a law after receiving approval from both its houses and receiving Presidential assent.
Here are the details of the three rights conferred by the proposed bill.
10. Rajya Sabha Passes Citizenship Amendment Bill
The Rajya Sabha has passed the controversial Citizenship Amendment Bill even as protests against it continued for the second day in the national capital and across northeast states.
- The bill was passed with 125 members voting in favour and 105 against it. It will now go for the President’s assent.
- Home Minister Amit Shah, while moving the bill in the Upper House, said that Indian Muslims have nothing worry as they “were, are and will remain Indian citizens”.
- The Bharatiya Janata Party government will protect the interests of Assamese, Shah said.
- But that did not stop protests from lawmakers. Rajya Sabha TV had to briefly stop the telecast of proceedings when opposition members heckled Shah over his claims of protecting Assamese interests.
- Congress leader P Chidambaram called the bill a slap on the face of Parliament and said the government is "ramming" through with it in order to advance its Hindutva agenda.
- Other lawmakers opposing the bill said they hoped the Supreme Court would strike it down.
- Meanwhile, internet was suspended in Assam amid massive protests.
- Even in Delhi, group of people from northeastern states gathered at Jantar Mantar to oppose the bill.
The bill is likely to be challenged in the Supreme Court.