Anonymous has left a new comment on your post "Since We Are On Short-Selling":
Hi Dali.
Can I ask you a question?
Why/How windfall tax on IPP will affect the bond market?
I have try to search the answer but failed. Can you please explain to me?
Thanks.
hng has left a new comment on your post "Bailout Chartbox":
Dear Dali
I wonder why Malaysia have 40%energy reserve and yet plan to proceed undersea cable energy transimsion from bakun, sarawak to west malaysia. With upcoming Jimah power plant ready by 2010, TNB energy reserve will just keep going up! Why Malaysia goverment don't realize that these big waste of money!
Recently, windfall tax of 30% on IPP ROA above 9% face a lot of critic from bond market player (CIMB is one of big bond issuer in Msia) and rumor say gov may abolish or reduce the windfall tax in order to stabilize bond market. Why gov have different perception between equity market and bond market response. Since the annoncement, IPP player namely Genting, MMC, YTL and tanjong share face downward pressure and traded almost year low. A lot of shareholder suffer big losses in equity market, but once bondholder voice out their concern and threated de-rating on IPP bond, it seem gov may response to their request! unfair treatment between shareholder vs. bondholder.
Another issue i don't understand is highway concessionaire, Why Plus, MTD infra and Litrak keep refinance their bond to longer term and free up cash for capital repayment to shareholder! Litrak for instance, has already proposed second capital repayment excerise. It seem like they want to spread their concensionaire risk to wider bond market and reduce risk of not getting traffic increase, as gov seem more likely to protect bondholder!
Hi Dali.
Can I ask you a question?
Why/How windfall tax on IPP will affect the bond market?
I have try to search the answer but failed. Can you please explain to me?
Thanks.
hng has left a new comment on your post "Bailout Chartbox":
Dear Dali
I wonder why Malaysia have 40%energy reserve and yet plan to proceed undersea cable energy transimsion from bakun, sarawak to west malaysia. With upcoming Jimah power plant ready by 2010, TNB energy reserve will just keep going up! Why Malaysia goverment don't realize that these big waste of money!
Recently, windfall tax of 30% on IPP ROA above 9% face a lot of critic from bond market player (CIMB is one of big bond issuer in Msia) and rumor say gov may abolish or reduce the windfall tax in order to stabilize bond market. Why gov have different perception between equity market and bond market response. Since the annoncement, IPP player namely Genting, MMC, YTL and tanjong share face downward pressure and traded almost year low. A lot of shareholder suffer big losses in equity market, but once bondholder voice out their concern and threated de-rating on IPP bond, it seem gov may response to their request! unfair treatment between shareholder vs. bondholder.
Another issue i don't understand is highway concessionaire, Why Plus, MTD infra and Litrak keep refinance their bond to longer term and free up cash for capital repayment to shareholder! Litrak for instance, has already proposed second capital repayment excerise. It seem like they want to spread their concensionaire risk to wider bond market and reduce risk of not getting traffic increase, as gov seem more likely to protect bondholder!
well, i think it can affect the direct bonds issued by IPPs, in that the windfall tax is not anticipated or worked in to the bonds previously, hence it becomes a new risk factor going forward plus a whack on earnings, which affects its "fundamentals" and "cash flow"... hence investors will demand higher yields for IPPs bonds in the future, and ratings agencies may rate down the bonds
the indirect effect could be for other similar bonds issued by plantation companies... or utilities, or PLUS... u can make up the rest... windfall tax is not a small issue, it affects "cumulative cash flow" "retained profits"... which lessens the fundamentals of these companies... being rated one or two notch lower will mean higher interest rates when Malaysian companies go tap capital in the future... oh yes, i missed out other oil n gas companies and timber as well...
hng, yr point on Litrak, MTD Infra is absolutely spot on... they keep raising bonds and keep repaying back capital and dividends... it will make the company's balance sheet not look so good, by having the extended bond, it forces the gov to think of it as a yet unfinished project in terms of financing n at the same time NOT make themselves too attractive as they may be taken over by some gov fund if it has tons of cash in the bank n still a decent concession... trying their best to mask their attraction n at the same time drain the profits out ... hellooo, any smart ppl out there in gov??
p/s photos: Sonja Kwok Sin Ney
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