Meeting with a Bank Week 3 August 2006
I had the following on my notes when I attended this meeting:1. Check requirement by October: PHP 409 Billion, roughly less than US$100 Million.
2. Remind them to submit a proposal while waiting for RFP
3. In Thailand, corporates borrow yen-denominated loans (low-yielding instrument) fromw hich they based their taxes then swap it to US dollars (currency of the high-yielding instrument).
4. The bank does not have a local office so no operations involving peso but there is so much liquidity in US dollar-yen that they can facilitate. So they can design a longer-term two-step transaction
5. Since we can no longer accommodate loan instruments with maturities equal or shorter than five years, the bank worried that it might be futile ven to respond to our RFP. I said that they can still forward to us their proposals because we really can't make any commitment as to how the entire debt profile looks until we have received all the proposals.
6. One of their bankers moved to another bank. They have noticed increasing movements of bankers. Mr. T said, he noticed the same thing in 1997 before the the onset of the Asian Financial Crisis.
7. A colleague asked the bank's reading of the Japanese economy. They reported that the Japan economy is highly reliant on the economy of China. If China continues to grow and as a result, import capital equipment from Japan then we see on overweight in expectations for Japan's stability. This is further evence by increased demand by their Japanese clients for investments.
8. It was further inquired on the balancing of prtfolio in terms of fixed and floating, the bank responded that usually, it's just half fixed-rate and half floating to limit losses due to volatility.
So it would really depend on the maturities. If you see that interest rates would eventually decline then short-term holdings should be floating. If rates are in the short-term increasing then have it fixed. Seince more than 60 percent of our debts are fixed-rate then we are open to floating but in the end it would all depend on the all-in cost.
posted by JD @ 4:58 PM
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