Monday, April 27, 2009
IMF, World Bank meet as signs of recovery seen
IMF, World Bank meet as signs of recovery seen
The Hindu Business Line, April 26, 2009, Page 4
WASHINGTON (AFP) – Top IMF and World Bank officials hold annual meetings Saturday and Sunday in the shadow of the worst global slump since the 1930s but with perhaps the first signs of recovery peeping through.
A banking crisis that started in the United States in mid-2007 has spread like wildfire to push the world deep into a recession which the IMF said earlier this week would see the global economy contract 1.3 percent this year.
The IMF forecast marked a dramatic downgrade of previous estimates and set the tone for the meetings of the top steering committees of the 185-member International Monetary Fund and its sister institution the World Bank.
But on Friday, the Group of Seven major economies said the worst might finally be over -- although the outlook remained clouded and difficult.
"Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging," a G7 statement said.
"Economic activity should begin to recover later this year amid a continued weak outlook and downside risks persist."
The G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- said they were "committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again."
US Treasury Secretary Timothy Geithner, the G7 host, said that "without underestimating the challenges we still face, there are signs that the pace of deterioration in economic activity and trade flows has eased."
He too cautioned against any simple optimism that the worst global slump since the 1930s would be over quickly.
"We are right to be somewhat encouraged but we would be wrong to conclude that we are close to emerging from the darkness that descended on the global economy (in September)," he said in a statement.
A subsequent meeting of the Group of 20, which includes the G7 and developing countries such as Brazil, China, India and Russia, ended without a statement.
The financial crisis was sparked by a credit boom based on the US subprime or higher risk home loan market which collapsed in mid-2007 as weaker borrowers could not keep up payments when the economy began to slow.
Many banks were heavily exposed and in order to limit their losses, cut lending, causing the economy to slow.
An already bad situation turned much worse with the collapse of giant US investment bank Lehman Brothers in September, tightening the screw in a global credit crunch which has plunged the world economy into recession.
The more positive G7 tone follows data showing that the downturn is easing but many officials remain reluctant to give the all-clear, warning that more bad news is to come which could blight any "green shoots" of recovery.
Others also warn that recovery or not, the human cost of the crisis is very high, still rising and should not be forgotten.
On Friday, a World Bank/IMF report said the crisis means up to 90 million more people will remain trapped in extreme poverty this year while the chronically hungry could top one billion.
The Hindu Business Line, April 26, 2009, Page 4
WASHINGTON (AFP) – Top IMF and World Bank officials hold annual meetings Saturday and Sunday in the shadow of the worst global slump since the 1930s but with perhaps the first signs of recovery peeping through.
A banking crisis that started in the United States in mid-2007 has spread like wildfire to push the world deep into a recession which the IMF said earlier this week would see the global economy contract 1.3 percent this year.
The IMF forecast marked a dramatic downgrade of previous estimates and set the tone for the meetings of the top steering committees of the 185-member International Monetary Fund and its sister institution the World Bank.
But on Friday, the Group of Seven major economies said the worst might finally be over -- although the outlook remained clouded and difficult.
"Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging," a G7 statement said.
"Economic activity should begin to recover later this year amid a continued weak outlook and downside risks persist."
The G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- said they were "committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again."
US Treasury Secretary Timothy Geithner, the G7 host, said that "without underestimating the challenges we still face, there are signs that the pace of deterioration in economic activity and trade flows has eased."
He too cautioned against any simple optimism that the worst global slump since the 1930s would be over quickly.
"We are right to be somewhat encouraged but we would be wrong to conclude that we are close to emerging from the darkness that descended on the global economy (in September)," he said in a statement.
A subsequent meeting of the Group of 20, which includes the G7 and developing countries such as Brazil, China, India and Russia, ended without a statement.
The financial crisis was sparked by a credit boom based on the US subprime or higher risk home loan market which collapsed in mid-2007 as weaker borrowers could not keep up payments when the economy began to slow.
Many banks were heavily exposed and in order to limit their losses, cut lending, causing the economy to slow.
An already bad situation turned much worse with the collapse of giant US investment bank Lehman Brothers in September, tightening the screw in a global credit crunch which has plunged the world economy into recession.
The more positive G7 tone follows data showing that the downturn is easing but many officials remain reluctant to give the all-clear, warning that more bad news is to come which could blight any "green shoots" of recovery.
Others also warn that recovery or not, the human cost of the crisis is very high, still rising and should not be forgotten.
On Friday, a World Bank/IMF report said the crisis means up to 90 million more people will remain trapped in extreme poverty this year while the chronically hungry could top one billion.
Cos go for mini perms to beat credit squeeze
Cos go for mini perms to beat credit squeeze
The Financial Express, April 27, 2009
Sunny Verma, Arun S
Amidst the ongoing credit squeeze, the financial community in India has found a novel way to fund infrastructure projects that need long-term loans, going up to 20 years. A clutch of leading institutional financiers has started offering ‘mini perms’, short for mini permanent loans, to finance infrastructure and commercial real estate development projects. In such a project-finance arrangement, a financier provides loans up to a particular duration, say seven years, with an understanding that at that stage the loan will get refinanced.
The idea is at the time of refinance, the strength of the cash flows of a project would be adequate for a new financier to step in, Anita Marangoly George, director (infrastructure), International Finance Corporation (IFC), told FE.
While companies can easily get refinance based on their balance sheet strength, lenders are reluctant on the project side — which are mostly executed through special purpose vehicles — until the project and its cash flows are adequate.
Mini perms help to bridge this gap in sectors such as power, commercial real estate, airports and ports. “We are starting to see that Indian companies are reluctant to tie themselves in, for example, at high rates. So they are taking five-year loans and then refinancing,” George said. Ultra mega power projects (UMPPs) that need financing for upwards of 18 years will particularly benefit from this structure.
Experts, however, note that the success of mini perms would depend on interest costs at the time of refinance. “We all need huge credit and are keen on long-term credit at competitive rates from a good source. But if mini-perm is about refinancing, not many would be keen if the interest rate is high at that particular point of time,” said NTPC Ltd CMD RS Sharma. Pointing out that NTPC has gone for refinancing earlier too, Sharma, however, said the company only goes for balance sheet-financing and not project-financing.
A UMPP requires an investment of Rs 16,000-20,000 crore. The government has so far awarded three projects—to Tata Power at Mundra in Gujarat and to Reliance Power at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh.
It took almost a year for both Sasan and Mundra projects to achieve financial closure.
IFC, which loaned $450 million to Tata’s Mundra project, says it is not keen on financing any more UMPPs. Along with SBI and Macquarie, IFC has recently set up a $1-billion infra fund to pick up stakes in projects, which will also bid for greenfield projects, George said.An official of PFC, which is offering a 20-year loan with a 15-year repayment period, said the manner of servicing the debt was crucial for mini perms. The repayment period on PFC’s loan starts from six months after the completion of construction, while the interest period starts from the day the loan is approved.
According to Jaidit Brar of McKinsey & Company, it is interesting to explore new financing options but they should not adversely affect the return profile of a developer undertaking the project. Funding needs of India’s infrastructure sector are estimated at $500 billion until 2012, of which the power sector alone requires $150 billion.
The Financial Express, April 27, 2009
Sunny Verma, Arun S
Amidst the ongoing credit squeeze, the financial community in India has found a novel way to fund infrastructure projects that need long-term loans, going up to 20 years. A clutch of leading institutional financiers has started offering ‘mini perms’, short for mini permanent loans, to finance infrastructure and commercial real estate development projects. In such a project-finance arrangement, a financier provides loans up to a particular duration, say seven years, with an understanding that at that stage the loan will get refinanced.
The idea is at the time of refinance, the strength of the cash flows of a project would be adequate for a new financier to step in, Anita Marangoly George, director (infrastructure), International Finance Corporation (IFC), told FE.
While companies can easily get refinance based on their balance sheet strength, lenders are reluctant on the project side — which are mostly executed through special purpose vehicles — until the project and its cash flows are adequate.
Mini perms help to bridge this gap in sectors such as power, commercial real estate, airports and ports. “We are starting to see that Indian companies are reluctant to tie themselves in, for example, at high rates. So they are taking five-year loans and then refinancing,” George said. Ultra mega power projects (UMPPs) that need financing for upwards of 18 years will particularly benefit from this structure.
Experts, however, note that the success of mini perms would depend on interest costs at the time of refinance. “We all need huge credit and are keen on long-term credit at competitive rates from a good source. But if mini-perm is about refinancing, not many would be keen if the interest rate is high at that particular point of time,” said NTPC Ltd CMD RS Sharma. Pointing out that NTPC has gone for refinancing earlier too, Sharma, however, said the company only goes for balance sheet-financing and not project-financing.
A UMPP requires an investment of Rs 16,000-20,000 crore. The government has so far awarded three projects—to Tata Power at Mundra in Gujarat and to Reliance Power at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh.
It took almost a year for both Sasan and Mundra projects to achieve financial closure.
IFC, which loaned $450 million to Tata’s Mundra project, says it is not keen on financing any more UMPPs. Along with SBI and Macquarie, IFC has recently set up a $1-billion infra fund to pick up stakes in projects, which will also bid for greenfield projects, George said.An official of PFC, which is offering a 20-year loan with a 15-year repayment period, said the manner of servicing the debt was crucial for mini perms. The repayment period on PFC’s loan starts from six months after the completion of construction, while the interest period starts from the day the loan is approved.
According to Jaidit Brar of McKinsey & Company, it is interesting to explore new financing options but they should not adversely affect the return profile of a developer undertaking the project. Funding needs of India’s infrastructure sector are estimated at $500 billion until 2012, of which the power sector alone requires $150 billion.
Low-cost switch is paying off: Unitech
Low-cost switch is paying off: Unitech
Sunday Business Standard, April 26, 2009, Page 3
Neeraj Thakur / New Delhi
Unitech Ltd, the country’s second-biggest property developer, says its strategy to focus on affordable residential housing for mid-income consumers is getting an encouraging response.
It launched its second mid-income housing project in Gurgaon early this week after closing sales of an earlier one on the nearby Sohna Road. It said it sold over 500 apartments at its planned township, called North Town, in Chennai two weeks earlier.
“We have launched the project after getting a good response for the recently launched projects in Gurgaon and Chennai. The launch of new mid-income residential housing projects has improved the operating cash flow of the company,” said an official who did not wish to be identified.
Due to cash crunch and almost no demand for some of its luxury projects, Unitech had stopped the launch of new projects for about five months. It has now changed its strategy.
The company says it is also planing to launch projects in the range of Rs 5-10 lakh an apartment in Gurgaon, Chennai and Kolkata, among other places.
Earlier this month, Unitech raised $325 million (Rs 1,625 crore) from selling new shares to institutions. It plans to use a part of the money to develop its affordable housing segment. The developer plans to launch 40 such projects during the fiscal year ending 2010, aggregating 30 million sq ft.
The company is trying to keep prices in the range of Rs 30-50 lakh, which calls for a price of close to Rs 3,000 per sq. ft. The new project, ‘The Residencies’, is located in Sector 33 of Gurgaon and offers two and three-bedroom apartments at a basic price of Rs 3,295 a sq ft.
The cost of a two-bedroom apartment with a “super area” of 1,100 sq ft would be a little over Rs 36 lakh, while a three-bedroom apartment of 1,535 sq ft would cost a bit over Rs 50 lakh.
Without disclosing the number of apartments to be launched, the official said, “We are testing the market with a soft launch and will decide the apartments to be developed in a few days”.
Sunday Business Standard, April 26, 2009, Page 3
Neeraj Thakur / New Delhi
Unitech Ltd, the country’s second-biggest property developer, says its strategy to focus on affordable residential housing for mid-income consumers is getting an encouraging response.
It launched its second mid-income housing project in Gurgaon early this week after closing sales of an earlier one on the nearby Sohna Road. It said it sold over 500 apartments at its planned township, called North Town, in Chennai two weeks earlier.
“We have launched the project after getting a good response for the recently launched projects in Gurgaon and Chennai. The launch of new mid-income residential housing projects has improved the operating cash flow of the company,” said an official who did not wish to be identified.
Due to cash crunch and almost no demand for some of its luxury projects, Unitech had stopped the launch of new projects for about five months. It has now changed its strategy.
The company says it is also planing to launch projects in the range of Rs 5-10 lakh an apartment in Gurgaon, Chennai and Kolkata, among other places.
Earlier this month, Unitech raised $325 million (Rs 1,625 crore) from selling new shares to institutions. It plans to use a part of the money to develop its affordable housing segment. The developer plans to launch 40 such projects during the fiscal year ending 2010, aggregating 30 million sq ft.
The company is trying to keep prices in the range of Rs 30-50 lakh, which calls for a price of close to Rs 3,000 per sq. ft. The new project, ‘The Residencies’, is located in Sector 33 of Gurgaon and offers two and three-bedroom apartments at a basic price of Rs 3,295 a sq ft.
The cost of a two-bedroom apartment with a “super area” of 1,100 sq ft would be a little over Rs 36 lakh, while a three-bedroom apartment of 1,535 sq ft would cost a bit over Rs 50 lakh.
Without disclosing the number of apartments to be launched, the official said, “We are testing the market with a soft launch and will decide the apartments to be developed in a few days”.
DLF launches initiative to pacify retailers
DLF launches initiative to pacify retailers
Business Standard, April 27, 2009, Page 5
Business Standard, April 27, 2009, Page 5
REAL REPORT - Investment in real estate picking up in metros
REAL REPORT - Investment in real estate picking up in metros
Hindustan Times, HT Estates, April 25, 2009, Page 5
HT Estates Correspondent
The metro rail projects have been the key drivers of infrastructure investment in Indian cities with projects worth Rs 34,000 crore, says a report
Despite the real estate sector having been the worst victim of a high cost economy, especially after the meltdown, it's share in the total private sector infrastructure investment in the metros in the last six months works out to be 12 per cent, followed by 10.26 per cent in the hospitality segment, according to an assess ment of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
However, metro rail projects accounted for the maximum of 27 per cent share in the total amount injected in metro cities for infrastructure development under Central, state and the local government, including corporates.
Sewerage and solid waste management investment in Tier I cities constituted the major chunk of investments, specifically via the government mode. Mumbai (Rs. 16694.672 crore), Chennai (Rs. 1588 crore) and Bangalore (Rs. 1354.92 crore) are the major recipients of sewerage related investment. In percentage terms, it worked out to be 16.90 per cent of the total infrastructure investment.
Indian metros continue to be the favourite destination for real estate development. The real estate projects constituting residential as well as commercial projects, have pocketed investment worth Rs. 15,710.5 crore, said Sajjan Jindal, president, ASSOCHAM.
The metro rail projects have been the key drivers of infrastructure investment in the cities with projects worth Rs.34,000 crore, he added.
The southern twin cities of Bangalore and Hyderabad have attracted maximum attention of real estate developers. Bangalore is the frontrunner in terms of real estate projects planned for the metros with an investment of Rs. 7990 crore. Hyderabad is at second place with projects worth Rs.4050 in the realty space.
Hindustan Times, HT Estates, April 25, 2009, Page 5
HT Estates Correspondent
The metro rail projects have been the key drivers of infrastructure investment in Indian cities with projects worth Rs 34,000 crore, says a report
Despite the real estate sector having been the worst victim of a high cost economy, especially after the meltdown, it's share in the total private sector infrastructure investment in the metros in the last six months works out to be 12 per cent, followed by 10.26 per cent in the hospitality segment, according to an assess ment of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
However, metro rail projects accounted for the maximum of 27 per cent share in the total amount injected in metro cities for infrastructure development under Central, state and the local government, including corporates.
Sewerage and solid waste management investment in Tier I cities constituted the major chunk of investments, specifically via the government mode. Mumbai (Rs. 16694.672 crore), Chennai (Rs. 1588 crore) and Bangalore (Rs. 1354.92 crore) are the major recipients of sewerage related investment. In percentage terms, it worked out to be 16.90 per cent of the total infrastructure investment.
Indian metros continue to be the favourite destination for real estate development. The real estate projects constituting residential as well as commercial projects, have pocketed investment worth Rs. 15,710.5 crore, said Sajjan Jindal, president, ASSOCHAM.
The metro rail projects have been the key drivers of infrastructure investment in the cities with projects worth Rs.34,000 crore, he added.
The southern twin cities of Bangalore and Hyderabad have attracted maximum attention of real estate developers. Bangalore is the frontrunner in terms of real estate projects planned for the metros with an investment of Rs. 7990 crore. Hyderabad is at second place with projects worth Rs.4050 in the realty space.
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