AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings

NEW YORK–(BUSINESS WIRE)–
AG Mortgage Investment Trust, Inc. (“MITT” or the “Company”) (NYSE: MITT – News) today reported net income for the quarter ended December 31, 2011 of $5.8 million and net book value of $20.52 per share.
FINANCIAL HIGHLIGHTS

• Net income of $5.8 million, or 0.58 per share for the fourth quarter
• Net income of $19.0 million, or $3.20 per share for the period from March 7, 2011 to December 31, 2011
• Core Earnings of $6.5 million or $0.65 per share for the quarter
• Core Earnings of $12.4 million, or $1.24 per share for the period from July 6, 2011 (the consummation of our initial public offering) to December 31, 2011
• Net realized gains of $2.9 million, or $0.29 per share, on Agency RMBS for the fourth quarter and $7.2 million, or $0.72 per share, for the period from July 6, 2011 to December 31, 2011
• Net realized losses of ($3.5) million, or ($0.35) per share, on credit investments for the fourth quarter and for the period from July 6, 2011 to December 31, 2011
• $0.70 per share dividend declared for the fourth quarter and $1.10 per share dividends declared for the period ended December 31, 2011
• Approximately $0.46 per share of undistributed taxable income as of December 31, 2011(1)
• $20.52 net book value per share as of December 31, 2011(1)

INVESTMENT HIGHLIGHTS

• $1.4 billion investment portfolio value as of December 31, 2011 (2) (4)
• 5.86x leverage as of December 31, 2011 (2) (3)
• 91.0% Agency RMBS investment portfolio (4)
• 9.0% credit investment portfolio, comprising Non-Agency RMBS, CMBS and ABS assets (4)
• 5.0% constant prepayment rate (“CPR”) for the fourth quarter on the Agency RMBS investment portfolio (5)
• 2.25% net interest margin as of December 31, 2011 (6)

FOURTH QUARTER 2011 AND PERIOD ENDED DECEMBER 31, 2011 RESULTS
AG Mortgage Investment Trust, Inc. is an actively managed REIT that opportunistically invests in a diversified risk-adjusted portfolio of Agency RMBS, Non-Agency RMBS, CMBS and ABS. For the fourth quarter, the Company had net income of $5.8 million, or $0.58 per diluted share, and Core Earnings of $6.5 million, or $0.65 per diluted share. For the period from March 7, 2011 to December 31, 2011, the Company had net income of $19.0 million, or $3.20 per diluted share (7), and for the period from July 6, 2011 to December 31, 2011 (“period ended December 31, 2011”), the Company had Core Earnings of $12.4 million, or $1.24 per diluted share. Core Earnings represents a non-GAAP financial measure and is defined as net income (loss) excluding (i) net realized gain (loss) on investments and terminations on derivative contracts and (ii) net unrealized appreciation (depreciation) on investments and derivative contacts. (See “Non-GAAP Financial Measure” below for further detail on Core Earnings)
David Roberts, Chief Executive Officer, commented “We are pleased to announce our fourth quarter earnings. During the quarter, Core Earnings increased to $0.65 per share and we announced our first full quarter dividend of $0.70 per share. In addition to meeting our financial goals, we continued to diversify funding relationships and in January we were able to successfully complete an equity raise which has improved our stock’s liquidity. We are proud of our accomplishments over the last two quarters and look forward to the opportunities ahead.”
“Amidst uncertainty in the global markets, European liquidity difficulties and year-end funding pressures, we continued to optimize our Agency portfolio, opportunistically rotate the credit portfolio and retain capital for potential market dislocations,” said Jonathan Lieberman, Chief Investment Officer. “While Agency RMBS yields have compressed, we believe the low interest rate environment and a carefully selected investment portfolio will continue to support attractive risk-adjusted returns. Over the course of the quarter, we rotated a significant portion of the Agency portfolio into securities with more favorable prepayment attributes to further mitigate prepayment risk. Allocations to credit securities were concentrated in less volatile short duration Non-Agency securities and CMBS tranches with superior intrinsic value. We believe MITT is well positioned to continue to produce sustainable returns and take advantage of the opportunities ahead in both the Agency RMBS and credit markets. With the success of the European Central Bank’s Long-Term Refinancing Operation, funding risks have materially declined and we anticipate deploying capital in a more aggressive style. New capital from our January equity transaction allows greater latitude to the investment team to selectively increase our capital allocation to credit opportunities.”

KEY STATISTICS (2)
		Weighted Average at						Weighted Average
		December 31, 2011						at September 30, 2011
Investment portfolio		$	1,388,006,801					$	1,332,205,377
Repurchase agreements		$	1,189,303,407					$	1,126,859,885
Stockholders’ equity		$	206,283,920					$	207,413,703
Leverage ratio		5.86x			(3	)		5.70x			(3	)
Swap ratio			66	%	(8	)			51	%	(8	)
Yield on investment portfolio			3.16	%	(9	)			3.26	%	(9	)
Cost of funds			0.91	%	(10	)			0.82	%	(10	)
Net interest margin			2.25	%	(6	)			2.44	%	(6	)
Management fees			1.49	%	(11	)			1.43	%	(11	)
Other operating expenses			1.57	%	(12	)			1.58	%	(12	)
Book value, per share		$	20.52		(1	)		$	20.64		(1	)
Dividend, per share		$	0.70					$	0.40

INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of December 31, 2011 (2):

														Weighted Average
		Current Face			Premium (Discount)				Amortized Cost		Fair Value			Coupon		Yield
Agency RMBS:
15-Year Fixed Rate		$	738,344,948		$	22,525,476			$	760,870,424	$	772,310,909		3.32	%	2.62	%
20-Year Fixed Rate			227,566,114			7,362,001				234,928,115		237,586,837		3.69	%	3.00	%
30-Year Fixed Rate			232,890,169			12,162,512				245,052,681		246,679,482		3.99	%	3.18	%
Interest Only			43,505,596			(34,046,500	)			9,459,096		6,636,871		5.50	%	3.45	%
Non-Agency RMBS			102,246,062			(8,980,754	)			93,265,308		90,368,316		5.90	%	6.31	%
CMBS			19,500,000			(5,411,965	)			14,088,035		13,537,851		5.88	%	13.44	%
ABS			21,046,150			(34,497	)			21,011,653		20,886,535		4.50	%	4.50	%
Total		$	1,385,099,039		$	(6,423,727	)		$	1,378,675,312	$	1,388,006,801		3.81	%	3.16	%

As of December 31, 2011, the weighted average yield on the Company’s investment portfolio was 3.16% and its weighted average cost of funds was 0.91%. This resulted in a net interest margin of 2.25% as of December 31, 2011. (6)
The CPR for the Agency RMBS portfolio was 5.0% for the fourth quarter and 5.0% for the month of December 2011. (5)
The weighted average cost basis of the Agency investment portfolio, excluding interest-only securities, was 103.5% as of December 31, 2011. The amortization of premiums (net of any accretion of discounts) on Agency securities for the fourth quarter was $1.9 million, or $(0.19) per share. The unamortized net Agency premium as of December 31, 2011 was $42.0 million.
Premiums and discounts associated with purchases of the Company’s securities are amortized or accreted into interest income over the estimated life of such securities, using the effective yield method. Since the cost basis of the Company’s Agency securities, excluding interest-only securities, exceeds the underlying principal balance by 3.5% as of December 31, 2011, slower actual and projected prepayments can have a meaningful positive impact, while faster actual or projected prepayments can have a meaningful negative impact on the Company’s asset yields.
We have also entered into “to-be-announced” (“TBA”) positions to facilitate the future purchase of Agency RMBS. Under the terms of these TBAs, the Company agrees to purchase, for future delivery, Agency RMBS with certain principal and interest specifications and certain types of underlying collateral, but the particular Agency RMBS to be delivered are not identified until shortly before (generally two days) the TBA settlement date. At December 31, 2011, we had $100 million net notional amount of TBA positions with a net weighted average purchase price of 103.8%. As of December 31, 2011, our TBA portfolio had a net weighted average yield at purchase of 3.01% and a net weighted average settlement date of February 5, 2012. We have recorded derivative assets of $1.4 million and derivative liabilities of $0.5 million, reflecting these TBA positions.
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of December 31, 2011 as summarized below:

		Agency RMBS						Non-Agency RMBS / CMBS / Other
Repurchase Agreements Maturing Within:		Balance			Weighted Average Rate			Balance			Weighted Average Rate
30 days or less		$	652,002,000		0.35	%		$	68,187,000		1.74	%
31-60 days			334,825,407		0.42	%			1,749,000		1.95	%
61-90 days			118,340,000		0.37	%			14,200,000		1.80	%
Greater than 90 days			-		-				-		-
Total / Weighted Average		$	1,105,167,407		0.37	%		$	84,136,000		1.75	%

As of December 31, 2011, the Company had entered into repurchase agreements with twenty-one counterparties. We continue to rebalance our exposures to counterparties and add new counterparties.
We have entered into interest rate swap agreements to hedge our portfolio. The Company’s swaps as of December 31, 2011 are summarized as follows:

Maturity		Notional Amount			Weighted Average Pay Rate			Weighted Average Receive Rate*			Weighted Average Years to Maturity
2012		$	100,000,000		0.354	%		0.285	%		0.14
2013			182,000,000		0.535	%		0.286	%		1.78
2014			204,500,000		1.000	%		0.395	%		2.54
2015			184,025,000		1.412	%		0.380	%		3.56
2016			87,500,000		1.625	%		0.328	%		4.63
2018			35,000,000		1.728	%		0.511	%		6.88
Total/Wtd Avg		$	793,025,000		1.008	%		0.350	%		2.72
* Approximately 50% of our interest rate swap notionals reset monthly based on one-month LIBOR and 50% of our interest rate swap notionals reset quarterly based on three-month LIBOR.

TAXABLE INCOME
The primary differences between taxable income and GAAP net income include (i) unrealized gains and losses associated with investment and derivative portfolios are marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) temporary differences related to amortization of net premiums paid on investments (iii) the timing and amount of deductions related to stock-based compensation and (iv) excise taxes. As of December 31, 2011, the Company had undistributed taxable income of approximately $0.46 per share.
DIVIDEND
On December 14, 2011, the Company declared a dividend of $0.70 per share of common stock to stockholders of record as of December 30, 2011 and paid such dividend on January 27, 2012. The Company declared dividends of $1.10 per share for the period ended December 31, 2011.
SUBSEQUENT EVENT
On January 24, 2012, the Company completed a follow-on offering of 5,000,000 shares of its common stock and subsequently issued an additional 750,000 shares of common stock pursuant to the underwriters’ over-allotments at a price of $19.00 per share, for gross proceeds of approximately $109.3 million. Net proceeds to the Company from the offerings were approximately $104.1 million, net of issuance costs of approximately $5.2 million.
SHAREHOLDER CALL
The Company invites shareholders, prospective shareholders and analysts to attend MITT’s fourth quarter earnings conference call on March 1, 2012 at 11:00 am Eastern Time. The shareholder call can be accessed by dialing (888) 424-8151 (U.S. domestic) or (847) 585-4422 (international). Please enter code number 8732511#.
A presentation will accompany the conference call and will be available on the Company’s website at www.agmit.com. Select the Q4 2011 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An audio replay of the shareholder call combined with the presentation will be made available on our website after the call. The replay will be available until midnight on March 15, 2012. If you are interested in hearing the replay, please dial (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international). The conference ID number is 8732511#.
For further information or questions, please contact Allan Krinsman, the Company’s General Counsel, at (212) 883-4180 or akrinsman@angelogordon.com.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a real estate investment trust that invests in, acquires and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., an SEC-registered investment adviser that specializes in alternative investment activities.
Additional information can be found on the Company’s website at www.agmit.com.
ABOUT ANGELO, GORDON & CO.
Angelo, Gordon & Co. was founded in 1988 and has approximately $22 billion under management. Currently, the firm’s investment disciplines encompass five principal areas: (i) distressed debt and leveraged loans, (ii) real estate, (iii) mortgage-backed securities and other structured credit, (iv) private equity and special situations and (v) a number of hedge fund strategies. Angelo, Gordon & Co. employs over 250 employees, including more than 90 investment professionals, and is headquartered in New York, with associated offices in Amsterdam, Chicago, Los Angeles, London, Hong Kong Seoul, Shanghai, Sydney and Tokyo.
FORWARD LOOKING STATEMENTS
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in interest rates, changes in the yield curve, changes in prepayment rates, the availability and terms of financing, changes in the market value of our assets, general economic conditions, market conditions, conditions in the market for Agency securities, and legislative and regulatory changes that could adversely affect the business of the Company. Additional information concerning these and other risk factors are contained in the Company’s most recent filings with the Securities and Exchange Commission (“SEC”). Copies are available on the SEC’s website, http://www.sec.gov/. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

AG Mortgage Investment Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
			December 31, 2011			April 1, 2011
Assets			(Unaudited)
Real Estate securities, at fair value
Agency – $1,186,149,842 pledged as collateral			$	1,263,214,099		$	-
Non-Agency – $47,227,005 pledged as collateral				58,787,051			-
CMBS – $2,747,080 pledged as collateral				13,537,851			-
ABS – $4,526,620 pledged as collateral				4,526,620			-
Linked transactions, net, at fair value				8,787,180			-
Cash and cash equivalents				35,851,249			1,000
Restricted cash				3,037,055			-
Interest receivable				4,219,640			-
Derivative assets, at fair value				1,428,595			-
Prepaid expenses				317,950			-
Due from broker				341,491
Due from affiliates				104,994			-
Deferred costs				52,176			-
Total Assets			$	1,394,205,951		$	1,000
Liabilities
Repurchase agreements			$	1,150,149,407		$	-
Payable on unsettled trades				18,759,200			-
Interest payable				2,275,138			-
Derivative liabilities, at fair value				7,908,308			-
Dividend payable				7,011,171			-
Due to affiliates				770,341			-
Accrued expenses				668,552			-
Due to broker				379,914			-
Total Liabilities				1,187,922,031			-
Stockholders’ Equity (Deficit)
Common stock, par value $0.01 per share; 450,000,000 and 1,000 shares of common stock authorized and 10,009,958 and 100 shares issued and outstanding at December 31, 2011 and April 1, 2011, respectively				100,100			1
Additional paid-in capital				198,228,694			999
Retained earnings				7,955,126			-
				206,283,920			1,000
Total Liabilities & Equity			$	1,394,205,951		$	1,000

AG Mortgage Investment Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
							Period from
			Quarter Ended				March 7, 2011 to
			December 31, 2011				December 31, 2011
Net Interest Income
Interest income			$	10,022,275			$	18,748,669
Interest expense				1,106,097				1,696,344
				8,916,178				17,052,325
Other Income (Loss)
Net realized gain (loss)				(589,747	)			3,701,392
Gain (loss) on linked transactions, net				(1,013,291	)			(808,564	)
Realized loss on periodic interest settlements of interest rate swaps, net				(1,175,788	)			(2,162,290	)
Unrealized gain (loss) on derivative instruments, net				70,663				(6,491,430	)
Unrealized gain (loss) on real estate securities				1,346,237				11,040,692
				(1,361,926	)			5,279,800
Expenses
Management fee to affiliate				770,341				1,512,898
Other operating expenses				811,372				1,566,642
Equity based compensation to affiliate				97,343				176,165
Excise tax				105,724				105,724
				1,784,780				3,361,429
Net Income (Loss)			$	5,769,472			$	18,970,696
Earnings Per Share of Common Stock
Basic			$	0.58			$	3.20
Diluted			$	0.58			$	3.20
Weighted Average Number of Shares of Common Stock Outstanding
Basic				10,009,958				5,933,930
Diluted				10,010,799				5,933,930
Dividends Declared per Share of Common Stock			$	0.70			$	1.10

Non-GAAP Financial Measure
This press release contains Core Earnings, a non-GAAP financial measure. AG Mortgage Investment Trust’s management believes that this non-GAAP measure, when considered with GAAP, provides supplemental information useful in evaluating the results of the Company’s operations. This non-GAAP measure should not be considered a substitute, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations from these results should be carefully evaluated.
Core Earnings are defined by the Company as net income excluding both realized and unrealized gains (losses) on the sale or termination of securities, including underlying linked transactions and derivatives. As defined, Core Earnings include the net interest earned on these transactions, including credit derivatives, linked transactions, inverse Agency securities, interest rate derivatives or any other investment activity that may earn net interest. One of the objectives of the Company is to generate net income from net interest margin on the portfolio and management uses Core Earnings to measure this objective.
A reconciliation of GAAP net income to Core Earnings for the quarter and period ended December 31, 2011 is set forth below:

						Period from
		Quarter Ended				March 7, 2011 to
		December 31, 2011				December 31, 2011
Net income/loss		$	5,769,472			$	18,970,696
Add (Deduct):
Net realized gain			589,747				(3,701,392	)
Gain/loss on linked transactions, net			1,013,291				808,564
Net interest income on linked transactions			554,729				900,638
Unrealized gain/loss on derivative instruments, net			(70,663	)			6,491,430
Unrealized gain/loss on real estate securities			(1,346,237	)			(11,040,692	)
Core Earnings		$	6,510,339			$	12,429,244

Footnotes
(1) Per share figures are calculated using outstanding shares including all shares granted to our Manager and our independent directors under our equity incentive plans as of quarter end.
(2) Generally when we purchase a security and finance it with a repurchase agreement, the security is included in our assets and the repurchase agreement is separately reflected in our liabilities on our balance sheet. For securities with certain characteristics (including those which are not readily obtainable in the market place) that are purchased and then simultaneously sold back to the seller under a repurchase agreement, US GAAP requires these transactions be netted together and recorded as a forward purchase commitment. Throughout this press release where we disclose our investment portfolio and the repurchase agreements that finance it, including our leverage metrics, we have un-linked the transaction and used the gross presentation as used for all other securities. This presentation is consistent with how the Company’s management evaluates the business, and believes provides the most accurate depiction of the Company’s investment portfolio and financial condition.
(3) Calculated by dividing total repurchase agreements, including $39.2 million included in linked transactions, plus payable on unsettled trades on our GAAP balance sheet by our GAAP stockholders’ equity.
(4) The total investment portfolio is calculated by summing the fair market value of our Agency RMBS, Non-Agency RMBS, CMBS and ABS assets, including linked transactions. The percentage of Agency RMBS and credit investments are calculated by dividing the respective fair market value of each, including linked transactions, by the total investment portfolio.
(5) This represents the weighted average monthly CPRs published during the period for our in-place portfolio during the same period.
(6) Net interest margin is calculated by subtracting the weighted average cost of funds from the weighted average yield for the Company’s investment portfolio, which excludes cash held by the Company. See footnotes (9) and (10) for further detail.
(7) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP. For the period from March 7, 2011 to December 31, 2011, the calculation reflected the impact of 100 shares outstanding from July 1, 2011 through the settlement date of our IPO.
(8) The swap ratio was calculated by dividing the notional value of our interest rate swaps by total repurchase agreements, including those included in linked transactions, plus payable on unsettled trades.
(9) The yield on our investment portfolio during the period represents an effective interest rate, which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of quarter end. This calculation excludes cash held by the Company.
(10) The cost of funds was calculated as the sum of the weighted average rate on the repurchase agreements outstanding at quarter end and the weighted average net pay rate on our interest rate swaps. Both elements of the cost of funds were weighted by the repurchase agreements outstanding at quarter end.
(11) The management fee percentage at quarter end was calculated by annualizing management fees incurred during the quarter and dividing by quarter-ended stockholders’ equity.
(12) The other operating expenses percentage at quarter end was calculated by annualizing other operating expenses recorded during the quarter and dividing by quarter-ended stockholders’ equity.
http://tourism9.com/    http://vkins.com/

Dollar debt set to remain sparse and steep in Asia

By Umesh Desai and Kelvin Soh
REUTERS – In a world awash with cheap cash from major central banks, it may seem ironic that companies in the top emerging market growth hotspot cannot get their hands on reasonably priced bank loans.
But Asia‘s credit landscape has changed dramatically over the past year and January provided the strongest evidence to date, with dollar lending by banks virtually non-existent except for the most pristine names — and at very rich prices.
Borrowers rushed into the more fickle and demanding bond markets, catching investors early in the year but still paying through their nose for the cash.
The flurry included eight top-tier Hong Kong-based companies that hit debt markets with a record $8 billion worth of dollar bonds in January.
“There’s never been a period with such a level of activity from Hong Kong corporates in the bond market. It’s unprecedented,” said Anthony Arnaudy, head of debt capital markets for North-east Asia at Standard Chartered Bank.
Hong Kong property developer Nan Fung International Holdings was a first time bond issuer in January, as was property firm Wheelock (0020.HK).
Spreads widened and yields soared. Bond issuers in Hong Kong paid a mark-up of as much as 4 percentage points above U.S. debt yields to secure 5-year funds, about 10 times more than they did in 2007 before the U.S. subprime crisis.
The risk, say bankers, is now of a long-term jump in funding costs in the region as U.S. and European banks stay away.
At first glance what has been happening in Asian credit markets might seem incongruous .
On the one hand, the Federal Reserve and European Central Bank have pumped cheap dollars and euros into the financial system to support their faltering economies. U.S. rates are set to stay near zero for at least two more years.
And yet corporates in fast-growing Asia are not able to get banks to lend them dollars or euros. This had not happened before. Not in 2009, and certainly not in any of the previous episodes when financial markets were this liquid.
But the past year has been different. The easiest carry trade in global markets has been disrupted by trussed up bank balance-sheets, the stringency of Basel III capital requirements and, most of all, the drawn out European debt crisis.
It’s not the best time to be seeking foreign currency loans, yet there’s potentially huge demand. At least $14 billion of dollar, euro and Hong Kong dollar denominated loans are scheduled to mature this year and might come up for refinancing.
And borrowers are sensing the terrain is not going to shift in their favour anytime soon. Hong Kong’s Nan Fung returned quickly to the dollar bond market with another issue this month, paying 5.15 percent for 5-year debt.
Others too, have been adapting to the changing game. Singapore’s MMI holdings decided to replace its loan with a bond, India’s Power Finance Corporation (PWFC.NS) had to cut the tenor on a loan proposal, and Hong Kong’s IFC Development both cut its bond offering by more than a third and upped its yield.
TAPS RUN DRY?
Forced by the turn in the credit cycle, borrowers have sought out alternate sources of funding, shifting to more liquid markets in Singapore or Japan.
Henderson Land (0012.HK), for instance, issued a S$200 million 5-year bond in Singapore late last year, while Cheung Kong Holdings (0001.HK), controlled by billionaire Li Ka-shing, also raised its bond offerings in the city-state.
Even so, loan volumes have collapsed. Across Asia, there were 28 deals totalling $3.4 billion in January 2012, a tiny fraction of the 63 deals worth $19.5 billion in January 2011.
That is worrisome, given the mountain of loans to be refinanced in Asia this year. Australia has about $53 billion maturing this year, Hong Kong has $26 billion and Singapore has $17 billion, according to Thomson Reuters data.
“Even with the monetary easing, some banks are trying to preserve capital, which will have an effect on loan pricing,” said Benjamin Ng, head of Asia syndicate and acquisition finance at Citigroup.
One fear is that European banks, traditionally the biggest providers of foreign funding in Asia, will continue deleveraging. Analysts at Morgan Stanley estimate European banks, excluding British ones, have claims of about $680 billion on Asia.
No one is quite sure how much of that cash has left the region in 2011, but one thing is certain: these banks are not committing new funds to Asia. And the billions of euros the European authorities are injecting into their banking systems are simply being recycled into safe deposits at the ECB and government debt.
“Not surprisingly, pricing on Asian loans has not budged much and the higher pricing is here to stay for some time to come,” said Birendra Baid, head of loan syndication, Asia-Pacific at Deutsche Bank.
Local banks, such as Singapore’s DBS (DBSM.SI) and India’s ICICI Bank, have sensed there are rich pickings among the assets the Europeans are offloading.
The problem though is that the foreign currency part of their balance-sheets is already stretched, and Basel III will require them to be even more prudent about managing risk and liquidity.
Foreign currency loan growth at most Asian banks has hit the 40-70 percent annual pace, Morgan Stanley estimates, which means their lending in dollars has been far faster than the 15-20 percent average rise in overall credit.
Moreover, dollar deposit growth has not kept pace, which has meant the ratio of dollar loans to deposits is upwards of an unhealthy 100 percent for most Asian banks, particularly those in South Korea and Thailand.
In Korea for instance, savings banks, which are big non-banking lenders in the economy, deposited $5 billion with their local lobby group late last year, preferring low yields over any exposure to risk.
“I don’t think it is a crisis by any stretch,” said Viktor Hjort, head of Asian credit strategy at Morgan Stanley.
“What you have though is a situation where over the past two years Asia’s grown used to there being this very generous and very cheap access to dollar funding by Asian banks.
“That’s now much more constrained because lending has already expanded aggressively over the last few years and the European banks, historical providers of cheap wholesale funding, are pulling out.”
The implications are two-fold. One is the risk that Asian banks join the issuance queue aggressively, going on a dollar-funding binge as they try to cherry-pick assets and expand balance-sheets — what Morgan Stanley terms the “dollarisation” of Asian banks.
Australia’s Macquarie Bank kicked off that country’s yankee bond issuance for 2012 this week, offering 420 basis points over U.S. Treasury yields for a 5-year U.S. dollar bond.
The other risk is a more permanent jump in funding costs for Asia, at least until the U.S. and European banks are able to come back into the emerging market wholesale lending business. Even though private banks and funds have stepped into the space vacated by the banks, Asia’s funding needs are growing.
PRICIER DOLLARS
There has already been a marked jump in borrowing costs. And a simultaneous and worrying trend of banks invoking “market disruption clauses” to increase pricing on pre-committed loans to better reflect the rise in their own cost of funds.
One interesting example is the refinancing by the top-tier IFC Development Ltd in Hong Kong, which owns the building of the same name in the city’s business district. It initially wanted to borrow HK$17 billion, but had to slash it by 71 percent to HK$5 billion, hit by the liquidity squeeze. It also had to lift the pricing by about 20 percent to attract more lenders.
Hong Kong-based Kerry Properties (0683.HK) is currently offering 230 basis points for a HK$2.4 billion three-year loan, 70 percent or 135 bps higher than it paid on a five-year loan in January 2011.
Loan pricing in Hong Kong needs to be at least 200 basis points over HIBOR, even for top rated companies, according to several loan bankers. This is almost double what was being offered about a year ago.
The all-inclusive pricing for a 5-year loan for a BBB rated borrower in Australia is close to 300 bps, a jump of 100 bps since November.
Simon Milne, treasury consultant at iSelect, an Australian insurance broker, said borrowers were facing the most difficult market conditions he has ever seen.
Milne, who has more than 20 years experience in the Australian debt markets, including four as treasurer of gaming company Crown Ltd (CWN.AX), says top-tier firms are still able to get loans at competitive rates. It’s the mid-range corporates that are struggling. “The risk of pulling a deal has increased,” he said.
Across in India, the Export-Import Bank of India, a frequent borrower in offshore loan markets with a good following given its status as a wholly state-owned borrower, is borrowing up to $250 million for 3 years, paying an all-inclusive charge of 250 bps over Libor. That is nearly double the 140 bps over Libor that it paid on a US$150 million three-year loan in March 2011.
(Writing by Vidya Ranganathan; Additional reporting by Prakash Chakravarti, Jacqueline Poh, Michael Flaherty and Stephen Aldred in Hong Kong, Sharon Klyne in Sydney,; Sumeet Chatterjee in Mumbai and; Yoo Choonsik in Seoul; Editing by Alex Richardson)http://tourism9.com/    http://vkins.com/

Saxo Capital Markets Launches Australian Retail Operations

SYDNEY, January 30, 2012 /PRNewswire/ –
Saxo Capital Markets (Australia) Pty Ltd (‘SCM Australia‘) , the online trading and investment specialist, today announced the launch of its retail operations in Australia, offering investors the opportunity to trade thousands of asset classes across award-winning online platforms.
Saxo Capital Markets (Australia) Pty Ltd is a wholly-owned subsidiary of Saxo Bank A/S. It holds an Australian Financial Services Licence 280372 and is regulated by the Australian Securities & Investments Commission.
The move extends Saxo Bank Group’s reach in the fast-growing Asia-Pacific, and is consistent with its goal of being the premier multi-asset online trading platform in the world.
SCM Australia offers local traders sophisticated trading platforms such as SaxoTrader and SaxoWebTrader, permitting the trading of foreign exchange, CFDs and stocks with live streaming prices and lightning-fast stock trades. SCM Australia provides clients with access to over 160 foreign exchange crosses, more than 13,000 stocks from 25 major exchanges and over 140 Futures contracts on live market prices from over 19 exchanges. SCM Australia’s CEO Anthony Griffin said the company believed it had the services and competitive offering to transform the online trading market in Australia.
Mr Griffin states, “In Australia, we will be adopting the standard Saxo business model that has been successfully implemented in over 20 countries and bringing our award-winning platforms to the market.”
Further, he states, “it was critical to ensure that investors were educated as much as possible on the asset classes they were trading in and the risks involved. As a result, SCM has a number of online educational tools available to ensure investors are informed.”
SCM Australia recently completed the acquisition of Logos Commodities Pty Ltd, the holding company of Commodity Broking Services Pty Ltd, bringing with it an excellent client base and broadening its suite of services.
Kim Fournais and Lars Seier Christensen, co-founders and CEOs of Saxo Bank, said in a joint statement:
“While opening an office in Sydney is a strategic decision to support our Asia-Pacific expansion and growth strategy, it has always been a priority for Saxo Bank. The acquisition has brought with it both tremendous staff as well as a great range of clients. That has given us the critical mass for doing business here. This is a good time for us to prove our commitment to the Australian market.”
Saxo Bank was founded in 1992. Saxo Bank’s trading platforms have defined the company’s success in the online trading space for over a decade. Since introducing the SaxoTrader in 1998, Saxo Bank has enhanced and improved its platforms to meet the evolving needs of traders and investors in a continuously changing industry. The Group has expanded overseas since 2006 and now has operations in more than 20 countries including major financial centres such as Tokyo, Singapore, Hong Kong, London, Zurich, Dubai, and Paris.
Disclaimer:
Saxo Capital Markets (Australia) Pty Ltd is a wholly-owned subsidiary of Saxo Bank A/S, the Copenhagen-headquartered online trading and investment specialist. It holds an Australian Financial Services Licence 280372 and is regulated by the Australian Securities & Investments Commission.  Leveraged investments in foreign exchange or derivatives carry a high degree of risk and may result in significant gains or losses. You should carefully consider your financial situation and consult your independent financial advisors as to the suitability of your situation prior to making any investments. For further information, please see: http://au.saxomarkets.com/about-us/general-disclaimer
About Saxo Capital Markets (Australia) Pty Ltd
Saxo Capital Markets (Australia) Pty Ltd is a wholly-owned subsidiary of Saxo Bank A/S, the Copenhagen-headquartered online trading and investment specialist. It holds an Australian Financial Services Licence and is regulated by the Australian Securities & Investments Commission.  Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, its leading multi-asset online trading platforms. SaxoTrader is available directly through Saxo Capital Markets or through one of its institutional clients. White labelling is a significant business area for Saxo Capital Markets, and involves customising and branding of its online trading platform for other financial institutions and brokers.
For more information, please visit http://www.saxomarkets.com.au/
http://tourism9.com/    http://vkins.com/

Saxo Capital Markets (Australia) Pty Ltd Launches Its Retail Operations

SINGAPORE–(Marketwire -01/30/12)- Saxo Capital Markets (Australia) Pty Ltd (‘SCM Australia’), the online trading and investment specialist, today announced the launch of its retail operations in Australia, offering investors the opportunity to trade various asset classes across award-winning online platforms.
Saxo Capital Markets (Australia) Pty Ltd is a wholly owned subsidiary of Saxo Bank A/S. It holds an Australian Financial Services Licence 280372 and is regulated by the Australian Securities & Investments Commission.
The move extends Saxo Bank Group’s reach in the fast-growing Asia-Pacific region, and is consistent with its goal of being the premier multi-asset online trading platform in the world.
SCM Australia offers local traders sophisticated trading platforms such as SaxoTrader and SaxoWebTrader, permitting the trading of foreign exchange, CFDs and stocks with live streaming prices and lightning-fast stock trades.
SCM Australia provides clients with access to over 160 foreign exchange crosses, more than 13,000 stocks from 25 major exchanges and over 140 Futures contracts on live market prices from over 19 exchanges. SCM Australia’s CEO Anthony Griffin said the company believed it had the services and competitive offering to transform the online trading market in Australia.
Mr. Griffin states, “In Australia, we will be adopting the standard Saxo business model that has been successfully implemented in over 20 countries and bringing our award-winning platforms to the market.”
Further, he states, “It was critical to ensure that investors were educated as much as possible on the asset classes they were trading in and the risks involved. As a result, SCM has a number of online educational tools available to ensure investors are informed.”
SCM Australia recently completed the acquisition of Logos Commodities Pty Ltd, the holding company of Commodity Broking Services Pty Ltd, bringing with it an excellent client base and broadening its suite of services.
Kim Fournais and Lars Seier Christensen, co-founders and CEOs of Saxo Bank, said in a joint statement:
“While opening an office in Sydney is a strategic decision to support our Asia-Pacific expansion and growth strategy, it has always been a priority for Saxo Bank. The acquisition has brought with it both tremendous staff as well as a great range of clients. That has given us the critical mass for doing business here. This is a good time for us to prove our commitment to the Australian market.”
Saxo Bank was founded in 1992. Saxo Bank’s trading platforms have defined the company’s success in the online trading space for over a decade. Since introducing the SaxoTrader in 1998, Saxo Bank has enhanced and improved its platforms to meet the evolving needs of traders and investors in a continuously changing industry. The Group has expanded overseas since 2006 and now has operations in more than 20 countries including major financial centres such as Tokyo, Singapore, Hong Kong, London, Zurich, Dubai, and Paris.
Company’s logohttp://release.media-outreach.com/i/Download/322
Disclaimer:Saxo Capital Markets Pte. Ltd. (“Saxo Capital Markets”) is licensed as a Capital Market Services provider and an Exempt Financial Advisor, and is supervised by the Monetary Authority of Singapore.
You should carefully consider whether trading in leveraged products is appropriate for you in the light of your financial circumstances. You should be aware that dealing in products that are highly leveraged carry significantly greater risk than non-geared investments such as share trading. As such, you could both gain and lose large amounts of money. You may sustain losses in excess of the moneys you initially deposit and also in excess of the margin required to establish and maintain any positions in leveraged products.
For further information, please see:
http://sg.saxomarkets.com/about-us/general-disclaimer
About Saxo Capital Markets
Saxo Capital Markets Pte Ltd is a wholly owned subsidiary of Saxo Bank A/S, the Copenhagen-headquartered online trading and investment specialist. It serves as the Asia Pacific headquarters and holds a Capital Markets Services license from the Monetary Authority of Singapore. Saxo Capital Markets also holds a Commodity Broker licence from The International Enterprise Singapore.
Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, its leading multi-asset online trading platforms.
SaxoTrader is available directly through Saxo Capital Markets or through one of its institutional clients. White labelling is a significant business area for Saxo Capital Markets, and involves customising and branding of its online trading platform for other financial institutions and brokers.
For more information, please visit http://www.saxomarkets.com.sg/
http://tourism9.com/    http://vkins.com/

China Financing Slowdown Reduces Systemic Risk, Moody’s Says

January 23, 2012, 6:19 AM EST
By Bloomberg News
(Adds comments from report starting in third paragraph.)
Jan. 23 (Bloomberg) — China’s slowing non-bank financing growth will help the economy achieve a “soft landing” and reduces concerns about systemic risk, Moody’s Investors Service said in its Weekly Credit Outlook.
Preliminary data released last week from China’s central bank on financing in 2011 suggests an estimated drop in non-bank funding growth to 25 percent from 45 percent the previous year, Moody’s said. That is a credit positive for banks, the ratings company said.
“China’s ability to slow non-bank financing growth to its current pace is helpful to the prospects of a ‘soft landing’ in the economy and a development that diminishes our concerns about systemic risk,” Yvonne Zhang, a Beijing-based vice president and senior analyst for Moody’s, wrote in the report.
Chinese investors and borrowers have increasingly turned to non-bank products such as trusts, with investors seeking higher returns than bank deposits offer and borrowers looking for financing as China’s government slowed down new lending growth beginning in 2010. Ratings companies, including Moody’s and Fitch Ratings Ltd., said the rise in non-bank lending created added risks to the financial system in part because trusts often invest in assets tied to the real estate market or buy loans that banks want to move off of their balance sheets.
“Although these products are not on banks’ balance sheets, banks play an important role in making the transactions happen,” Zhang wrote.
Slowing Growth
Growth in China is slowing as the government seeks to curb inflation and rising home prices and refocus the engine of economic growth away from investment toward consumption. Gross domestic product expanded by 8.9 percent in the fourth quarter of 2011 from a year earlier, the slowest pace in more than two years. Foreign direct investment fell for the second straight month in December, with November’s decline the first since 2009.
Moody’s Zhang said at a Beijing conference in November that off-balance sheet risks at Chinese banks were rising fast and that the country’s lenders needed better management of credit and liquidity.
China’s aggregate financing, which includes bank lending, off balance-sheet loans and bond and stock sales, fell 1.11 trillion yuan ($175.1 billion) to 12.83 trillion yuan in 2011 from the previous year, the People’s Bank of China said in a Jan. 18 statement.
–Editors: John Brinsley, Patrick Harrington
To contact the reporters on this story: Benjamin Purvis in Sydney at bpurvis@bloomberg.net; Michael Forsythe in Beijing at mforsythe@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
http://tourism9.cm/    http://vkins.com/

Boutique hopes for perfect retail fit

Picture: John Mokrzycki/The West Australian

New Cottesloe designer fashion store MYCATWALK believes it can have its cake and eat it, too.
Many retailers are closing or downsizing as more people shop online, but MYCATWALK has bucked the trend, opening a boutique in Cottesloe in the past month. It is one of four brick-and-mortar stores it has recently opened, with the others in Sydney and Melbourne.
MyCatwalk.com was launched almost 10 years ago and quickly became one of Australia’s top online boutiques. The new stores have backing from former Perth businessman Andrew Roberts, the eldest of three Roberts children, who sold their stake in their late father’s Multiplex construction business for $1.2 billion in 2007.
Sydney-based Mr Roberts’ investment team deals in commercial property, private equity, listed investments and hedge funds.
MYCATWALK creative director Marlene Mangioni said she and Mr Roberts had wanted to open boutiques across Australia but identified the need to be online, prompting them to buy a 50 per cent stake in MyCatwalk.com.
“Once we did that, it just made sense to merge the two and continue with the name because the online business was established,” Mrs Mangioni said.
She said the online store would be relaunched next month to include the special services shoppers would experience in their four boutiques.
“There will always be many people who still want to go and have a look, touch, feel, try on experience and we just think that we can have both,” she said.

http://tourism9.com/

KL property investment ranking slips in new survey

By Yow Hong Chieh KUALA LUMPUR, Dec 7 — Kuala Lumpur’s property outlook will continue to slide in 2012 while Singapore remains the most attractive Asia Pacific city for real estate investors, according to an Urban Land Institute (ULI) report.
Kuala Lumpur’s investment prospects slipped one spot to 16th out of 21 Asian cities tracked going into next year while development prospects dropped three places, also to 16th, the “Emerging Trends in Real Estate Asia Pacific 2012” outlook released yesterday said.
Singapore topped the list despite a less positive environment and falling yields this year, and was the only city besides Shanghai considered to have “generally good” development prospects.
Buying sentiment was stronger in Kuala Lumpur for retail and industrial property than in Singapore while the reverse was true for office, apartment and hotel property.
The largest group of experts polled for the report recommended a hold on all property sectors in Kuala Lumpur next year, while a “sizable minority” backed acquisitions in all areas.
“Construction financing (for Kuala Lumpur) might remain more limited as global economic concerned continue to linger,” the report added.
“However, government plans are in place to improve infrastructure over the coming years — always a boost for commercial real estate.”
It also said that despite recent declines investors still saw Malaysia’s capital as “an emerging city of interest”, noting that properties in the city were valued at one-fifth that of comparable properties in Singapore.
Investors also predicted bullish growth in Malaysia, with the report predicting that national GDP growth would remain at five per cent or above through to 2015.
The report was compiled by Washington-based ULI with PricewaterhouseCoopers International from interviews with 360 property experts, including investors, developers, asset managers, fund managers, brokers and architects.
Only three cities — Bangkok, Manila and Osaka — saw their investment ratings rise this year while Taipei, Bangkok, Sydney and Jakarta achieved the largest gains in investment rank.
Chinese cities dominated the investment prospect rankings, with Shanghai, Chongqing and Beijing placing second, fourth and fifth respectively; Guangzhou was the lowest ranked Chinese city at sixth spot.

Click here to get the latest news on your mobile!