S&P Sees Israel’s 4th Election Boosting Medium-Term Fiscal Risks

IL&FS gets approval to sell China road asset

Proceeds to address ₹2,600 crore debt

IL&FS Group said it has received approval for sale of its Chinese road asset — Chongqing Yuhe Expressway Co. Ltd. (CYEC) — to China Merchants & PingAn Infrastructure Phase 1 Equity Investment Fund (Tianjin) Co. Ltd., a group company of PingAn Insurance (Group) Company of China.

IL&FS Group holds 49% stake in CYEC through its step-down Singapore-based subsidiary ITNL International Pte. Ltd. (IIPL).

The balance 51% is held by Chongqing Expressway Group (CEG).

“PingAn has bid at an aggregate equity valuation of $281 million for 100% stake. This values IIPL’s 49% stake at approximately $138 million (₹1,020 crore). PIngAn will also take over the ₹1,600 crore debt in CYEC (as of October 2018).

“IIPL will now be signing definitive agreements and filing an application with NCLT to complete the transaction,” according to a statement from IL&FS.

“On completion, sale of this asset will address nearly ₹2,600 crore of IL&FS debt,” it said.

Herald morning quiz: December 25

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Mrs Bectors’ shares zoom 107% on debut

Shares rise to ₹595.5 apiece.

Shares of Mrs Bectors Food Specialities on Thursday made a remarkable market debut and closed at a premium of 107% against its issue price of ₹288.

The stock opened at ₹501, reflecting a jump of 73.95% from the issue price on the BSE. It closed at ₹595.55, a gain of 106.8%. The company’’s market valuation was at ₹3,498.65 crore on the BSE. About 37.81 lakh shares on the BSE and more than 3.70 crore units on the NSE were traded during the day.

Mirroring massive investor response, Mrs Bectors Food Specialities initial public offer was subscribed a whopping 198 times earlier this month. The price band for the share sale was at ₹286-₹288 apiece. Mrs Bectors Food manufactures and markets a range of products such as biscuits, breads and buns.

It markets a variety of biscuits and breads under the flagship brands ‘Mrs Bector’s Cremica’ and the ‘English Oven’, respectively.

Earlier this month, shares of Burger King India had zoomed almost 131% on their debut.

Central Bank of India to exit housing finance

PSB to sell stake in JV for ₹160 crore.

State-owned Central Bank of India will exit its housing finance joint venture by selling its entire stake of more than 64% to Centrum Housing Finance for ₹160 crore.

“This is to inform that the bank has entered into a binding agreement to divest its entire equity stake of 64.4% i.e. 1,61,00,000 shares of face value of ₹10 each in Cent Bank Home Finance Ltd (CBHFL), to Centrum Housing Finance, subject to approvals from regulatory authorities,” Central Bank of India said.

According to a separate filing by Centrum Capital, the parent of Centrum Housing, the cost of acquisition is about ₹160 crore.

Centrum Capital said the deal was expected to close in about 2-3 months.

CBHFL is a financing and mortgage firm jointly promoted by Central Bank of India, National Housing Bank, Specified Undertaking of Unit Trust of India and Housing and Urban Development Corporation.

The company’s assets under management stood at ₹1,211.7 crore as of September 30. Total income was ₹65.81 crore.

Cash flows, not ratings may decide loans in future: UCO Bank’’s Ajay Vyas

Trend has already begun with SBI, says ED of UCO Bank.

Moving on from ratings criteria for grant of loans, banks are likely to focus on cash flow-based lending in time to come, according to a a top executive of UCO Bank.

“Banks will focus on cash flow-based lending in time to come and this has already been started by SBI,” Ajay Vyas, executive director, UCO Bank said at a virtual panel discussion on ‘Redefining corporate financing in new normal’ organised by PHD Chamber.

Various SBI officials have advocated cash flow-based lending models over the traditional asset-based, or ratings-based ones. In cash-flow lending, a financial institution grants a loan that is backed by the recipient’s past and future cash flows.

Mr. Vyas further noted the turnaround time (TAT) for grant of loans needs to come down and emphasised that it was important to move on from ratings criteria for grant of loans.

AI for lending

According to Mr. Vyas, artificial intelligence, algorithms and prediction analysis are the future of lending norms for banks to follow.

On banks’ exposure to the realty sector through non-banking financial companies (NBFCs), DMD, Commercial Credit Group-II (North & South), SBI Thekepat Keshav Kumar said, “it is wrong to say that banks were lending to NBFCs and [hence] indirectly to the real estate companies as very few NBFCs have stakes in the real estate sector.”

S&P Sees Israel’s 4th Election Boosting Medium-Term Fiscal Risks

Israel could face increased medium-term fiscal risk because of the uncertainty caused by the government’s collapse earlier this week, according to a report from S&P Global Ratings.

Israel’s election is set for March 23, the fourth in two years, and early polling shows no candidate with a clear path to a governing majority. The ratings agency warned of the potential for “continued political brinkmanship and the possibility of another inconclusive election result,” and political gridlock reducing the state’s ability to cut its debt load.

Read more: Israel Heads to Fourth Vote in Two Years Over Budget Crisis

In November, the S&Paffirmed Israel’s AA- rating for the country’s long-term foreign currency debt, with a stable outlook.