Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (30286)	3/3/2008 11:37:05 AM
From: Elroy Jetson	Respond to of 218131

Has the Fed finally noticed the U.S. Dollar falling, is a large bank failing, or will they try to postpone the inevitable recession? federalreserve.gov Advance Notice of a Portion of a Meeting under Expedited Procedures It is anticipated that a portion of the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 a.m. on Monday, March 3, 2008, will be held under expedited procedures, as set forth in section 26lb.7 of the Board's Rules Regarding Public Observation of Meetings, at the Board's offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting. Meeting date: March 3, 2008 Matters to be Considered: 1. Review and determination by the Board of Governors of the advance and discount rates to be charged by Federal Reserve Banks. A final announcement of matters considered under expedited procedures will be available in the Board's Freedom of Information and Public Affairs Offices and on the Board's Web site following the closed meeting. For more information please contact: Michelle Smith, Director, or Dave Skidmore, Assistant to the Board, Office of Board Members at 202-452-2955. .

To: Cogito Ergo Sum who wrote (30286)	3/3/2008 12:27:00 PM
From: elmatador	Respond to of 218131

Project financiers to abandon dollar. Banks avoid the greenback as liquidity dries up and speculation mounts over currency depegging. Project financiers to abandon dollar. Published: 29 February 2008 18:27 GMT Author: Matthew Martin More by this Author Last Updated: 02 March 2008 13:09 Banks avoid the greenback as liquidity dries up and speculation mounts over currency depegging. Companies raising project finance debt could drop the US dollar from their plans this year, as the knock-on effects of the sub-prime crisis continue and speculation mounts over imminent currency revaluations across the Gulf. Advisory banks in the region say they are finding it increasingly difficult to raise project finance debt in dollars. Liquidity in the market is drying up and increasing the cost of dollar-based debt. The problems are expected to increasingly drive banks to raise finance in regional currencies and other international currencies, such as the euro or yen. The speculation comes in the wake of Opec's warning that it could drop the dollar in favour of a basket of international currencies, underlining the danger to the dollar's status as the leading international currency (MEED 8:2:08). The volatile market conditions have left bankers at odds over how much project finance activity there will be in the region this year. While some banks predict 2008 will be a record year, others say the market will contract over the next 12 months. Local finance houses have always had problems raising long-term dollar financing, according to Irfan Said, head of project and structured finance at Saudi bank Samba, but it has become more acute in the past six months. "There has been a clear message coming out of our [bank's] treasury department to say do not offer long-tenor dollar funding without checking with us first, whereas before we pretty much had carte blanche," he says. The problem is not expected to improve in the short term. "The availability of dollar funding will get worse before it gets better," says Rajan Malik, vice-president and head of syndications at Gulf International Bank (GIB). The problems come at a time of renewed speculation that regional currencies will drop their pegs to the dollar. "There is a lot of speculation about a depegging," says Fahad al-Raqbani, senior manager of Mubadala. "There is a lot of interest among local banks to fund in GCC currencies." "Local banks can raise dollars but the problem is that they are prohibitively expensive" Darren Davis, HSBC Middle EastThe trend is expected to lead financial advisers to explore the possibility of structuring project finance deals with tranches in several currencies, rather than using ones that are denominated only in dollars, as is common at present. "Local banks can raise dollars but the problem is they are prohibitively expensive," says Darren Davis, head of project finance at HSBC Middle East. "If your dollars cost Libor [London interbank offered rate] plus 40-50 basis points, you cannot lend them at 20 basis points. "But there is also a problem with local currencies and worries about the dollar peg. I think we will see more different currency tranches this year, but I do not think it is the whole answer." Project developers have to buy supplies in dollars, euros and yen as well as local currencies. If banks supply financing in a similar mixture of currencies and hedge the exchange-rate risk, it could help resolve the issue. However, some bankers say it will simply lead to other problems. "It is a misconception that local currency tranches will help because it will force those tranches to compete," says Malik. A competition for local currency debt could also lead to the profit margins on the debt being reduced, even though it is already priced too keenly for some regional banks. Despite these reservations, it is expected that more projects will experiment with multi-currency debt facilities. Most bankers expect the dollar liquidity problems to continue for six to 12 months. Despite the problems, Davis says he expects more than $50bn worth of deals to be completed in the GCC this year, higher than the $40bn completed in 2007. A key element to whether this happens will be if there is an increase in infrastructure spending. "Infrastructure will be the name of the game this year," says Christophe Mariot, regional head of Energy, Commodities, Export & Project Finance at BNP Paribas, who also thinks it will be a bigger year for project finance deals. However, several project bankers in regional institutions are more sceptical. They say sponsors will not be keen to enter a financing market with higher costs. With no major deals having tested the market this year, bankers remain cautious on how much appetite there will be for deals. "If the first two months of this year are anything to go by, it will be one of declining project finance activity," says one regional banker. "Those critical projects that have to get done will be the only ones done this year." Sponsors of non-essential projects outside the infrastructure sector could shelve their plans until conditions improve, according to some. "I believe a lot of projects will delay themselves or get shelved," says Samba's Said. "Banks will finance projects from their key relationship clients, but otherwise liquidity problems will pose a real problem," says another Bahrain-based banker. Author: Matthew Martin. Senior Gulf Correspondent Dubai