Bangladesh: Statement at the Conclusion of the IMF Mission for the Fourth …
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Posted by admin on 04/17/2014 | Short Link

Press Release No.14/160

April 7, 2014

An International Monetary Fund mission (IMF), led by Mr. Rodrigo Cubero, visited Dhaka during March 19-April 2 to conduct the fourth review under the three-year, SDR 639.96 million (US$ 985.66 Million), Extended Credit Facility (ECF) arrangement (see Press Release 12/129). The mission met with the Minister of Finance, Minister of Planning, Finance Secretary, Banking Secretary, Bangladesh Bank Governor, other senior officials, and development partners.

At the conclusion of the visit, Mr. Cubero made the following statement:

“Real GDP growth is expected to be below 6 percent for fiscal year (FY) 14 (July 2013-June 2014) as unrest and uncertainty in the run-up to the January 2014 general elections have taken a toll on the Bangladesh economy. Imports, remittances, tax collections, and credit growth have all slowed. Inflation has edged up, largely due to food supply disruptions. Exports, however, have proven resilient, helped by Bangladesh’s growing share of the global textile market. Provided political stability continues and uncertainty abates, growth should rise above 6 percent in FY15.

“Throughout the recent turbulent period, macroeconomic policies have been sound, the government’s economic program remains on track, and there has been good progress on structural reforms. As a result, the mission and the authorities have been able to reach a staff-level agreement on the quantitative targets and policies needed to complete the fourth review under the ECF arrangement. This agreement is subject to review by the management and the Executive Board of the IMF. Upon the Executive Board’s completion of this review, which is expected in May 2014, SDR 91.4 million (about US$140.5 million) would be made available to Bangladesh.

“The authorities’ program continues to be suitably focused on the following broad objectives:

Maintaining fiscal prudence. The authorities are committed to maintaining fiscal prudence in FY14 and FY15. To support this goal, the government will be taking further steps to reduce tax exemptions, strengthen tax administration, and implement the new value added tax (VAT). On the expenditure side, public spending on programs and projects with high social returns will continue to be prioritized.

Consolidating debt management. Building on recent reforms that strengthen the oversight of non-concessional debt contracting, the authorities will formulate a comprehensive debt management strategy and will develop concrete guidelines to govern the issuance of sovereign guarantees.

Strengthening the financial sector. The authorities will continue to strengthen the governance and balance sheets of the state-owned commercial banks through the strict enforcement of policies that enhance these banks’ credit risk management practices and internal controls, as well as by gradually recapitalizing these banks and digitizing financial reporting by their branches.

Promoting growth and improving labor conditions. Customs procedures and foreign exchange regulations are being streamlined to improve the business climate. In addition, the government–in coordination with development partners, the business community, labor unions, and international buyers–is taking important steps to improve the working conditions and strengthen safety standards for garment workers in Bangladesh. These will be critical to ensuring strong, sustained and inclusive growth.

“The mission wishes to thank the authorities for their excellent cooperation and warm hospitality during its stay in Dhaka.”


Improving US home market is still facing obstacles
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Posted by admin on 04/17/2014 | Short Link

WASHINGTON — Entering the 2014 spring buying season, the US housing market faces an unusual dilemma: Too few people are selling homes. Yet too few buyers can afford the homes that are for sale.

Both sides of the equation are in a funk, said Glen Kellman, CEO of the real estate brokerage Redfin.

A 13.4 percent jump in the average price of a home sold last year, according to the Standard amp; Poors/Case-Shiller 20-city index, hasnt managed to coax more homeowners to sell. And combined with higher mortgage rates, higher prices have made homes costlier for first-time buyers as well as for all-cash investors.

Average prices nationally are expected to rise by single digits this year. The gains could be strongest in areas with solid job growth, such as Seattle and Austin, Texas. And while construction will put more homes on the market, lack of affordability could keep sales flat to falling.

On the other hand, many lenders are easing the barriers for those with less-than-sterling credit. For these people, qualifying for a mortgage could become a little easier.

All of which leaves real estate, much like the rest of the economy, still trudging back to health nearly a half-decade after the recession ended. After last years growth spurt, the housing recovery may have begun an awkward adolescence, one prone to fits and starts that can defy predictions.

Here are five vital signs that will shape home sales this spring and the rest of the year:


Good question. Its slim pickings for a lot of would-be buyers. That brutal winter we just got through prevented many East Coasters from listing their homes in recent months. About five months worth of homes are on the market, compared with 5.9 months in 2012 and 8.3 months in 2011.

Housing supply previously dipped toward the 5-month level during the height of the boom in 2006, when buyers snapped up homes faster than they could be added. This time, fewer homes are being listed because roughly 20 percent of owners are underwater on their mortgages — meaning their sale price wouldnt be enough to repay their loan.

Still, warmer weather, job growth and a strengthening economy are expected to encourage more listings this spring.

Were all trying to figure out where the sellers are, said Redfin CEO Kellman. Everyone seems to be waiting until April or May or June.

About 60 percent of Redfin buyers faced bidding wars in February, down from 73 percent at this time last year.

When few sellers emerged last year, prices for the limited number of homes available surged. Would-be buyers, facing a shortage of homes and locked in competition with one another, raised their offers.

Prices climbed in locales such as San Francisco, where a ton of money is chasing few properties and theres not enough construction. Bay Area homes have surged 23 percent, on average, the past 12 months, according to the Samp;P Case-Shiller index. That was faster than any other major metro area except Las Vegas, where much of the housing stock was rebounding from the depths of the recession.

This problem usually corrects itself. Higher prices should lure more sellers into the market who see an opportunity to cash out. That would then then lead to more listings for would-buyers while limiting bidding wars. This appears to have happened in Los Angeles, where more homes have been put up for sale, and theyre staying on the market longer, according to sales data.

But around the country, many homeowners are still reluctant to sell because they would likely lose money on the deal. The 2007 housing bust still haunts the market.

About 19 percent of homeowners owe more on their mortgages than their properties would sell for, according to the online real estate database Zillow. An additional 37 percent are effectively underwater: Their sale profit would be too low to cover the cost of listing their home and putting a down payment on a new property.

Still, each mortgage payment repairs some of the damage and improves a homeowners equity. As home values grow further, more people will start to put their homes up for sale, and the supply should rise.


After the Great Recession officially ended in mid-2009, many economists predicted that pent-up demand for homes would drive sales in the years to come. Not exactly. Nearly five years into the recovery, buying remains subpar.

Sales of existing homes are projected to total 5 million this year, according to the National Association of Realtors. Thats about 100,000 fewer than last year and far below the 5.5 million associated with healthy markets.

Much of that shortfall can be summed up simply: Too few first-time buyers. They bought about 1.5 million homes last year, about 500,000 fewer on average than they would have typically.

Last years price increases makes affordability a growing obstacle for first-timers, said Jed Kolko, chief economist for the online real estate firm Trulia. Unlike current owners whose down payments come from selling a previous home, first-timers must amass a down payment. And higher home prices require more cash up front.

The situation is slowly improving for the 25- to 34-year-olds who would buy homes. About 738,000 of them found jobs in the past year. With more disposable income, more of them will move out on their own. Homebuilders have already ramped up apartment construction in anticipation of younger renters. Thats a critical first-step before they eventually buy a house or condo.

I dont think it will have a big impact on home ownership right away, Kolko said, because it will take some time for young adults to save and build a credit history to buy a home.


You might have thought the economic meltdown would have shut off home loans to people with middling-to-weak credit. Yet something close to subprime borrowing has just started a comeback.

Wells Fargo is now offering mortgages to subprime borrowers with credit scores as low as 600, down from 640. (The median credit score for 30-year fixed mortgages had been around 730.) And non-bank lenders such as Carrington Mortgage Services are moving into that territory. Carrington has dropped its minimum credit score to 550. Its a sign that lenders are becoming less tight-fisted after restricting credit in the wake of the financial crisis.

Lenders are accepting borrowers they once rejected in part because theyre hungry for more business after mortgage refinancing plunged in the past year as interest rates rose. The average 30-year fixed mortgage rate has risen about a percentage point to 4.4 percent from near-historic lows in May. A subprime borrower with a credit score of 550 would pay 7.15 percent, according to Carringtons rate sheet.


Investors bought roughly one in every five homes sold last year, according to the National Association of Realtors. Most of them made all-cash offers and ignited bidding wars that other would-be homeowners lost. The investors properties became rehab projects or rentals.

But the 2013 price jump should cause investors to play a lesser role this year. Areas that suffered the most during the recessions housing bust, like Phoenix, Las Vegas and Tampa, have seen prices rise. Theyre no longer the bargains that investors considered them to be a year ago, said Zillows chief economist Stan Humphries. The result is that bidding wars wont likely be as fierce in 2014.

Not all investors are disappearing. Theyre pursuing areas where homes can most easily be converted into rentals and deliver higher returns. Home prices in Cincinnati, for example, rose an average 2 percent last year, but rental prices jumped 10 percent. Similar trends can be seen in the Midwest.


Its better to be on the luxury side of the real estate market for the moment. Prices generally rise faster than at the lower end. And sales have been improving in the past year.

Sales of homes worth more than $1 million rose 14.4 percent over the past 12 months, according to Bank of America Merrill Lynch. By contrast, sales of properties valued at less than $100,000 dropped 18 percent. A key reason: Fewer foreclosed homes are being listed.

Prices for more expensive homes have also risen much faster, according to Zillow. The online real estate firm divided the US housing stock into thirds based on price. Homes now worth $305,700 or more — the top one-third of the market– rose in value annually at a 3.38 percent average during the past 18 years. Those prices grew 20 percent faster than did the bottom two-thirds of the market.

Essentially, its a tale of two markets, said Zillows Humphries. Your experience as a top-tier homeowner was substantially different than for a bottom-tier owner.


AP Business Writer Joshua Freed in Minneapolis contributed to this report.


Report: Half of payday loans result in fees exceeding original cash advance
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Posted by admin on 04/17/2014 | Short Link

Washington— About half of all payday loans are made to people who extend the loans so many times they end up paying more in fees than the original amount they borrowed, a report by a federal watchdog has found.

The report released last week by the Consumer Financial Protection Bureau also shows that four of five payday loans are extended, or “rolled over,” within 14 days. Additional fees are charged when loans are rolled over.

Payday loans, also known as cash advances or check loans, are short-term loans at high interest rates, usually for $500 or less. They often are made to borrowers with weak credit or low incomes, and the storefront businesses often are located near military bases. The equivalent annual interest rates run to three digits.

The loans work this way: You need money today, but payday is a week or two away. You write a check dated for your payday and give it to the lender. You get your money, minus the interest fee. In two weeks, the lender cashes your check or charges you more interest to extend, or “roll over,” the loan for another two weeks.


Dispute in Boston casino licensing could impact state finances
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Posted by admin on 04/16/2014 | Short Link

BOSTON (AP) – A delay in licensing the sole eastern Massachusetts resort casino could have at least a short-term impact on state finances.

Budget-writers anticipated the $85 million licensing payment before the end of the current fiscal year. But the state Gaming Commission says a dispute over Boston#39;s negotiating rights for proposed casinos in the neighboring cities of Everett and Revere could delay the award until August or later.

A portion of casino licensing fees goes to the state#39;s so-called rainy day fund, while other revenue goes to local aid, community colleges, tourism and other purposes.

The state has received a $25 million license fee for a slots parlor in Plainville and could still receive by June 30 an $85 million licensing fee for the sole western Massachusetts license.


Seven Steps to Spring Clean Your Finances
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WASHINGTON, April 7, 2014 /PRNewswire-USNewswire/ — The season for spring cleaning has arrived and while many may be focused on organizing closets or scrubbing floors, the American Bankers Association encourages consumers to clean up their finances, as well.

Spring is a great time to take a hard look at your finances and identify ways to manage them more efficiently, said Frank Keating, ABA president and CEO. By getting your financial house in order, you can set the stage for a stronger, more successful future.

ABA offers the following tips to help consumers cut back on financial clutter this spring:

  • Evaluate and pay down debt. Take a look at how much you owe and what you are paying in interest. If there are better rates available now, consider requesting a lower credit card interest rate or refinancing your mortgage. Begin paying off existing debt, whether thats by chipping away at loans with the highest interest rates or eliminating smaller debt first.
  • Review your budget. A lot can change in a year. If youve been promoted, had a child, or become a single income household, be sure to update your budget. Determine what expenses demand the most money and identify areas where you can realistically cut back. Develop a strategy for spending and saving and stick to it.
  • Check your credit report. Every year, you are guaranteed one free credit report from each of the three bureaus. Take advantage of these free reports and check them for any possible errors. Mistakes can drag down your score and prevent you from getting a loan, or cause you to pay a higher than necessary interest rate.
  • Sign up for e-statements and paperless billing. Converting to paperless billing will help keep your house, physical and financial, more clean and organized.
  • Set up automatic bill pay. By signing up for automatic bill pay, youll never have to worry about a missed payment impacting your credit score. You can set it so that money is withdrawn from your checking account on the same day each month.
  • Consolidate your accounts. Managing several accounts can be challenging. If you have open accounts that you rarely use, consider closing them. Its important to note that cancelling accounts may come with a fee or impact your credit score. Other options include streamlining all your accounts under a single bank, or using a bill management service that allows you to view all of your financial accounts, bills, subscriptions and travel rewards in one place with a single password.
  • Download your banks mobile app. Many banks now offer mobile apps that allow consumers to manage their finances from the palm of their hand. With the click of a button, you can make a deposit or access a record of all your recent transactions.

Follow us on Twitter: @ABABankingNews

SOURCE American Bankers Association



Beyond Breakeven Facilitates Small Business Start-Ups, Acquisitions
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Posted by admin on 04/16/2014 | Short Link

(PRLEAP.COM) Tampa, Fla. – For small business entrepreneurs seeking to start or acquire a business in one of the toughest financial climates in history, it is essential to have an advisor that can provide expert help in targeting the right business to buy or finding small business financing to buy or start a business.

Beyond Breakeven provides services to small business entrepreneurs who can#039;t find them anywhere else, helping buyers get valuations on businesses they may want to purchase, to ensure they are getting a good deal. Beyond Breakeven also helps facilitate deals between buyers and sellers for financing business acquisitions. In addition, the company can help entrepreneurs find business financing from hundreds of non-bank lenders to provide needed start-up capital.

Purchasing a business is very different from buying a home. Cooperation between buyers and sellers is essential to finding financing from banks or other lenders for the transaction. Buyers are often expected by lenders to finance part of the sale, making it important to create a deal with which both buyers and sellers can be happy. Beyond Breakeven can help with this process and provide support in finding small business financing from a variety of sources.

The 2013 Tampa Awards recognized Beyond Breakeven, Inc. for the excellent services it provides, giving the company an award in its Business Consulting classification. The Tampa Awards recognize businesses in the greater Tampa area that are among the top companies in their field.

Beyond Breakeven Inc.#039;s recent Tampa Award, and its continued success in helping small business entrepreneurs find the right opportunities and the right financing, make it the ideal consultant to help them make the most of a new business opportunity.

For additional information about Beyond Breakeven Inc., check out the organization#039;s website at The company can be reached by phone at 813-977-7071.

About Beyond Breakeven, Inc.
Beyond Breakeven, Inc. is a Florida-based business consultant that assists entrepreneurs in developing business plans, finding financing and optimizing their operations. Their firm can provide more than 50 tools and programs to help optimize your business, and more than 400 sources of funding for entrepreneurs seeking capital.


Straight From His Mouth: How Much Do A Woman’s Finances Affect Her …
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Posted by admin on 04/16/2014 | Short Link

When a man sits down and thinks about the woman he’s dating and if he wants to move on to marriage, there are several things that go through his mind. I wouldn’t say that a woman’s finances are one of the first things that come to mind but it can quickly become the elephant in the room if the matter is out of order. That being said, I also wouldn’t recommend a man get too into the details of her finances either because the process of marriage will do that on its own. I personally have never asked a woman for her credit score or an exact amount of her debt. I have noticed the way she handles her finances, though. Does she pay her bills on time? Does she avoid phone calls from certain numbers? Does she have a twitch in her eye when she hears the words Sallie Mae? Those are the things that I pay attention to early on in the relationship so that they don’t become the elephant in the room later.

Taking a step back, to the people who tend to think that it’s acceptable to dive into someone’s finances when they’re assessing if they can date them or not, that a bit off. People are more than welcome to approach dating however they see fit but they should know they will turn some people away with their behavior. It’s okay to ask someone you’re marrying about their finances but dating that’s just invasive. And yet people feel like they have a right to know but to be honest, you just have a desire to know. It’s a desire that is personal in nature and really doesnt have any indication on whether you will continue to date them or not. You can certainly date someone with bad credit or debt; it doesn’t affect you.

I encourage people to keep in mind that we’re currently in a financial crisis in this country. You’ll meet more people who have college loan debt than you will people without it. You’re going to meet people who have made bad financial decisions (we all have done it at some point in some regard) and you’re going to meet people who’ve struggled financially. I would go as far as saying that you’ll meet people who may have gone bankrupt or even foreclosed on a home. This is an indication of the times that we live in and I don’t think those people should have to walk around with a scarlet letter.

What really matters is what a person does when they face financial crises. Do they run away and avoid their problems or do they face them head on? Are they working to deal with their problems? If so, then you can likely deal with that and accept it. It also shows you the resilience that comes with working out a hardship. That’s a trait that goes a long way in a relationship because it shows you that when things arent easy, you’re with someone who can work through it with you.

That’s the real thing you want to address and find in a partner. It’s not necessarily about their financial position or the amount of debt they have but how they handle tough issues in their life. Nobody wants to be broke but you can live without being rich. Anyone who is dating on the basis of how much income they will have in their household is not going to find true happiness. The couples who do it well don’t make finances an issue; they make it something that they can work through together. What they’re doing is their working through life together. It can be anything in the form of hardship that comes into a relationship. A person could have a perfect credit score but they can’t figure out how to keep their past from ruining their present. That could be more of a deal breaker than a sub-500 credit score.


Fitch Affirms Bombardier’s IDR at ‘BB-’ & Rates Planned Sr. Unsecured Debt ‘BB …
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Posted by admin on 04/15/2014 | Short Link

Proquest LLC

Fitch Ratings has affirmed the Issuer Default Rating (IDR) and long-term debt ratings for Bombardier Inc. (BBD) at BB-.

Fitch has also assigned a rating of BB- to BBDs planned issuance of approximately $1.8 billion of senior unsecured notes.

Proceeds from the new notes will be used to redeem the companys EUR 785 million ($1.1 billion) 7.25 percent notes due 2016 and $162 million of 6.3 percent notes due 2014. Proceeds in excess of amounts required for debt repayment would be available for general corporate purposes.

The Rating Outlook is Stable. A full list of rating actions follows at the end of this release.


Fitch has affirmed BBDs ratings despite the negative impact on leverage from the planned transaction. Fitchs view of BBDs credit profile and future performance has not changed since the ratings were downgraded one notch in January 2014. Fitch continues to believe liquidity is adequate, without including approximately $500 million of cash proceeds from planned debt in excess of amounts used for debt repayment. Proceeds will strengthen BBDs balance sheet while the company develops the CSeries and could potentially be used for short periods of no more than one or two quarters to support temporary liquidity needs related to timing differences without affecting the ratings. However, Fitch could consider a negative rating action if excess cash appears to be permanently deployed due to weaker operating results or larger capital expenditures than expected. Fitch continues to anticipate BBD will reduce debt and leverage materially after development spending returns toward much lower levels and the CSeries enters service in the second half of 2015.

The ratings for BBD incorporate an extended period of negative free cash flow and high leverage while the company develops the CSeries as well as several other aircraft. Entry into service for the CSeries is expected in the second half of 2015 which would be at least 18 months later than projected when BBD launched the program. Entry into service for the CS300, which has received more than two- thirds of firm orders for the CSeries, would occur approximately six months later. Development delays have increased the total cost of the program as well as risks to the programs long term profitability. Fitch expects the delays may lead to penalties and defer future debt reduction.

FCF may not become solidly positive on an annualized basis until late 2015 and was negative $1.5 billion in 2013. Near-term pressure on FCF includes low margins and development spending at Bombardier Aerospace (BA) as well as low margins at Bombardier Transportation (BT) that are improving more slowly than originally expected. BBDs total capital spending likely peaked in 2013, reflecting plans to reduce annual capital spending at BA by $700 million or more over the next two years.

Debt/EBITDA at Dec. 31, 2013 was 6.2x and may decline only slightly below 6x by the end of 2014 when including the planned net increase in debt. Fitch expects FFO Adjusted Leverage of 5.5x at Dec. 31, 2013 could increase towards 7x in 2014 before returning to a lower level. A decline in leverage should result from a gradual improvement in operating earnings and, over the longer term, future debt reduction.

The Stable Outlook incorporates Fitchs view that BBDs credit metrics, adjusted for the new debt, are near trough levels and that liquidity, including cash and availability under bank facilities, should be sufficient through 2014 before FCF begins to improve. However, BBDs weak credit metrics make it vulnerable to any future negative developments which, if not resolved effectively, could result in a negative rating action.

A developing rating concern is the impact on BBD from economic sanctions on Russia. Ilyushin Finance Co. has placed firm orders for 32 CS300 aircraft, which Fitch believes could be at risk depending on how events unfold. Also, BA expects delays are possible in negotiating an agreement with Rostec to build and sell turboprop aircraft in Russia. Furthermore, Russia and other members of the Commonwealth of Independent States are a promising source of future growth for BTs signaling, railcar and locomotive business, and the imposition of trade limits with Russia could diminish this opportunity.

Other concerns include margin pressure at BA that reflects costs for the CSeries and weak demand in the smaller end of the business jet market. Demand is better for large business jets. Orders for regional jets and turboprops have been low as the market shifts toward larger aircraft but could increase modestly, partly reflecting increasing airline profitability. Although BAs backlog is at a solid level, many aircraft orders are for fleet business jets and CSeries aircraft which will be delivered over several years.

First flight for the CSeries was achieved in September 2013, nine months after the original target date. The CSeries is the largest and most important development program at BA, and the companys ability to recoup its investment and establish a competitive position in the 100 – 149 seat category will require satisfactory performance of new technologies and sufficient orders to establish a viable market for the aircraft. There are currently 201 firm orders from 17 customers and lessees for the CSeries compared to BBDs target of 300 orders from 20 – 30 customers by the time the CSeries enters service. Program risks should decline as flight testing progresses and BBD demonstrates its ability to meet performance targets for the CSeries, including fuel efficiency and noise reduction.

Margins at BT have been slower than planned due to recurring execution challenges on certain contracts. The segment margin was 5.8 percent in 2013 before special items, compared to a long term target of 8 percent. Operating challenges are gradually being addressed but remain a risk. BT operates in more stable markets than BA, partly reflecting significant revenue from government customers that have supported BTs orders and backlog.

Rating concerns are mitigated by BBDs diversification and strong market positions in the aerospace and transportation businesses and BAs portfolio of commercial aircraft and large business jets. The company has continued to refresh its aircraft portfolio which should position it to remain competitive. The Global 7000 and 8000 aircraft are scheduled for entry into service in 2016 and 2017, respectively, and the Learjet 70 and 75 entered service in the fourth quarter of 2013. First flight for the Learjet 85, originally planned for the fourth quarter of 2013, has been further postponed to an unspecified date due to a required software update.

BBDs liquidity at Dec. 31, 2013 included approximately $3.4 billion of cash and equivalents, and availability under a $750 million bank revolver that matures in 2017. In addition, BT has a EUR 500 million revolver that matures in 2016. Both facilities were unused. BA and BT also have LC facilities that are used to support performance risk and secure advance payments from customers. The bank facilities contain various leverage and liquidity requirements for both BA and BT, which remained in compliance at Dec. 31, 2013. Minimum required liquidity at the end of each quarter is $500 million at BA and EUR600 million at BT. BBD does not disclose required levels for other covenants. Fitch expects covenants may be adjusted if necessary to incorporate the impact of BBDs planned debt in order to mitigate the risk of covenant defaults.

In addition to the two committed facilities, BBD uses other facilities including a performance security guarantee (PSG) facility that is renewed annually as well as bilateral agreements and bilateral facilities with insurance companies and banks. BA uses committed sale and leaseback facilities ($138 million outstanding at Dec. 31, 2013) to help finance its trade-in inventory of used business aircraft.

In addition, BT uses off-balance-sheet, non-recourse factoring facilities in Europe under which nearly $1.5 billion was outstanding. Usage under factoring facilities has increased significantly during the past four years and has nearly doubled since the end of 2011. Fitch expects these facilities will continue to be available, but BBDs cash flow and liquidity could be reduced if the availability of funding declines.

Liquidity is offset by current debt maturities due in 2014 that totaled $215 million at Dec. 31, 2013; debt maturities are minimal in 2015 and total approximately $1.9 billion in 2016. These amounts are before adjustments for debt repayment related to the planned debt issuance. In addition to long-term debt, BBD had nearly $800 million of other current financial liabilities at the end of 2013 including refundable government advances, sale and leaseback obligations, lease subsidies and other items. BBD also has contingent liabilities related to aircraft sales and financing and to foreign currency risk. BAs contingent liabilities have been generally stable or slightly lower, except trade-in commitments for used aircraft which have increased due to the growth in orders for larger business jets.

Pension contributions to defined benefit plans are estimated by BBD at $410 million in 2014 which would be down slightly from $481 million in 2013. At the end of 2013, net pension obligations declined below $1.7 billion from $2.5 billion at the end of 2012 due to an increase in discount rates and positive asset returns. The obligation included $725 million of unfunded plans. Funded plans at the end of 2013 were 90 percent funded.


Future developments that may, individually or collectively, lead to a negative rating action include:

–Liquidity is insufficient to carry BBD through the current development cycle at BA. Fitch would view liquidity as a significant concern if cash balances fall below approximately $1.5 billion, before considering the impact of proceeds from incremental debt, compared to $3.4 billion at Dec. 31, 2013;

–Inability by BBD to return to consistently positive annualized FCF by the end of 2015;

–The CSeries is delayed again, or orders do not reach BBDs target of 300 aircraft before entry into service;

–Demand for commercial and business jet markets is weaker than expected, leading to flat or lower total deliveries in 2014.

A positive rating action is unlikely in the near term. However, future developments that could, individually or collectively, support a positive rating action over the long term include:

–The CSeries enters service in the second half of 2015 with sufficient orders to generate a positive return on the program;

–BT improves project execution and builds stronger margins;

–FCF becomes sufficiently positive to fund debt reduction after development spending for aerospace programs winds down.

Fitch has affirmed BBDs ratings as follows:

–IDR at BB-;

–Senior unsecured revolving credit facility at BB-;

–Senior unsecured debt at BB-;

–Preferred stock at B.

The Rating Outlook is Stable.

BBDs debt, as calculated by Fitch, totaled nearly $7.3 billion at Dec. 31, 2013. The amount includes sale and leaseback obligations and is adjusted for $347 million of preferred stock which Fitch gives 50 percent equity interest. The debt amount excludes adjustments for interest swaps reported in long-term debt as the adjustments are expected to be reversed over time.

Additional information is available at

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It’s Time To Spring Clean Your Finances!
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Posted by admin on 04/15/2014 | Short Link

Even though it may not seem like it sometimes, it is officially spring. And when I think about spring, the phrase “spring cleaning” definitely comes to mind. I spent the all of this weekend cleaning out my closets, downsizing utensils in the kitchen, and giving away what was either too small or too ugly to keep. But that is just the beginning. Since I am all about financial fitness and making my money grow, spring cleaning also means getting my financial house in order.

Here are four things that I plan to do with get my money right for the spring.

1. Review my financial New Year Resolutions. We are a quarter of the way into 2014, a great place to check-in on your progress toward your money goals. If you wanted to eliminate debt, have you started by tracking your spending and creating a budget? If not, now is the time to do it. If you wanted to save for a big purchase, have you determined the full cost and worked out a savings schedule to meet your goal? If not, now is a great time to start.

2.  Organize my files. Tax season will be ending in the next week or so, but that does not mean you should do away with those documents. According to the Internal Revenue Service, tax returns should be kept for three years.

3. Shred. I am not sure about what your desk is looking like, but mine is in some desperate need of downsizing. Shredding is an excellent way to get rid of unnecessary paperwork and safeguard you against identity theft.

4. Check my credit report. If you haven’t ordered your free credit report or paid for your credit score, now is a good time to review your report for mistakes and them. Your credit score is an important number that banks and other lending institutions use to vouch your creditworthiness. Even though there are different rules of thumb, keeping your credit score above a 740 will put you in a position to have the most desirable interest rates.

For those of you that live in or near NYC and need a little help and support in getting your money matters streamlined, on Saturday, April 12th, The Frugal Fab 5, the brown girl personal finance blogger collective that I am a part of, will be hosting an interactive budget and credit clinic called to Spring Clean Your Finances. We’ll be teaching a comprehensive WORKshop on how to get out of debt, budget and fix your credit.

For more information, RSVP here:


Fitch Rates Beazer’s $325MM Sr. Notes Offering ‘CCC+/RR5′
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Posted by admin on 04/15/2014 | Short Link

CHICAGO Fitch Ratings has assigned a CCC+/RR5 rating to Beazer Homes USA, Inc.s (NYSE: BZH) offering of $325 million principal amount of 5.75% senior unsecured notes due 2019. The notes issue will be ranked on a pari passu basis with BZHs existing senior unsecured notes. Net proceeds from the notes offering will be used to fund or replenish cash that is expected to be used to fund the redemption of its 9.125% senior notes due 2018 ($298 million outstanding as of Dec. 31, 2013).

A complete list of ratings follows at the end of this release.


The rating and Outlook for BZH is based on the companys execution of its business model in the current moderately recovering housing environment, its land policies, and geographic diversity. The companys rating and Outlook is also supported by its solid liquidity position.

Risk factors include the cyclical nature of the homebuilding industry, the companys high debt load and high leverage, BZHs underperformance relative to its peers in certain operational and financial categories, and its current over-exposure to the credit-challenged entry level market (approximately 60% of BZHs customers are first-time home buyers).


BZH ended the December 2013 quarter with $382.6 million of unrestricted cash and no borrowings under its $150 million secured revolving credit facility. The companys debt maturities are well-laddered, with no major maturities until 2016, when $172.9 million of senior notes become due.


BZH maintains a 5.7-year supply of lots (based on last 12 months deliveries), 79% of which are owned, and the balance controlled through options. As is the case with other public homebuilders, the company is rebuilding its land position and trying to opportunistically acquire land at attractive prices. Total lots controlled as of Dec. 31, 2013 increased 15.4% year-over-year (yoy) and grew 3.5% compared with the previous quarter.

The company has been aggressive in its land and development spending following the successful execution of its capital markets transactions in 2012. BZH spent roughly $475.2 million on land purchases and development activities during fiscal 2013 (ending Sept. 30, 2013) compared with $185.6 million expended during fiscal 2012. During the first quarter of fiscal 2014, the company spent $123.8 million on land and development, up from the $90 million expended during the same period last year. BZH expects to spend about $500 million on land and development during fiscal 2014. As a result, Fitch expects BZH will be cash flow negative by about $100 million – $150 million this fiscal year.

Fitch is comfortable with BZHs land strategy given the companys liquidity position, debt maturity schedule, proven access to the capital markets, and managements demonstrated discipline in pulling back on its land and development activities during periods of distress.


Housing metrics showed improvement in 2013. Single-family housing starts grew 15.4%, while new-home sales increased 16.3%. Existing home sales advanced 9.2% in 2013. The most recent Freddie Mac 30-year interest rate was 4.40%, 109 bps above the all-time low of 3.31% set the week of Nov. 21, 2012. The NARs latest monthly existing home affordability index was 174.2, well below the all-time high of 213.6, but still meaningfully above the 20-year average. Housing metrics should increase in 2014 due to faster economic growth (prompted by improved household net worth, industrial production and consumer spending), and consequently, some acceleration in job growth (as unemployment rates decrease to 6.9% for 2014 from an average of 7.5% in 2013), despite somewhat higher interest rates as well as more measured home price inflation.

Fitchs housing estimates for 2014 are as follows: Single-family starts are forecast to grow almost 20% to 741,000, while multifamily starts expand about 8% to 333,000; single-family new-home sales should grow approximately 20% to 513,000 as existing home sales advance 2.0% to 5.19 million. Average single-family new-home prices (as measured by the Census Bureau), which dropped 1.8% in 2011, increased 8.7% in 2012. Median new-home prices expanded 2.4% in 2011 and grew 7.9% in 2012. Average and median new-home prices improved 9.8% and 8.4%, respectively, in 2013. New-home price inflation should moderate in 2014, at least partially because of higher interest rates. Average and median new-home prices should rise about 3.5% this year.


There has been some short-term volatility in certain housing metrics following the increase in interest rates (and higher home prices) during the past nine months as well as harsh winter weather conditions in some parts of the country.

For the public homebuilders in Fitchs coverage, net order gains substantially slowed or turned negative during the second half of 2013 following strong gains in the first half of the year. On average, net orders for these builders fell 2.1% during the fourth quarter of 2013 (4Q13) compared with a 1.5% increase during 3Q13, a 16.8% improvement during 2Q13, and a 28.2% growth during 1Q13. Fitch expects weak order comparisons continued during the 1Q14.

The companys new home orders fell 9% during the 2Q14 (ending March 31, 2014) following a 4% decline during 1Q14 and a 7.4% improvement during 4Q13. The drop in net new orders was due primarily to lower community count, which decreased 6% and 8.6% during 2Q14 and 1Q14, respectively. The company reported 3.3 sales per community per month during 2Q14 compared with 3.4 sales per community per month last year. BZH ended the 2Q14 with 2,163 homes in backlog, a 2.2% decline compared with the same period last year.

While there has been some weakness in housing activity so far this year, Fitch expects the housing recovery will continue during 2014. As Fitch noted in the past, the housing recovery will likely occur in fits and starts.


Future ratings and Outlooks will be influenced by broad housing market trends as well as company-specific activity, such as trends in land and development spending, general inventory levels, speculative inventory activity (including the impact of high cancellation rates on such activity), gross and net new-order activity, debt levels, free cash flow trends and uses, and the companys cash position.

BZHs ratings are constrained in the intermediate term due to weak credit metrics and high leverage. However, positive rating actions may be considered if the recovery in housing is maintained and is meaningfully better than Fitchs current outlook, BZH shows continuous improvement in credit metrics (particularly debt-to-EBITDA consistently below 8x and interest coverage above 2x), and preserves a healthy liquidity position.

Negative rating actions could occur if the recovery in housing dissipates, resulting in BZHs revenues and operating losses approaching 2011 levels, and the company maintains an overly aggressive land and development spending program. This could lead to consistent and significant negative quarterly cash flow from operations and diminished liquidity position. In particular, Fitch will review BZHs ratings if the companys liquidity position (unrestricted cash plus revolver availability) falls below $200 million.

Fitch currently rates BZH as follows:

–Long-term Issuer Default Rating B-;

–Secured revolver BB-/RR1;

–Second lien secured notes BB-/RR1;

–Senior unsecured notes CCC+/RR5;

–Junior subordinated debt CCC/RR6.

The Rating Outlook is Stable.

The Recovery Rating (RR) of RR1 on BZHs secured credit revolving credit facility and second-lien secured notes indicates outstanding recovery prospects for holders of these debt issues. The RR5 on BZHs senior unsecured notes indicates below-average recovery prospects for holders of these debt issues. BZHs exposure to claims made pursuant to performance bonds and joint venture debt and the possibility that part of these contingent liabilities would have a claim against the companys assets were considered in determining the recovery for the unsecured debtholders. The RR6 on the companys junior subordinated notes indicates poor recovery prospects for holders of these debt issues in a default scenario. Fitch applied a liquidation value analysis for these recovery ratings.

Additional information is available at

Applicable Criteria and Related Research:

–Corporate Rating Methodology (Aug. 5, 2013);

–Liquidity Considerations for Corporate Issuers (June 12, 2007).

Applicable Criteria and Related Research:

Corporate Rating Methodology – Effective 12 August 2011 to 8 August 2012

Liquidity Considerations for Corporate Issuers

Additional Disclosure

Solicitation Status



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