Debt Ceiling in US has been reached. The political drama between the Republicans and Democracts continue. Too much of political gimmick has gone into it, I don't expect it to fundamentally alter the debt or borrowing profile - maybe some points scored.
In EURP, Rating agencies have given a real scare. Expecting that Greece will get the much needed relief in the short run now. But long term prospects for all of Eurozone are daunting. Countries in the Eurozone (and the US for that matter) may have noted the expression by the rating agencies. Anticipating that the rating agencies will now come under intense scrutiny in the medium term. After all, its not dictatorship, so you cannot 'order' things, but you can 'influence' the decision-making purposes to be optimized :).
In INDIA, interestingly no one is talking yet (at least openly) about the multiple debt monsters building up:
a) Air India : Has defaulted and been bailed out by Banks and OMCs.
b) OMCs : Will probably be bankrupt. Need to understand better how this is stacking up in the Union Budget (all Oil Bonds, Losses to Upstream and OMC companies), is this all on Govt Balance Sheet, or off the balance sheet item ( I infer this will be later, but just a conjecture yet will need to dig and confirm)
c) State Electricity Boards: This is the biggest ticking bomb of all. No one is openly mentioning it, but the kind of burden built up is almost asking for another bailout and amnesty. Either the SEBs will default or the banks loaning to them will have to declare significant NPAs.
Altough not mainstream, the Street has already built in the assumption of a 'technical default', where REC, PFC etc will have to rollover the bonds with lower NIMS and longer periods, perhaps also take a haircut on accumulated interest. Check the recent prices of REC, PFC (or the drops) and this seems to be built in. Interesting to see how this pans out
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