Debt swap – Arab Center http://arabcenter.net/ Tue, 22 Nov 2022 00:54:44 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://arabcenter.net/wp-content/uploads/2021/05/cropped-icon-32x32.png Debt swap – Arab Center http://arabcenter.net/ 32 32 Credit default swap climbs to 92.53% on political unrest https://arabcenter.net/credit-default-swap-climbs-to-92-53-on-political-unrest/ Tue, 22 Nov 2022 00:54:44 +0000 https://arabcenter.net/credit-default-swap-climbs-to-92-53-on-political-unrest/

KARACHI: The cost of insuring Pakistan’s five-year sovereign debt exposure rose 1,224 basis points over the weekend to an all-time high of 92.53%, according to local brokerage data Monday.

The rate at these levels reflects some default. Analysts said the country’s sovereign dollar bonds would remain vulnerable until the political standoff between the government and former Prime Minister Imran Khan’s main opposition party is resolved.

“The situation on the ground is difficult but not as severe as reflected in the current credit default swap (CDS) rate,” one analyst said. “The margin for any mishap was slim, that’s for sure.”

Pakistan’s economy is in turmoil and its foreign exchange reserves are rapidly depleting. The central bank’s foreign exchange reserves stood at $7.959 billion as of November 11 and are sufficient for less than six weeks of imports.

Despite the recent renewal of Chinese debt and new injections from the World Bank and AfDB, reserves have declined. As talks with the International Monetary Fund (IMF) on the ninth review of the lending facility reach an impasse, its external financial tensions are growing. Friendly nations have made no specific funding pledges. After exports, remittances are the second largest source of income, but these are also declining.

Along with deteriorating economic fundamentals, Pakistan’s political instability has forced foreign debt markets to view its bonds as risky and politically unstable sovereign bonds for months.

According to Dr. Salman Shah, the former finance minister, “it was political instability that heightened concerns for Pakistan and, in turn, increased debt insurance premiums for the country’s bonds. “.

Shah said the market is waiting for the government to take action to change the way foreign investors view Pakistani bonds. “First and foremost, the army chief should be appointed as soon as possible and without controversy. This will make the political environment in the country more stable,” Shah said.

Second, the repayment of $1 billion on Sukuk due on December 5 should be made on time. Third, an election roadmap acceptable to all political parties should be announced. The CDS would start to fall right away if these actions passed, he said.

Otherwise, everything would spiral out of control. The IMF does not currently provide significant support to Pakistan, he added. “As Pakistan needs to secure external financing to pay its external debt obligations, the economy demands full attention. Therefore, there is a need to implement the IMF program in letter and spirit, carry out structural reforms, especially in the energy sector, and improve the investment climate in the country. said Dr. Shah.

Fahad Rauf, head of research at Ismail Iqbal Securities, said an important event would be the next $1 billion payout on Sukuk, which would give the market confidence.

“Pakistan is likely to remain in the IMF program even after the current program ends, which would help Pakistan manage its debt payments. However, serious reforms are needed to reduce the growing debt levels of the economy, i.e. i) conserve energy, ii) increase the tax base, iii) focus on exports and iv) attract FDI,” Rauf said.

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5 p.m. ET: The future of Twitter, Taylor Swift, federal student debt relief, and more https://arabcenter.net/5-p-m-et-the-future-of-twitter-taylor-swift-federal-student-debt-relief-and-more/ Fri, 18 Nov 2022 21:48:51 +0000 https://arabcenter.net/5-p-m-et-the-future-of-twitter-taylor-swift-federal-student-debt-relief-and-more/

Anna Sturla (host)

00:00:01

Hello from CNN. I’m Anna Sturla with the five things you need to know for Friday, November 18.

The Biden administration has formally asked the Supreme Court to intervene on its student debt relief package. The White House is asking the High Court to let the scheme go into effect while legal challenges unfold across the country. Debt relief was suspended after lower courts blocked the program, preventing the administration from canceling up to $20,000 in debt per borrower for millions of Americans. Before a federal judge froze it on Nov. 10, about 26 million applied for the program. The government then stopped taking requests and no debt has been canceled so far.

It’s been ten days since Election Day, but we’re still feeling the aftershocks and some important races are still up in the air. A big question for Congress: who will succeed Nancy Pelosi as House leader of the Democrats? We already have a candidate. New York Congressman Hakeem Jeffries put his hat on in the ring today. California Democratic Congresswoman Jackie Speier spoke to CNN about the new generation ready to take the leadership of her party in Congress.

Rep. Jackie Speier (sound extract)

00:01:03

They are very representative of our caucus. Our caucus is very diverse. They are very talented people. They will serve us well.

Anna Sturla (host)

00:01:11

Meanwhile, in the race for Colorado’s 3rd congressional district, Democrat Adam Frisch conceded to GOP Congresswoman Lauren Boebert today. The district had been safely considered Republican, but this morning Boebert led Frisch by just 551 votes. CNN is also predicting that Democratic Congresswoman Katie Porter will win re-election in her California district in another tougher-than-expected race. Still, the two results don’t change CNN’s projection that Republicans will control the chamber in January.

American basketball star Brittney Griner has been moved to a penal colony in western Russia to begin her sentence, ending days of speculation over her fate. That’s according to Griner’s attorneys, who said Thursday they visited him earlier in the week. Meanwhile, Russia has said it quote-unquote hopes for a positive outcome in prisoner swap talks over a convicted Russian arms dealer serving a 25-year sentence in the United States. Multiple sources told CNN that the Biden administration offered to trade the trafficker for Griner and Paul Whelan, another American detained by Russia. But Russian officials have requested that another Russian national be added to the potential swap.

It’s been a roller coaster ride for Twitter since billionaire Elon Musk bid for the social media platform. After already laying off about half of his workforce earlier this month, Musk this week gave remaining Twitter employees less than 24 hours to engage in an extremely difficult work environment. After Thursday’s deadline expired at 5 p.m. EST, an internal Twitter Slack channel was filled with employees displaying the hello emoji indicating they had decided to leave the company. The site is a major communication tool for politicians, brands, dissidents… and journalists like me. And this second exodus raises questions about the future of Twitter and whether the platform will continue to operate. CNN’s Clare Duffy provides some insight into the impact Twitter’s uncertain future could have on users.

Clare Duffy (sound extract)

00:02:55

I don’t think we’ll see Twitter go down all of a sudden. You know, we might start to see some of these issues and these kind of platform failures. As you know, some of those really crucial employees are gone. And there’s not the kind of support the platform needs to function.

Anna Sturla (host)

00:03:11

Then, a ticketing debacle ahead of Taylor Swift’s tour catches the attention of Congress.

Speaking of Twitter, you may have seen a lot of social media chatter about Ticketmaster this week. Ticket sales for Taylor Swift’s upcoming “The Eras” tour began on Tuesday. Fans grabbed over 2 million tickets, setting the record for the most sold by an artist in a single day. But the high demand overloaded the seller, Ticketmaster, and many fans were unable to purchase tickets. The site then announced yesterday that it would cancel today’s scheduled ticket sales to the general public, blaming high demand and low inventory. Today, Swift spoke out in an Instagram post blaming Ticketmaster for the snafu. Live Nation, the nation’s largest concert promoter, merged with Ticketmaster about a decade ago. And this week’s debacle means the merger is garnering renewed congressional attention, with critics calling it a monopoly. Senator Amy Klobuchar chairs the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights. After this week’s delays and cancellation, she sent an open letter to the CEO of Ticketmaster saying the company was unfairly profiting from its grip on the ticketing industry.

That’s all for the moment. I am Anna Sturla. And if you listen to CNN 5 Things to hear the news, leave us a rating and review in Apple Podcasts.

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Egypt heading for clean energy transformation, building on its 2014 structural reforms: Al-Mashat https://arabcenter.net/egypt-heading-for-clean-energy-transformation-building-on-its-2014-structural-reforms-al-mashat/ Wed, 16 Nov 2022 06:30:38 +0000 https://arabcenter.net/egypt-heading-for-clean-energy-transformation-building-on-its-2014-structural-reforms-al-mashat/

Egypt – Rania Al-Mashat, Minister of International Cooperation, said that since 2014, Egypt has launched plans and structural reforms to develop renewable energy, stimulate private sector investment and increase its contribution to production efforts solar and wind energy, which has helped the state a lot in the current period to build on what has been achieved since 2014 and strengthen efforts to transition to a green economy.

His remarks came during his participation in the round table organized by the International Renewable Energy Agency in cooperation with the European Union during the COP27 climate conference, Sharm El-Sheikh City and the participation of Franz Timmermans, Vice-President of the European Commission, Tini van der Streten, Minister of Energy of Belgium; Francesco La Camera, Director General of the International Renewable Energy Agency; Amiani Abuzid, African Union Commissioner for Infrastructure and Digitization; Kadri Simson, European Union Commissioner for Energy; and Odell Renault, President of the European Bank for Reconstruction and Development.

The Minister of International Cooperation said Egypt is making progress in the current period to increase climate action efforts and generate renewable energy. The government has also started a strategic collaboration with the Norwegian company Skatek to implement the first phase of the green hydrogen project in the Suez Canal economic zone to become an important center for the African continent, stressing that international partnerships and the role of international partners financial institutions are also present in this partnership through the International Finance Corporation

She pointed out that the state’s success in implementing structural reforms and establishing a regulatory framework has enabled it to increase renewable energy capacities, supply gas to traditional power plants and increase foreign exchange earnings, and stimulate the private sector through funding from international financial institutions such as the European Union Bank, IAEA and others.

Al-Mashat mentioned the energy pillar of the National Green Projects Platform “NWFE”, which includes clear plans to transform fossil fuel power plants into renewable energy, in light of the National Climate Change Strategy 2050 and Nationally Determined Contributions, which Egypt is updated by June. NWFE provides various financing mechanisms for green projects, whether through blended finance, debt swaps, development grants and private sector investments.

Egypt is progressing with many steps towards implementing climate commitments in line with the objectives of the Climate Conference and promoting environmentally friendly development efforts, explaining that the NWFE is based on key principles: a strong state commitment to green transformation, clarity in the formulation of projects and credibility, which have earned the relationship with development partners an important pivot.

Franz Timmermans, Vice-President of the European Commission, said that Egypt has a clear strategy to generate green hydrogen and develop renewable energy, explaining that renewable energy from its various sources will be the winning horse for the Africa in the coming period.

The expansion of green hydrogen production represents a sustainable energy saving solution and a strong opportunity for developing countries and continental African countries in particular to compete for energy markets. and generate huge returns.

For his part, Amani AbuZaid, Commissioner for Infrastructure and Digitalization of the African Union, said that Egypt is organizing an exceptional and very different version of the COP27 climate conference, praising Egypt’s efforts in Egypt. to host and organize the conference at the highest level.

© 2022 Daily News Egypt. Provided by SyndiGate Media Inc. (Syndigate.info).

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Uncertain year for Korean banks amid looming debt crisis, CEO terms end https://arabcenter.net/uncertain-year-for-korean-banks-amid-looming-debt-crisis-ceo-terms-end/ Thu, 10 Nov 2022 00:07:00 +0000 https://arabcenter.net/uncertain-year-for-korean-banks-amid-looming-debt-crisis-ceo-terms-end/



FSC Chairman Kim Joo-hyun (center) poses for a photo with the heads of the country’s five major banking groups in central Seoul on November 1. (Yonhap)

The heads of South Korea’s major banks are fast approaching the end of their current terms amid fears of a looming debt crisis in the financial sector, sources said on Wednesday.

Beginning with NH Financial Group Chairman Son Byung-hwan’s term ending next month, Shinhan Financial Group Chairman Cho Yong-byoung and Woori Financial Group Chairman Son Tae-seung are approaching from the end of their current term in March next year.

The CEOs of some banking giants’ flagship commercial lenders are in the same boat, with Shinhan Bank CEO Jin Ok-dong, NH NongHyup Bank CEO Kwon Joon-hak and Hana Bank CEO Park Sung-ho, who will step down from their current positions by next March. year.

Industry watchers expect the current heads of banking groups to be appointed for at least another one- or two-year term, as it has become the norm for them to serve for a decade. Both Cho and Woori’s Son were appointed in 2017, while NH’s Son was promoted to chairman last year.

Over the past two years, major banks have posted record net profits and performance, supported by a record Bank of Korea interest rate cut in 2020, later followed by an aggressive rate hike. However, presidents now face new challenges that could be a game-changer.

As a side effect of their aggressive lending, banks now face a heightened risk of bankruptcy due to rising default risks coupled with fears of a nationwide credit crunch.

Commercial banks’ default swap premiums – an indicator of their credit and bankruptcy risks – have risen to their highest level in five years. The average CDS spread of the country’s four major banking giants – KB, Shinhan, Hana and Woori – reached 75 basis points as of November 4, according to recent data from the Korea Center for International Finance. Banks face greater risks of failure as the number rises.

The figure has more than tripled since the end of last year, when it stood at 22 basis points.

Regardless of bankruptcy concerns, the country’s five major banks, including NH NongHyup, pledged on November 1 to inject 95 trillion won ($69 billion) into the domestic financial market by the end of the year. to avoid a massive credit crunch.

“It seems inevitable that Korean banks will participate in such a public project to suppress the financial system, but with banks simultaneously carrying out COVID-19 relief projects, the decision to inject liquidity is likely to increase the risks of credit for banks,” Choi Jung-wook, an analyst at Hana Securities, said Monday.

In addition to financial risks, the Yoon Suk-yeol administration’s intransigent policies against financial crimes are likely to pose major obstacles for incumbents as well.

The Financial Services Regulatory Commission is currently preparing to announce the level of sanction it will impose on chief Woori Son, holding him responsible for the mis-selling of funds under defunct Lime Asset Management. The mis-selling has cost investors a large sum of money since 2019, leading the financial watchdog in April last year to impose Son the third-highest penalty in its five-tier system. If the FSC upholds the FSS decision, it will be difficult for Chief Woori to serve another term, as the sentence prohibits working in a financial firm for up to five years.

FSC Chairman Kim Joo-hyun told reporters on Wednesday that confirmation would come by the end of the year.

“Despite a tough market situation, FSC believes we have to do what needs to be done, and we expect to implement the decisions one by one by the end of the year,” Kim said when he was asked about Son’s sanctions.

By Jung Min-kyung (mkjung@heraldcorp.com)

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Newly commissioned steel capacity in China adds to supply pressure https://arabcenter.net/newly-commissioned-steel-capacity-in-china-adds-to-supply-pressure/ Mon, 07 Nov 2022 11:07:34 +0000 https://arabcenter.net/newly-commissioned-steel-capacity-in-china-adds-to-supply-pressure/

China’s steel production continues to show a slight decline despite weak profit margins for steelmakers, due to new pig iron and crude steel capacities launched in recent months, while the absence of production cuts on a large scale fails to increase the pressure on production.

North China, home to major steelmakers, could see winter production cuts from mid-November, particularly in the steel hub of Hebei, market sources said.

But these brakes should remain smaller than the previous year, they added.

Chinese steelmakers are usually ordered to cut production during the winter to reduce pollution.

Setting a bearish tone for steel prices, several new pig iron and crude steel manufacturing facilities are also coming online, which could partly offset the impact of any government-imposed production cuts for 2022. and 2023, according to sources.

“I fear steel production will remain elevated this winter relative to subdued demand, so any price increases in the remainder of 2022 may be limited unless further stimulus packages are announced.” , said a market player in eastern China.
Increase in iron and steel production capacity

Between August and October, China commissioned about 6.4 million tonnes per year of new blast furnaces and 4.8 million tonnes per year of crude steelmaking capacity through capacity swaps, according to S&P Global Commodity Insights calculations.

Since some of the replaced facilities were already closed in the period 2017-2020, these newly commissioned facilities will theoretically lead to a net increase of 2.5 million tonnes/year of pig iron and 3 million tonnes/ year of crude steel capacity for 2022, according to calculations based on industry data.

In the first 10 months of 2022, a total of 28.8 million tonnes/year of new pig iron manufacturing capacity and 23.1 million tonnes/year of crude steel production capacity were commissioned. service in China through capacity swaps, resulting in a net increase of 8.3 million tonnes/year of pig iron and a capacity of 6 million tonnes/year of crude steel for 2022.

Although low steel profit margins have recently forced some steel mills in Shanxi and Shaanxi provinces to cut production, these newly commissioned facilities have partly offset reductions in overall steel production in China.

Some factory sources in North and East China also said that with these newly added capacities and most of the factories still refuse to cut production despite the current losses, the crude steel production of the China in October and so far in November could remain almost the same as in September.

China’s daily crude steel output in September was about 7% higher on the month and 17.6% higher on the year, according to China’s National Bureau of Statistics.

On Nov. 3, amid sluggish steel demand and a bearish market outlook, profit margins for rebar and hot-rolled coil sales in the Chinese market fell to minus $33/mt and below. $46/mt, respectively, according to S&P Global data.

Although some factory sources S&P Global spoke to expected Hebei to initiate winter production cuts around mid-November, which could ease the supply glut and support oil prices. steel.

Excess supply may persist
However, with China’s heavily indebted real estate sector and sluggish domestic consumption unlikely to generate additional steel demand for 2023, China’s steel market may remain under excess supply pressure at longer term, especially as more iron and steel manufacturing facilities continue to operate. , according to sources.

For the rest of 2022 and all of 2023, Chinese steelmakers plan to commission a total of 116 million tons/year of new pig iron capacity and 143 million tons/year of new crude steel capacity. thanks to the capacity exchange mechanism, according to an analysis. industry data.

Although the net capacity growth is minimal for these swaps, these new facilities will generally be more efficient and greener than the ones they replaced, and therefore any government-mandated production cuts for environmental protection purposes environment or decarbonization would have less impact on their production.
Source: Platts

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HIRERIGHT HOLDINGS CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q) https://arabcenter.net/hireright-holdings-corp-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/ Fri, 04 Nov 2022 10:07:33 +0000 https://arabcenter.net/hireright-holdings-corp-managements-discussion-and-analysis-of-financial-condition-and-results-of-operations-form-10-q/
You should read the following discussion of the financial condition and results
of operations together with our condensed consolidated financial statements
included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited
consolidated financial statements for the fiscal year ended December 31, 2021,
as disclosed in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC") on March 21, 2022 ("Annual Report").
The statements in the following discussion and analysis regarding expectations
about our future performance, liquidity and capital resources and any other
non-historical statements in this discussion and analysis are forward-looking
statements. These forward-looking statements are subject to numerous risks and
uncertainties, including, but not limited to, those described immediately below.

Caution Regarding Forward-Looking Statements


This Quarterly Report on Form 10-Q and related statements by the Company contain
forward-looking statements within the meaning of the federal securities laws.
You can often identify forward-looking statements by the fact that they do not
relate strictly to historical or current facts, or by their use of words such as
"anticipate," "estimate," "expect," "project," "forecast," "plan," "intend,"
"believe," "seek," "could," "targets," "potential," "may," "will," "should,"
"can have," "likely," "continue," and other terms of similar meaning in
connection with any discussion of the timing or nature of future operating or
financial performance or other events. Forward-looking statements may include,
but are not limited to, statements concerning our anticipated financial
performance, including, without limitation, revenue, profitability, net income
(loss), adjusted EBITDA, adjusted EBITDA margin, adjusted net income, earnings
per share, adjusted diluted earnings per share, and cash flow; strategic
objectives; investments in our business, including development of our technology
and introduction of new offerings; sales growth and customer relationships; our
competitive differentiation; our market share and leadership position in the
industry; market conditions, trends, and opportunities; future operational
performance; pending or threatened claims or regulatory proceedings; and factors
that could affect these and other aspects of our business.

Forward-looking statements are not guarantees. They reflect our current
expectations and projections with respect to future events and are based on
assumptions and estimates and subject to known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements
to be materially different from expectations or results projected or implied by
forward-looking statements.

Factors that could affect the outcome of the forward-looking statements include,
among other things, our vulnerability to adverse economic conditions, including
without limitation inflation and recession, which could increase our costs and
suppress labor market activity and our revenue; the aggressive competition we
face; our heavy reliance on information management systems, vendors, and
information sources that may not perform as we expect; the significant risk of
liability we face in the services we perform; the fact that data security, data
privacy and data protection laws, emerging restrictions on background reporting
due to alleged discriminatory impacts and adverse social consequences, and other
evolving regulations and cross-border data transfer restrictions may increase
our costs, limit the use or value of our services and adversely affect our
business; our ability to maintain our professional reputation and brand name;
the impacts, direct and indirect, of the COVID­19 pandemic on our business, our
personnel and vendors, and the overall economy; social, political, regulatory
and legal risks in markets where we operate; the impact of foreign currency
exchange rate fluctuations; unfavorable tax law changes and tax authority
rulings; any impairment of our goodwill, other intangible assets and other
long-lived assets; our ability to execute and integrate future acquisitions; our
ability to access additional credit or other sources of financing; and the
increased cybersecurity requirements, vulnerabilities, threats and more
sophisticated and targeted cyber-related attacks that could pose a risk to our
systems, networks, solutions, services and data. For more information on the
business risks we face and factors that could affect the outcome of
forward-looking statements, refer to our Annual Report on Form 10-K filed with
the SEC on March 21, 2022, in particular the sections of that document entitled
"Risk Factors," "Forward-Looking Statements," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and other filings we
make from time to time with the SEC. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.

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Investors should read this Quarterly Report on Form 10-Q and the documents that
we reference in this report and have filed or will file with the SEC completely
and with the understanding that our actual future results may be materially
different from what we expect. We qualify all of our forward-looking statements
by these cautionary statements.

Company overview


HireRight is a leading global provider of technology-driven workforce risk
management and compliance solutions. We provide comprehensive background
screening, verification, identification, monitoring, and drug and health
screening services for approximately 39,000 customers across the globe. We offer
our services via a unified global software and data platform that tightly
integrates into our customers' human capital management ("HCM") systems enabling
highly effective and efficient workflows for workforce hiring, onboarding, and
monitoring. In 2021, we screened over 29 million job applicants, employees and
contractors for our customers and processed over 110 million screens.

HireRight GIS Group Holdings LLC ("HGGH"), was formed in July 2018 in connection
with the combination of two groups of companies: the HireRight Group and the
General Information Services ("GIS") Group, each of which includes a number of
wholly-owned subsidiaries that conduct the Company's business in the United
States, as well as other countries. Since July 2018, the combined group of
companies and their subsidiaries have operated as a unified operating company
providing screening and compliance services, predominantly under the HireRight
brand.

On October 15, 2021, HGGH converted into a Delaware corporation and changed its
name to HireRight Holdings Corporation ("HireRight" or the "Company"). In
conjunction with the conversion, all of HGGH's outstanding equity interests were
converted into shares of common stock of HireRight Holdings Corporation. The
foregoing conversion and related transactions are referred to herein as the
"Corporate Conversion." The Corporate Conversion did not affect the assets and
liabilities of HGGH, which became the assets and liabilities of HireRight
Holdings Corporation.

Factors Affecting Our Results of Operations

Economic conditions


Our business is impacted by the overall economic environment and total
employment and hiring. The rapidly changing dynamics of the global workforce are
creating increased complexity and regulatory scrutiny for employers, bolstering
the importance of the solutions we deliver. We have benefited from key demand
drivers, which increase the need for more flexible, comprehensive screening and
hiring solutions in the current environment. Our customers are a diverse set of
organizations, from large-scale multinational businesses to small and medium
businesses across a broad range of industries, including transportation,
healthcare, technology, financial services, business and consumer services,
manufacturing, education, retail and not-for-profit. Hiring requirements and
regulatory considerations can vary significantly across the different types of
customers, geographies and industry sectors we serve, creating demand for the
extensive institutional knowledge we have developed from our decades of
experience.

While we have benefited from the changing dynamics of the labor market as well
as a strong hiring environment, there continues to be uncertainty around the
near term macroeconomic environment. This uncertainty stems from high inflation,
volatile energy prices, rising interest rates, geopolitical concerns, supply
chain disruptions and labor shortages. Each of these drivers has its own adverse
impact and the outlook for our business remains uncertain. Inflation puts
pressure on our suppliers, resulting in increased data costs, and also increases
our employment and other expenses. A sustained recession will have an adverse
impact on the global hiring market and therefore the demand for our services.
Slowing demand for our services will adversely affect our future results.
Additionally rising interest rates will lead directly to higher interest
expense. See "Item 3. Quantitative and Qualitative Disclosures about Market Risk
- Inflation Risk" for additional information on the impact of inflation on our
business. Although the majority of our cost of services are variable in nature
and will move in tandem with revenue increases or decreases, there can be no
assurance that we can reduce our cost of services in proportion to
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income changes. The Company has taken steps to continue to improve its profitability, including the impact of lower interest charges through the voluntary repayment of debt.


The Company's net U.S. federal and state deferred tax assets were previously
fully offset by a valuation allowance, excluding a portion of its deferred tax
liabilities for tax deductible goodwill, primarily as a result of the Company's
lack of U.S. earnings history and cumulative loss position. The Company prepares
a quarterly analysis of its deferred tax assets which considers positive and
negative evidence, including its cumulative income (loss) position, revenue
growth, continuing and improved profitability, and expectations regarding future
profitability. Although the Company believes its estimates are reasonable, the
ultimate determination of the appropriate amount of valuation allowance involves
significant judgment.

Even though there are factors creating uncertainty in the future financial
results of the business as described above, the Company determined sufficient
positive evidence existed to conclude that the U.S. deferred tax assets are more
likely than not realizable. As a result, the Company released the valuation
allowance attributed to the deferred tax assets associated with the Company's
operations in the U.S. during the three months ended September 30, 2022. In
making the determination to release the valuation allowance, the Company
considered its movement into a cumulative income position for the most recent
three-year period, the significant decrease in its interest expense from the
paydown of debt in the fourth quarter of 2021 using IPO proceeds, its seventh
consecutive quarter of operating income, forecasts of future earnings for its
U.S. operations, and other factors. The release of the valuation allowance
resulted in a non-cash deferred tax benefit of $70.2 million, which materially
decreased the Company's income tax expense during the three months ended
September 30, 2022.

Developments 2022


On June 3, 2022, the Company entered into an amendment to its First Lien Term
Loan Facility, as defined below under "Liquidity and Capital Resources",
("Amended First Lien Term Loan Facility") with the lenders party thereto and
Bank of America, N.A. as administrative agent. The Amended First Lien Term Loan
Facility amended the Company's revolving credit facility ("Amended Revolving
Credit Facility") to increase the aggregate commitments under the facility from
$100.0 million to $145.0 million and extend the maturity date from July 12, 2023
to the earlier of June 3, 2027 or 91 days prior to the maturity of the First
Lien Term Loan Facility. The interest rate benchmark applicable to the Amended
Revolving Credit Facility was converted from the London Interbank Offered Rate
("LIBOR") to the Secured Overnight Financing Rate ("SOFR").

Effective February 18, 2022, the Company terminated the Interest Rate Swap
Agreements, as defined below, prior to their stated termination dates. In
connection with the termination of the Interest Rate Swap Agreements, the
Company made a payment of $18.4 million to the swap counterparties. Following
these terminations, $21.5 million of unrealized gains related to the terminated
Interest Rate Swap Agreements included in accumulated other comprehensive income
(loss) on the condensed consolidated balance sheet will be reclassified to
earnings as reductions to interest expense through December 31, 2023. See
"Liquidity and Capital Resources - Interest Rate Swaps" below for additional
information.

Key elements of our operating results

Revenue


The Company generates revenues from background screening and compliance services
delivered in online reports. Our customers place orders for our services and
reports either individually or through batch ordering. Each report is accounted
for as a single order which is then typically consolidated and billed to our
customers on a monthly basis. Approximately 28% of revenues for each of the
three and nine months ended September 30, 2022 and 32% and 29% of revenues for
the three and nine months ended September 30, 2021, respectively, were generated
from the Company's top 50 customers, which consist of large U.S. and
multinational companies across diversified industries such as transportation,
healthcare, technology, financial services, business and consumer services,
manufacturing, education, retail and not-for-profit. None of the Company's
customers individually accounted for greater than 3% of revenues during each of
the three and nine months ended September 30, 2022, and

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5% of revenues during each of the three and nine months ended September 30,
2021. Technology, healthcare, financial services, and transportation customers
represent the largest contributors to revenues. Revenues for the three and nine
months ended September 30, 2022, from these customers increased 5% and 24%,
respectively, over the prior year periods.

Expenses


Cost of services (excluding depreciation and amortization) consists of data
acquisition costs, medical laboratory and collection fees, personnel-related
costs for operations, customer service and customer onboarding functions, as
well as other direct costs incurred to fulfill our services. Approximately 80%
of cost of services is variable in nature.

Selling, general and administrative expenses consist of personnel-related costs
for sales, technology, administrative and corporate management functions in
addition to costs for third-party technology, professional and consulting
services, advertising and facilities expenses. Selling, general and
administrative expenses also include amortization of capitalized cloud computing
software costs.

Depreciation and amortization expenses consist of depreciation of property and
equipment, as well as amortization of purchased and developed software and other
intangible assets, principally resulting from the acquisition of GIS in 2018.

Other expenses consist of interest expense relating to our credit facilities and
interest rate swap agreements, gains and losses on asset disposal, foreign
exchange gains and losses, as well as other expenses. The majority of our
receivables and payables are denominated in U.S. dollars, but we also earn
revenue, pay expenses, own assets and incur liabilities in countries using
currencies other than the U.S. dollar, including the Euro, the British pound,
the Polish zloty, the Australian dollar, the Canadian dollar, the Singapore
dollar, the Mexican peso, the Japanese yen, and the Indian rupee, among others.
Therefore, increases or decreases in the value of the U.S. dollar against other
currencies could result in realized and unrealized gains and losses in foreign
exchange. However, to the extent we earn revenue in currencies other than the
U.S. dollar, we generally pay a corresponding amount of expenses in such
currency and therefore the cumulative impact of these foreign exchange
fluctuations is not generally deemed material to our financial performance.

The income tax expense consists of WE federal, state and local income taxes based on income in multiple jurisdictions for our affiliates.

Operating results

Comparison of operating results for the three and nine months ended
September 30, 2022 and 2021

The following tables present the results of operations for the three and nine months ended September 30, 2022 and 2021.

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                                                                    Three Months Ended September 30,
                                                                2022                                  2021
                                                               (in thousands, except percent of revenues)
Revenues                                          $   210,303             100.0  %       $ 204,981             100.0  %

Expenses

Cost of services (exclusive of depreciation and
amortization below)                                   110,848              52.7  %         111,328              54.3  %
Selling, general and administrative                    49,378              23.5  %          47,652              23.2  %
Depreciation and amortization                          17,946               8.5  %          19,531               9.5  %
Total expenses                                        178,172              84.7  %         178,511              87.1  %
Operating income                                       32,131              15.3  %          26,470              12.9  %

Other expenses
Interest expense                                        8,457               4.0  %          18,518               9.0  %
Other expense, net                                         89                 -  %              22                 -  %
Total other expenses, net                               8,546               4.1  %          18,540               9.0  %
Income before income taxes                             23,585              11.2  %           7,930               3.9  %
Income tax (benefit) expense                          (69,704)            (33.1) %             649               0.3  %
Net income                                        $    93,289              44.4  %       $   7,281               3.6  %



                                                                     Nine Months Ended September 30,
                                                                2022                                  2021
                                                               (in thousands, except percent of revenues)
Revenues                                          $   631,306             100.0  %       $ 531,522             100.0  %

Expenses

Cost of services (exclusive of depreciation and
amortization below)                                   343,241              54.4  %         295,832              55.7  %
Selling, general and administrative                   152,032              24.1  %         130,261              24.5  %
Depreciation and amortization                          54,056               8.6  %          56,013              10.5  %
Total expenses                                        549,329              87.0  %         482,106              90.7  %
Operating income                                       81,977              13.0  %          49,416               9.3  %

Other expenses
Interest expense                                       20,971               3.3  %          54,674              10.3  %
Other expense, net                                        163                 -  %             125                 -  %
Total other expenses, net                              21,134               3.3  %          54,799              10.3  %
Income (loss) before income taxes                      60,843               9.6  %          (5,383)             (1.0) %
Income tax (benefit) expense                          (68,456)            (10.8) %           2,954               0.6  %
Net income (loss)                                 $   129,299              20.5  %       $  (8,337)             (1.6) %



Revenues

Turnover for the three months ended September 30, 2022 increased to $210.3 millionan augmentation of $5.3 million, or 2.6%, over the prior year period, primarily due to increased overload revenue. Surcharge

                                       32
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revenues increased due to price increases. Revenues from international and
United States regions increased by $0.3 million, or 2.1%, and by $5.0 million,
or 2.6%, respectively, during the three months ended September 30, 2022,
compared to the three months ended September 30, 2021. The strengthening of the
U.S. dollar against the British pound in the three months ended September 30,
2022, compared to the same period in 2021 had an unfavorable impact on revenue
from international regions. On a constant currency basis, United Kingdom
revenues would have been $2.0 million higher than actual revenues. Constant
currency represents current period results that have been retranslated using
exchange rates in effect in the prior comparable period.

Revenues for the nine months ended September 30, 2022 increased to $631.3
million, an increase of $99.8 million, or 18.8%, from prior-year period,
primarily driven by higher order volume and higher average order values
associated with existing customers and sales to new customers. Revenues from
international and United States regions increased by $8.5 million, or 21.1%, and
by $91.3 million, or 18.6%, respectively, during the nine months ended September
30, 2022, compared to the nine months ended September 30, 2021. For the same
reasons noted in the preceding paragraph, on a constant currency basis, United
Kingdom revenues would have been $3.5 million higher than actual revenues for
the nine months ended September 30, 2022.

Cost of services (excluding depreciation and amortization)


Cost of services for the three months ended September 30, 2022 decreased to
$110.8 million, a decrease of $0.5 million, or 0.4%, from the prior-year period,
primarily due to lower average labor costs per background screen partially
offset by increased data supplier costs and increased fringe benefit programs to
keep up with market conditions. Cost of services as a percent of revenues
decreased to 52.7% for the three months ended September 30, 2022, compared to
54.3% for the three months ended September 30, 2021, primarily driven by lower
average labor costs per background screen as a result of process improvements
associated with our ongoing technology initiatives as well as an increase in the
use of offshore labor.

Cost of services for the nine months ended September 30, 2022 increased to
$343.2 million, an increase of $47.4 million, or 16.0%, from the prior-year
period, primarily due to higher volumes and increased incentive compensation and
fringe benefit programs to keep up with market conditions. For the same reasons
noted in the preceding paragraph, cost of services as a percent of revenues
decreased to 54.4% for the nine months ended September 30, 2022, compared to
55.7% for the nine months ended September 30, 2021.

Selling, general and administrative expenses


Selling, general and administrative expenses ("SG&A") for the three months ended
September 30, 2022 increased $1.7 million to $49.4 million primarily due to
increases in personnel costs of $3.4 million and increases in professional
service fees of $1.3 million, partially offset by a decrease in facility related
expenses of $2.7 million. Of the $3.4 million increase in personnel costs, $3.2
million was related to increased salary expenses, incentive compensation and
fringe benefit programs. SG&A as a percent of revenues for the three months
ended September 30, 2022 increased to 23.5% from 23.2% for the three months
ended September 30, 2021.

SG&A expenses for the nine months ended September 30, 2022 increased $21.8
million to $152.0 million primarily due to increases in personnel costs of $19.1
million, investments in technology of $3.3 million, and the addition of public
company costs of $3.2 million. Of the $19.1 million increase in personnel costs,
$5.6 million was related to stock-based compensation and $13.5 million was
related to increased salary expenses, incentive compensation and fringe benefit
programs. The increases were partially offset by a decrease in facility related
expenses of $4.9 million. SG&A as a percent of revenues for the nine months
ended September 30, 2022 decreased slightly to 24.1% from 24.5% for the nine
months ended September 30, 2021.

The increases in personnel costs in both periods were attributable to responses
to increases in market compensation rates, the increased use of stock-based
compensation following our initial public offering in November 2021, and
staffing to support growth. Our initial public offering also drove the addition
of public company costs including incremental audit, accounting and legal fees
as well as premiums for increased insurance coverage, which were not present in
the 2021 periods but which will continue. The increases in SG&A expenses

                                       33
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were partially offset in each period by decreases in various other costs, including a reduction in facilities-related expenses resulting from the vacating of unused office space in 2021.


Interest Expense

Interest expense decreased by $10.1 million to $8.5 million for the three months
ended September 30, 2022, and by $33.7 million to $21.0 million for the nine
months ended September 30, 2022. The decreases in both periods were primarily
due to a reduction in outstanding indebtedness under our credit facilities as a
result of voluntary principal prepayments using IPO proceeds during the fourth
quarter of 2021, and scheduled principal repayments. Interest expense for the
three and nine months ended September 30, 2021 includes $4.2 million and
$12.4 million, respectively, related to a second lien senior secured term loan
facility which was repaid on November 3, 2021. Additionally, reclassifications
from accumulated other comprehensive income (loss) on the condensed consolidated
balance sheet of unrealized gains related to the terminated Interest Rate Swap
Agreements, reduced interest expense by $3.4 million and $9.7 million during the
three and nine months ended September 30, 2022, respectively. The decreases for
the three and nine months ended September 30, 2022 were partially offset by
increased interest expense of $3.7 million and $4.9 million, respectively,
associated with rising interest rates during those periods.

Income tax expense (benefits)


The effective tax rate for the three months ended September 30, 2022, was
negative 295.5% compared to 8.2% for the three months ended September 30, 2021.
The effective tax rate for the nine months ended September 30, 2022, was
negative 112.5% compared to 54.9% for the nine months ended September 30, 2021.
The effective tax rate for the three and nine month periods ended September 30,
2022, compared to the prior year periods, changed primarily due to the release
of the federal and state valuation allowances in 2022 and revaluation of
deferred taxes in the United Kingdom in 2021.

The effective tax rate for the three and nine months ended September 30, 2022,
differs from the Federal statutory rate of 21% primarily due to the release of
federal and state valuation allowances, state taxes, and U.S. tax on foreign
operations. The effective tax rate for the three months ended September 30,
2021, differs from the Federal statutory rate of 21% primarily due to valuation
allowances, state taxes, and U.S. tax on foreign operations. The effective tax
rate for the nine months ended September 30, 2021, differs from the Federal
statutory rate of 21% primarily due to the revaluation of deferred taxes in the
United Kingdom.

Non-GAAP Financial Measures

We believe that the presentation of our non-GAAP financial measures provides
information useful to investors in assessing our financial condition and results
of operations. These measures should not be considered an alternative to net
income (loss) or any other measure of financial performance or liquidity
presented in accordance with accounting principles generally accepted in the
United States ("GAAP"). These measures have important limitations as analytical
tools because they exclude some but not all items that affect the most directly
comparable GAAP measures. Additionally, because they may be defined differently
by other companies in our industry, our definitions may not be comparable to
similarly titled measures of other companies, thereby diminishing their utility.

Adjusted EBITDA and Adjusted EBITDA margin


Adjusted EBITDA represents, as applicable for the period, net income (loss)
before interest expense, income taxes, depreciation and amortization expense,
stock-based compensation, realized and unrealized gain (loss) on foreign
exchange, merger integration expenses, amortization of cloud computing software
costs, legal settlement costs deemed by management to be outside the normal
course of business, and other items management believes are not representative
of the Company's core operations. Adjusted EBITDA Margin is defined as Adjusted
EBITDA divided by revenues for the period. Adjusted EBITDA and Adjusted EBITDA
margin are supplemental financial

                                       34
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measures that management and external users of our financial statements, such as
industry analysts, investors, lenders and rating agencies, may use to assess
our:

• Operating performance relative to other publicly traded companies, regardless of capital structure or historical cost base;

•Ability to generate cash flow;

•Ability to contract and service debt and finance capital expenditures; and

•Viability of acquisitions and other capital expenditure projects and returns on investment from various investment opportunities.


The following table reconciles our non-GAAP financial measure of Adjusted EBITDA
to net income (loss), our most directly comparable financial measures calculated
and presented in accordance with GAAP, for the periods presented.


                                                            Three Months Ended                              Nine Months Ended
                                                              September 30,                                   September 30,
                                                      2022                     2021                   2022                      2021
                                                                                      (in thousands)
Net income (loss)                                    $93,289                  $7,281                $129,299                  $(8,337)
Income tax (benefit) expense (1)                    (69,704)                    649                 (68,456)                   2,954
Interest expense                                      8,457                   18,518                 20,971                    54,674
Depreciation and amortization                        17,946                   19,531                 54,056                    56,013
EBITDA                                                49,988                   45,979                135,870                   105,304
Stock-based compensation                              1,282                     841                  8,587                     2,493
Realized and unrealized (gain) loss on foreign
exchange                                              (780)                     24                   (795)                      125
Merger integration expenses (2)                         -                       193                   205                      1,174
Technology investments (3)                             559                     1,690                  559                      1,690
Amortization of cloud computing software costs
(4)                                                    980                       -                   1,446                       -
Other items (5)                                       1,943                    2,895                 3,501                     6,659
Adjusted EBITDA                                      $53,972                  $51,622               $149,373                  $117,445
Net income (loss) margin (6)                           44%                      4%                    20%                        2%
Adjusted EBITDA margin                                 26%                      25%                   24%                       22%



(1)During the three months ended September 30, 2022, the Company determined
sufficient positive evidence existed to reverse the Company's valuation
allowance attributable to the deferred tax assets associated with the Company's
operations in the U.S. This reversal resulted in a non-cash deferred tax benefit
of $70.2 million, which materially decreased the Company's income tax expense
during the three and nine months ended September 30, 2022.

(2) Merger integration expenses consist primarily of information technology (“IT”) related costs, including personnel expenses, professional and service fees associated with customer integration and GIS operations, which began in July 2018 and was substantially completed at the end of 2020.

(3) Technology investments represent discovery phase costs associated with various platform and runtime technology initiatives aimed at achieving greater operational efficiency.


(4)Amortization of cloud computing software costs consists of expense recognized
in selling, general and administrative expenses for capitalized implementation
costs for cloud computing IT systems incurred in connection with our platform
and

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execution technology initiatives that aim to increase operational efficiency. This charge is not included in the amortization above.


(5)Other items include (i) costs of $0.4 million and $1.7 million associated
with the implementation of a company-wide enterprise resource planning ("ERP")
system during the three and nine months ended September 30, 2022, respectively,
(ii) $1.0 million and $1.6 million of severance costs during the three and nine
months ended September 30, 2022, respectively, and (iii) $0.4 million related to
professional services fees not related to core operations for the three and nine
months ended September 30, 2022, and (iv) $0.2 million related to loss on
disposal of assets and exit costs associated with one of our short-term leased
facilities during the nine months ended September 30, 2022. These costs were
partially offset by a reduction in previously accrued legal settlement expense
of $0.6 million during the nine months ended September 30, 2022 due to a more
favorable outcome than originally anticipated in a claim outside the ordinary
course of business. Other items for the three and nine months ended
September 30, 2021 include (i) $1.1 million and $4.3 million, respectively,
related to the preparation of the Company's initial public offering during 2021,
(ii) $1.5 million related to loss on disposal of assets and exit costs
associated with one of our short-term leased facilities during the three and
nine months ended September 30, 2021, and (iii) costs of $0.3 million and $0.8
million associated with the implementation of an ERP system during the three and
nine months ended September 30, 2021.

(6) Net earnings (loss) margin represents net earnings (loss) divided by revenues for the period.

Adjusted net earnings and adjusted diluted earnings per share


In addition to Adjusted EBITDA, management believes that Adjusted Net Income is
a strong indicator of our overall operating performance and is useful to our
management and investors as a measure of comparative operating performance from
period to period. We define Adjusted Net Income as net income (loss) adjusted
for amortization of acquired intangible assets, stock-based compensation,
realized and unrealized gain (loss) on foreign exchange, merger integration
expenses, amortization of cloud computing software costs, legal settlement costs
deemed by management to be outside the normal course of business, and other
items management believes are not representative of the Company's core
operations, to which we apply an adjusted effective tax rate. See the footnotes
to the table below for a description of certain of these adjustments. We define
Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by the
adjusted weighted average number of shares outstanding (diluted) for the
applicable period. We believe Adjusted Diluted Earnings Per Share is useful to
investors and analysts because it enables them to better evaluate per share
operating performance across reporting periods and to compare our performance to
that of our peer companies.

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The following table reconciles our non-GAAP financial measure of Adjusted Net
Income to net income (loss), our most directly comparable financial measure
calculated and presented in accordance with GAAP, for the periods presented:

                                                     Three Months Ended                    Nine Months Ended
                                                       September 30,                         September 30,
                                                   2022               2021               2022              2021
                                                                         (in thousands)
Net income (loss)                             $    93,289          $  7,281          $ 129,299          $ (8,337)
Income tax (benefit) expense (1)                  (69,704)              649            (68,456)            2,954
Income (loss) before income taxes                  23,585             7,930             60,843            (5,383)
Amortization of acquired intangible assets         15,353            16,226             46,335            47,518
Interest expense swap adjustments (2)              (3,413)                -             (9,676)                -
Interest expense discounts (3)                        790             1,057              2,549             3,139
Stock-based compensation                            1,282               841              8,587             2,493
Realized and unrealized (gain) loss on
foreign exchange                                     (780)               24               (795)              125
Merger integration expenses (4)                         -               193                205             1,174
Technology investments (5)                            559             1,690                559             1,690
Amortization of cloud computing software
costs (6)                                             980                 -              1,446                 -
Other items (7)                                     1,943             2,895              3,501             6,659
Adjusted income before income taxes                40,299            30,856            113,554            57,415
Adjusted income taxes (8)                         (71,216)              662            (70,951)            2,533
Adjusted Net Income                              $111,515            $30,194           $184,505           $54,882


                                       37
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The following table shows the calculation of adjusted diluted earnings per share for the periods presented:

                                                         Three Months Ended                            Nine Months Ended
                                                           September 30,                                 September 30,
                                                     2022                    2021                  2022                   2021

Diluted net income (loss) per share           $      1.17               $      0.13          $      1.63             $     (0.15)
Income tax (benefit) expense (1)                    (0.88)                     0.01                (0.86)                   0.05
Amortization of acquired intangible assets           0.19                      0.29                 0.58                    0.83
Interest expense swap adjustments (2)               (0.04)                        -                (0.12)                      -
Interest expense discounts (3)                       0.01                      0.02                 0.03                    0.06
Stock-based compensation                             0.02                      0.01                 0.11                    0.04
Realized and unrealized loss on foreign
exchange                                            (0.01)                        -                (0.01)                      -
Merger integration expenses (4)                         -                         -                    -                    0.02
Technology investments (5)                           0.01                      0.03                 0.01                    0.03
Amortization of cloud computing software
costs (6)                                            0.01                         -                 0.02                       -
Other items (7)                                      0.02                      0.05                 0.04                    0.12
Adjusted income taxes (8)                            0.90                     (0.01)                0.89                   (0.04)
Adjusted Diluted Earnings Per Share           $      1.40               $      0.53          $      2.32             $      0.96

Weighted average number of shares outstanding
- diluted                                              79,542,715           57,199,204              79,476,574           57,168,291




(1)During the three months ended September 30, 2022, the Company determined
sufficient positive evidence existed to reverse the Company's valuation
allowance attributable to the deferred tax assets associated with the Company's
operations in the U.S. This reversal resulted in a non-cash deferred tax benefit
of $70.2 million, which materially decreased the Company's income tax expense
during the three and nine months ended September 30, 2022.

(2) Interest expense swap adjustments consist of the amortization of unrealized gains on terminated interest rate swap contracts, which will be recognized in December 2023 as a reduction in interest charges.

(3) Interest expense discounts include the amortization of the initial issue discount and debt issue costs.

(4) Merger integration expenses consist primarily of information technology (“IT”) related costs, including personnel expenses, professional and service fees associated with customer integration and to GIS operations, which began in July 2018 and was substantially completed at the end of 2020.

(5) Technology investments represent discovery phase costs associated with various platform and runtime technology initiatives aimed at achieving greater operational efficiency.


(6)Amortization of cloud computing software costs consists of expense recognized
in selling, general and administrative expenses for capitalized implementation
costs for cloud computing IT systems incurred in connection with our platform
and fulfillment technology initiatives that are intended to achieve greater
operational efficiencies. This expense is not included in depreciation and
amortization above.

(7)Other items include (i) costs of $0.4 million and $1.7 million associated
with the implementation of a company-wide enterprise resource planning ("ERP")
system during the three and nine months ended September 30, 2022, respectively,
(ii) $1.0 million and $1.6 million of severance costs during the three and nine
months ended September 30, 2022, respectively, and (iii) $0.4 million related to
professional services fees not related to core operations for the three and nine
months ended September 30, 2022, and (iv) $0.2 million related to loss on
disposal of assets and exit costs associated with one of our short-term leased
facilities during the nine months ended September 30, 2022. These costs

                                       38
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were partially offset by a reduction in previously accrued legal settlement
expense of $0.6 million during the nine months ended September 30, 2022 due to a
more favorable outcome than originally anticipated in a claim outside the
ordinary course of business. Other items for the three and nine months ended
September 30, 2021 include (i) $1.1 million and $4.3 million, respectively,
related to the preparation of the Company's initial public offering during 2021,
(ii) $1.5 million related to loss on disposal of assets and exit costs
associated with one of our short-term leased facilities during the three and
nine months ended September 30, 2021, and (iii) costs of $0.3 million and $0.8
million associated with the implementation of an ERP system during the three and
nine months ended September 30, 2021.

(8)The tax effect of each adjustment is determined based on the tax laws and
valuation allowance status of the jurisdiction to which the adjustment relates.
An adjusted effective income tax rate has been determined for each period
presented by applying the statutory income tax rate, net of applicable
adjustments for valuation allowances, which was used to compute Adjusted Net
Income for the periods presented. Due to the existence of a U.S. tax valuation
allowance, the tax impact of the pre-tax adjustments for the three and nine
months ended September 30, 2021 is immaterial. During the three months ended
September 30, 2022, the Company determined sufficient positive evidence existed
to reverse the Company's valuation allowance attributable to the deferred tax
assets associated with the Company's operations in the U.S. This reversal
resulted in a non-cash deferred tax benefit of $70.2 million, which materially
decreased the Company's income tax expense during the three and nine months
ended September 30, 2022. As a result of the reversal of the valuation
allowance, the U.S. tax provision for the remainder of the year is expected to
be immaterial.


Cash and capital resources

General


Our primary sources of liquidity and capital resources are cash generated from
our operating activities, cash on hand, and borrowings under our long-term debt
arrangements. Income taxes have historically not been a significant use of funds
but after the benefits of our net operating loss ("NOL") carryforwards are fully
recognized, could become a material use of funds, depending on our future
profitability and future tax rate. Additionally, as a result of the income tax
receivable agreement ("TRA") we entered into in connection with the IPO, we will
be required to pay certain pre-IPO equityholders or their transferees 85% of the
benefits, if any, that the Company and its subsidiaries realize, or are deemed
to realize in income tax savings due to our utilization of the NOLs and other
tax attributes, for which the Company recognized an estimated total liability of
$211.4 million as of September 30, 2022. Based on our current taxable income
estimates, we expect to repay the majority of this obligation by the end of
2030. These payments will result in cash outflows of amounts we would otherwise
have retained in the form of tax savings from the application of the NOLs and
other tax attributes.

Cash and cash equivalents not allocated to September 30, 2022 has been
$146.5 million. From September 30, 2022cash held in foreign jurisdictions was approximately $17.1 million and is mainly related to international operations.


Restricted cash of $1.3 million as of September 30, 2022 consists primarily of
$1.1 million held in escrow for the benefit of former investors in a subsidiary
of the Company pursuant to the terms of its divestiture of a former affiliate in
April 2018.

Debt

The Company currently has two long-term debt agreements:


•The Amended First Lien Term Loan Facility, a first lien senior secured term
loan facility, bearing interest payable monthly at a LIBOR variable rate (3.12%
at September 30, 2022) + 3.75%, maturing on July 12, 2025. Total principal
outstanding on our debt was $701.6 million as of September 30, 2022 and $707.9
million as of December 31, 2021.

• The Amended Revolving Credit Facility, a first lien senior secured revolving credit facility in an aggregate principal amount of up to $145.0 millionincluding an $40.0 million letter of credit sub-facility, bearing

                                       39
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interest monthly at a SOFR variable rate (2.47% at September 30, 2022) + 2.5%
(subject to adjustment pursuant to a leverage-based pricing grid) and maturing
on June 3, 2027 or, if earlier, 91 days prior to the maturity of the Company's
term loans under the Amended First Lien Term Loan Facility. The Company had
$143.7 million in available borrowing capacity under the Amended Revolving
Credit Facility, after utilizing $1.3 million for letters of credit as of
September 30, 2022.

The Amended First Lien Term Loan Facility includes a financial maintenance
covenant for the benefit of the revolving lenders thereunder, which requires us
to maintain a maximum first lien leverage ratio as of the last day of any fiscal
quarter on which greater than 35% of the revolving commitments are drawn
(excluding for this purpose up to $15.0 million of undrawn letters of credit).
The Company was in compliance with the covenants under the Amended First Lien
Facilities for the three and nine months ended September 30, 2022.

The Company's obligations under the Amended First Lien Facilities are
guaranteed, jointly and severally, on a senior secured first-priority basis, by
substantially all of the Company's domestic wholly-owned material subsidiaries,
as defined in the agreement, and are secured by first-priority security
interests in substantially all of the assets of the Company and its domestic
wholly-owned material subsidiaries, subject to certain permitted liens and
exceptions. Collateral includes all outstanding equity interests in whatever
form of the borrower and each restricted subsidiary that is owned by any credit
party.

Operating Commitments

As of September 30, 2022, the Company had purchase obligations to various
parties of approximately $28.9 million in the aggregate, primarily to purchase
data and other screening services in the ordinary course of business. These
purchase obligations have varying expiration terms through 2023, and
approximately $25.8 million of the total is expected to be paid within one year.
Our obligations as of September 30, 2022, have increased from $21.7 million as
of December 31, 2021, due to the extension of a service agreement with one of
the Company's current vendors.

In addition to our regular capital expenditures, we expect to invest
approximately $45 to $50 million in a capital expenditure program, expected to
extend through the end of fiscal year 2023 to continue to enhance our operating
systems and technologies to improve operational efficiency. We expect that cash
flow from operations and current cash balances, together with available
borrowings under the Amended Revolving Credit Facility, will be sufficient to
meet operating requirements as well as the obligations under the TRA through the
next twelve months. Although we believe we have adequate sources of liquidity
over the long term, cash available from operations could be affected by any
general economic downturn or any decline or adverse changes in our business such
as a loss of customers, market and or competitive pressures, unanticipated
liabilities, or other significant changes in business environment. Additional
future financing may be necessary to fund our operations, and there can be no
assurance that, if needed, we will be able to secure additional debt or equity
financing on terms acceptable to us or at all.

Cash flow analysis

Comparison of cash flows for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The following table presents a summary of our condensed consolidated cash flows for the nine months ended September 30, 2022 and 2021:

                                       40
--------------------------------------------------------------------------------


                                                                  Nine Months Ended September 30,
                                                                      2022                2021
                                                                           (in thousands)
Net cash provided by operating activities                         $   70,927          $  19,043
Net cash used in investing activities                                (13,122)            (9,983)
Net cash used in financing activities                                (25,050)            (7,503)

Net increase in cash, cash equivalents and restricted cash $32,755 $1,557



Operating Activities

Cash provided by operating activities reflects net income (loss) adjusted for
certain non-cash items and changes in operating assets and liabilities. Cash
provided by operating activities was $70.9 million for the nine months ended
September 30, 2022 compared to cash provided by operating activities of $19.0
million for the nine months ended September 30, 2021. The increase in cash
provided by operating activities was due primarily to higher net income for the
current period compared to the prior year period, partly offset by the tax
benefit from the release of the valuation allowance and higher use of cash for
working capital which includes our expenditures related to our cloud computing
platform modernization and automation efforts.

Investing activities


Cash used in investing activities was approximately $13.1 million during the
nine months ended September 30, 2022, compared to approximately $10.0 million
during the nine months ended September 30, 2021. The increase was due primarily
to increases in capitalized software development costs under our program to
enhance operational efficiencies compared to the prior period, partly offset by
a decrease of purchases of property and equipment.

Fundraising activities


Cash used in financing activities was approximately $25.1 million for the nine
months ended September 30, 2022 compared to cash used in financing activities of
approximately $7.5 million during the nine months ended September 30, 2021. The
increase was due primarily to the $18.4 million payment related to the
termination of the Interest Rate Swap Agreements, as defined below. Mandatory
repayments on our debt facilities were $6.3 million in in each of the nine
months ended September 30, 2022 and 2021.

Interest rate swaps


Effective December 31, 2018, the Company had entered into interest rate swap
agreements with a total notional amount of $700.0 million ("Interest Rate Swap
Agreements"). The Interest Rate Swap Agreements were designed to provide
predictability against changes in the interest rates on the Company's debt, as
the Interest Rate Swap Agreements converted a portion of the variable interest
rate on the Company's debt to a fixed rate. The Interest Rate Swap Agreements
were originally scheduled to expire on December 31, 2023.

On September 26, 2019, the Company modified the terms of the Interest Rate Swap
Agreements with the then existing counterparties to change the LIBOR reference
period to one month. The notional amount and maturities of the Interest Rate
Swap Agreements remained unchanged. The Company elected hedge accounting
treatment at that time. To ensure the effectiveness of the Interest Rate Swap
Agreements, the Company elected the one-month LIBOR rate option for its variable
rate interest payments on term balances equal to or in excess of the applicable
notional amount of the Interest Rate Swap Agreement as of each reset date. The
reset dates and other critical terms on the term loans perfectly matched with
the interest rate cap reset dates and other critical terms through February 18,
2022, the date the Interest Rate Swap Agreements were terminated, and during the
three and nine months ended September 30, 2021. At September 30, 2022 and
December 31, 2021, the effective portion of the Interest Rate Swap

                                       41
--------------------------------------------------------------------------------

The agreements were included in the condensed consolidated balance sheets in accumulated other comprehensive income.


Effective February 18, 2022, the Company terminated the Interest Rate Swap
Agreements. In connection with the termination of the Interest Rate Swap
Agreements, the Company made a payment of $18.4 million to the swap
counterparties. Following these terminations, $21.5 million of unrealized gains
related to the terminated Interest Rate Swap Agreements included in accumulated
other comprehensive income (loss) will be reclassified to earnings as reductions
to interest expense through December 31, 2023.

Off-balance sheet arrangements

From September 30, 2022we had no off-balance sheet arrangements within the meaning of Section 303(a)(4)(ii) of Regulation SK.

Recently issued accounting pronouncements

See Note 2 – Recently issued accounting pronouncements for more information on recently adopted accounting pronouncements and those not yet adopted.

© Edgar Online, source Previews

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PDNA report estimates $16.3 billion for post-flood reconstruction https://arabcenter.net/pdna-report-estimates-16-3-billion-for-post-flood-reconstruction/ Sat, 29 Oct 2022 04:41:15 +0000 https://arabcenter.net/pdna-report-estimates-16-3-billion-for-post-flood-reconstruction/

ISLAMABAD:

Pakistan needed at least $16.3 billion for flood rehabilitation and reconstruction, a new post-disaster needs assessment (PDNA) report revealed on Friday.

The PDNA report, released by government officials and international development institutions, put the cost of the floods at $30.1 billion – $14.9 billion in damages and $15.2 billion in losses.

The figure is $2.2 billion lower than originally announced by the government at a donor roundtable in the United States earlier this month. The scope of the report is limited to 94 affected districts, excluding areas that were affected by floods but not declared disaster areas.

“Pakistan will need a minimum of $16.3 billion for rehabilitation and reconstruction, which is based on what the government and the international community can do for people affected by the floods due to limited resources” ,

Planning Minister Ahsan Iqbal said at the launch ceremony.

The sector that suffered the most damage was housing, with $5.6 billion in damages and $636 million in additional losses. An amount of 2.8 billion dollars will be required for the rehabilitation of this sector.

The agriculture, food, livestock and fisheries sector also suffered the highest damage and losses, amounting to $13 billion, including $3.7 billion in direct damage. . The government will need $4 billion for rehabilitation and reconstruction.

The transport and communications sector suffered a total of $3.6 billion in damages and losses and its needs are estimated at $5 billion – the highest needs of any sector.

Sindh suffered the most – with $9 billion in damages and $11.4 billion in additional losses, bringing the total cost to $20.4 billion or 68% of the total cost.

Balochistan suffered $4.1 billion in damages and losses, followed by Khyber-Pakhtunkhwa for $1.6 billion and Punjab for $1.1 billion.

Pakistan calls on the global community

At the ceremony, Ahsan Iqbal and Climate Change Minister Sherry Rehman harshly criticized the International Monetary Fund (IMF) and the donor community for their lack of support.

Iqbal called out the IMF and criticized it for imposing fiscal restrictions on Pakistan despite the devastating floods that affected 33 million people.

“The IMF has imposed a condition on Pakistan that it cannot spend even 40% of its own development budget until the last quarter of this fiscal year, which is harsh, unfair and unfair and must be reversed immediately,” he said. Iqbal.

The government had allocated 728 billion rupees under the Public Sector Development Program (PSDP), but 291 billion rupees can only be spent between April and June 2023 if the country is on track to implement IMF fiscal targets.

“Other countries are getting debt relief, but we’ve been asked to appeal for humanitarian aid, which is not the solution,” Rehman said, adding, “We haven’t even been able to serve half of the affected population”.

The minister added that Pakistan would not go around the world with a begging bowl in hand. She stressed that countries must live up to their “moral and financial” obligations.

Iqbal said rich countries must sign debt swap agreements with countries affected by the floods. “Rich nations must fulfill their commitments to contribute $100 billion a year to poor nations to mitigate losses from climate change,” he added.

Finance Minister Ishaq Dar also failed to receive an encouraging response during his recent visit to Washington, with the IMF handing over a list of demands, including the imposition of around 600 billion rupees in new taxes.

“Pakistan is a test case for climate justice…after the launch of the report, the ball is now in the court of the G-20 countries,” Iqbal said, adding that Pakistan’s 20 years of poverty reduction had been swept away in just two months. of rains.
Rehman said the world should not “teach us but rather help us reach” the 33 million people affected by the floods.

“It is certainly important that the reconstruction plan be based on a sustainable financing plan,” said Najey Benhussain, the World Bank’s country director.

Asked about an alternative funding plan if the world does not help, Iqbal said that so far Pakistan has met almost all relief and rescue requirements from its resources, but “we hope that the international community will come up with pledges” at the donors’ conference.

“They promise Ukraine billions of dollars but are not ready to fulfill their moral obligations to Pakistan which is affected by climate change, caused by development in the West,” Iqbal said.

The disaster will have a profound impact on lives and livelihoods, according to the PDNA report. Its preliminary estimates suggest the national poverty rate will rise by 3.7 to 4 percentage points, pushing between 8.4 and 9.1 million people into poverty, as a direct result of the floods.

Similarly, multidimensional poverty will increase by 5.9 percentage points, which means that 1.9 million additional households will be pushed into non-monetary poverty.

Above the national average, poverty in Sindh would increase from 8.9 to 9.7 percentage points, and from 7.5 to 7.7 percentage points in Balochistan. In addition, the depth and severity of poverty will increase for households that were already poor before the floods.

The poverty gap has increased dramatically, with the number of extremely poor people living more than 20% below the poverty line, rising from 18 to 25-26 million.

In addition, recent gains in child and maternal health could be reversed, undermining poverty reduction efforts. There will be an increase in the proportion of households deprived of access to health facilities.

As a result, an additional 5.5 million households with children under 5 will not be fully immunized, putting children at risk of deadly and preventable diseases. An additional 2.8 million households with newborns will be deprived of prenatal examinations and postnatal care.

The 2022 floods caused widespread destruction of housing and human settlements. In the 94 districts affected by the calamity, around 780,000 houses were destroyed and more than 1.27 million houses were partially damaged.

The floods affected approximately 17,205 public schools. At least 6,225 educational facilities were assessed as fully damaged and 10,980 as partially damaged. This affected some 94,478 teachers and 2.6 million enrolled students.

The 2022 floods affected nearly half of the country, damaging 13% of health facilities, which in turn disrupted health service delivery at the community level.

Malnutrition, which was already dangerously high, has increased dramatically.

About 650,000 pregnant women struggle to access maternal services, while nearly 4 million children lack access to health services.

Do more

Pakistan will need to have enabling policies and institutional arrangements for rehabilitation and reconstruction, according to the report. He added two key steps needed to achieve the vision and goals.

First, notification of the activation of recovery policies; and second, finalizing the appropriate institutional and implementation arrangements, according to the report.

Appropriate institutional and implementation arrangements should be based on good governance. Arrangements should include special provisions for strategic oversight and decision-making; coordination, management and monitoring of operations; and transparency, accountability and equity in resource allocation, particularly for priority recovery interventions.

“While targeted relief measures are needed to cushion the human and economic impacts of the floods, delays in fiscal consolidation will increase risks to macroeconomic and fiscal stability in the context of high inflation and fiscal and current account deficits. “, advised the lenders.

Likewise, monetary policy must necessarily be maintained at the current stance, given the overheated economy, extremely high inflation rates and exchange rate depreciation pressures, he added. .

To manage short-term risks, the government must strike a delicate balance between advancing the required fiscal consolidation and meeting targeted relief and recovery needs.

In the context of high domestic and external financing needs, persistent political uncertainties and upcoming elections, it will be essential to maintain market confidence.

It will be essential to maintain a tight monetary policy; pursue fiscal consolidation to the extent possible, including by tightly targeting and prioritizing any new spending; and carry out planned structural reforms, including in the energy sector.

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Recession Chances Reach 100% (And That 7.3% Dividend Can’t Wait) https://arabcenter.net/recession-chances-reach-100-and-that-7-3-dividend-cant-wait/ Sat, 22 Oct 2022 12:51:00 +0000 https://arabcenter.net/recession-chances-reach-100-and-that-7-3-dividend-cant-wait/

A recession is on its way – and are stocks… rallying? This makes zero meaning on the surface, but there is good reason for the rebound we’ve seen this week. And we’re going to play with a fund paying 7.3% which should rise with a recovering market.

No, we are not talking about an index fund like the SPDR S&P 500 Trust ETF (SPY

P.Y.

TO SPY
).
My colleague Brett Owens calls SPY “America’s ticker” for good reason: just about everyone has it!

Instead, we’re going with a fund that pays us a 7.3% dividend today. That’s more than 4 times SPY’s meager 1.7% payout. And this fund profits volatility which, despite the rebound, should persist.

More on this unique fund in a second. (Tip: You drop the “Y” into the “SPY” ticker and add an “XX”.)

First, I want to give you my outlook for this new market rally.

The result ? What we have in front of us now is a near-perfect setup for the fund we’ll discuss below – a special type of fund called a “covered call fund”.

Memories of past recessions

You’ve probably heard the media tweeting about the latest prediction from Bloomberg Economics: that we are facing a 100% chance of a recession in 2023.

Honestly, they’re probably right, but that prediction is less important than the fact that, unlike any recession in a generation, the pain is already priced into stocks.

Consider that in the first 12 months leading up to the 2008 crisis, the markets were buzzing. The S&P 500 rose more than 10% in one year before beginning to falter in late 2007, and even then it didn’t enter bearish territory until late 2008.

This time around, however, the benchmark is good down (as we know!), suggesting that a recession is already priced in.

With the S&P 500 already in bearish territory, stocks priced in a recession before the onset of the recession. This means that an economic contraction is the base scenario for the markets. The other side of the coin, as we mavericks know, is that any a slight brightening of the outlook is enough to trigger a recovery.

And there’s reason to believe that the picture might indeed be brighter than the markets believe, giving us a better chance of a nice upside (with a 7.3% dividend “side”, as we’ll get to that in a second).

Let me show you where this good news can come from, starting with the country’s debt chart.

Debt worries are only half the story

As interest rates rise and debt becomes more expensive, a review of debt balances should be our first stop in determining the health of the US economy. And on this scale, total debt is just over $16 trillion, up from $11.4 trillion a decade ago. That’s a 42% increase in just 10 years.

But debt only gives you half the picture. Let’s say I told you I knew someone who borrowed $6 million to buy a house. Based on that information alone, you might think that this person was in debt due to overspending. But if I told you that man was Mark Zuckerberg, and that $6 million was a microscopic portion of his net worth, you would have a different opinion. The point here is that we must always look at debt versus wealth.

So let’s do that.

Wealth is skyrocketing, even with the hindsight of 2022

Clearly, falling stock and bond prices have hit the country’s wealth this year, but even so, the net worth of all American households has soared to $136 trillion, a gain of 108% in a decade. It also means that the average American is a third less in debt than they were ten years ago.

Yes, the interest rates on these debts are getting more and more expensive, but Americans are in a better position to manage these debts than they have been throughout history. That’s why a slowdown in the economy, even a deep and steep recession, is likely to be less painful in 2023 than it was in 2008.

But you would never know by the performance of the market this year.

Thinking back to the Great Depression, only five years on record are worse than 2022. And if we remove the years before World War II, only two years are worse than this: 1974 and 2008. Of those two years, 1974 most closely resembles 2022. At the time, an OPEC embargo was causing an energy shortage in the United States, as well as shortages of all kinds of goods.

The difference today is that we have already seen signs of easing shortages, especially for food and fuel (the main drivers of inflation in the 1970s). Meanwhile, America now generates more oil than it uses, meaning an OPEC embargo is no longer a concern today. We can see this in the recent drop in oil prices.

So where does this leave us? The long-term trend of a lower debt ratio, higher incomes, lower energy prices and higher productivity are signs that a US recession could be milder than what is currently planned.

And we CEF investors are lucky to have a way to make a profit: covered call funds like the one we’re going to talk about now..

Take advantage of volatility and recovery with SPXX

The Nuveen S&P 500 Dynamic Replacement Fund (SPXX) is like SPY “America’s ticker” in a way: it owns all the stocks in the S&P 500, as the name suggests.

This means you may not need to change your current investments to get SPXX and its 7.3% dividend. Simply “exchange” your current holdings into Microsoft

MSFT
(MSFT), Apple

AAPL
(AAPL),
Visa

V
(V)
or whatever for this fund.

You also get these actions after they have sold and are rated for a major recession. Additionally, SPXX’s income stream is supported by the fund’s covered call strategy, which benefits from higher volatility. (Under this strategy, the fund sells call options on its portfolio and earns cash bonuses in return, regardless of the outcome of the options trading.)

It’s a good setup for now, with a (still) oversold market and a good chance for near-term volatility, as uncertainty continues to hang over the Fed’s next moves.

Michael Foster is the Principal Research Analyst for Opposite perspectives. For more revenue ideas, click here for our latest report »Indestructible income: 5 advantageous funds with stable dividends of 10.2%.

Disclosure: none

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The next Fed crisis is brewing in US Treasuries https://arabcenter.net/the-next-fed-crisis-is-brewing-in-us-treasuries/ Fri, 14 Oct 2022 18:18:00 +0000 https://arabcenter.net/the-next-fed-crisis-is-brewing-in-us-treasuries/

Markets have been skewed in recent weeks, first by rhetoric that a cooling labor market would allow the Federal Reserve to ‘walk away’ from its aggressive interest rate hike campaign, then by comments central bankers that such a move would be premature – as evidenced by Thursday’s Consumer Price Index report. Perhaps there is a solution that would allow the Fed to continue to fight inflation while tackling what is quickly becoming a potential crisis in the world’s most important market, US Treasuries. .

The word “crisis” is not hyperbole. Liquidity evaporates quickly. Volatility is skyrocketing. Once unthinkable, even demand at government debt auctions is becoming a concern. The conditions are so worrisome that Treasury Secretary Janet Yellen took the unusual step on Wednesday of expressing concern over a potential trading breakdown, saying after a speech in Washington that her department is “worried about a loss of adequate liquidity” in the $23.7 trillion market for the United States. state titles. Make no mistake, if the Treasury market crashes, the global economy and financial system will have far bigger problems than high inflation.

But rather than slowing or even stopping the pace of rate hikes, which would only resuscitate the idea that there is indeed a Fed put to bail out investors, the central bank could choose to slow quantitative tightening. While quantitative easing, or QE, injects liquidity into the financial system through bond purchases, QT has the opposite effect. Instead of selling bonds, the Fed is letting the roughly $9 trillion of US Treasuries and mortgage-backed securities it has accumulated on its balance sheet since the 2008 financial crisis mature without replacing them. The amount of QT made by the Fed peaked at $95 billion per month in September, down from $47.4 billion.

The thing is, just as there is no strong evidence that many years of QE have had the desired effect of triggering inflation, QT is unlikely to help temper inflation. What it is more likely to do – and is probably already doing – is wreak havoc on the government bond market, the benchmark for all other markets that determine the cost of money for investors. governments, businesses and consumers.

A Bloomberg index shows that liquidity in the Treasury market is worse now than at the start of the pandemic and lockdowns, when no one knew what to expect. Likewise, implied volatility as measured by the ICE BofA MOVE index is near its highest since 2009. And in an unusual development that shows just how dysfunctional the Treasury market has become, newer securities and more liquid securities, known as short-term notes, are trading at a discount to older, harder-to-trade obsolete securities, according to data compiled by Bloomberg. Daily swings in interest rate swaps have become extreme, proving further evidence of the disappearance of liquidity.

What should worry the Fed and the Treasury Department the most is the deterioration in demand at US debt auctions. A key metric called the bid-to-cover ratio during Wednesday’s government bid of $32 billion in benchmark 10-year bonds was more than one standard deviation below last year’s average, according to Bloomberg News. . Demand from indirect bidders, generally considered a proxy for foreign demand, was the weakest since March 2021, according to data compiled by Bloomberg. Although the Treasury is in no danger of suffering a “failed auction”, weaker demand means the government is paying more to borrow.

This all comes as Bloomberg News reports that the biggest and strongest buyers of Treasuries — from Japanese pensions and life insurers to foreign governments and U.S. commercial banks — are all pulling out at once. “We need to find a new marginal buyer of Treasuries as central banks and banks as a whole exit the stage,” said Glen Capelo, who spent more than three decades on the bond trading desks of Wall Street and is now managing director of Mischler Financial. Bloomberg News.

The US bond market, which sets the tone for debt markets around the world, is not alone. The turmoil in UK gilts over the past two weeks has laid bare the liquidity crunch that was bubbling in most major sovereign debt markets. From the Fed’s perspective, it’s probably reluctant to tinker with QT for fear of being seen as more concerned with bailing out Wall Street’s big cats than controlling inflation. But, again, QE and QT have been shown to have more impact on the proper functioning of the financial system than on the real economy. And it’s not like the Fed hasn’t tweaked its QT program before to deal with market plumbing disruptions. Recall that in 2019, the central bank halted QT and flooded the banking system with liquidity to stop a large and troubling rise in repo rates that led to undue stress. Another option is for the Fed to use its permanent repurchase facility to provide a backstop to the Treasury market, which Yellen says “may be helpful.”

The thinking among market participants is that the Fed will keep raising rates until something “breaks”. That something is looking more and more like it could be the Treasury market, which would be the worst-case scenario on anyone’s dashboard. Time is running out for the Fed to act.

More from Bloomberg Opinion:

• UK can’t afford to look so ridiculous: John Authers

• What happens after a week that shook the world: John Authers

• The strong dollar is about to pay dividends: Robert Burgess

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Robert Burgess is the editor of Bloomberg Opinion. Previously, he was Global Editor of Financial Markets for Bloomberg News.

More stories like this are available at bloomberg.com/opinion

]]> Italy’s MPS scrambles to secure share issuance commitments https://arabcenter.net/italys-mps-scrambles-to-secure-share-issuance-commitments/ Wed, 12 Oct 2022 11:08:00 +0000 https://arabcenter.net/italys-mps-scrambles-to-secure-share-issuance-commitments/
  • Plans to sign a subscription contract on Wednesday evening
  • Underwriters refusing to commit without investor support
  • MPS against the clock to collect the necessary documents

MILAN, Oct 12 (Reuters) – Monte dei Paschi di Siena (BMPS.MI) was rushing on Wednesday to secure investor commitments for its 2.5 billion euro ($2.4 billion) share issue. ) so that it can get a backstop from banks for any unsold stock, three people familiar with the matter said.

While the markets are seized by fears of recession, conflict in Ukraine, inflation and rising rates, the group of banks which was to subscribe to the sale of MPS refused to take the risk without being reassured on the amount shares they might have left.

Five years after an 8.2 billion euro ($8 billion) bailout that returned its 64% stake to the state, MPS plans to raise additional funds to lay off staff and bolster capital.

Join now for FREE unlimited access to Reuters.com

Italian taxpayers will provide up to €1.6 billion, while the rest must come from private investors to comply with EU state aid rules.

The group of eight banks that are to underwrite the MPS issue are only willing to back a third of the €900 million private share of the capital raising, one of the sources said.

They demanded written pledges from investors for an amount roughly equivalent to half the overall figure, accepting unwritten pledges for the remainder to reach two-thirds of the total, the source added.

MPS CEO Luigi Lovaglio had until recently failed to produce the written commitments, sparking a race in recent days to get all the necessary documents signed.

MPS and the banks expect to be able to reach an agreement on the underwriting contract later on Wednesday, although sources have not previously ruled out that preparations will not take until Thursday.

The Tuscan bank has so far secured support from its insurer partner AXA (AXAF.PA), local banking foundations and asset manager Anima Holding (ANIM.MI).

The failure to secure an underwriting contract on Tuesday prompted the sale of the bank’s riskier junior bonds, which have seen their prices fall to around half their face value, as MPS may have to resort to a swap of debts against shares.

As of 10:22 GMT, the September 2030 Tier 2 bond yield stood at 34.72% on the Tradeweb platform, down from 32.93% on Tuesday, but below a session high of 36.72 %.

A January 2030 bond returned 41.42% after rising to 45.44% from 39.95% at the close on Tuesday.

($1 = 1.0303 euros)

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Additional reporting by Sara Rossi in Milan; Editing by Agnieszka Flak and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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