Negative rates shaky, says Manila cbank

Philippine central bank governor Amando Tetangco said on Friday negative real interest rates were unsustainable even as the monetary authority lowered its forecast for average inflation in 2007. The benchmark Philippine 91-day Treasury bill rate hit 2.935 percent at an auction on Monday, close to record lows, while the annual inflation rate in February fell to a four-year low of 2.6 percent. Removing a 20 percent withholding tax on the T-bill yield and comparing it to inflation leaves real interest rates close to negative territory. A negative interest rate environment is something that cant be sustained for a period of time, Tetangco told a bankers forum. Interest rates in the GS (government securities) market are reacting to a lower inflation rate and reduced budget deficit and (an) expectation that the supply of GS will go down in the future as the government reduces borrowing.

Takaful Nasional aims for US$75m premiums from offshore products

KUALA LUMPUR: Takaful Nasional Sdn Bhd is aiming for US$75mil in premiums from offshore products by end-July, with the launch of its international currency business unit (ICBU), on Friday.
Chief executive officer Mohd Tarmidzi Ahmad Nordin speaking to reporters at the launch said, "The US75mil target is for our first tranch of offshore products."
Although foreign-currency products was "new territory" for the company, the target was achievable as a recent launch of a similar onshore product by Maybank Life achieved RM700mil sales within a week, Tarmidzi said.
Takaful Nasional is part of Maybank's insurance arm, having merged with Mayban Fortis in December 2005.
Mayban Fortis Holdings Bhd head of offshore business Eduard C. Holtz said "We will be working on these products (the first tranch) from now to the end of July," but added that the group also planned to launch a new product in the second quarter.
"Tentatively, we are looking at launching one or two new products per quarter," he said.
The company is targeting high net worth middle-eastern customers in Dubai and Bahrain as well as those banking in Switzerland and Singapore.
While Takaful Nasional also provides general takaful products, the focus of the offshore business would be on single premium, investment-linked family products, Holtz said.

Five sue Ernst and Young over failed tax dodge

Five prominent Silicon Valley businessmen are suing Ernst & Young, accusing the Big Four accounting firm of roping them into an illegitimate tax shelter which resulted in millions of dollars in IRS penalties, interest and professional fees.
Thomas Fallon, Carl Redfield, Richard Timmins, Robert Puette and Alexandre Balkanski filed suit in Santa Clara County Superior Court on Jan. 30.
According to the lawsuit, the men are five of 125 people in the U.S. who bought an Ernst & Young tax shelter product called a "contingent deferred swap" or "CDS" between 1999 and 2002. The five men all purchased the tax shelter product as a way to reduce exposure to taxes on a collective $51 million.
The Internal Revenue Service said in 2002 it wouldn't recognize the swap as a legitimate tax strategy.

Cayman Retains Leadership In Financial Services

Not only has the Cayman Islands continued to maintain its leadership position in international financial services and national economic performance, but it is also moving ahead of competitors, the government has claimed, pointing to a new credit rating report.
Moody's, the international credit rating agency, has raised Cayman's ceiling for foreign currency bonds and notes from Aa3 or high grade, to Aaa or exceptional - which means that it is now alongside the UK, US, Canada and Bermuda. This resulted from a change in the rating methodology last year which included raising the foreign currency country ceilings of approximately 70 countries. Of these countries, the Cayman Islands is among only three countries which had their ceilings upgraded to Aaa, according to reports.
The country ceiling is the highest rating obtainable for an issuer of long-term foreign currency-dominated bonds.

Taxes are not trusts' only problem

CALGARY, Alberta (Reuters) - With their tax advantages ripped away, investing in Canada's energy trusts looked set to become a mug's game. Units prices are down, costs are an issue and commodity prices have been volatile.
The sector has been a headache for investors since the surprise Halloween announcement from Ottawa that the tax advantages enjoyed by trusts would end in 2011. They had been able to avoid most corporate taxes if they distributed their cash to investors, an edge that gave them a premium value.
Since the October 31 tax decision, the sector has badly lagged. Despite oil prices that are now sticking around $60 a barrel and robust natural gas prices, the Toronto Stock Exchange's energy trust index has dropped nearly 18 percent.
"There's still a lot of anger in the market and an awful lot of uncertainty," said Leslie Lundquist, a portfolio manager at Bissett Investment Management.