China Grounds all Boeing 737 MAX 8 Models, Jet Secures Loan From PNB, Trump To Request More Funds For the Border Wall et al.

China grounds all Boeing 737 MAX 8 models following the Ethiopian Airlines crash. Jet secures a loan from PNB. India seeks investment from Saudi in strategic oil storage. Trump to request more funds for the Border Wall.

 

Moving on to the top Business stories of the week. 

 

AVIATION

 

 China grounds all Boeing 737 MAX 8 models. Jet, Spice to be questioned by DGCA.


Safety First: China has ordered all of the country’s airlines to ground Boeing 737 MAX aircrafts in their fleet.  


The move comes over safety concerns following the Ethiopian Airlines crash yesterday. 13 Chinese airlines currently operate 96x737 MAX jets.

 

Unusual: It is highly unusual for regulators in a major country to take such a step before a similar move by regulators in the country that certified the aircraft type.


Read more on the matter here.

 

Aftermath: Indian aviation regulator DGCA will seek information from Boeing as well as Jet Airways and SpiceJet in regard to the Boeing 737 MAX aircraft being operated in the country. 

 

Is It Safe?: The model has been involved in two crashes over the past 5 months including the Ethiopian Airlines crash yesterday, which killed 149 passengers. 


Currently, SpiceJet has 13x737 MAX 8 planes and Jet Airways has 8 such aircraft within their fleets.

 

DEBT


IDBI Bank steps up efforts to recover bad loans. Jet secures a loan from PNB. 



Turnaround: IDBI Bank, the lender with India’s worst NPA ratio, is planning to sell off INR100bn of its stressed assets and step up efforts to recover dues from delinquent borrowers. 


IDBI’s turn-around efforts have gathered pace after LIC bought a 51% controlling stake in the bank. Stock up 3.5% by close of play. 



Moving Out: The Bank is expected to move out of the RBI’s PCA framework by September as bad-loan ratio narrows and profits rise.



Fresh Cash: Jet Airways has secured fresh credit facilities of INR2,050cr from PNB, providing a temporary lifeline to the cash-strapped airline.


The airline has raised foreign currency term loans worth INR1,100cr and a non-fund based credit facility of INR950cr from PNB.


Paying Dues: The credit facility is likely to be used to meet working capital needs, pay rental dues to aircraft lessors and salary arrears.


Shares of Jet Airways closed at INR249 (+1.75%), the highest in over a month following the news of the infusion. 



PNB is a part of the consortium of lenders led by SBI which has lent to the airline in the past.

 

TECH



Softbank to start a new fund. General Atlantic and Tencent pump INR80cr into Byju’s. Govt to charge for e-KYC transactions.


SoftBank: Is set to launch a new global investment fund for early-stage investments.


The fund, to be run by Seoul-based SoftBank Ventures Asia, will be worth $500m. SoftBank, South Korea’s National Pension Service as well as other companies and asset management firms will invest in the fund. 


General Atlantic and Tencent: Have put in an additional c. INR80cr in Think and Learn, the owner and operator of ed-tech platform Byju’s Learning.

 

General Atlantic has pumped in INR33cr for over 4,000 compulsorily convertible cumulative preference shares. Tencent has invested through its entity, Proxima Beta and has been issued over 5,000 shares.


Earlier: The latest infusion comes about three months after the company closed a $540m equity financing round led by Naspers Ventures and Canadian Pension Plan Investment Board, which valued the company at over $3.6bn.


Now, UIDAI: The UIDAI recently announced the Aadhaar (Pricing Of Aadhaar Authentication Services) Regulations 2019 which directed private entities to pay for the e-KYC and authentication services provided by the Authority.


Pay Now: eKYC will be charged at INR20 per transaction as per the latest Gazette notification. For electronic signatures, which use the eKYC framework, charges could be as high as INR25 per transaction, post implementation.


Read the industry comments on the matter here.

 

OIL

India seeks investment from Saudi in strategic oil storage. Oil shale-led US growth causing disruption in the global market. Indian govt to no longer seek profits in less explored oil and gas regions.


Reserve Oil: India is seeking investment from Saudi Arabia to build emergency crude reserves, which will act as a buffer against volatility in oil prices and supply disruptions.


Counter Measures: India, which imports four out of every five barrels of oil it consumes, is expanding its strategic reserves in a bid to shield its interests from perennial political risk in the Middle East and Africa that account for the bulk of its purchases.


Expanding Capacity: The country has already built 5.33m tons of underground reserves in three locations, which can meet 9.5 days of the country's oil needs. It now plans two new reserves with a combined capacity of 6.5 million tons, sufficient to cover an additional 12 days.


New King: The US has disrupted the global energy market and has made the crude market more volatile by becoming the world's largest oil producer.
 


Production has grown to a record 12.1mn barrels a day, eclipsing both Russia and Saudi Arabia in the past year.
 


Read more on how this affects the global oil market.


Leeway: In a bid to attract private and foreign investment to raise domestic output the Indian government has decided to not charge any share of profits from hydrocarbons produced from less explored areas.


Breaking away from the practice of having a uniform contractual regime for all sedimentary basins in the country, the new policy provides for different rules for areas that already have producing fields and ones where commercial production of oil and gas is yet to be established.

 

US


Fed Chairman clears air around interest rates. Trump to request more funds for the Border Wall.
 

No Hurry: In an interview with CBS, Federal Reserve Chairman Jerome Powell commented that the Central Bank did not feel the need to change the current level of interest rates.
 

He based his comments on the observation that the US economic outlook was favorable and that the economy didn't require higher or lower interest rates.


Read the full interview here.
 

Big Request: President Trump plans to seek an additional $8.6bn for the Border Wall along the southern US border as part of his budget proposal scheduled to be released on Monday.
 

Grand Total: The $8.6bn request for barrier funding, $5bn for the Department of Homeland Security and $3.6bn for Defense Department military construction would enable the Trump administration to complete its plans for new or replacement barriers for 722 miles of the US-Mexico border.

 

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