Bail Out ............Time Bomb

Guarantees by Govt are ticking time bombs . Suggest someone do an analysis of how big this mess is should the Guarantees come into effect. How will it hit the gov budget.

You can start with the Term Sheet or offering documents in the SC website ...but must read the fine print on specific covenants especially potential "put" option against the government.

This is a problem which have been brewing for a long time... BNM should know about this and have been studying the potential impact to the system.......breeding too big too fail institutions into our systems

What is the criteria for the gov to provide guarantees to private sector. How is the economic benefit considered for the gov to extend the so called guarantee...?

One thing i dont understand is how in the world does a default by one company can create systematic risk to the banking system? Does not make any sense at all ...4.5 Billion is small compared to the outstanding loan in the banking system...unless one particular bank is overexposed ..then again they should have single customer limit to begin with...

next question is it a direct loan or a bond? if direct loan what is the collateral ? if bond what is the right of bondholders in the event of default.....


So folks put on ur thinking cap...why does the government need to bail out this company? Does it pose any systematic risk to the financial system? Is the project so strategic that it tantamount to failure of the Selangor Economic System.....i dont think so....

In the market economy....companies are bound to fail and financial intermediary should understand the risk involved in financing such a venture....and government should not get involved apart from taxation incentive.....

This is a classic case of good money chasing after bad money

And for FM2 Nor Yaakop to give out a vague statement like that is unacceptable......

BNM on the hand are prudential regulators i.e. if the shit hits the fan in the banking system ...everything must be done in a hush hush manner in order to stop any potential bank run which will affect public confidence......so expect no statement from Zety

We need answers soon on how the initial project was financed, the terms, the institutions involved....if an idiot made a mistake along the value chain to "think" that it is a Gov Guaranteed Bond....look again...study from the beginning ...just follow the money.......if it was gov guarantee it should have been traded at a quasi government levels.....market seldoms misprice a "govt" risk.....so was the market unaware.....last i heard the whole issue is messed up from the initial placement up to its secondary market activity which lead to clear cut securities fraud involving some of our bankers......SC n BNM prodded into the case but never went on to further...this is what happen when u sleep at the switch....

My rough guess is that there is a potential of at least 1% of our GDP in Government guarantees outstanding........and that is a lot of zeroes.....