Category Archives: Breaking News

Betting on Asia’s Debt, Europe’s Hunt for Yield Heads East

SINGAPORE/AMSTERDAM — Low yields at home are sending some previously shy European investors into Asia’s credit markets, money managers say, lured by the promise of higher returns and a hope that rebounding economies can hold defaults at bay.

Unlike in Europe or the United States, Asia’s central banks have not stepped in to put a floor under corporate debt prices. That has the market’s recovery in Asia trailing the rest of the world.

“Now people are looking for the valuation gap to close,” said Hayden Briscoe, head of Asia-Pacific fixed income at UBS Asset Management.

Starting with family offices, then private banks, flows from Italy, Germany, Switzerland and the United Kingdom have broadened over the past few months, he said.

“I don’t think it’s slowing down,” he said. “We haven’t had a day of outflows, it’s just been continuous.”

Like elsewhere Asia’s junk bond spreads, the premium over safer assets that buyers demand for riskier debt, have narrowed sharply since March.

But Asian high yield still offers a rich 686 basis points over safe-haven benchmarks, which is at least 200 basis points more than what European or U.S. junk debt offers.

At the same time Asia’s economies, especially China which dominates the region’s $260 billion high-yield market, are emerging in better shape from the coronavirus crisis.

Asia is the only region Goldman Sachs Asset Management says it expects to grow this year, and as a consequence, it forecasts junk default rates at 4% compared to 8% in the United States for 2020.

“When you have a market that is giving you sufficient yield and is not necessarily any more risky, it becomes a market that people at least have to look at,” said Elizabeth Allen, head of credit research, Asia-Pacific at HSBC Global Asset Management.

“Rather than just – ‘Oh this is Asia, I don’t know about it, never mind about it’ – that mindset is rapidly changing.”

(Graphic: Asian corporate debt sits at attractive levels, https://fingfx.thomsonreuters.com/gfx/mkt/xlbvgljkjpq/asian%20high%20yield.png)

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Along with the asset management arms of UBS, HSBC and Goldman, J.P. Morgan Asset Management, Pictet Wealth Management and Credit Suisse are among advisors to sound upbeat on Asian credit.

Goldman Sachs Asset Management, like UBS-AM’s Briscoe and HSBC Global Asset Management’s Allen, told Reuters it has noticed demand from Europe lately.

Beyond the economic factors, the composition of Asia’s debt market is another attraction, investors say, because exposure to sectors hardest hit by the virus – such as energy, travel and other cyclicals – is lower than in Europe or the United States.

“The dominant sector is really the Chinese property names,” said Tiansi Wang, Senior Credit Analyst at Dutch fund manager Robeco in Hong Kong, adding the well-capitalised industry is driven by supportive domestic factors.

“That makes a big part of Asia’s high-yield market run low-correlation with the global high-yield market,” she said.

To be sure, Asia is still home to plenty of risky companies vulnerable to going broke and burning their bondholders.

U.S. and European investment in Asian bonds comprises only about 16% of the total, according to J.P. Morgan Asset Management.

But interest in recent deals such as last week’s nearly 13-times oversubscribed Tencent Music’s $800 million debt sale, of which about two-thirds went to EMEA and U.S. buyers, suggests at the very least a more receptive audience abroad.

“We expect the region’s positive growth trajectory, highly-supportive policies and the global grab for yield to continue to sustain demand for Asian dollar credits,” said Shaw Yann Ho, head of Asia fixed income at J.P. Morgan Asset Management.

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On-Demand: Fewer Collectors, More Accounts: Prioritizing Contact Efforts for the Coming Wave of Delinquencies and Defaults

As the economy faces unprecedented unemployment rates and an impending recession, record numbers of financial accounts across industries will enter collections. According to NPR, banks are preparing for “an onslaught of defaults in debt.” Agencies face staffing challenges with limited office use and work-from-home challenges.

Additionally, the recession may accelerate consumer contact information changes, either from moving residences or changing phone information. Poor data and an increase in call blocking and SPAM tagging could worsen RPC rates. Collections organizations that have more accurate consumer phone and email data, and the phone behavior of their target consumers, will be better positioned to efficiently make contact and arrange for payment.

How are you preparing for fewer collectors and more accounts? Learn how other agencies are leveraging the following insights to improve their contact efficiency and effectiveness:

  • Omnichannel phone, email, and device data for coordinated contact attempts across channels
  • Dialing the phone number a consumer uses most
  • Contacting the consumer during the times and days when they are most likely to answer
  • Mitigating inappropriate call blocking or spam-mislabeling

Join Neustar dialing optimization experts Mitchell Young, Vice President of Customer Intelligence & Risk Solutions; Todd Meeks, Director of Risk Product Management; and Wendy Weinhardt, Principal Solutions Engineer; as they explain proven strategies that will help your organization prepare for the coming wave of accounts entering collections.

Debt collection rules should not affect first-party collectors

The Consumer Financial Protection Bureau (CFPB) should ensure its debt collection rulemakings do not extend unwarranted regulatory requirements to first-party debt collectors, CUNA wrote Tuesday in response to a CFPB proposal. The proposal would amend Regulation F to require debt collectors to make certain disclosures when collecting time-barred debts (debts for which the applicable statute of limitations has expired).

“We respectfully recommend the Bureau continue to rely solely on its Fair Debt Collection Practices Act (FDCPA) authority when promulgating rules governing the practice of debt collection,” the letter reads. “The FDCPA provides the Bureau with ample ability to achieve its desired limitations on third-party collections without exposing credit unions that collect their own debts to expanded regulatory compliance and litigation burden.”

The letter also calls for the CFPB to:

  • Acknowledge the complex patchwork of state debt collection laws governing time-barred debts and adopt a “knowledge” standard for determining prohibited communications;
  • Avoid mandating any disclosures that assert legal interpretations or provide legal advice, which may ultimately confuse consumers, and instead establish disclosures that provide information on time-barred debts in a general manner so the consumer can pursue additional information regarding their specific situation;
  • Provide a safe harbor for debt collectors making a good faith attempt to accurately determine the status of a debt and provide the relevant disclosure to a debtor; and
  • Clarify expectations for required disclosures in states where there are already time-barred debt disclosure requirements in place.

Breakdown of NYC DCA FAQs and Reporting Requirements for New LEP Rule

Last week, the New York City Department of Consumer Affairs (DCA) provided some clarity to debt collectors on its newly-enacted Limited English Proficiency Rule (LEP Rule). DCA issued an FAQ document and a form for the annual reporting requirement for the LEP Rule, and also announced yet another extension of its grace period for enforcement, which now runs through October 1, 2020. In this article, you’ll find a summary of the three-page, thirteen-question long document.

Applicability

  • The LEP Rule applies to anyone who is required to obtain a Debt Collection Agency license in NYC.
  • When asked if the LEP Rule applies to creditors, DCA says “yes, no, and maybe” depending on the functions of the creditor’s actions and other statutory litmus tests (citations can be found in the FAQ document).
  • The LEP Rule does not apply to litigation activities that can only be performed by a licensed attorney, such as filing a lawsuit or requesting an income execution.

Annual reporting requirement

The annual report form is a lot less convoluted than many speculated when the rule was first issued. The reporting form can be found here, and only requires collectors to keep a month-by-month log of the:

  • Number of NYC consumer accounts on which the agency collected or attempted to collect a debt in a language other than English; and
  • Number of employees who collected or attempted to collect a debt from NYC consumers in a language other than English.

These are aggregate numbers, the report form does not call for an account-by-account or consumer-by-consumer log.

Agencies need to maintain the annual report but don’t need to send it to DCA on an annual basis. DCA only wants to see it if they request it.

Specifics on requesting language preference

We’ll briefly summarize this in bullet points:

  • Language preference must be solicited for each consumer from whom the agency attempts to collect. This means that if there are multiple consumers on the account, then a language preference must be solicited from each.
  • The request for language preference can come after the consumer verifies his identity and after the debt collector provides required disclosures (e.g., Mini-Miranda).
  • Once a debt collector has obtained and recorded the language preference—or exhausted reasonable attempts to do so—they need not make the request again in subsequent communications. Debt collectors may not infer a language preference.
  • If a consumer declines to provide a language preference, the agency may record the non-response to satisfy its obligation.

Validation letter and website requirements

The FAQs seem to imply that a debt collector must list the language access services it provides in its validation letter to consumers and on its publicly-accessible websites. This includes if the agency has the option for a consumer to speak with a multilingual company representative, to receive collection letters in the preferred language, and to list the languages in which the debt collector provides language access services.

There does not seem to be a requirement to provide specific language access services. A debt collector may provide some, but not all, services so long as this is clearly and conspicuously articulated in the validation letter and on the website. For example, just because a debt collector provides a multilingual representative for consumers to speak with on the phone, that does not mean that the debt collector must also provide written communications in that language.

If a collector does not provide language access services, then it must state so in the validation letter.

While it is not explicitly specified, there does not seem to be a requirement for agencies to request a language preference in the validation letter or on its websites.

What, exactly, are language access services?

DCA provides examples of language access services, including but not limited to:

  • Collection letters in a language other than English
  • Customer service representatives who speak in a language other than English
  • A translation service for the collector’s website
  • A service that interprets phone conversations in real-time.

Article by Katie Grzechnik Neill

Insurance company, debt collector review Dade City woman’s 4-year-old hospital bill

DADE CITY, Fla. (WFLA) – Carolyn Matinzi turned to Better Call Behnken for help with a 4-year-old hospital bill that her insurance company claimed it already paid.

Days after her call to Consumer Investigator Shannon Behnken, she says Humana Insurance called her to say they are sending additional payment proof to the debt collector.

“I am so happy that something finally appears to be happening,” Matinzi said. “Thank you so much.”

Matinzi says Humana told her it could still take weeks for a full resolution.

Matinzi turned to Better Call Behnken for help after receiving bills from a debt collection company that is threatening to send the debt to credit bureaus. Letters turned into phone calls, and she says the callers are getting aggressive.

Here’s the problem: The bills for two amounts that total $3,624 from a hospital visit in 2016. Matinzi’s insurance company, Humana, has provided documentation that clearly shows the bills were paid in full by Humana.

Matinzi has provided that information to the debt company, Healthcare Revenue Recovery Group, but no one there acknowledges the information and the bills keep coming.

Investigative Reporter Shannon Behnken reached out to Advent and Humana. A spokesperson for Advent said the company reviewed this matter and discovered this hospital has never billed Matinzi. Advent purchased the hospital in 2018 and did not acquire the hospital’s debt.

Matinzi says a Human representative told her that they reached the debt collection company and received confirmation that they will be reviewing the proof of payment and will likely discharge the debt.

Article by Shannon Behnken