European governments and related organisations have ramped up their sales of new debt this year, in the latest sign of bond markets bracing for rises in interest rates and an increase in political risks, the Financial Times reported. Overall borrowing from eurozone sovereigns, local authorities, agencies and supranationals such as the European Investment Bank is currently at €210bn — the highest year-to-date amount since 2012, Dealogic data show, and the second-highest level on record at this stage of the year. Read more. (Subscription required.)
Global banks have warned they could move thousands of jobs out of Britain to prepare for the expected disruption caused by the country's exit from the European Union, endangering London's status as a major financial centre, the International New York Times reported on a Reuters story. Leading financial firms warned for months before last June's Brexit referendum that they would have to move some jobs if the "Leave" side won, and have been working on plans for how they would do so for the past six months. Read more.
Shares in Toshiba Corp rose on Monday morning after a report that U.S. unit Westinghouse Electric Co could file for bankruptcy protection as early as Tuesday and is seeking support from South Korea's Korea Electric Power Corp, the International New York Times reported on a Reuters story. Toshiba's shares were last up 0.5 percent at 224 yen after earlier rising as high as 232 yen, against the backdrop of a broader market downturn. Read more.
European banking regulators Monday touted their achievements in pulling eurozone banks back from the brink, though they said more should be done to improve the sector’s profitability, repeating a call for more bank mergers. The eurozone economy is moving to slow, steady growth—giving the region’s banks a shot in the arm—after a prolonged contraction following the 2011 euro crisis, The Wall Street Journal reported. Read more. (Subscription required.)
Nigeria's state-owned AMCON has recovered 681.5 billion naira ($2.2 bln) over the past six years from debtors in the form of cash, properties and shares, it said on Monday. The Asset Management Corporation of Nigeria (AMCON) was set up in 2010 to absorb banking sector-wide non-performing loans in exchange for government bonds, after the central bank rescued nine weak lenders from collapse in 2009, Reuters reported. Read more.
Greece’s beleaguered banking system has taken a fresh hit from the country’s shaky bailout talks this year, registering its worst deposit outflows since the height of its debt crisis in the summer of 2015, the Financial Times reported. Latest figures from the European Central Bank showed households and businesses pulled €1.1bn from the country’s lenders last month, moderating from the €1.7bn withdrawn at the start of the year but marking the worst two-monthly outflow since the country was bought to the brink of a eurozone exit nearly two years ago. Read more. (Subscription required.)
One of the arguments employed by EU politicians to oblige UK-based financial companies to shift activity across the Channel after Brexit is that a necessary price of access is “onshore” regulation, the Financial Times reported. It is mainly a question of “who’s queen?”, namely which authority has the legal right to supervise the contents of the City’s vast financial punchbowl. Brussels might have swallowed the UK’s jurisdiction over the part that’s sourced in Europe when Britain was inside the trading bloc, runs the logic. Put the country outside it and the dispensation can’t remain. There are also questions of financial safety. Read more. (Subscription required.)
Toshiba’s biggest creditors are split over its future strategy as pressure mounts for a swift Chapter 11 bankruptcy protection filing by Westinghouse, the troubled Japanese conglomerate’s US nuclear subsidiary, the Financial Times reported. People briefed on the situation said talks between Toshiba, its main lenders and other stakeholders are focused on whether it is possible or even desirable for Westinghouse to be placed under bankruptcy protection before the end of the Japanese group’s financial year on March 31. Read more. (Subscription required.)
Croatia's government is drawing up a law to protect the economy if a major company runs into trouble, Deputy Prime Minister Martina Dalic said on Friday. She said the law could be used for debt-laden food business Agrokor, a major employer whose creditors include Russia's Sberbank. She denied the legislation was being drawn up because of Agrokor's problems, the International New York Times reported on a Reuters story. "The law, which I expect to be ready very soon, will be relevant for companies with more than 8,000 employees and a debt of at least one billion euros ($1.1 billion) they cannot regularly service," Dalic, who is also the Economy Minister, told reporters. Read more. (Subscription required.)
CEO Jung said he expected Daewoo to receive considerable calls from shipowners for "builder's default", cancelling existing orders, if the company goes into court receivership - the regulator's alternate plan for the troubled firm in case the bailout does not go through, the International New York Times reported on a Reuters story. Company leadership will do its best to convince stakeholders that hold Daewoo debt, such as world's No.3 pension fund National Pension Service, that backing the government's plan for debt-equity swaps and grace periods is the most rational decision, Daewoo CFO Kim Youl-jung said. Read more. (Subscription required.)
Businesses across the 19-country eurozone, and particularly in France, are increasingly upbeat and hiring more people despite big uncertainties — including France's high-stakes presidential election, the International New York Times reported on an Associated Press story. A closely watched survey of some 5,000 companies indicates that business activity is growing overall at the fastest rate in over six years. The so-called purchasing managers' index, which serves as a gauge of business activity, rose to 56.7 points in March, from 56 in February, confounding expectations for a modest decline. Read more. (Subscription required.)
The two biggest bondholder groups in Brazilian telephone operator Oi SA said on Friday they "strongly oppose" the terms of a new debt restructuring plan the company intends to present in bankruptcy court, Reuters reported. Claiming the proposed terms "were not previously negotiated with either of the Oi bondholder groups," the creditors said in a joint statement that Oi has "failed to engage" with them, nine months after filing for bankruptcy protection. Read more.
South Korean state banks are preparing a fresh $2.6 billion bailout for floundering Daewoo Shipbuilding & Marine Engineering Co Ltd (042660.KS), which has built up huge losses from offshore projects and risks missing debt repayments, Reuters reported. Without the infusion of funds, Daewoo is not expected to be able to redeem 940 billion won ($840.49 million) in corporate bonds maturing this year - starting with 440 billion won due in April, the country's financial regulator, the Financial Services Commission (FSC), said on Thursday. Read more.
“An indebted Africa cannot be a rising Africa,” Akinwumi Adesina, head of the African Development Bank, told a gathering of the region’s heads of state, senior ministers and leading financiers last year. That warning is acquiring greater weight as government debt burdens tick up in many African countries on the back of a rising dollar, low commodity prices, rapid borrowing during the low interest rate era and sliding currencies, the Financial Times reported. The problem is not unique to Africa. Between 2014 and 2016, repayments of foreign debt by developing countries as a proportion of government revenues rose from an average of 6.7 per cent to 9.7 per cent, according to an analysis of 122 countries by the Jubilee Debt Campaign. Read more. (Subscription required.)
A new specter is haunting China’s financial system: the negotiable certificate of deposit. An explosion in banks’ use of the bondlike loans, whose durations range from a month to a year, is testing Beijing’s resolve to cure the economy of its addiction to debt-fueled growth and investment booms, The Wall Street Journal reported. As authorities push up key short-term interest rates in their campaign to deflate asset bubbles swelled by borrowed money, the interest rates charged on these NCDs is rising so fast that it is starting to expose banks to the risk of investment losses and abrupt funding squeezes. Read more. (Subscription required.)
A Portuguese bank has borrowed on the international debt market for the first time in more than a year, defying a boycott from BlackRock and Pimco, which are locked in a legal fight with the country’s authorities over losses incurred in 2015, the Financial Times reported. Caixa Geral de Depósitos’ €500m subordinated bond, which priced on Thursday at a coupon of 10.75 per cent, attracted more than €2bn of orders. CGD, which is state-owned, is the second lender this month to tap investor interest in higher-yielding, although riskier, bank bonds from the eurozone’s so-called periphery. Read more. (Subscription required.)
South Korea's KEPCO, the likeliest suitor for Toshiba Corp's troubled nuclear business, is holding off from making an approach because of question marks over the scale of damage at the unit and political uncertainty in both South Korea and the United States, people with direct knowledge of the matter say, Reuters reported. Japanese TV-to-rail conglomerate Toshiba has been battered by a $6.3 billion hit from overruns in the nuclear business and has widened a probe into governance failures at its U.S.-based unit, Westinghouse. It is now considering a sale. State-controlled Korea Electric Power Corp (KEPCO), one of few utilities with global nuclear ambitions, has developed its own technology and led a consortium in 2009 that won a contract to build four reactors in the United Arab Emirates. Unlike Westinghouse and France's Areva (AREVA.PA), whose new third-generation reactor models have faced years of delays and big cost overruns, KEPCO has managed to build its reactors abroad on time and to budget. This positions the Korean firm as a major new player in nuclear reactor manufacturing at a time when Westinghouse and Areva, the two leading OECD nuclear firms, are struggling. KEPCO aims to build six more reactors abroad by 2025, targeting markets like Britain and South Africa. Read more.
A new reorganization plan from Brazil's debt-laden phone carrier Oi SA boosted shares on Thursday, but analysts continued to focus on the need for fresh capital after a heavy fourth-quarter loss, Reuters reported. Changes to the plan revealed late on Wednesday would offer Oi's financial creditors 25 percent of its equity or convertible bonds to be called in three years, at which point they could own up to 38 percent of the company's shares. The updated plan would more than halve Oi's total financial debt to about 21 billion reais from 48 billion reais, analysts at Credit Suisse said on Thursday. Read more.
Mozambique missed a $119 million payment due Tuesday on a loan Credit Suisse Group AG arranged, the second debt repayment the government failed to make in as many months, Bloomberg News reported. The $622 million facility was taken out by state-owned ProIndicus and was supposed to fund the purchase of boats and radar systems to protect the country’s Indian Ocean coastline, where companies including Italy’s Eni SpA and U.S.-based Anadarko Petroleum Corp. have large offshore gas reserves. Credit Suisse on Tuesday declined to comment on its financing of Mozambique. “We are in negotiations with the investors,” Finance Ministry spokesman Rogerio Nkomo said by phone Wednesday from the capital, Maputo. Read more.
Slumping cocoa prices are testing to the limit top producer Ivory Coast’s efforts to ensure stability for farmers, heightening risks for the domestic economy and world markets, Bloomberg News reported. Authorities have warned they’ll have to cut payments to growers. That follows a wave of defaults by local exporters who’d bet on higher prices, costing the government more than $300 million and pushing cocoa futures even lower. The more than 30 percent drop in London benchmark prices from a six-year high in July has parallels with a 1980s crisis that saw farmers’ payments shrink by half and bankrupted the marketing system. Read more.