Daily Insolvency News Headlines

Brazil (1)
China (1)
China (1)
Greece (1)
Romania (1)
Russia (1)
Venezuela (1)

Thu., September 3, 2015

Thu., September 3, 2015

China will loan Venezuela $5bn to boost oil output, the Venezuelan president said in a televised broadcast from Beijing, in a show of continued support for the troubled Latin American economy from one of its main creditors, the Financial Times reported. China has lent $50bn to Venezuela in oil-backed loans secured under former president Hugo Chávez but has become much less enthusiastic about adding to its exposure as the Venezuelan economy has worsened. Venezuela is the eighth-largest oil supplier to China, primarily of heavy crude that trades at lower than benchmark prices. Nicolas Maduro, Venezuelan president, said in a broadcast aired in his home country on Tuesday evening that the deal would “increase oil production in a gradual way in coming months”. Mr Maduro is visiting China ahead of a military parade on Thursday to celebrate the end of the second world war in Asia. Analysts said Venezuela’s economic woes combined with a global slide in oil prices posed China with a dilemma over its dealings with the Latin American country. Read more. (Subscription required.)

Thu., September 3, 2015

For most countries, the economic slowdown in China and the accompanying slump in commodity prices represent something between nuisance and pothole. For Russia, they are a catastrophe, The Wall Street Journal reported. Russia’s currency and economy, already squeezed by Western sanctions, have been sent into virtual free fall by slumping oil prices. The International Monetary Fund predicted in July that Russia’s economy would shrink 3.4% this year, the most of any major emerging market. That now looks optimistic. Anders Aslund, a Russia expert at the Atlantic Council in Washington, thinks 6% is more likely. Coincidentally, that’s close to what the Russian central bank predicted would happen if oil fell to $40 a barrel, roughly its current level. Russian growth had averaged 7% from 1999 to 2008, due in great part to high oil and natural-gas prices. The oil collapse has exposed deep cracks in Russia’s economic foundations: falling productivity, a shrinking labor force, uncompetitive industries, and private enterprise hemmed in by a kleptocratic state and crony capitalism. Read more. (Subscription required.)

Thu., September 3, 2015

During a previous stint in government, Brazilian finance minister Joaquim Levy won the nickname “Edward Scissorhands” after the 1990s film because of his ability to cut public spending, the Financial Times reported. Ever since President Dilma Rousseff brought him back to Brasília in January to play the role of the government’s economic bad cop, Mr Levy has delivered a blunt warning: either Brazil gets its fiscal house in order or it will see its debt relegated to junk status. “The money is gone,” the former banker said in May, referring to recent years of free-spending. But eight months into the job, Mr Levy is struggling to make much headway amid a slumping economy and a political crisis that has undercut the government’s ability to get anything done in Congress. Read more. (Subscription required.)

Thu., September 3, 2015

China’s sudden decision last month to devalue its currency riled neighbors and fueled investors’ fears about a sharp slowdown in the world’s No. 2 economy. But the move has won over the International Monetary Fund and even secured restrained praise from the U.S. Treasury Department, The Wall Street Journal reported. The currency maneuver has positioned the Chinese government to press for a greater international role for the yuan during visits to a series of Group of 20 meetings starting this week and a visit to Washington later this month. Economists are generally viewing the depreciation as China presented it: as a move to make the country’s exchange rate more market-determined. Combined with Beijing’s careful management of the currency since then, it is bolstering China’s bid to get the yuan included in the IMF’s basket of reserve currencies after the IMF board’s vote in November, according to people familiar with the matter. They and other experts say China is holding to its currency commitments for now despite discord in its financial markets and deepening international worries about the Chinese economy. Read more. (Subscription required.)

Thu., September 3, 2015

Usually prime ministers call snap elections only when they have a great story to tell. But Alexis Tsipras has never been afraid to challenge conventional political wisdom. He is seeking a renewed mandate after just eight months in office despite what must rank as one of the worst economic records of any leader of a modern industrialized country outside of wartime. Before he triggered the political crisis that brought him to power in January, Greece was the second-fastest growing economy in the eurozone, the government was running a budget surplus before interest payments and the banks had just passed a European Central Bank stress test. Now the economy is back in recession, the government is running a deficit and the banks are estimated to need up to €25 billion ($28 billion) in fresh capital. Mr. Tsipras’s eight-month standoff delivered next to nothing that he couldn’t have achieved on his first day. In agreeing to a new €86 billion bailout deal, he broke virtually every one if his January manifesto commitments, promising to implement the very tax increases, pension reforms and privatizations he had vowed to resist. In the process, he also broke his own party, with a third of his hard-left parliamentarians having defected to create their own new anti-euro party. Remarkably, the eurozone seems ready to overlook this litany of failure. Eurozone officials are still pinching themselves over how smoothly the negotiations ran after Mr. Tsipras made his decision to capitulate. So complete was his surrender in July that many officials and political leaders now seem convinced that he isn’t just a reliable partner, but the only game in town—the only political leader in Greece who can be relied upon to deliver what has been agreed. Read more. (Subscription required.)

Thu., September 3, 2015

Ambient Sibiu, a local do-it-yourself (DIY) retailer and distributor of building materials, has filed for insolvency. The company submitted an insolvency request at the Sibiu court asking for its approval to start a reorganization process, Romania-Insider.com reported. “The evolution of the construction sector and the retail with building materials in the past years has shown that the domestic market remains a difficult one,” reads a company press release, cited by local Capital. “Only the firms that managed to adopt measures for strengthening and streamlining the business have succeeded to overcome the difficulties of this period.” Ambient hasn’t managed to attract the necessary funds to finance the working capital, during the financial restructuring process in the last four years, according to company representatives. Ambient has 12 stores in Romania, most of them located in Transylvania, and over 1,200 employees. Its sales went down by more than 20% last year, to EUR 112 million. The company thus recorded EUR 7.3 million losses. Read more.

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