Daily Insolvency News Headlines

Fri., July 31, 2015

Fri., July 31, 2015

The International Monetary Fund’s board has been told Athens’ high debt levels and poor record of implementing reforms disqualify Greece from a third IMF bailout of the country, raising new questions over whether the fund will join the EU’s latest financial rescue, the Financial Times reported. The determination, presented by IMF staff at a two-hour board meeting on Wednesday, means that while IMF staff will participate in bailout negotiations currently under way in Athens, the fund will not decide whether to agree a new programme for months — potentially into next year. That delay could have significant repercussions, particularly in Germany, where officials have long said it would be impossible to win Bundestag approval for the new €86bn bailout without the IMF on board. The IMF’s assessment adds another source of complexity, just as Athens and its bailout monitors begin discussions to try to conclude a deal before a tight August 20 deadline. While the creditors harbour misgivings, Alexis Tsipras, Greece’s prime minister, is also facing a mutiny from leftwing members of his Syriza party unhappy with the conditions attached to the bailout. Read more. (Subscription required.)

Fri., July 31, 2015

Long drawn-out negotiations between Ukraine and the major investors who own its debt are finally starting to thaw, The Wall Street Journal reported. After months of relative stalemate, a group of the conflict-torn country’s creditors has indicated it is willing to take a small reduction in the face value of Ukrainian bonds to speed up a debt restructuring process, according to two people close to the negotiations. Ukraine and its creditors have stood at an impasse for months over about $19 billion worth of bonds, which have tanked in value because of concerns the country wouldn’t be able to meet repayments. Ukraine, assisted by financial adviser Lazard, has sought a restructuring of the bonds that would see investors take a haircut, or a reduction in the face value of their holdings. In June, Ukraine reiterated a proposed deal whereby bondholders would take a 40% haircut. Read more. (Subscription required.)

Fri., July 31, 2015

Some of the world’s largest companies have sounded the alarm about the slowdown in the Chinese economy, warning that weaker growth would hit profits in the second half of the year, the Financial Times reported. Car companies such as PSA Peugeot Citroën, Audi and Ford have slashed growth forecasts while industrial goods groups such as Caterpillar and Siemens have all spoken out on the negative impact of China. The warnings are a sign that China’s weaker growth and its stock market rout this month are creating a headache for global corporates that have long relied heavily on the world’s second-largest economy to drive revenues. Audi and France’s Renault both cited China as they cut their global sales targets on Thursday, with Christian Klingler, sales chief at Audi parent Volkswagen, predicting “a bumpy road” in the country this year. Read more. (Subscription required.)

Fri., July 31, 2015

Mexico, a middle-income but highly unequal country, is betting on sweeping structural reforms to catapult it into the big league of advanced economies. But it is not winning the battle against poverty and has not been for the past quarter of a century, despite economic growth and its membership of the North American Free Trade Agreement (Nafta). That is the stark conclusion to be drawn from a new bi-annual report from Coneval, a Mexican government agency charged with evaluating social policies. Coneval found that Mexico’s overall poverty rate in 2014 rose to 46.2 per cent of the population, of 55.3m people, from 45.5 per cent or 53.3m people in 2012 — an increase of 2m people, or 3.7 per cent of those considered to be in poverty, in two years. The increase took place despite gross domestic product rising 3.9 per cent in 2012, 1.4 per cent in 2013 and 2.1 per cent in 2014. Read more. (Subscription required.)

Fri., July 31, 2015

British regulators said on Thursday that they had barred a former trader at the Dutch lender Rabobank from the securities industry after he pleaded guilty in the United States in March in connection with rigging a global benchmark interest rate, the International New York Times reported. The Financial Conduct Authority of Britain said the former trader, Lee Stewart, 52, had been barred from working in the British financial services industry for lacking “honesty and integrity.” The ban was put in place on July 21, the regulator said. In March, Mr. Stewart pleaded guilty to conspiracy to commit wire and bank fraud in the United States District Court for the Southern District of New York and acknowledged misconduct related to the bank’s submissions of the London interbank offered rate, or Libor, as it was tied to the dollar. He is set to be sentenced in 2017. Read more. (Subscription required.)

Fri., July 31, 2015

Bankia will look to fortify its balance sheet in 2016 through the issuance of subordinated debt instruments including Additional Tier 1, signalling another step forward for the bailed-out Spanish lender, Reuters reported. "There is no urgency and I don't foresee issuing capital this year, but we could issue an Additional Tier 1 and further Tier 2 next year," said Lennart de Jong, funding director at the bank. While Bankia has already tapped the Tier 2 market as part of its comprehensive overhaul, it has not yet sold an AT1 bond - the riskiest type of bank debt. Unlike Spanish national champions BBVA and Santander, which are familiar faces in the AT1 market, smaller names have not been big issuers so far with only Banco Popular Espanol raising capital in the format. Bankia this year has focused on its covered funding programme. It priced a 1.25bn seven-year covered bond on almost 2bn of demand on Tuesday. Read more.

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