Some of the world’s top economies could see their credit ratings cut or put on downgrade warnings in the coming months in a second global wave of coronavirus-related revisions, S&P Global’s top sovereign analyst has warned, Reuters reported. S&P’s sovereign group managing director Roberto Sifon-Arevalo told Reuters that the immense costs of supporting health systems, firms and workers through the pandemic was fundamentally altering some countries’ finances for the worse.
Singapore’s efforts to promote itself as a global restructuring hub have been hit by a court’s decision to grant a distressed water company an unprecedented string of extensions as it battles to avoid liquidation, the Financial Times reported. A court in the city-state said on Friday that the next hearing in the case of Hyflux would take place on November 16 following a decision on Wednesday to grant the water management group a 12th adjournment. The Singaporean company has become saddled with S$2.7bn ($2bn) in unsecured debt after years of soaring growth came to a halt.
Long-haul, low-cost carrier AirAsia X Bhd has run out of money and needs to raise up to 500 million ringgit ($120.60 million) to restart the airline, deputy chairman Lim Kian Onn said in a newspaper interview published on Saturday, Reuters reported. The Malaysian airline, the long-haul arm of AirAsia Group Bhd, said this month it wanted to restructure 63.5 billion ringgit ($15.32 billion) of debt and slash its share capital by 90% to continue as a going concern. “We have run out of money,” Lim told The Star newspaper.
Thailand’s central bank will not extend a broad-based debt moratorium but will introduce targeted measures to help debtors affected by the coronavirus pandemic, an assistant governor said on Friday, Reuters reported. Southeast Asia’s second-largest economy posted its deepest contraction in over two decades in the second quarter and the pandemic has battered tourism and domestic activity. The central bank will monitor the situation closely and did not expect rapid and large defaults after the six-month debt holiday ended on Thursday, Assistant Governor Roong Mallikamas told a briefing.
The head of the International Monetary Fund on Sunday called for significant steps to address the increasingly unsustainable debt burdens of some countries, urging creditors and debtors to start restructuring processes sooner rather than later, Reuters reported. IMF Managing Director Kristalina Georgieva said a six-month extension of the Group of 20 major economies’ freeze in official bilateral payments would help low-income countries hammered by the COVID-19 pandemic, but more urgent action was needed.
A Turkish energy producer and distributor started preliminary talks with lenders to renegotiate interest rates on $3.9 billion of debt to try and benefit from lower borrowing costs, Bloomberg News reported. Bereket Enerji approached nine lenders about adjusting rates on debt that had previously been restructured, people with knowledge of the matter said. Some banks are reluctant to meet the demand, while others are more sympathetic, the people said, asking not to be identified as the deliberations are confidential. Negotiations are continuing, they said.
AirAsia X Bhd (AAX), now at an existential crossroads, is in dire need of massive debt forgiveness from its creditors, or be prepared to shut its business down for good, AviationPros.com reported. The low-cost, medium-haul airline, which has grounded all its flights due to the Covid-19 outbreak, is asking creditors and suppliers to forgo over RM63bil in liability and instead accept a maximum RM200mil in payment. While the proposal may sound atrocious, analysts think many creditors would, in fact, accept the offer.
Two Turkish construction groups in a consortium that includes General Electric Co. started talks to restructure 900 million euros ($1.1 billion) of loans, the latest sign of corporate distress following a plunge in the local currency, Bloomberg News reported. The firms, which used the debt to build hospitals, are negotiating with lenders on the foreign-currency loans, according to two people familiar with the matter, who asked not to be identified as negotiations are private. The consortium is made up of Gama Holding AS and Turkerler Insaat AS, while Boston-based GE’s stake is around 10%.
China Evergrande Group, the country’s most indebted property developer, on Wednesday said it has raised $555 million in a secondary share sale, settling for half its initial target and sparking a 16% drop in its share price, Reuters reported. To help pay debt, the firm sold 260.65 million shares at HK$16.50 ($2.13) each - the low end of a price range flagged by its bankers in a term sheet when the deal launched on Tuesday.
International Monetary Fund Managing Director Kristalina Georgieva on Wednesday called for increased participation in debt relief for poor countries by private creditors and China, saying this was key to its success and a potential framework for debt restructurings, Reuters reported. Georgieva told a news conference that private creditor participation in a debt service suspension program for poor countries has been largely non-existent, with only three of 44 countries signed up for the program reaching out to private creditors.