Europe

An Opel spokesman reacted to a New York Times newspaper report on Monday, which said US big-three carmaker GM may undergo what it called a "surgical" bankruptcy as early as June 1, Deutsche Welle reported. An Opel spokesman told dpa press agency that Opel wasn't worried about the effects of "a possible bankruptcy in terms of the measures taken up to now and business development." Carl-Peter Forster, the head of GM Europe, also said a possible bankruptcy at GM posed no danger to Opel. "Our production and the sale of cars in Europe won't be affected," he said.

Leveraged buyouts may help push corporate defaults in Europe to a record 14.7 percent this year, according to Standard & Poor’s. Between 90 and 112 speculative-grade companies in western Europe rated by S&P may default this year, the New York-based firm said in a report today, increasing an earlier estimate of as much as 11.1 percent. Defaults will be “materially higher” among companies purchased in LBOs, where target firms are loaded with acquisition debt, S&P said.

The ripple effects of American International Group Inc.'s woes have spread from the bastions of global finance to U.S. transit authorities to little towns throughout Germany, The Wall Street Journal reported. The reach can be chalked up in part to a kind of infrastructure tax deal that gained popularity in the 1990s and spread among hundreds of municipal and state governments around the world. Now, the deals in many cases have backfired because of the giant insurer's problems. The notion was this: Localities could earn millions of dollars selling their infrastructure to U.S.

The world could face high inflation and a “crisis after the crisis” when the global economy recovers, Peer Steinbrück, German finance minister, has warned, the Financial Times reported. The comments, in a weekend interview, are the latest sign of concern from Germany at the extra-loose monetary policies conducted by central banks around the world and the ever-larger fiscal stimuli being unveiled by governments.

Russian banks’ bad loans will quadruple to $70 billion this year, deepening the country’s worst financial crisis since the government’s 1998 debt default, a Bloomberg survey shows. Non-performing loans will increase to 12.8 percent of the 18.4 trillion rubles ($549 billion) owed by Russian companies and individuals by the end of this year, from 3.2 percent in March, according to the mean estimate of 17 banking analysts polled by Bloomberg in the past week. HSBC Holdings Plc, Europe’s biggest bank, expects delinquencies to reach 23 percent, Europe’s highest rate after Hungary at 25 percent.

Ireland will take commercial-property assets off the books of six of its biggest lenders and house them in a new state agency, a plan it hopes will restore international confidence in the nation's financial system, The Wall Street Journal reported. If necessary, the state will take majority stakes in Ireland's two main banks. Irish Finance Minister Brian Lenihan said Wednesday that all land and development loans of Ireland's major banks will be housed in the new National Asset Management Agency.

The Dutch government may have offered too much help to an arm of Fortis NV when it nationalized the financial-services company last year, the European Union's competition regulator said, announcing that it was opening a formal investigation into the bailout, The Wall Street Journal reported. EU rules meant to ensure that foreign companies can compete with domestic ones in the common market restrict how governments can provide aid to businesses.

The Russian factory known as Avtovaz is one of the least efficient automobile factories anywhere in the world--each worker produces, on average, eight cars a year, compared with 36 cars a year at General Motors’ assembly line in Bowling Green, Ky., for example. Yet the government is giving Avtovaz billions of dollars in aid, no strings attached, The New York Times reported. “The key issue is too much government protection,” Yegor T. Gaidar, a former prime minister, said.

Ireland’s government, reeling from the loss of its top credit rating by Standard & Poor’s, may increase taxes and cut spending in an emergency budget today aimed at stemming the biggest deficit among euro-area nations, Bloomberg reported. Finance Minister Brian Lenihan, who is making his second budget speech in six months, says the country faces a “very grave national crisis” as the deficit heads for 13 percent of gross domestic product, four times the European Union limit. He may also announce plans to remove toxic property loans from the nation’s biggest banks.

Fourteen global corporate bond issuers defaulted last week, the largest weekly tally so far this year, Standard and Poor's said in a report. This raised the total of corporate issuers that have defaulted in 2009 to 68, more than triple the 19 defaults seen at the same time last year, the report said. "By region, the U.S. continued its dominance in default count, adding nine issuers this (last) week to its roster of 45 issuers so far this year," said Diane Vazza, managing director of research for S&P. Europe followed, adding three defaults to its tally of six defaulted issuers for 2009.