Europe

Ratings agency DBRS believes there is a low risk that the borrowers of the €290 million worth of mortgages being sold by lender Finance Ireland will default, The Irish Times reported. Finance Ireland said this week that it intends offering almost 1,400 home loans on which the borrowers owe €290 million for sale in bonds known as residential-mortgage-backed securities. DBRS Ratings, which assesses businesses’ ability to pay their debts, has given the Finance Ireland bonds ratings of between BB and AAA, meaning that it believes there is a low risk of the borrowers defaulting.

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Mining company Power Resources Group (PRG) said on Friday it was buying Metalysis, a British high-tech specialist which was backed by asset manager Neil Woodford, out of administration, Reuters reported. Metalysis, which manufactures 3D printing powder, fell into administration in June, around the same time Woodford’s equity income fund, was frozen. His fund had a 1.6 million pound stake in Metalysis, which has received a total of 92 million pounds ($115 million) through numerous funding rounds, most recently in 2018.

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Germany’s benchmark Bund yield touched a fresh record low on Thursday, as fears about a global economic slowdown and the prospect of renewed eurozone economic stimulus drew investors into government bonds, the Financial Times reported. Demand for the debt sent its yield down to as low as minus 0.403 per cent, taking it deeper into negative territory, meaning any investor holding the paper until maturity faces a loss.

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As Eurozone retail sales saw an unexpected contraction on the month in May this helped to limit the downside pressure on the Pound Sterling to Euro (GBP/EUR) exchange rate, Euro Exchange Rate News reported. Although the previous month’s reading saw a positive revision investors were still disappointed to find that sales had slowed, suggesting a weaker level of consumer confidence. Given the current weakness of the Eurozone manufacturing sector this slowdown in retail sales raised concerns that the service sector could also falter in the months ahead.

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Spain’s arduous economic recovery has reached a milestone after the number of people employed finally surpassed pre-crisis levels, the Financial Times reported. But while the figure of 19.52m with jobs, announced by the labour ministry on Tuesday, represents a new peak and the highest since 2007, other statistics present a bleaker picture of the negative effects of a decade of turmoil and its effects on millions of workers. Despite the rising job numbers, Spain still has an unemployment rate of 13.6 per cent, according to EU statistics, the worst in the 28-country bloc after Greece.

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Countries that perform well on environmental, social and governance metrics are viewed by investors as less likely to default, a new study that examined credit default swap spreads on sovereign bonds has found, the Financial Times reported. In an analysis of 59 countries between 2009 and 2018, Hermes Investment Management found that countries with the best ESG scores tend to have the lowest CDS spreads and vice versa, suggesting a link between credit risk and ESG performance.

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Let this sink in for a minute: Yields on two-year Italian government bonds briefly fell below 0% on Tuesday. That's right - for a moment, investors decided it was just fine to pay Italy for the privilege of lending it money, even though barely a month ago the country was on the verge of a fiscal crisis so bad some wondered whether it would be need to leave the euro zone, a Bloomberg View reported. It matters little that yields ended the day on the right side of zero at 0.02%, but even that shows how the “greater fool” theory in markets has gone too far.

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Funding Circle floated to much fanfare last September. It matches small businesses who want to borrow with investors looking for better returns than their cash could earn sitting in a savings account, the Financial Times reported. Shareholders may feel aggrieved about their returns however: shares in the lender are already down more than 60 per cent since its debut and fell another 25 per cent at the beginning of trading today. The reason for the sharp fall? Funding Circle warned this morning that revenue growth this fiscal year will only be half of what it previously expected.

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Truworths International Holdings Ltd. fell the most in five months in Johannesburg as the South African retailer joined the ranks of those feeling the pain from the U.K.’s ailing shopping streets, Bloomberg News reported. Truworths said Tuesday British footwear subsidiary Office had started debt restructuring talks with its lenders in the face of the “depressed retail trading environment.” The stock slumped as much as 6.5%, the biggest drop since January, making it the second-worst performer among Johannesburg’s general retailers this year.

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