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Increased risk taking in global financial markets, particularly in leveraged debt, could worsen future downturns, according to U.K. monetary authorities, Bloomberg News reported. As borrowing in global junk-rated debt markets continues to climb, valuations are vulnerable to changes in growth prospects and the path of interest rates, officials wrote in the Bank of England’s Financial Stability Report. “Elevated asset valuations and compressed risk premia imply a vulnerability to a sharp correction in asset prices,” according to the report.
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The Bank of England signaled it’s not overly worried that the U.K.’s current housing boom, fueled by a temporary tax cut, will lead to an unsustainable buildup in mortgage debt, Bloomberg News reported. In its twice-yearly assessment of financial stability, the central bank said while the share of households struggling with debt increased “slightly” during the the pandemic, it “remains significantly below its pre-global financial crisis level.” The sanguine assessment comes amid a surge in U.K. house prices as buyers race to take advantage of a cut in stamp duty, a levy on transactions.
The pandemic has pushed global government debt to the highest level since World War II, surpassing the world’s annual economic output. Governments, especially in rich countries, are borrowing still more, partly to erase the damage of Covid-19, the Wall Street Journal reported. Advocates say that the spending, also encouraged by new economic thinking about debt, could usher in a period of robust global growth, reversing the malaise many wealthy countries have felt this century.
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The U.S. private equity group in talks with Sanjeev Gupta over refinancing his Australian operations, White Oak Global Advisors, is moving deeper into the trade credit business after snapping up one of Greensill Capital’s subsidiaries, the Australian Financial Review reported. White Oak Global Advisors CEO Andre Hakkak, who is in refinancing talks with Sanjeev Gupta, has bought Greensill Capital subsidiary Finacity. White Oak has been named the successful bidder of Finacity, a US firm which helps companies raise cash by acquiring their invoices.
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Those in the business of mining cryptocurrencies are rushing to leave China, which had accounted for 60% of global bitcoin mining, as the nation tightens restrictions on such activities, Nikkei Asia reported. China, which is already testing a digital yuan, has moved early to rein in other virtual currencies, sparking widespread disruption. The government in May announced tougher restrictions targeting cryptocurrency mining and transactions.
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Mainly people who are vaccinated or recently tested negative for Covid-19 will be allowed in bars, restaurants and malls in France starting from August, President Emmanuel Macron said on Monday, as the spread of the virus increases across the country, the Wall Street Journal reported. The new restrictions will also apply in trains, domestic flights, theaters, amusement parks, concert halls, hospitals and nursing homes. Authorities will reinforce border controls this week and impose quarantines on travelers who aren’t vaccinated and have arrived from countries at risk, he added.
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Hyflux Ltd.’s judicial manager brought a plan to liquidate the Singapore company before a court on Monday, following a years-long saga in one of the city-state’s most high-profile distressed cases, Bloomberg News reported. The hearing comes after the court-appointed manager in charge of the water treatment company since November applied last month to wind up the firm. Judicial manager Borrelli Walsh Ltd. said in a statement in June that “the remaining value” of the Hyflux Group is best realized in a liquidation.
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Singapore property group City Developments Limited (CDL) has said it will continue to limit further exposure to a China unit, which is now facing a bankruptcy claim, the Straits Times reported. CDL reiterated in a filing to the Singapore Exchange on Thursday that it has "ring-fenced its current financial exposure" to its investment in Sincere Property, and will not support the unit's continuing financial obligations. "Despite the bankruptcy proceedings, the group will continue to strenuously protect its position and limit further exposure," said CDL.
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There were fewer corporate restructurings and bankruptcies among small and medium businesses in Canada last year compared to 2019. This was directly related to government initiatives that supported financially vulnerable businesses, delaying bankruptcy for many, according to a Toronto Star commentary. However, when the stimulus and government support come to an end, those businesses that were already vulnerable will find that repaying both pre-coronavirus and post-coronavirus debt may not be possible, and that the possibility of bankruptcy looms large.
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Tsinghua Unigroup Co., a key player in China’s push for self-reliance in semiconductors, said Friday that one of its creditors has asked a court to begin bankruptcy proceedings for the group, the Wall Street Journal reported. The state-backed chip maker said that it had received a notice from a Beijing court saying that Huishang Bank Corp Ltd. , a Hong Kong-listed bank based in Anhui province, has requested the court to start bankruptcy and reorganization proceedings, on the grounds that it has failed to repay its debts, according to a Unigroup filing to the Shanghai Stock Exchange.
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