Headlines

Italy is working to extend by 12 months a state guarantee scheme designed to help banks shed problem loans, two sources familiar with the matter said on Tuesday, as the industry braces for a surge in pandemic-driven defaults, Reuters reported. Authorities are focusing on how best to help banks deal with the fallout from the coronavirus crisis, once governments unwind extraordinary measures they deployed to support businesses.

China has suspended one of its top credit rating agencies after a former executive was accused of taking “massive” bribes, as a growing pile of defaults rattle the country’s $4tn corporate debt market, the Financial Times reported. The China Securities Regulatory Commission announced on Tuesday that it was temporarily freezing the licence of Golden Credit Rating and had forbidden the agency from taking on new business for three months. The move came as Shandong Ruyi, China’s largest textile manufacturer, looked set to default on a second bond in as many days.

Shareholders of baking goods maker Aryzta have elected a chairman who has previously spoken out against a takeover, after a deadline on an 800 million Swiss franc ($902.53 million) approach from Elliott Advisors expired last week, Reuters reported. Urs Jordi was elected as chairman of the struggling company, which produces McDonald’s burger buns, at its remotely held annual general meeting. Jordi has said now is not the time for Aryzta to consider selling up, instead favouring a restructuring of the company, whereas some previous board members favoured a takeover.

The Swiss economy will shrink this quarter and recover less quickly than previously expected in 2021 as renewed restrictions to stem the spread of Covid-19 in Europe and elsewhere weigh on global momentum, Bloomberg News reported. Switzerland’s State Secretariat for Economic Affairs sees gross domestic product expanding 3.2% next year, slower than the 4.2% previously forecast.

More than 60 per cent of the corporate insolvency resolution processes (CIRPs) that achieved closure in July-September 2020 have ended up in liquidation, Business Standard reported. The data by the Insolvency and Bankruptcy Board of India (IBBI) shows that 68 of the 112 cases closed during this period went into liquidation. While a significant number of cases had faced liquidation in the previous quarter too, it was still only one-third of the total cases that got closure.

China’s central bank made its biggest ever injection of medium-term funds on Tuesday to shore up liquidity, after recent corporate bond defaults shattered investor confidence and scuppered new issuances, Reuters reported. The People’s Bank of China (PBOC) said in a statement it had issued 950 billion yuan ($145 billion) worth of one-year medium-term lending facility (MLF) loans to financial institutions to keep the “banking system liquidity reasonably ample”. It kept the interest rate unchanged for an eighth straight month at 2.95%.

Lessor BOC Aviation Limited (BOCA) has asked a Malaysian court to dismiss AirAsia X Bhd’s debt restructuring scheme as it rules out a debt-to-equity swap and gives too much power to Airbus as a creditor, an affidavit filed by a top BOCA executive shows, Reuters reported. AirAsia X (AAX), the long-haul unit of budget airline AirAsia Group, has proposed to reconstitute $15.3 billion of debt into a principal amount of 200 million ringgit ($48 million) and have the rest waived.

Automaker Mahindra & Mahindra’s South Korean unit Ssangyong Motor Co has defaulted on loan repayment of about 60 billion won ($55 million), the Indian company said in a statement to the stock exchange on Tuesday, Reuters reported. Of the total payment that was due on Dec. 14, about 30 billion won was owed to Bank of America, 20 billion won to JP Morgan Chase and 10 billion won to BNP Paribas, Mahindra said. Shares of the Indian automaker fell as much as 1.5% on Tuesday to their lowest since Nov. 23, while those of Ssangyong fell up to 7.72%.

An EY anti-fraud team warned in 2018 that “red-flag indicators” at Wirecard pointed to potential accounting manipulation and required further investigation, according to documents seen by the Financial Times. Just weeks later, the separate EY team in charge of Wirecard’s annual audit decided against investigating the matter further and subsequently issued an unqualified audit, the Financial Times reported. Wirecard, a once high-flying German payments group, this summer collapsed into insolvency in one of Europe’s biggest postwar accounting frauds.

Malaysia’s AirAsia X Bhd (AAX) said on Monday it proposed raising 500 million ringgit ($123 million) through a rights issue to existing shareholders and a share subscription for new investors, Reuters reported. The airline, the long haul arm of AirAsia Group, said in a stock exchange filing that it intends to raise up to 300 million ringgit through the rights issue.