Headlines

Holders of Argentina’s $15bn in provincial debt are growing nervous that pressure from the national government is behind “arbitrary” demands for debt restructurings, threatening investors with big losses, the Financial Times reported. After the successful restructuring of $65bn in sovereign debt with foreign creditors in August, Argentina’s leftist government is now locked in talks with the IMF to renegotiate the repayment of $44bn lent since a currency crisis in 2018. Foreign creditors to Argentina’s provinces are next in line.

South Korean household borrowing from banks and brokerages grew at record pace in November fueled by retail investors borrowing to buy stocks in a bull market that stands 90% higher than lows struck in March, Reuters reported. Bank lending to households for mortgages, stocks and living expenses in November was up by 13.6 trillion won ($12.54 billion) from October, in another big monthly rise that added to record levels of household debt despite fresh curbs on loans introduced by regulators last month.

With eurozone governments’ responses to the coronavirus pandemic set to rack up €1.5tn of extra debt, several senior Italian officials including the prime minister’s economic adviser have suggested the European Central Bank should forgive governments the debt bought through quantitative easing, the Financial Times reported in a commentary. Cancelling sovereign debt the ECB has gathered or extending its maturity perpetually, they say, would free up more resources for the government to support the recovery. The idea has caused consternation in France and Germany.

A top Chinese chipmaker’s deepening bond crisis is sending a fresh signal that Beijing is willing to let ailing state-linked firms fail in order to instill stronger financial discipline into a recovering economy, Bloomberg News reported. Tsinghua Unigroup Co. said it won’t be able to repay the principal on a $450 million dollar bond due Thursday, which would trigger cross defaults on a further $2 billion of debt. This would be the company’s first dollar bond repayment failure and came after it defaulted on a 1.3 billion yuan ($199 million) local bond last month.

Even as the Committee of Creditor (CoC) is likely to decide within a week on Videocon Industries promoter Venugopal Dhoot's offer of Rs 31,289 crore for withdrawal of insolvency proceedings against 15 of his group companies, the question that will remain in creditors' mind is how he would fund this offer, Business Today reported. In an interaction with Business Today, Venugopal Dhoot says that they plan to raise the money from monetisation of assets, affordable housing, consumer electronics and home appliances business.

Italy’s two houses of parliament gave the go-ahead on Wednesday for Prime Minister Giuseppe Conte to approve a contested reform of the euro zone’s bailout fund, known as the European Stability Mechanism (ESM), at an EU summit on Dec. 10-11, Reuters reported. Last week some 60 rebels from the co-ruling 5-Star Movement, which has always opposed the reform, threatened to vote against the government, leaving it potentially vulnerable to defeat.

When Kuwait’s prime minister returns to office in the coming weeks, he faces an apparent paradox: the Gulf state with a $550bn sovereign wealth fund is running short on cash to pay ballooning public sector salaries, the Financial Times reported. Oil accounts for 90 per cent of its revenue, but slumping prices have hit the western ally’s income hard, putting its forecast deficit close to 40 per cent of GDP, higher than it was in the 1990s, during the financially perilous aftermath of the first Gulf war when Iraq invaded Kuwait.

Administrators of troubled hospital operator NMC Health are sounding out potential buyer interest for its flagship business in the United Arab Emirates (UAE), three sources familiar with the matter said, Reuters reported. The potential sale of its biggest assets which would also include Oman, could generate around $1 billion, one of the sources said. It follows administrators Alvarez & Marsal’s launch in August of a process to sell NMC’s international business including its international fertility units.

Investors are cooling on debt from riskier Chinese companies after missed payments by state-backed firms have cast doubt on the reliability of government support, The Wall Street Journal reported. The wariness has helped push new borrowing costs for these businesses to their highest levels in nearly two years, marring what has been a banner year for debt issuance. In November, corporations with below triple-A credit ratings paid an average 5.89% coupon for stock-exchange listed debt, according to Wind, the highest since January 2019. In contrast, triple-A coupon rates fell to 4.09%.

Greek banks, among Europe’s weakest, are getting rid of their bad loans at a healthy clip. In spring, the pandemic interrupted plans among the country’s banks to shed loans still festering from the eurozone crisis a decade ago, The Wall Street Journal reported. But stimulus from central banks and governments globally has sent fresh cash into funds that buy non-performing loans, reinvigorating the efforts.