Headlines

Creditors of China’s Yongcheng Coal & Electricity Holding Group Co have agreed to repayment plans for two commercial paper issues after the state-owned miner defaulted on them in late November, underwriters said on Friday, Reuters reported. Defaults by highly rated Chinese state firms including Yongcheng caught the world’s second-largest bond market off guard last month and prompted speculation that Beijing may be renewing a deleveraging push interrupted by the COVID-19 pandemic.

Norwegian Air, which has filed for bankruptcy protection in Ireland, has reported a 95 per cent collapse in passenger numbers in November, The Irish Times reported. The troubled carrier said 124,481 customers flew with it last month as travel restricions across Europe continued to decimate air travel. The airline is flying just six of its aircraft, as the pandemic has grounded the remaining 134. “The pandemic continues to have a negative impact on our business as travel restrictions remain,” chief executive Jacob Schram said.

China’s fast growing $15tn onshore bond market has been rattled by a wave of defaults by state-owned enterprises that threaten to expose systemic weaknesses across the financial system of the world’s second-largest economy, the Financial Times reported. More bond defaults are expected to follow as Beijing has indicated that it is no longer prepared to help state-owned debtors that run into trouble. But the ending of China’s deeply entrenched system of implicit government guarantees has left investors struggling to price credit risks.

Ann Summers has launched an insolvency process to slash rents, as the sex toy and lingerie retailer fights to survive the hit to high streets caused by the pandemic, the Financial Times reported. The UK chain on Friday announced plans for a company voluntary agreement, which often ends with landlords agreeing hefty rent cuts. It said rents for two-thirds of its 91 stores had been cut after “extensive discussions” with landlords. But it had failed to reach an agreement on 25 stores, which it was now proposing to place under the CVA to negotiate rents pegged to sales.

German prosecutors on Friday opened an investigation into partners at EY who audited Wirecard , after an accounting watchdog filed a report accusing them of criminality in their work for the failed payments company, Reuters reported. A spokeswoman for the Munich prosecutor’s office said it had examined the complaint brought by the APAS oversight board, adding that opening such an investigation was a procedural requirement. “We continue to conduct our investigations in the entire Wirecard complex against numerous suspects,” the spokeswoman said, adding the outcome of the inquiries was open.

Global debt is set to reach $200 trillion, or 265% of the world’s annual economic output, by the end of the year, S&P Global has forecast - although it doesn’t expect a crisis any time soon, Reuters reported. The credit ratings giant said it amounted to a 14-point rise as a percentage of world GDP, having been amplified by both the economic plunge caused by COVID and the extra borrowing that governments, firms and households have had to resort to. “Global debt-to-GDP has been trending up for many years; the pandemic simply exacerbated the rise,” S&P’s report said.

Japan should consider creating a safety net for companies that may need help surviving the hit from the coronavirus pandemic, such as airlines and transportation firms, said Heizo Takenaka, a close aide to premier Yoshihide Suga, Reuters reported. The Bank of Japan (BOJ) also may need to support financial institutions if they suffer huge losses from big bailouts, said Takenaka, who as economic minister battled Japan’s domestic banking crisis in the late 1990s.

The Queen’s purse has been hit by a string of company collapses including PizzaExpress and New Look, showing that even royal finances are not immune from the turmoil on the UK’s high streets, the Financial Times reported. The Crown Estate, which manages the monarchy’s £13.4bn commercial property portfolio in the public interest, has suffered as retailers and casual dining chains restructure after pandemic lockdowns and restrictions crushed earnings, plunging many companies into administration.

Rising defaults by China’s state firms are showing the need for bond investors to be much savvier about those borrowers -- no easy feat in a country where government decisions and business operations lack transparency, Bloomberg News reported. Five state-linked companies -- from a coal miner to a top chipmaker and an auto firm with ties to BMW AG -- have defaulted for the first time in the onshore bond market this year. That’s the most since 2016.

Economic activity in Spain and Italy’s services sector has hit a six-month low according to a widely watched business survey, as consumer companies bear the brunt of lockdowns to battle the spread of coronavirus, the Financial Times reported. Italy’s IHS Markit purchasing managers’ index for services fell for the third consecutive month to 39.4 in November, while the Spanish index fell for the fourth consecutive month to 39.5. A reading below the 50 mark indicates that a majority of businesses reported a contraction in activity from the previous month.