Headlines

Argentina’s government sent a bill to Congress late on Thursday night laying out its plans to restructure public debt in dollars issued under local law, offering creditors new instruments in both foreign currency and pesos, Reuters reported. The process to revamp the local-law debt is running in parallel to tense negotiations with international creditors to restructure $65 billion of the nation’s foreign-law bonds, with a deadline for creditors to accept a “final” offer on Aug. 4.

Restaurant chains Ask and Zizzi have been sold in a £70m prepack administration deal that means another 1,200 job losses in the UK’s already struggling casual dining sector, the Financial Times reported. The sale of Azzurri to TowerBrook Capital Partners, announced late on Friday, comes as the pandemic adds to the pain for a sector already under pressure from hefty debts and intense competition after a decade of rapid, private equity-backed expansion.

China’s cash-strapped small lenders are expanding their pile of the riskiest kind of bank debt to shore up their capital levels, bracing against an economic slowdown and rising loan defaults, Bloomberg News reported. A total of 19 banks have sold 339.6 billion yuan ($48.5 billion) perpetual bonds, high-yielding subordinated bonds with no maturity dates, as of July 10 this year, according to data compiled by Bloomberg. Smaller lenders including Chongqing Three Gorges Bank Co., Bank of Rizhao Co., and Huarong Xiangjiang Bank Corp. accounted for more than 70% of the issuance.

Russian incomes in the second quarter plunged by the most since the country’s 1998 default as the economy of the world’s biggest energy exporter took a double blow from the pandemic and slump in global oil demand, Bloomberg News reported. Real disposable incomes fell 8% between April and June compared with a year ago, the Federal Statistics Service reported Friday. Data for the first quarter, which earlier showed a drop, were revised up to a 1.2% increase. “This situation with incomes is pointing to a lot of problems,” said Evgeny Nadorshin, chief economist at PF Capital in Moscow.

The problem is both extensive and urgent. Within months, the UK government will start dismantling the schemes it put in place to help small businesses through the Covid-19 lockdown, the Financial Times reported in a commentary. The loss of all those cheques for furloughed employees is bad enough, let alone the end of tax deferrals. But there is worse to come next spring, when the state starts demanding the repayment of the loans it has guaranteed (£46bn now and rising), which more than 2m smaller businesses are expected by then to have taken out to help eke out their cash flows.

In the wake of the Wirecard accounting scandal, exchange operator Deutsche Boerse said on Friday it was proposing rules to enable it to quickly expel companies from the leading DAX index if those firms file for insolvency, Reuters reported. The ruling, if adopted, could mean that Wirecard would leave the DAX index in August, rather than during a regular review of the index makeup in September.

Alberto Fernández, Argentina’s president, has made an impassioned appeal for the world to accept that — with an economy devastated by coronavirus — he cannot budge from his final offer to restructure $65bn of foreign debt, the Financial Times reported. Weighed down by $323bn of borrowing, Argentina was already in a deep recession before the pandemic and in May the South American country defaulted for the ninth time in its history — although no creditors have attempted to sue it yet.

The head of India’s largest bank said the country’s escalating coronavirus outbreak risks jeopardising a years-long clean up of the financial system if authorities and lenders aren’t ready to step in and support struggling sectors like aviation or hotels, the Financial Times reported. Rajnish Kumar, chairman of the State Bank of India — India’s largest lender with over $500bn in assets — told the FT that pressures on the loan books of public-sector banks may require further capitalisation by the government, as well as rescheduling of debt and writedowns by banks themselves.

China has avoided a recession, but debt problems are piling up. Output rose 3.2% year-on-year in the three months to June, following last quarter’s record contraction. Investment still looks tepid, employers are shedding jobs, and retail is anaemic, Reuters reported. That means more bad loans. Unfortunately, the country is running low on distressed debt investors. The pandemic has forced Beijing to prop up sectors, including exports and tourism, where demand has been hit hard and unemployment rising.

French bank Natixis will merge its commodities and infrastructure operations to focus on clean energy in a restructuring sources said was accelerated by a series of loss-making loans to oil traders, Reuters reported. The move by one of the most active banks in commodities lending highlights the struggles of businesses connected to a sector grappling with an oil price collapse, rising bankruptcies and growing pressure to switch attention to greener fuels.