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As many Chinese companies take advantage of declining interest rates to slash borrowing costs, some debt-laden developers are doing the opposite -- raising coupons to avoid having to buy back debt, Bloomberg News reported. Developers make up almost a third of 16 bond issuers that substantially increased coupons this year when a put option allowing investors to sell their holdings back to the company came due, according to Bloomberg calculations based on public data.
Eurobank has moved ahead of Greek peers in the drive to cut bad loan volumes after completing a deal with Italian debt recovery firm doValue, and is now focused on boosting lending, its chief executive told Reuters on Tuesday. Greek banks have been making headway in their bid to sell, write off or restructure billions of euros of soured loans accumulated during the last financial crisis, Reuters reported. The high level of non-performing exposures (NPEs) - about 40% of their loanbooks in March - constrains their ability to finance the country’s economic recovery.
Financially battered Hong Kong airline Cathay Pacific Airways has become the latest airline to resort to government support to survive the coronavirus pandemic, the International New York Times reported on an Associated Press story. The Hong Kong government on Tuesday approved a 39 billion Hong Kong dollar ($5 billion) recapitalization plan that calls for a new government-controlled entity called Aviation 2020 to buy $2.6 billion of an up to 33 billion Hong Kong dollars ($4.3 billion) share offering by Cathay Pacific.
Last week, as coronavirus continued to threaten growth around the world, Moody’s cut India back to Baa3. Fellow rating agencies Fitch and S&P, too, have India just one notch above junk, the Financial Times reported in a commentary. The country is not simply a victim of the havoc wrought by the pandemic. Its problems predate the virus. One crucial weakness is a slow-burning crisis in the financial system: a long history of bad lending decisions and poor governance has contributed to deep pain at banks, shadow banks and mutual funds.
South African state airline SA Express escaped liquidation on Tuesday after a judge granted a three-month delay in liquidation proceedings, giving the government more time to clarify its plans for the domestic and regional carrier, Reuters reported. SA Express, a different business to national flag carrier South African Airways (SAA), was placed under provisional liquidation in April after its administrators said they could not secure funding for turnaround efforts.
South Korea’s Hyundai Development Co said on Tuesday it wants new terms for its acquisition of Asiana Airlines after the carrier’s already hefty debt burden increased by some $3.8 billion (2.9 billion pounds), Reuters reported. It also called on Asiana’s state-funded creditors to provide support to the long-troubled airline, which must now also contend with the coronavirus pandemic’s crippling impact on travel demand. Hyundai Development and brokerage Mirae Asset Daewoo agreed in December to purchase control of South Korea’s No. 2 airline for about 2.5 trillion won ($2.1 billion).
The head of the International Monetary Fund called on private creditors to join the Group of 20 in providing debt relief for the world’s poorest nations, saying that the alternative to suspension and restructuring is defaults, Bloomberg News reported. A debt-service suspension would provide time for restructuring debt on a case-by-case basis in countries where debt sustainability needs to be restored, Managing Director Kristalina Georgieva said in a webcast with the U.S. Chamber of Commerce Tuesday.
Asian companies are at a higher risk of default in the coming quarters than last year, a Reuters analysis of their credit ratios showed, as the coronavirus pandemic has squeezed revenue and made it harder to refinance debt, Reuters reported. One measure of how easily a company can pay interest on outstanding debt - operating profit to interest ratio - fell to the lowest in 11 years at the end of March. The sample took into account companies worth at least $500 million with available data on Refinitiv.
Uganda’s central bank cut its benchmark interest rate for a second time this year to a new low as risks to inflation remain benign and the outlook for economic growth is tilted toward the downside, Bloomberg News reported. The monetary policy committee reduced the rate to 7% from 8%, Governor Emmanuel Tumusiime-Mutebile said Monday in a speech broadcast online. That is the lowest level since the central bank introduced the policy rate in 2011 at 13%. Returning to pre-pandemic levels of economic activity will be gradual, partly due to weak external demand, Tumusiime-Mutebile said.