Headlines

Credit Suisse Group AG was stung by the collapse of Luckin Coffee Inc. in China following an accounting scandal, which led to a five-fold increase in Asian loan-loss provisions, Bloomberg News reported. The Swiss bank set aside 97 million Swiss francs ($100 million) for soured loans, primarily related to three cases, the largest of which was Luckin Coffee, according to a person familiar with the matter. The bank only referred to a “Chinese food and beverage company” in its earnings statement Thursday.

Banco BPM SpA may deepen cost cuts and branch closures and slow planned investments as the coronavirus pandemic weighs on profitability, Chief Executive Officer Giuseppe Castagna said, Bloomberg News reported. Italy’s third-largest bank unveiled its four-year strategic plan just days before the country entered a nationwide lockdown, with a 0.1% contraction as its worst-case scenario for the economy. Bloomberg Economics now expects output to shrink by more than 13% over the full year.

Canada’s stellar credit rating is being put to the test as the oil crash and recession expose the country’s weak link: its provinces, Bloomberg News reported. Among the Group of Seven countries, only Germany and Canada have AAA ratings from S&P Global Ratings. But as pressure rises on the government of Justin Trudeau to aid provinces and key industries, Canada’s fiscal position is looking shakier. Going into the Covid-19 crisis, Canada’s provincial governments had C$853 billion ($602 billion) of debt securities outstanding, more than the national government.

The African Union, whose members face economic disaster from coronavirus pandemic, may seek international support for a plan financed by rich nations to let countries on the continent postpone bond payments, Bloomberg News reported. The International Monetary Fund and some members of the Group of 20 leading economies have been supportive of the idea, according to, Ngozi Okonjo-Iweala, one of the AU’s special envoys to mobilize international support for the continent’s response to the pandemic.

Argentines are flocking to buy black-market dollars as real interest rates sink below zero and fears mount of yet another chaotic sovereign debt default, Bloomberg News reported. The peso weakened to a record 118 pesos per dollar in informal exchange houses known as “caves” Thursday, up from 107 the previous day, according to people with direct knowledge of the matter. That’s even higher than the blue-chip swap rate, another parallel rate derived from buying securities locally and selling them abroad.

Developing countries need about $1 trillion in debt canceled to free up funds to fight the coronavirus pandemic and avert a massive debt crisis, the United Nations said, Bloomberg News reported. Immediate payment waivers coupled with a debt overhaul will help countries stay solvent in the face of as much as $3.4 trillion in obligations due this year and next, according to the UN’s trade and development agency, UNCTAD. The total debt stock of developing countries -- external and domestic, private and public -- stood at 191% of gross domestic product by the end of 2018.

Restructuring experts expect to be paid as much as A$30 million ($19 million) to find a buyer for Virgin Australia Holdings Ltd., the highest-profile airline to fall to the coronavirus, Bloomberg News reported. The debt-laden carrier said Tuesday it handed control to administrators at Deloitte after being overwhelmed by a near-halt in passenger revenue. The estimated remuneration for the voluntary administration is A$20 million to A$30 million, with further costs in the event of a liquidation, according to a circular to Virgin Australia’s creditors posted on Deloitte’s website.

South African Airways (SAA) faces a wind-down or liquidation after specialists appointed to try to save the state-owned airline said on Thursday they had run out of funds, Reuters reported. SAA has been fighting for its survival since it entered a form of bankruptcy protection in December. Its fortunes deteriorated further when the coronavirus pandemic forced it to suspend all commercial flights. It has already offered severance packages to its workforce of roughly 5,000 people after the government said it would not provide more funds for rescue efforts.

UniCredit boosted its provisions for potential loan losses by €900m in preparation for a sharp economic contraction, an early indication of the severe impact the coronavirus pandemic will have on the fragile European banking system, the Financial Times reported. Italy’s largest bank by assets made the decision after estimating that the eurozone gross domestic product will shrink 13 per cent this year, before a 10 per cent rebound in 2021, according to a statement on Wednesday. It stressed that the “unprecedented situation” made financial forecasting “difficult”.

The United Nations is calling for the creation of a global authority to help implement the temporary suspension of debt obligations from developing countries during the coronavirus pandemic, Bloomberg News reported. The proposal will enable private creditors to join the debt payments pause and allow countries use resources to fight the new illness, said Stephanie Blankenburg, head of debt and development finance at UNCTAD, the UN’s trade and development agency.