Headlines

While fears over coronavirus continue to spread in China (and just now, in Taiwan), there’s news of another ailment watchers of the People’s Republic have been concerned about for the past decade: corporate debt, the Financial Times reported in a commentary…Chinese property giant Evergrande Group is paying as much as 12 per cent in its latest overseas bond issuance to raise $2 billion for debt repayment.

Slovenia’s largest food retailer Mercator refinanced a debt of its Serbian unit Mercator-S to the value of 90 million euros ($99.8 million) with Serbian bank AIK, Mercator said on Wednesday, Reuters reported. It did not give details of the deal but said the conditions of the refinancing were “much more favourable” than those of the previous syndicated loan which was taken in 2014 and would expire in March. It added the refinancing will improve liqudity of the Serbian unit over the next five years and enable further development of Mercator in Serbia.

Australia’s Downer EDI cut its annual profit forecast on Thursday amid a surge in costs at its loss-making construction contracts, sending the company’s shares sharply lower to mark their worst session in nearly a decade, Reuters reported. The revised outlook comes amid weak global business investment and as Australia’s economy stutters along with sluggish wage growth and high consumer debt.

When bank executives descended on Davos last year for the annual meeting of the world’s elite, they did so under a cloud. Just a day before the gathering began, UBS issued a profit warning after its predominantly rich clients pulled $13bn of assets from the bank, the Financial Times reported. Here was Switzerland’s largest bank and one of the top global wealth managers sending a distress signal from its own doorstep. The world’s wealthy had apparently turned bearish on the economy because of geopolitical tensions and sluggish growth. It proved to be a sign of things to come.

Lebanon’s new government faces huge upcoming debt repayments and a currency peg at breaking point, but it may already have run out of the hard cash firepower it needs to tackle these problems, Reuters reported. The heavily indebted country faces hefty bond repayments coming up in March and April, when $1.34 billion and $842 million of interest and principal respectively come due. Analysts expect the central bank to be able to foot the bill, for now, though some in Beirut believe a rescheduling or restructuring is preferable.

Bondholders have balked at a plea to accept late payment on debt backed by the province of Buenos Aires, in a stand-off that could complicate already delicate negotiations over Argentina’s central government debt, the Financial Times reported. Buenos Aires province’s bonds fell sharply on Wednesday after a group of investors criticised an attempt to secure their approval to postpone a $250m debt payment coming due on January 26.

Deutsche Bank AG has moved an insolvency application against Uttam Galva Steels Ltd. at the National Company Law Tribunal to recover dues against the foreign currency-denominated loans its Singapore branch extended, BloombergQuint reported. Uttam Galva Steels—which had entered into a $20-million credit facility agreement with the lender for its capital and operational needs—had challenged the maintainability of the bank’s application under section 7 of the Insolvency and Bankruptcy Code. The section allows financial creditors to file insolvency application.

Investors will be closely watching HNA Group Co. as $500 million of dollar bonds mature this week, testing the debt-laden Chinese conglomerate’s repayment ability, Bloomberg News reported. A $200 million bond issued by HNA Group International will come due Jan. 23, while its $300 million note is set to mature a day later, according to Bloomberg-compiled data. HNA Group International declined to comment when reached by Bloomberg via email. HNA Group Chairman Chen Feng predicted last month that 2020 will be “the decisive year to win the war” against its long-running liquidity challenges.

Eurozone companies’ demand for bank loans has fallen for the first time in six years, in a worrying sign for the region’s faltering economy and the European Central Bank’s attempt to stimulate more lending, the Financial Times reported. Loan demand fell in the fourth quarter because of lower investment needs and wider availability of alternative finance, according to an ECB survey of 144 banks. The biggest fall was in Spain, with a smaller decline in France. Demand from German companies was still up while in Italy it was flat.

Wang Yizhi sensed an opening last July when local investors raced to dump the debt of Future Land Development, a Shanghai-based developer, after the arrest of its founder on sexual abuse charges, the Financial Times reported. Shortly after the scandal broke, Mr Wang, general manager of Raman Capital, bought four-year bonds for 88 cents on the dollar. Within weeks, he had sold them for 95 cents, after the developer put dozens of projects on sale to improve its cash flows.