Headlines

Argentina’s credit rating was downgraded to near-default status by two of the biggest global ratings companies after the government said it would delay payments on its short term dollar-denominated local debt, Bloomberg News reported. Fitch Ratings cut Argentina’s long-term issuer rating two notches to “restricted default” from CC, the company said in a statement, after President Alberto Fernandez’s government announced by decree it would extend payments on $9.1 billion in dollar-denominated Treasury bills until Aug. 31 of next year.

These are perilous times for holders of Chinese corporate bonds. Record domestic defaults and the biggest dollar-debt delinquency by a state-owned company in two decades have jolted investors this year, underscoring the need for increased vigilance as the economy slows and Chinese policy makers scale back support for a slew of cash-strapped businesses, Bloomberg News reported. As bondholders adjust to a new -- and arguably more healthy -- environment where companies are allowed to default, these are some of the indicators they’re watching to avoid getting burned.

Lebanon, a politically troubled but upper middle-income Middle Eastern state, is in the midst of a deep financial and political crisis. Banks have been intermittently closed since mid-October and depositors across the country are finding it impossible to gain access to dollar balances, the Financial Times reported in a commentary. While capital controls have not officially been introduced, it seems banks have taken it upon themselves to conserve liquidity and capital by dictating what level of funds clients can withdraw or transfer abroad.

Argentina has delayed payment on roughly $9bn in dollar-denominated debt for the second time in five months, pushing off payment until August 31 while calling on bondholders to show “good faith” in talks to restructure the country’s massive debt pile, the Financial Times reported. The government was due to repay $67m on Friday and an additional $280m on Monday for the local notes, known as Letes, according to local newspaper Clarin. These short-term bonds are sold by the country’s Treasury to individuals and companies.

When Mexican food chain Chilango offered customers the chance to invest in its “burrito bonds” last year, it promised annual returns of 8 per cent and free food for life. It was part of a new wave of early stage restaurant businesses that have found creative — and sometimes risky — ways to finance their expansion at a time when cost pressures and competition in the sector are at all time highs, the Financial Times reported.

South Africa’s biggest labor group is proposing that more than half the debt of state-owned Eskom Holding SOC Ltd. be put into a special purpose vehicle to help save the utility and avoid job cuts, Bloomberg News reported. The Congress of South African Trade Unions urged the government strike a deal with the Public Investment Corp., Africa’s biggest money manager, to help cut Eskom’s debt to 200 billion rand ($14 billion) from 450 billion rand, according to a document dated Nov. 10-11 and seen by Bloomberg News. Development finance institutions should also be involved, the group said.

As Argentina looks set to restructure its debt, bondholders are trying to grasp the implication of two words written into most bond sales worldwide since 2014. The debate is around a “uniformly applicable” rule that sits in the collective action clauses (CACs) that comes into play in case of a debt restructuring, Bloomberg News reported. If the government chooses to sign a single accord with bondholders, the clause implies all investors have to be treated the same -- whichever bond they hold and whatever its current value.

South African Airways (SAA) has a reasonable chance of being saved from collapse, the specialists appointed to turn around the state-run carrier said on Friday, Reuters reported. Les Matuson, the business rescue practitioner charged with assessing the prospects of SAA and 10,000 related jobs, said he and his team considered a rescue to be the preferable option. He said there was a “reasonable prospect” of a successful business rescue notwithstanding the inevitable risks and challenges.

As central bank for the world’s least cash dependent economy, Sweden’s Riksbank risks becoming a bystander, Reuters reported. Its banknotes face extinction, while commercial banks control the country’s electronic payment infrastructure, diluting the Riksbank’s influence over its own financial system. Central bankers in Stockholm worry they are losing control over moving people’s money, while a few banks have gained pricing power over Sweden’s financial plumbing.

One of the key issues in the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (code), is the status and resolution of disputed claims, Vantage Asia reported. This has now been set to rest by the Supreme Court in the recent Essar Steel case. The National Company Law Appellate Tribunal (NCLAT), in the Essar Steel case, had held that disputed claims can be decided by the appropriate forums after the expiry of the moratorium period.