Headlines

The UK financial watchdog has issued a warning to customers over the risk of peer-to-peer loans held within an individual savings account. The Financial Conduct Authority said it had seen evidence that Innovative Finance Isas — used to shelter peer-to-peer loans from income and capital gains tax — were being marketed alongside cash Isas despite the fact they offer far less protection to consumers, the Financial Times reported. It follows the high-profile collapse of London Capital & Finance, a company selling unregulated minibonds, in January.

The European Commission’s president urged Rome to do more to spur growth in Italy’s anaemic economy as a slowdown raises the risk that the government will breach spending limits agreed with Brussels, the Financial Times reported. Jean-Claude Juncker said during a visit to Giuseppe Conte, Italy’s prime minister, that the budget deficit target agreed between the coalition government and the commission last year had been based on economic growth forecasts that now seemed optimistic.

Turmoil has ripped through Turkish financial markets in recent weeks, reprising the fear and volatility that sent the country’s economy into a tailspin and its currency into crisis last summer, The Wall Street Journal reported. Only limited progress has been made since then to shore up the country’s finances. And wary international investors have balked at signs that Turkey’s president, Recep Tayyip Erdogan, is returning to his unorthodox economic playbook. His party’s losses in key local elections this weekend add more uncertainty to the mix.

Debenhams is set to burn through tens millions of pounds in fees after securing its latest rescue deal, ratcheting up the pressure on the struggling retailer as it battles to stem falling sales, cut costs and fight off the attentions of its biggest shareholder, the Financial Times reported. Last week, the department store group agreed a refinancing package with its lenders and bondholders, designed to give it more time to rationalise its store estate, reduce its operating costs by £80m and improve its product offering.

True believers in Petroleos Mexicanos are fueling a rally in its bonds, reckoning that government support for the beleaguered state-owned company will ultimately provide a backstop from any troubles, Bloomberg News reported. Investors including MetLife, Pictet and SMBC Nikko Securities say Pemex’s bonds were overly punished last year amid concerns the government isn’t doing enough to address the company’s problems. The challenge of falling production given Pemex’s $108 billion of debt and high taxes is real, but optimists argue its yields shouldn’t be much above sovereign notes.

The Bank of England has been meeting with direct lenders to gauge the industry’s resilience to slowing growth, according to two people familiar with the matter. At least two of the biggest U.K. private credit funds met separately with members of the central bank’s financial stability unit in the past month, said the people, who asked not to be identified because the talks were private, Bloomberg News reported. The meetings were part of the BOE’s efforts to gauge potential sources of stress in an economic downturn, they said.

Indian tycoons whose companies have fallen behind on loan repayments can breathe a bit easier now. The nation’s top court on Tuesday struck down a Reserve Bank of India directive that tightened rules for recasting delinquent accounts and mandated when they must be moved to bankruptcy tribunals, Bloomberg News reported. In doing this, the court restored to lenders some discretion in deciding how they want to resolve a loan once it’s in default.

For investors trying to make sense of recent extreme moves in the global credit market, bad news: The roller coaster may go on. The long-feared liquidity menace is well and truly here, and it’s overshadowing more prosaic factors like low default rates and corporate earnings when turbulence in the $13 trillion market erupts, according to new research from UBS Group AG, Bloomberg News reported. “Dizzying” moves of late have been driven by rapidly rising and falling liquidity, strategists at the bank argued this week.

Hyflux Ltd. will put its debt restructuring plan to vote this week, leaving its fate in the hands of unsecured creditors, Bloomberg News reported. Whatever the outcome, it will mark another entry in the list of fallen Singapore companies. The Singapore water-treatment and power group is seeking to fix S$2.8 billion ($2.1 billion) of liabilities by asking senior lenders to accept haircuts of some 75 percent and junior retail investors of about 90 percent on their claims.

South Korea’s cash-strapped Asiana Airlines Inc plans to cut unprofitable routes and the size of its fleet to improve its financial health, Chief Executive Han Chang-soo said in a letter to employees on Monday. Han’s co-chief executive resigned on Thursday and its debt-ridden parent Kumho Asiana Group sought financial support from its biggest creditor after an accounting fiasco triggered warnings of credit rating downgrades, Reuters reported. He also said the company would sell more assets to secure liquidity, but did not elaborate.