Headlines

Germany’s pace of growth will drop sharply as demand for the country’s products weakens amid a slowing global economy, according to a forecast by a leading research group, the Financial Times reported. The Munich-based Ifo Institute cut its 2019 economic growth rate estimate for the eurozone’s largest economy from 1.1 per cent to 0.6 per cent. The German economy expanded 1.5 per cent in 2018, the slowest since 2013, according to official data.

The prior instalment of this sovereign insolvency blog trilogy concluded that "output foregone" is huge in highly-indebted IMF programme countries with high growth potential, the Financial Times reported. That is because in such cases, IMF programme design prioritises debt recovery ahead of activity. It imposes exorbitant primary surplus targets, wrecking the balance between primary spending and low taxes that is necessary to realise high productive potential. Jamaica is a case in point.

Billionaire Mike Ashley’s latest bid to control Debenhams Plc has sharpened battle lines with the troubled U.K. department-store chain’s lenders as it seeks to restructure its debt and avoid insolvency, Bloomberg News reported. Ashley, angling to add Debenhams’s roughly 240 U.K. and overseas stores to his empire that already includes Sports Direct International Plc and House of Fraser, has launched an effort he’s dubbed “Project Serpico” to expose what he says is an insider plot to steer the iconic company into the clutches of foreign hedge funds.

The German Finance Ministry urged Italian lenders to speed up a reduction of soured loans and make more progress in cutting risk, with the warning coming as the government in Berlin pushes for a merger of the country’s struggling banking titans. “The Italian banking sector has long been faced with various structural problems, including the high level of non-performing loans,” the ministry wrote in responses to lawmakers’ questions published by the Bundestag on Thursday.

Etihad Airways posted a loss of $1.28 billion in 2018, extending the deficit over three years to $4.8 billion, as the Gulf carrier pushes ahead with a cost-cutting plan to stabilize the balance sheet, Bloomberg News reported. The Abu Dhabi company, which has abandoned an attempt to build a global network of airline investments after a string of failures, canceled a further nine unprofitable routes last year, it said in an emailed statement Thursday. The review is ongoing and comes alongside a reduced delivery of new planes, with deals to slash $21.4 billion of orders agreed with Boeing Co.

A once-lucrative business within Deutsche Bank AG catering to hedge funds is on its way to becoming yet another casualty of the German lender’s chronic turmoil, Bloomberg News reported. The German firm’s revenue from prime services declined for a third straight year in 2018, while rivals Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. all saw jumps, according to people with knowledge of the business.

Shashikant Rathi, who has dominated India’s local bond underwriting business for over a decade at Axis Bank, says the industry now faces its biggest challenge since the global financial crisis, Bloomberg News reported. Shock defaults since last year by shadow bank IL&FS group and a new electronic bidding platform have disrupted the $108 billion market where underwriters like Rathi help companies raise money by selling debt securities. Sales of rupee corporate bonds that tend to pay the highest fees have fallen this quarter to a 2016 low.

After record defaults on China’s bonds, there’s now record interest in trading the country’s distressed debt, Bloomberg News reported. An arm of the central bank that runs the biggest bond-trading platform last month conducted the third auction of distressed securities since July. This one had the biggest participation yet, spanning 43 institutions. While prices of the trades were published by the China Foreign Exchange Trade System, the counterparties’ names were kept secret to maximize deals.

Steinhoff International Holdings NV is seeking to sell properties in Europe worth about 400 million euros ($450 million) to raise cash as it restructures its debt, according to people familiar with the matter, Bloomberg News reported. The South African retailer, which almost collapsed amid an accounting scandal in late 2017, has hired Eastdil Secured LLC to advise on the sale of office buildings, warehouses and production sites in countries including the U.K., Germany, Poland, and Hungary, said the people, who asked not to be identified because the matter is private.

The Canadian subsidiary of British American Tobacco PLC has become the second Canadian tobacco company to get restructuring protection in the wake of an $11 billion Quebec appeals court judgment, with the company saying it is under "existential threat" from tobacco suits, Law360 reported. On Tuesday, the Ontario Superior Court of Justice granted protection to Imperial Tobacco Canada Ltd. under the Companies' Creditors Arrangement Act, staying the collection of the more than $6.8 billion the company expects it will owe on the judgment.