Headlines

Banks are partnering with alternative lenders that can offer riskier Payment In Kind (PIK) loans to smaller European companies as they battle to protect their middle market lending businesses from private debt funds, Reuters reported. European commercial banks which arrange senior loans have been losing business to alternative lenders which are able to offer unitranche loans with higher leverage. Unitranche loans combine senior and subordinated tranches of debt into a single loan at a blended cost.

German carmaker Opel, owned by France’s PSA Group, said on Tuesday it would stop selling the Cascada convertible, the Adam city car and the KARL at the end of 2019, as part of a product overhaul to focus on sport-utility vehicles. The maker Opel and British Vauxhall branded cars blamed new emissions rules for the cull, but the carmaker has struggled to reach sustainable profitability after racking up more than a decade of losses selling low-margin cars under previous owner General Motors, Reuters reported.

The spread between the cost of Italian and Spanish debt is at its highest level for more than 20 years, in a sign that investors remain unconcerned about the future of the eurozone despite Italy’s spiralling bond yields, the Financial Times reported. Italy’s 10-year yield hit 3.71 per cent on Tuesday, its highest level since February 2014, after the country’s finance minister Giovanni Tria failed to alleviate growing investor jitters over its fiscal position. Short-dated bond yields also rose, although they remain below the highs they hit earlier this year.

Italy is working on an Alitalia rescue plan that would see the state taking a stake of around 15 percent in the carrier along with separate investments by state-owned firms such as Ferrovie dello Stato and a foreign player, Il Sole 24 Ore said on Sunday. Once a symbol of Italy’s post-war economic boom that has recently struggled to compete with low-cost carriers and high speed trains, Alitalia was put under special administration last year after workers rejected a rescue plan, Reuters reported.

Singapore is giving liquidators of insolvent companies a new tool to retrieve funds for bondholders and other creditors, Bloomberg News reported. Court-appointed managers will now be able to seek funding from investors unrelated to the case to pay the cost of pursuing claims, in exchange for part of the proceeds. That change came under the Insolvency, Restructuring and Dissolution Act, which was passed by lawmakers on Oct. 1.

Investors in Indian equity funds held tight and even bought more last month, seemingly unfazed by the selloff triggered by a tumbling currency and a crisis at a troubled lender, Bloomberg News reported. Stock funds took in 111 billion rupees ($1.5 billion) in September, the most since May, up from 83 billion rupees in August, data from the Association of Mutual Funds in India show.

Xinjiang Production Construction 6th Shi State-owned Assets Management is an agricultural trader and producer that traces its history to Chairman Mao’s efforts to develop China’s far-flung frontiers. It is also emblematic of the difficulties facing the country’s debt-ridden local government financing vehicles (LGFVs) as China’s central authorities attempt to convince investors that the bonds can default, according to HSBC, Bloomberg News reported. The company missed payment on a yuan-denominated issue in August, only to fully repay two days later.

Infrastructure Leasing & Financial Services Ltd. is missing more debt obligations, even as the Indian government pledged to prevent further defaults, underscoring the challenges its new board faces in fixing the firm’s mounting debt problems, Bloomberg News reported. IL&FS failed to service principal and interest on loans from banks, inter-corporate deposit and commercial papers totaling 339 million rupees ($4.6 million) due for the period from Sept. 30 to Oct. 4, it said in an exchange filing.

Hyflux Ltd., the embattled Singapore water-treatment and power company, is in advanced talks with at least two potential investors about taking a strategic equity stake in the group as part of a restructuring plan, Bloomberg News reported. The discussions with these investors are taking place concurrently with efforts to sell its desalination plant known as Tuaspring, its legal adviser WongPartnership LLP said in an update during a case management hearing in court Monday. Hyflux has an Oct. 15 deadline to sell the plant, which is Southeast Asia’s biggest.

History does not repeat itself, but it does rhyme. Jim Leaviss of Bond Vigilantes has dug out his missives in the months before Lehman Brothers imploded in 2008, and found some ominous similarities, the Financial Times reported in a commentary. The market was obsessing about oil prices, then on their way to $140 a barrel, while the European Central Bank was tightening monetary policy. All that is needed for a hat-trick today, says Mr Leaviss, is a “credit accident”, and for good measure, he notes that the biggest difference between then and now is the level of debt.