Headlines

Just as Iceland looks back at a decade of recovery since its financial and economic collapse, the north Atlantic island is once again grappling with an existential challenge for one of its key industries, Bloomberg News reported. Tourism and the foreign cash it provides was instrumental in digging the 340,000-person nation out of its deep hole. Now, the industry is cooling fast and problems are mounting for its airlines after years of rapid expansion. Rewind to 10 years ago, and a similar tale could be told about the nation’s banks.

Senior European Union officials believe Italy risks facing a massive debt restructuring task - and one that would hit its own citizens hardest - unless it backs down in its unprecedented challenge to Brussels' budget rules. Italy's 2.3 trillion euro national debt dwarfs that of Greece and the euro zone bailout fund would not be able to cope with the costs of supporting its government in a crisis, the International New York Times reported on a Reuters story. Any such crisis could threaten the euro itself, seen by many as the EU's greatest achievement.

Bahrain said Thursday that Kuwait, Saudi Arabia and the United Arab Emirates pledged $10 billion to support the island kingdom, helping it avoid defaulting on loans as it tries to restructure its finances, the International New York Times reported on an Associated Press story. Bahrain, though the first Arab nation in the Persian Gulf to strike oil, had faced the specter of defaulting on a $750 million Islamic bond repayment due on Nov. 22.

The global financial crisis left lasting scars on the world economy, including slower growth, higher government debt and even lower fertility rates, the International Monetary Fund said. A decade after Lehman Brothers filed for bankruptcy in 2008, output in more than 60 percent of the world’s economies remains below where it would have been if the crisis hadn’t occurred, the fund said in a report Wednesday. The drop was steepest in the 24 countries that experienced financial crises, the Fund said in an analytical chapter accompanying its latest World Economic Outlook, Bloomberg News reported.

On track for their first annual drop since 2015, emerging Asia’s sovereign bonds look set to call time on a two-year binge fueled by a tide of cheap money, Bloomberg News reported. Investors start the fourth quarter on the defensive, thanks to soaring oil prices, a raging U.S.-China trade war and a stronger dollar. Indian and Indonesian debt will be the most vulnerable as risk sentiment remains fragile, even as policy makers step up efforts to contain the weakness, according to fund managers surveyed by Bloomberg.

A crisis at one of India’s biggest infrastructure financiers is the latest example of how the end of an easy money era is causing strain in the world’s fastest-growing economy, Bloomberg News reported. Rising borrowing costs are putting pressure on lenders like Infrastructure Leasing & Financial Services Ltd. -- whose recent debt defaults rocked financial markets in India and sparked fears of a contagion -- as well as on debt-focused mutual funds that are liquidating holdings.

The recent clash between Italy’s populist government and the European Union over its ballooning budget deficit has created an attractive buying opportunity for shorter duration Italian sovereign debt, according to UBS Group AG, Bloomberg News reported. The bank initiated an overweight position in two-year government bonds versus cash as there is “only a very low probability that Italy will default within the next two years,” according to a note from Mark Haefele, chief investment officer at UBS Global Wealth Management.

Shares in peer-to-peer lender Funding Circle traded as much as 24 per cent below their initial public offering price on their first day of trading, in a blow to aspirational fintech companies hoping to float, the Financial Times reported. At their low of the day, the company’s shares hit 334.5p, down from the IPO price of 440p. During conditional dealings on Tuesday, ahead of their official London Stock Exchange debut, the shares had been trading at a steep discount to the offer price, closing down 17 per cent at 364p, according to data from Refinitiv.

Lebanon’s finances have long resembled something out of Alice in Wonderland. Some investors are now wondering whether the house of cards is about to come crashing down in a messy sovereign default, the Financial Times reported. The backdrop is stark. The Mediterranean country’s government debt is equal to an eye-watering 153 per cent of its gross domestic product, the third-worst figure in the world after Japan and Greece.

Credit Suisse, one of the largest players in the $1.3tn market for leveraged loans, has issued an unusual defence of lending to highly-indebted companies even as investor concerns rise over the booming area of finance, the Financial Times reported. After investors expressed worries over sliding standards and the IMF singled the type of loan out as a potential source of financial instability, the Swiss investment bank’s asset management arm sent a confidential letter to clients in September attempting to assuage fears.