Headlines

Thousands of struggling buy-to-let investors are facing a dramatic increase in mortgage payments over the next four years, the Irish Times reported. A study by Central Bank staff says that many borrowers currently on interest-only payments are set to switch to a traditional amortising mortgage between now and 2022. That means they will have to start paying down the principal of the loan, a move that will significantly increase their monthly repayments. Close to half of buy-to-let mortgages examined in the study were interest-only.

Following recent revelations of Malaysia’s ballooning debt under Najib Razak, the ousted prime minister, there is a growing concern that south-east Asia’s infrastructure drive is pushing the region towards a debt crisis, the Financial Times reported. Laos has been identified by the International Monetary Fund as being at high risk of debt distress and others could follow.  There are parallels with south Asia, where Sri Lanka recently handed China a 99-year lease on a port to repay its debt.

Steinhoff International Holdings NV may have to compromise with creditors over the length of a debt-payment extension plan to win support for a deal that may keep the embattled retailer afloat, according to people familiar with the situation. The owner of Conforama in France and Mattress Firm in the U.S. is negotiating a two-year payment delay with bondholders and lenders that would include zero cash interest, said the people, who asked not to be identified as the talks are still ongoing, Bloomberg News reported. The South African company initially proposed a three-year payment postponement.

UniCredit SpA is selling at least 3 billion euros ($3.5 billion) of non-performing loans in different deals, while extending a partnership to manage troubled corporate debt as part of its cleanup strategy, according to people with knowledge of the matter, Bloomberg News reported. The Italian bank is reviewing final offers for 700 million euros of unsecured loans in a disposal project dubbed Narciso and plans to finalize the sale next month, said the people, who asked not to be identified because the matter is private.

Deutsche Bank AG, which is in the throes of a global restructuring involving thousands of job cuts, is zeroing in on an Asian market where an unprecedented bad-loan clean-up offers the potential for a credit bonanza, Bloomberg News reported. In India, where bankruptcy law changes have injected urgency into efforts to restructure $210 billion of stressed assets, Deutsche Bank sees an opportunity to generate outsized returns by refinancing and trading debt, according to Amit Khattar, Asia-Pacific co-head of global credit trading. Khattar is considering adding to his team.

The surge in the price of oil has pushed eurozone inflation above the European Central Bank’s target, but policymakers in Frankfurt are expected to ignore the rise as broader price pressures across the region remain weak, the Financial Times reported. Headline inflation rose to 2 per cent in the year to June from 1.9 per cent in May, according to a preliminary estimate published by the European Commission’s statistics bureau, Eurostat, on Friday.

European Union leaders agreed on Friday the ESM bailout fund should play a bigger role in a more integrated euro zone, but left the details of that to December and difficult issues like a euro zone budget or deposit insurance for an undefined future, the International New York Times reported on a Reuters story. Deeper euro zone integration has been championed by French President Emmanuel Macron since his election last year, but has run into opposition from Germany and its allies, wary of sharing more responsibility with less fiscally prudent governments.

Greece exits its third international bailout in August, but without further debt relief it may not be able to sustain market access in the long run, the International Monetary Fund said on Friday. Greece and its European partners agreed last week on a set of debt measures to help the country emerge smoothly from the program, the International New York Times reported on a Reuters story. The deal significantly improved medium-term debt sustainability but "longer prospects remain uncertain," the IMF said.

Hundreds of companies are headed for bankruptcy proceedings in India, and that’s a good thing. A new bankruptcy code sets a tight timetable for a defaulting company to deal with its debt: If it doesn’t come up with a solution in nine months, the company is liquidated, The Wall Street Journal reported. In May, Bhushan Steel Ltd. became the first of a group of large defaulters pushed into the bankruptcy court by the central bank to be resolved under the new rules. It was sold for $5.2 billion, and creditors recovered almost two-thirds of what they were owed.

Prosecutors in Cologne are preparing their first indictments in a tax-evasion probe involving some of the biggest names in finance that cost the German treasury billions of euros, according to people familiar with the matter. Investigators are looking at the role of dozens of banks, brokerages, accounting companies, and law firms in the deals, and the cases involve hundreds of individuals, said the people, who declined to be identified because they’re not authorized to discuss the probe, Bloomberg News reported.