Headlines

A rare event in a corner of China’s credit market is fueling concern that more defaults are looming, adding to strains sparked by the government’s crackdown on leverage, Bloomberg News reported. A timber company in the country’s northeast decided this week not to pay off perpetual bonds despite having an option to do so. That was a first for a junk-rated issuer of such securities in China. Firms that raise money with perpetuals never have to pay off the principal, in theory.

Saudi Arabia and the United Arab Emirates are the hardest places in the world to collect unpaid debts, according to new research from Euler Hermes, the Financial Times reported. The trade credit insurer analysed debt collection processes around the world and ranked the results. China, Russia, Malaysia and South Africa also scored badly, appearing in the “severe” category in terms of the complexity of debt collection. Countries in western Europe came out better though, with Sweden at the top of the pile followed by Germany, Ireland, Finland and the Netherlands.

Etihad Airways is urgently examining ways to avert a technical default of some $1.2 billion in bonds indirectly linked to the Gulf airline, sources close to the situation told Reuters. An Amsterdam-based special purpose vehicle called SPV Equity Alliance Partners (EAP) was set up in 2015 and issued two bonds for Etihad and other airlines it partially owned at the time, including Alitalia and Air Berlin, which are both now insolvent, the International New York Times reported on a Reuters story.

SPAXS, an Italian company set up to buy a bank and develop it into an online lender focusing on small businesses, has short-listed five small Italian banks, the new firm said on Thursday. Veteran banker Corrado Passera and Andrea Clamer, former head of the non-performing loan division of IFIS, showed there is investor demand for Italian financial assets by raising 600 million euros in an IPO of SPAXS, the International New York Times reported on a Reuters story.

Saudi Arabia has accelerated steps to resolve a $22-billion debt dispute that is seen by investors as a litmus test of Crown Prince Mohammed bin Salman's commitment to reforms, three sources familiar with the matter say. Legal battles over the debts left by Saad Group and Ahmad Hamad al-Gosaibi & Bros Co (AHAB) have dragged on for almost a decade since the two family conglomerates collapsed in 2009, the International New York Times reported on a Reuters story. From Switzerland to the Cayman Islands, the two groups have squabbled over which of them is to blame for the meltdown.

Capita Plc slumped the most on record after saying it would halt dividend payouts and sell shares to raise capital, triggering further concerns over the state of Britain’s outsourcing sector just two weeks after Carillion Plc collapsed, Bloomberg News reported. London-based Capita, whose customers include the U.K. government as well as firms like Telefonica S.A.’s O2 and retailer Marks & Spencer Group Plc, will seek to raise as much as 700 million pounds ($993.8 million) and plans to sell some non-core assets. The stock fell as much as 46 percent.

Noble Group Ltd. responded to criticisms by one of its biggest shareholders about the embattled commodity trader’s conduct, and defended the debt rescue plan that’s set to hand management a bigger stake than equity investors, Bloomberg News reported. Abu Dhabi-based Goldilocks Investment Co. wrote to the Singapore Exchange Ltd. this week requesting an investigation into Noble’s directors and management, according to a copy of the letter seen by Bloomberg.

China’s Great Fire Sale looks set to take off. HNA Group Co., the indebted Chinese aviation-to-hotels conglomerate, told creditors it will seek to sell about 100 billion yuan ($16 billion) in assets in the first half of the year to repay debts and stave off a liquidity crunch, according to people familiar with the matter, who asked not to be identified because the discussions were private, Bloomberg News reported. Under the proposal, about 80 percent of that would be executed in the second quarter, according to the people.

Banks across the European Union will be tested to make sure they can withstand doomsday consequences of Brexit, including the bloc’s economy shrinking cumulatively by over 8 per cent by 2020, the Financial Times reported. In what it billed as its toughest stress-test to date — even though there is no pass or fail — the European Banking Authority on Wednesday unveiled the scenarios against which 48 of the largest banks across the 28-member bloc will be tested, with results published by early November.

The eurozone economy may be enjoying its best growth in a decade and seeing unemployment drop sharply, but there are few signs that is fueling the inflation that the European Central Bank is looking for, the International New York Times reported on an Associated Press story. In fact, figures Wednesday from the European Union's statistics agency showed annual consumer price inflation across the 19-country bloc fell to 1.3 percent in January from the previous month's 1.4 percent.