Headlines

Asia’s booming bond market is leaving distressed-debt investors with few options to bet on for the new year, Bloomberg News reported. As Asia’s bond sales surpass $300 billion, the region’s junk bond yields have slipped below its five-year average this year, keeping some of the lowest-rated stressed issuers afloat. Hedge funds dedicated to distressed strategies for 2018 will likely focus on the big names like Noble Group Ltd. and Reliance Communications Ltd., which are seeking to restructure more than $8 billion of debt combined, investors said.

One of China’s biggest state-owned oil companies is suing its Venezuelan counterpart in a US court, in a sign that Beijing’s patience over unpaid debts is running out as the Caribbean nation falls deeper into economic and social chaos, the Financial Times reported. A US subsidiary of Sinopec is suing PDVSA, the Venezuelan state oil company, for $23.7m plus punitive damages over a May 2012 contract to supply steel rebar for $43.5m, half of which it says remains unpaid, according to court documents seen by the Financial Times.

Brussels has called for the creation of a European Monetary Fund and financial aid for countries hit by economic shocks, as it pushes ahead with ambitious plans to overhaul the institutions and functions of the euro area, the Financial Times reported. The European Commission said its proposals were a natural response to shortcomings of eurozone governance that were brutally revealed by the sovereign debt crisis.

Brazil’s telecommunications regulator Anatel said it rejected a petition by Societe Mondiale, a shareholder in Oi SA, to stop Aurelius Capital Management inking a debt restructuring accord with the struggling Brazilian telecoms company, Reuters reported. The regulator said in a statement on Tuesday, however, that it would open an administrative inquiry to examine claims levied by Societe Mondiale, an investment vehicle of distressed debt tycoon Nelson Tanure, regarding Aurelius’ holdings in the nation’s telecoms sector.

Ratings agency Standard & Poor’s cut Swissport’s credit rating on Tuesday as a result of its weakening outlook for HNA Group, the Swiss aviation services company’s Chinese owner. S&P cut the company’s rating one notch to B-, deeply in “junk” territory, the Financial Times reported. HNA Group acquired the Swiss airport services group at the start of 2016, and last week the ratings agency lowered its assessment of the group’s creditworthiness due to the “aggressive financial policy” and the risk of “tightening liquidity at China’s most prolific dealmaker.

Samsung Heavy Industries sheds more than a quarter of its value on Wednesday after announcing plans to raise Won1.5tn ($1.4bn) in a sale of new shares and flagging operating losses for this year and next, the Financial Times reported.

The world economy is enjoying a synchronised recovery. But it will prove unsustainable if investment does not pick up, especially in high-income economies, the Financial Times reported in a commentary. Debt mountains also threaten the recovery’s sustainability, as the OECD, the Paris-based group of mostly rich nations, argues in its latest Economic Outlook. This report is the swansong of Catherine Mann, who was an outstanding OECD chief economist. It suggests that relief is legitimate, but complacency definitely is not.

A complex scheme Italy conceived to help the country's banks offload their bad loans seems ready at last to deliver on its potential, as the lenders fight their way through a mass of practical problems, the International New York Times reported on a Reuters story. The "GACS" state guarantee scheme, aimed at easing a major concern hanging over the Italian economy, has had a long gestation. European authorities approved the plan almost two years ago, and one senior banker has compared the drawn-out task of preparing debt sales under its rules with childbirth.

Two major Chinese lenders plan to support a move by China Development Bank to put Indian wireless carrier Reliance Communications (RCom) into insolvency court as they seek to recover about $2 billion in debt, said three people with knowledge of the matter. Last month, CDB began insolvency proceedings against RCom, which has been trying for months to restructure its debt via a debt-for-equity swap, the International New York Times reported on a Reuters story.

British wholesaler and convenience retailer Nisa Retail said on Monday it would provide a new short-term contract to its member McColl’s Retail Group to help it ensure continuity of supplies after the collapse of Palmer & Harvey (P&H), Reuters reported. P&H, the UK’s largest tobacco distributor which also delivers food and drink to supermarkets, went into administration last week after running out of cash, raising the possibility of tobacco shortages across the country. Analysts said McColl’s was relatively well-placed to deal with the situation but could face additional costs.