Headlines

Companies in Britain and the European Union face an extra 58 billion pounds in annual costs if there is a no-deal Brexit, with Britain’s vast financial sector set to be the worst-hit industry, according to a report on Monday, Reuters reported. Firms across the EU’s 27 countries other than Britain will have to pay 31 billion pounds a year in tariff and non-tariff barriers if Britain leaves the bloc without a deal, the report by Oliver Wyman management consultants and law firm Clifford Chance said. In return, British exporters to the EU will have to pay 27 billion pounds a year.

It’s been years coming, but the latest Chinese moves to rein in leverage mean 2018 may be the year for the country’s first bond default by a local government financing vehicle, Bloomberg News reported. The units that amassed record debt in the borrowing-and-building binge after the global financial crisis have faced increasing strains, and with their borrowing costs climbing Moody’s Investors Service and others have anticipated a default at some stage. Aberdeen Standard Investments says the groundwork is now ready for that to happen in 2018.

The European Central Bank’s internal staff calculations on the future path of monetary policy assume asset purchases totaling 30 billion euros ($37 billion) in the fourth quarter, according to euro-area officials familiar with the matter, Bloomberg News reported. The assumptions are technical and don’t constitute a pre-commitment on bond buying past September, when the current program is scheduled to end, the people said.

New loans in China dipped last month as growth in total financing slowed, signalling a more measured increase in credit and tighter conditions for shadow financing after a record jump in new lending in January, the Financial Times reported. New renminbi loans totalled Rmb839.3bn ($132.2bn) in February, according to the People’s Bank of China - down from a record Rmb2.9tn in January, when loan officers’ annual lending quotas reset and local governments leaned on banks for loans as they awaited their own quotas for bond sales.

The Singapore Stock Exchange has asked Noble Group, the crisis-hit commodity trader, to appoint an independent adviser to review its proposed debt-for-equity swap that will see existing shareholders almost wiped out, the Financial Times reported. Under the proposed deal, about half of the company’s $3.5bn of senior debt will be swapped for equity. As a result, creditors will own around 70 per cent of the restructured company, while management will get 20 per cent. Existing shareholders will get just 10 per cent.

Bahrain-based Gulf International Bank has sold its 513.6 million riyals ($137 million) claim against Ahmad Hamad Al-Gosaibi and Brothers, which has been locked in a near decade-long dispute with creditors, sources told Reuters. And now Standard Chartered, Dubai-based Emirates NBD and Bahrain’s Arab Banking Corporation are also seeking to sell AHAB debt totalling around 2.24 billion riyals, the financial sector sources said. AHAB and Saad Group both defaulted in Saudi Arabia’s biggest financial meltdown in 2009, with international and regional banks and other creditors owed about $22 billion.

The government may seek to ease the ‘related party’ norms of the Insolvency and Bankruptcy Code (IBC) to ensure the law is not overly restrictive and doesn’t cut down the number of those eligible to bid for assets, effectively weakening competition and reducing the amount that banks can recoup, a senior government official told the Economic Times. The IBC was strengthened by ordinance and then by amendment to prevent promoters from regaining control of assets in insolvency proceedings unless they repaid their dues.

Bulgarian MPs voted on March 7 to overturn President Roumen Radev’s veto on the bill of amendments to the Bank Insolvency Act, The Sofia Globe reported. The motion carried with 129 MPs in favour, 40 opposed and no abstentions. Radev vetoed the bill on February 21, arguing that some of the provisions had retroactive effect, which breached the principle of the rule of law. “The president supports the efforts of the National Assembly for greater efficiency in defending the public interest in bank insolvency, but that must be achieved using constitutional means.

Tata Steel Ltd said on Wednesday it had been selected as the highest bidder to buy a controlling stake in debt-laden Bhushan Steel Ltd, ending weeks of speculation on which Indian group would clinch a deal, Reuters reported. Salt-to-software conglomerate Tata Group’s steel business and India’s biggest domestic steelmaker JSW Steel Ltd were the two primary industry bidders for the acquisition of Bhushan Steel.

The debt resolution of Essar Steel has turned into a full-scale corporate war between VTB Bank of Russia and LN Mittal’s ArcelorMittal, both of which have made multi-billion dollars offers for the Gujarat-based steel company, Business Standard reported. All eyes are now on the lenders’ meeting scheduled on Thursday. The lenders are expected to call for a second round of bidding. According to sources, legal advisers are not convinced about the eligibility of either bidder.