Headlines

China was supposed to be the loser after Moody's Investors Service lowered its rating on Chinese government debt for the first time since 1989, a Bloomberg View reported. The May 24 downgrade to A1 from Aa3 was widely reported as an ominous turn for the world's second-largest economy, whose credit was said to be deteriorating amid borrowing problems and slower growth.

The availability of consumer credit in the UK economy tightened in the second quarter and is expected to decline further as banks turn cautious amid a worsening in Britain’s economic outlook, according to the Bank of England. Retail banks and other lenders told the BoE they had cut back on the supply of unsecured lending – which includes credit card loans – in the three months to the end of June, the Financial Times reported.

What was that about the end of “deflationary forces” in the eurozone? While the rest of the eurozone shows tentative signs of a self-sustaining increase in prices, Ireland’s economy returned to deflation in June, and economists at the local central bank are blaming the country’s reliance on trade with the UK, the Financial Times reported. While a weak pound has led to uncomfortably high inflation in the UK, its post-Brexit referendum depreciation has created the opposite problem in Ireland.

Sears Canada Inc majority shareholders including Edward Lampert, ESL Investments Inc and Fairholme Capital Management LLC are seeking access to internal documents related to its restructuring, according to a notice of motion posted on Wednesday, Reuters reported. The court motion, which will be made on Thursday in the Ontario Superior Court of Justice, comes as the court-appointed monitor FTI Consulting said more than 20 parties have signed non-disclosure agreements with Sears Canada. The retailer was still negotiating non-disclosure agreements with ESL and Fairholme.

International Bank of Azerbaijan, the state-owned lender that defaulted on foreign debts, said it had enough support from creditors to implement a $3.3 billion debt-restructuring plan, Bloomberg News reported. Creditors holding more than 87 percent of the debt affected by the proposal have voted in favor, a day before the deadline, the bank said in a statement on Wednesday. Two-third support is required to make the proposal binding under Azeri rules.

Greece’s budget has been formally declared compliant with with European Union budget standards, bolstering the nation that received its latest round of rescue aid earlier this week, as it mulls its first bond sale since 2014. The European Commission, the EU’s executive arm, announced that it will recommend the removal of its so-called excessive deficit procedure for Greece, a step taken when a member state’s budgetary shortfall gets too big, according to a statement on Wednesday.

Beijing may currently favour megamergers when it comes to reform of state-owned enterprises, but at least one central bank adviser is suggesting a different approach to dealing with China’s lossmaking zombie companies, the Financial Times reported. In a column published in the Communist party mouthpiece People’s Daily on Thursday, Huang Yiping, a member of the People’s Bank of China monetary policy committee, recommended the creation of a government fund to aid employees who lose their jobs when zombie companies are shuttered.

Bank of Italy Governor Ignazio Visco welcomed on Wednesday a European Union proposal to set up state-backed vehicles to buy bad loans off banks, but said participation should be voluntary, the International New York Times reported on a Reuters story. In an effort to speed up the unloading of bad debt by banks, EU finance ministers on Tuesday approved a blueprint to create national "asset management companies" that could help develop the market for bad loans. "We believe such a measure would potentially be useful," Visco said in a speech to the Italian banking association.

Carillion's lenders are preparing for potentially painful restructuring talks if the British construction company is unable to stabilise its business and plunging share price, sources familiar with the company and its investors said. Carillion, which has worked on projects ranging from London's Tate Modern gallery to the Twickenham Rugby stadium, announced huge provisions on problem contacts on Monday, leading its chief executive to step down and its shares to plummet by more than two thirds in three days, the International New York Times reported on a Reuters story.

European Union finance ministers on Tuesday called for speedier unloading of bad debt by EU banks and recommended more money be put aside by the banks to protect them from trouble. The decade-long financial crisis left European banks holding nearly 1 trillion euros of non-performing loans (NPLs), reducing their ability to lend and slowing down Europe's economic recovery, Reuters reported.