Headlines

France’s industrial sector unexpectedly contracted in April, after a particularly severe drop in manufacturing output, highlighting the challenges still facing new president Emmanuel Macron despite the recent economic pickup across the eurozone. Total industrial output fell 0.5 per cent over the month, in contrast to forecasts of a 0.2 per cent rise, the Financial Times reported. The surprise contraction brought the year on year growth figure down to 0.6 per cent, from 2.5 per cent the previous month.

The subordinated debt market stayed relatively sanguine in the face of the wipeout of Banco Popular's Additional Tier 1 and Tier 2 bonds this week, though the full impact of the biggest event faced by the asset class has yet to be fully digested, Reuters reported. "The risk of write-down in these junior securities has been underpriced," said Puneet Sharma, head of credit strategy in investment management at Zurich Insurance. "This is a very significant event.

The German government on Friday said it was evaluating Air Berlin's request for state loan guarantees with two regional governments, noting any support would be contingent upon a sustainable business model for the struggling airline, Reuters reported. The federal government stepped in a day after Air Berlin said it had made a request to the states of Berlin and North-Rhine Westphalia (NRW) to consider loan guarantees. Most of loss-making Air Berlin's roughly 8,000 German staff are located in Berlin and NRW.

Around US$300m of a US$1.1bn revolving credit loan for Noble Group has been sold to funds in the secondary loan market as banks seek to limit their losses as the company faces a potential restructuring, banking sources said on Thursday, Reuters reported. The struggling commodities trader is trying to extend a separate US$2bn loan as finding an investor to recapitalise the business looks increasingly difficult, leaving debt restructuring or bankruptcy as the most likely options, several sources said.

Ailing German airline Air Berlin said on Thursday it has asked the German states of North-Rhine Westphalia (NRW) and Berlin to consider possible loan guarantees amid signs of waning support from Etihad Airways, its biggest shareholder. Abu Dhabi-owned Etihad, which has thrown Air Berlin several life lines over the years, earlier on Thursday said it had pulled out of a prospective deal to combine Air Berlin's holiday flight business Niki with tour operator TUI Group's own carrier TUIfly, Reuters reported.

Three recent bank rescues in Europe could form the backbone of a textbook on how to deal with large, failing banks -- and how not to. These are the uncompromising bail-in of Banco Popular in Spain, the controversial rescue of Monte dei Paschi di Siena in Italy and the much-praised but in fact horribly botched nationalization of Ukraine's largest bank, Privatbank, a Bloomberg View reported. The Banco Popular purchase for 1 euro ($1.12) by Santander, Spain's biggest bank, is an example of how such operations should work.

Essar Steel India Ltd., the mill controlled by billionaire brothers Shashi and Ravi Ruia, expects lenders to decide on its debt restructuring plans by the end of this month as the company’s prospects brighten on increased output and an improved domestic demand outlook, Bloomberg News reported. “We are in discussions with lenders and the entire restructuring package should be done by June-end,” Shivramkrishnan Hariharan, the director commercial at the closely held Mumbai-based steelmaker, said in an interview Wednesday.

Prices on three of Reliance Communication Ltd.’s loans totaling $2.33 billion have been indicated in the mid- to low-70 cents on the dollar level, as the Indian telecommunications company’s bond and stock prices tumble while it scrambles to sell its tower business to repay debt, Bloomberg News reported. Two term loans for $1.33 billion and $925.2 million, plus a $75 million capital spending facility were indicated at this level, according to people familiar with the matter, adding that there have been no trades or offers on this bank debt recently.

Reports of a failure to pay a debt to Russia and a requested ruling on whether such a failure constitutes a “credit event” that could trigger insurance contracts on billions of dollars of international bonds have brought Venezuela closer than ever to the brink of financial collapse.

The regime to deal with failing European banks cleared its first major hurdle Wednesday as the market shrugged off the resolution of Banco Popular and the wipeout of its subordinated debt, Reuters reported. After watching the bank wobble on the edge of insolvency for months, regulators eased market jitters with a relatively swift winding up of the Spanish lender. The Single Resolution Board bailed in the sub debt, wrote down the shares and Additional Tier 1 instruments, converted the Tier 2 debt to new equity - and won wide praise for doing so.