Headlines

The Republic of Congo became the second African country this year to miss a Eurobond payment after a contractor alleging the government owes it money blocked the transfer of funds to debt investors, Bloomberg News reported. Holders of the Central African nation’s $363 million of securities due in 2029 did not receive around $21 million in coupons and amortization payments by the end of July, when the grace period expired, according to Lutz Roehmeyer, a money manager at Landesbank Berlin Investment.

A battle over whether energy-company creditors should help pay for cleaning up thousands of abandoned oil wells in Canada may be heading to the country’s Supreme Court, Bloomberg News reported. At the center of the dispute is Redwater Energy Corp., a small publicly traded oil producer in Alberta that filed for bankruptcy in late 2015. The receiver that’s liquidating the company argues it should be able to sell its best wells and leave the worst behind for an energy industry-funded group to clean up.

1Malaysia Development Bhd., the embattled state investment company, said it failed to make a $603 million payment to Abu Dhabi’s sovereign wealth fund because of a delay it faced in receiving the money, Bloomberg News reported. Payments to International Petroleum Investment Co. would have been made from proceeds of a 1MDB rationalization plan, and funds that were expected to arrive last month have been delayed till August, it said in an emailed statement. The holdup was due to the need for additional regulatory approvals, it said.

The Italian government is hoping to avoid the break-up of Alitalia by insisting it will give preference to bids for the entire company at the launch of the final stage of its sale out of bankruptcy, the Financial Times reported. On Tuesday, the state-appointed commissioners running the airline since it collapsed into administration in May set out the key conditions for tabling bids in the upcoming public tender. They specify offers for all of Alitalia, or separate bids for the airline operations, which includes maintenance, and for the group’s airport ground handling activities.

The eurozone has grown at its fastest rate since the eruption of the debt crisis five years ago, underscoring a brighter outlook after elections that eased fears of a populist political threat, the Financial Times reported. Quarterly eurozone GDP growth accelerated from 0.5 per cent to 0.6 per cent in the three months to June, compared with the same period in 2016. The performance helped to drive year-on-year expansion from 1.9 per cent to 2.1 per cent — the highest rate since the second quarter of 2011.

Chinese companies battling to cope with the government-induced tightening in funding markets are bracing themselves for the next shoe to fall: a wave of early bond redemptions. The nation’s businesses sold about 65 percent of all corporate bonds with put options worldwide, at 3.9 trillion yuan ($580 billion), Bloomberg News reported. Creditors holding some 2 trillion yuan of mainland notes will be able to exercise those options in the next two years, forcing issuers to either increase interest payments or redeem the debt early.

The specter of tighter U.S. sanctions is pushing up the perception that Venezuela is getting closer to defaulting on its bonds, Bloomberg News reported. Venezuela is awaiting possible further restrictions after the U.S., its largest trading partner, sanctioned President Nicolas Maduro after he held elections Sunday for a new assembly that will rewrite the constitution. U.S.

Brexit will push up costs for banks by as much as 4 per cent and their capital requirements will rise up to 30 per cent, according to the most detailed assessment yet of what Britain’s departure from the EU means for the sector, the Financial Times reported. The findings by consultants Oliver Wyman will make grim reading for its bank clients, many of which are struggling with low profitability. They come a day after HSBC became the first lender to put a price tag on Brexit, saying the immediate disruption would cost it $200m-$300m.

The European Central Bank has been pumping stimulus into the eurozone economy for over two years. As part of their quantitative easing measures, the bank’s policymakers have promised to “reinvest” the money they make from maturing bonds back into the debt market. Despite talk of “tapering” dominating markets, more and more bond redemptions are due over the coming years, and thus increasing reinvestment is on the cards, the Financial Times reported. Analysis from Nordea shows these “silent” ECB measures will have one principle beneficiary: Germany.

A key measure of euro zone inflation accelerated to a four-year high this month and euro zone unemployment fell to its lowest since 2009 in June, data showed on Monday, in two encouraging signs for the European Central Bank as it considers reducing its monetary stimulus. The ECB is due to decide by the autumn whether and how to extend its 2.3 trillion euros (2.05 trillion pounds) quantitative easing programme into 2018 and President Mario Draghi has cited sluggish core inflation and wage growth as reasons to be cautious, the International New York Times reported on a Reuters story.