Headlines

A key offshore bondholder group of China Evergrande plans to join a petition to liquidate the developer at a hearing in a Hong Kong court on Monday, Reuters reported. The bondholder group owns more than $2 billion in offshore notes guaranteed by Evergrande and its support to a winding-up petition against the world's most indebted developer could increase the chances of an immediate liquidation order from the court, lawyers in the industry said.

China’s real-estate crisis has dragged down the economy, caused massive layoffs and pushed multibillion-dollar companies to the point of collapse. Economists think it is about to get worse, according to a Wall Street Journal analysis. Sales of newly built homes in China fell 6% last year, returning to a level not seen since 2016, according to China’s statistics bureau. Secondhand home prices in its four wealthiest cities—Beijing, Shanghai, Guangzhou and Shenzhen—declined by between 11% and 14% in December from the year before, according to the broker Centaline Property.

China said it will cut the reserve requirement ratio for banks within two weeks and hinted at more support measures to come, an unusually early disclosure that shows mounting urgency across President Xi Jinping’s government to shore up the economy and halt a $6 trillion stock-market rout, Bloomberg News reported. The RRR — which determines the amount of cash banks have to keep in reserve — will be lowered by 0.5 percentage points on Feb.

Scandinavian airline SAS AB will cancel and redeem all of its common shares and commercial hybrid bonds when it emerges from chapter 11 bankruptcy proceedings in the U.S. around June, Bloomberg News reported. “SAS reiterates its expectation that there will be only a modest recovery for general unsecured creditors, no recovery for subordinated creditors and no value for SAS AB’s existing shareholders,” the carrier said in a statement released at 11 p.m. Stockholm time on Tuesday.

Banco BTG Pactual SA and Farallon Capital Management are considering injecting fresh money into troubled utility Light SA, Bloomberg News reported. The firms, both of which are Light creditors, are mulling new loans for company, including convertible notes, said the people, who asked not to be named discussing internal deliberations. The loans would be contingent on Light reaching an agreement with regulators to allow it to charge higher rates for the power it sells in Rio de Janeiro.

Banks in the European Union face closer scrutiny of how they assess the impact of interest rate changes on their balance sheets after an initial examination uncovered a patchwork of approaches, the bloc's banking watchdog said on Wednesday, Reuters reported. The European Banking Authority (EBA) last year discussed with banks how they apply a rule known as interest rate risk in the banking book or IRRBB written by the global Basel Committee.

The European Central Bank has asked some banks to closely monitor activity on social media to detect a worsening in sentiment which could lead to a deposit run, two banking executives with knowledge of the request told Reuters. European regulators have sharpened scrutiny of banks' liquidity after the collapse of Silicon Valley Bank and Credit Suisse in March last year, the people said, requesting anonymity because the discussions are private. Banks can run into financial trouble if clients rush to pull deposits at the same time.

The Bank of Canada (BoC) held its key overnight rate at 5% on Wednesday and said that while underlying inflation was still a concern, the bank's focus is shifting to when to cut borrowing costs rather than whether to hike again, Reuters reported. The BoC governing council has held rates steady at four consecutive policy meetings after last hiking in July. Annual inflation in December accelerated to 3.4%, still higher than the central bank's 2% target but below a June 2022 peak of 8.1%.

Nigeria's central bank aims for inflation to fall to about 21% and will work to strengthen the country's undervalued naira currency, Governor Olayemi Cardoso said on Wednesday, Reuters reported. Cardoso faces pressure to raise interest rates when the Central Bank of Nigeria (CBN) holds a rate-setting meeting next month for the first time since he took office in September. Inflation in December hit 28.92%, its highest level in more than 27 years.

The European Union is unlikely to confiscate Russian central bank assets frozen in Europe, despite G7 plans to discuss the legality of such a move at a meeting in February, senior EU officials said, Reuters reported. The EU, United States, Japan and Canada froze some $300 billion of Russian central bank assets in 2022 when Russia invaded Ukraine. Some $200 billion of that is held in Europe, mainly in the Belgian clearing house Euroclear. The discussion comes as U.S. President Joe Biden faces Republican opposition to his request for another $61 billion in aid to Ukraine.