Headlines

China's Baosteel Group and Wuhan Iron and Steel Group, two of the country's largest steelmakers, are together planning to restructure, their listed units said in separate stock exchange filings on Sunday, Reuters reported. Baosteel Group is China's second-largest steelmaker, and Wuhan Iron and Steel Group is the country's fourth-largest. The companies did not specify what the restructuring would entail. Beijing has said that mergers would be a key way to consolidate the steel sector, aiming to cut overcapacity and increase the proportion of output from China's ten biggest mills.

In the imprecise science of divining China’s banking health, the fine print is sometimes worth a closer look than the final statistic. This week, the McKinsey Global Institute published a new estimate of China’s nonperforming loan ratio, measuring it at 7% as of last year. The indicator shows bad debt as a percentage of the total loan book, and is the most basic brush stroke in an analysis of China’s economic state. McKinsey ventured that this portion could rise to 15% in 2019 if China fails to change its investment-heavy approach to economic development.

Moody’s Investors Service has changed the outlook on the UK’s credit rating to negative from stable following the EU referendum result, Bloomberg News reported. The agency said the result will herald “a prolonged period of uncertainty with negative implications for the country’s medium-term growth outlook”. “During the several years in which the UK will have to renegotiate its trade relations with the EU, Moody’s expects heightened uncertainty, diminished confidence and lower spending and investment to result in weaker growth,” the agency said.

Chinese officials hit back at critics of the country’s mounting debt pile on Thursday, saying the country’s banks had taken measures to ensure non-performing loans would not pose a systemic risk to China’s financial system, the Financial Times reported. “China’s banking sector is generally stable and risks are under control,” Wang Shengbang, a senior official with the country’s banking regulator, said at a briefing.

Solocal Group began a court-backed process to restructure 1.1 billion euros ($1.3 billion) of debt, its second reorganization in about two years, Bloomberg News reported. The French directories publisher asked the Commercial Court of Nanterre to appoint a restructuring adviser, triggering a default event on 350 million euros of June 2018 bonds, according to a statement Thursday. The Paris-based company’s shares and bonds tumbled. Solocal, previously called PagesJaunes, has warned it won’t be able to repay debt due in 2018 as online services lure users from traditional print directories.

Bond and currency traders seeking refuge as the results of the U.K. vote on membership in the European Union come in are finding that the world’s financial-market havens aren’t so safe, Bloomberg News reported. There were already signs that liquidity, the ability to trade without affecting prices, was deteriorating in some investment oases in advance of Thursday’s ballot. Liquidity has dropped by about a third in European sovereign bonds, according to David Page, a senior economist in London at AXA Investment Managers.

Brazil's biggest bankruptcy filing ever is sending shockwaves far beyond the recession-hit country's borders as operator Oi SA seeks creditor protection from global telecoms suppliers and export banks around the world. Oi is seeking protection on over 500 million reais ($150 million) of accounts payable to international providers from Nokia Corp and Ericsson to IBM Corp and Alcatel-Lucent SA, according to court documents reviewed by Reuters.

Dominic Chappell, the former owner of BHS, tried to pay for a family holiday to the Bahamas on company expenses and took a £90,000 loan from the department store chain to pay a personal tax bill, according to evidence submitted to MPs, The Guardian reported. The allegations were made by Darren Topp, chief executive of BHS, in a submission to the parliamentary committee investigating the demise of the company, which accuses Chappell of treating the retailer’s money as if it was his own personal funds.

Novo Banco is seeking to buy back up to 500m of senior debt, some of which is held by retail investors, at a discount to par as it looks to bolster its balance sheet, Reuters reported. The Portuguese bank has launched a discounted cash tender offer on eight euro and US dollar bonds, which have a face value of 2.39bn-equivalent, through an unmodified Dutch auction. Banks bought billions of subordinated debt at discounted prices during the financial crisis as a way of bolstering their balance sheets but senior purchases below par are much more unusual.

Brazil’s federal government plans to bail out the state of Rio de Janeiro with 2.9 billion reais ($849 million) as it struggles with a fiscal crisis less than two months before the Olympic Games begin, The Wall Street Journal reported. According to a presidential decree published late Tuesday, the transfer is to be used for public security during the Olympics and Paralympics, set to be held in August and September, respectively.