Headlines

Holdout creditors are demanding information from HSBC Holdings Plc about Argentina’s effort to raise cash, as the government seeks to end a 14-year standoff that has kept the nation out of international credit markets, Bloomberg News reported yesterday. The creditors last week served HSBC with a subpoena for documents on the bank’s involvement in the country’s attempt to raise money abroad.

Brazil’s government has settled overdue payments to state-run banks stemming mostly from budget maneuvers this year and last, which are the basis for impeachment proceedings against President Dilma Rousseff, Bloomberg News reported today. The Treasury this year paid 72.4 billion reais ($18.2 billion) it owed state banks such as Banco do Brasil, it said today. The amount is included in the 120 billion-real primary budget deficit before interest payments authorized by Congress this month.

Russia will cut interest rates on the central bank's deposits in ailing state development bank Vnesheconombank (VEB), said Finance Minister Anton Siluanov, Reuters reported today. The proposal is part of measures aimed at helping the ailing bank, which has been hit by Western sanctions over Moscow's role in the Ukraine crisis and is facing bad loans and heavy external debt repayments. The ministry previously proposed to also extend the National Wealth Fund's (NWF) deposits in VEB for five years and to cut interest rate on these deposits.

Four Italian banks rescued last month from collapse will be sold by late spring, the chairman of the lenders said today, as Rome comes under pressure from Brussels to find buyers quickly, Reuters reported. "There is an obligation to sell (the banks) and significant pressure from the EU to do so very fast," Roberto Nicastro said.

Abengoa, the Spanish company trying to avert becoming the country's biggest-ever bankruptcy, said today it hoped to reach agreement with creditors before a legal deadline of March 28, Reuters reported. Abengoa said it currently had 39.5 percent of the share capital of its Abengoa Yield unit tied up as financial backing on loans. Read more.

China’s insurance regulators are raising alarms about risks in the industry, warning that aggressive stock buying by insurers and sales of high-return products could damage the country’s financial system, the Wall Street Journal reported today. The China Insurance Regulatory Commission has issued at least six statements on risk control since late November, including a demand for better disclosure and limits on the size of high-return products.

Argentina's new government is shopping around for a second law firm to help resolve the country's longstanding battle with creditors suing it over its unpaid debt, Reuters reported yesterday. The center-right government of Mauricio Macri will publicly launch its search otoday for a new firm based in New York City to work together with Cleary Gottlieb Steen & Hamilton LLP. Argentina and the so-called "holdout" bondholders plan to meet in the second week of January to start talks toward settling the legal dispute that stems from the country's $100 billion default in 2002.

Chinese corporate defaults will likely spread next year as borrowing costs climb, financial companies surveyed by Bloomberg said yesterday. All 22 bond traders, analysts and others surveyed forecast China’s corporate default rate will rise in 2016, while over 70 percent expect the extra yield on corporate notes to increase. The premium on five-year AA rated company securities over government notes has risen to 173 basis points after plunging to an eight-year low of 169.2 basis points last month.

Poland’s ruling party softened a tax on its financial industry which could have hurt its ability to finance the budget deficit, helping to rally government bonds today, Bloomberg News reported. Parliament’s public finance committee excluded banks’ roughly $41 billion in government- bond holdings from taxable assets “to prevent an increase in budget-financing costs,” Law & Justice lawmaker Wieslaw Janczyk, a deputy head of the committee.

Lenders of last resort are becoming agents of change for economies across the former Soviet Union, Bloomberg News reported today. Their governments paralyzed by collapsing revenue, central banks sprang into action when the crisis hit last year, allowing more flexible currencies to take root from Belarus to Azerbaijan.