Headlines

In finance, things that grow very fast have an irksome tendency to blow up, The Economist reported. American subprime mortgages prior to 2008, southern European sovereign debt in the run-up to 2010 and Japanese banks in the 1980s are but recent examples. So it is worrying that bank lending in emerging markets has ballooned in recent years, from about 77% of GDP in 2007 to 128% at the beginning of this year, according to JPMorgan Chase, a rich-world bank (see chart). That 51-percentage-point jump dwarfs the mere 20-point rise in credit in the rich world in 2002-07.

The International Monetary Fund (IMF) will not get involved in the negotiations between Moscow and Kiev to restructure Ukraine’s debt to Russia, IMF Communications Department Director Gerry Rice said in a briefing on Thursday, Sputnik News reported. “We expect Russian and Ukrainian authorities to conduct direct discussions on this matter,” Rice stated.

Creditor banks of Abengoa , in pre-insolvency talks to prevent the engineer becoming Spain's largest ever bankruptcy, are considering involving bondholders in debt restructuring negotiations, two sources familiar with the situation said. It is unusual for bondholders to sit alongside creditors in negotiations connected to insolvency proceedings but in this case there is a common interest to get the company afloat given the massive size of potential losses, the sources said.

Private-sector debt in developing countries is growing so quickly that it threatens the creditworthiness of domestic governments according to new research, underlining concerns that an emerging market slowdown could yet worsen next year, the Financial Times reported. The warning, in a report on Wednesday by Fitch Ratings, one of the three big global credit rating agencies, adds to a rising chorus of concern over EM private sector debt and its impact on global growth.

Offshore driller Vantage Drilling Co said it reached a support agreement with lenders and noteholders holding more than $1.6 billion in debt to reduce interest expense but one of its units will file for U.S. bankruptcy on Dec. 3. The agreement and bankruptcy will help its subsidiary Offshore Group Investment Ltd to ride out a downturn in the energy sector. The company said the deal with lenders calls for deleveraging the unit, which holds the contracts for some of its rigs.

Late President Hugo Chávez won loyalty by distributing hundreds of billions of petrodollars to lift millions of Venezuelans out of poverty. The money has run out for his handpicked successor, President Nicolás Maduro, The Wall Street Journal reported. Less than three years into Mr. Maduro’s tenure, Venezuela’s economy is in shambles amid low oil prices, and poverty is more prevalent than it was when the leftist Chavismo movement took power nearly 17 years ago.

If there were any lingering doubts that the European Central Bank would ratchet up its stimulus of the sluggish eurozone economy, they probably evaporated on Wednesday, the International New York Times reported. New official data showed that the region’s dangerously low inflation rate remained at an annual pace of 0.1 percent in November. That was unchanged from October’s reading, and still far below the central bank’s target of just below 2 percent.

Canberra building subcontractors left tens of millions of dollars out of pocket by insolvencies and payment disputes are hoping and praying a Senate Committee will come to their rescue, The Canberra Times reported. The report of the Senate's Economics References Committee inquiry into insolvency in the construction industry is due to be tabled on Thursday afternoon. Wayne Richards said his Queanbeyan based Erincole Building Services lost more than $1 million in a dispute with the John Holland Group, the lead contractor on the National Portrait Gallery.

The Bank of England drew a line under the era of bank-bashing on Tuesday, saying it had no desire for new capital buffers and would seek to use its powers to strengthen lenders in good times rather than to tame the credit cycle, the Financial Times reported. The move reflected the government’s post-election shift away from the post-financial crisis emphasis on tighter regulation towards a more emollient stance on the City.

Spanish renewable energy and engineering group Abengoa faces a civil lawsuit after shareholders accused the indebted company of keeping them in the dark when it last week initiated insolvency proceedings, Reuters reported. The firm filed for preliminary protection against creditors after struggling for a year with high debts. It now has four months to reach an agreement with creditors to avoid a full-blown insolvency process and the biggest Spanish bankruptcy on record.