Headlines

During an interview last month at the posh Shangri-La Hotel in Hong Kong, Henry Li stepped aside four times in an hour to take calls. Creditors were frantically trying to connect with the chief financial officer of China Shanshui Cement Group Ltd., and they wanted to know one thing: Was his company about to default? "Honestly speaking, banks are very worried about us, as you can tell from the fact that I’ve received many calls,” said Li, sitting alongside Shanshui Chairman Zhang Bin as they discussed the firm’s predicament with Bloomberg on Oct. 14.

South Korea's financial watchdog said Wednesday that it has picked 175 small and medium enterprises (SMEs) to be placed under debt restructuring this year as part of government-led efforts to sort out highly indebted firms and prevent their sudden collapse, Yonhap News Agency reported. The number of debt-heavy firms selected for 2015 rose by 50 to 175 this year from a year earlier, with 70 of them given a rating of "C" and the remaining 105 graded a "D," according to the Financial Supervisory Service (FSS).

Greece and its European creditors have run into a dispute over Athens’ new €86bn bailout, forcing a delay in a €2bn aid payment and raising questions over whether the government is returning to the brinkmanship tactics that embittered relations with Brussels earlier this year, the Financial Times reported. Eurozone finance ministers were scheduled to sign off the €2bn tranche at a Monday evening meeting in Brussels, but ministers said a stand-off over repossession protections for homeowners would delay the payment for at least a week, and potentially longer.

A spiraling economic crisis has pushed Brazil’s emerging middle class to the brink, The Wall Street Journal reported. Urban unemployment rose to 7.6% in September, tied with August for the highest rate in more than five years. Inflation approaching 10% has forced the poor to stop buying meat and the central bank to ratchet up interest rates. A disorganized effort by the government to stem a widening budget deficit has resulted in painful tax increases, further crimping family budgets.

The Organisation for Economic Co-operation and Development has warned of big threats to Ireland’s “robust” growth, among them the risk of another property bubble, the Irish Times reported. Amid anxiety in the EU/IMF troika about Government moves to loosen the fiscal stance, the OECD said in a new forecast that Budget 2016 was “reasonable” once Dublin maintained progress to eliminate deficits in the public finances. The latest assessment from the OECD came as Minister for Finance Michael Noonan said he was confident the EU Commission will approve the Budget in the coming weeks.

A group of financial policy makers has outlined a new framework intended to keep banks around the world from becoming “too big to fail” and requiring government bailouts in a future financial crisis, the International New York Times DealBook blog reported. The proposed rules would require the world’s biggest banks to maintain capital buffers that could absorb potential losses when a bank is failing and prevent further pressure on the financial system. Regulators are seeking to shift the costs of a failing bank to its investors, rather than on taxpayers in a future financial upheaval.

Saudi Arabia has decided to tap international bond markets for the first time, in a sign of the damage lower oil prices are inflicting on its public finances, the Financial Times reported. Saudi officials say the kingdom could increase debt levels to as much as 50 per cent of gross domestic product within five years, up from a forecasted 6.7 per cent this year and 17.3 per cent in 2016. Work on finalising the bond programme is likely to start in January, according to a senior official.

Falling public spending will undermine the ability of public services to deal with social crises, a think tank has warned, the Irish Times reported. More than half the income gains of the last five years have gone to the top 10 per cent of earners, the Think-tank for Action on Social Change (Tasc) added.

Two dozen pilots and stewardesses from the Russian airline Transaero observed a minute’s silence in the centre of St Petersburg on Sunday for those who died in the crash of Metrojet flight 9268 in Egypt last weekend, the Financial Times reported. But the men and women in the dark blue coats were just as anguished over the fate of their own airline. They have joined protests against the looming bankruptcy of Transaero, Russia’s second-largest carrier and the country’s largest privately owned one.

A consortium of investors in debt-laden Chinese developer Kaisa Group Holding led by Farallon Capital has drafted a proposal that would inject $650 million into the company and result in higher recovery for bondholders, documents seen by Reuters showed. Under the proposal, the consortium would inject $150 million into the company with the rest coming from existing shareholders exercising warrants to buy heavily discounted shares. That purchase would result in the consortium owning a 20 percent stake, with existing shareholders getting an additional $5 million in cash on a pro-rata basis.