Headlines

The small Caribbean island of Grenada offers a salutary lesson on the dangers of loading up with debt for governments tempted by easy money, the Financial Times reported. Since defaulting on close to $200m of international bonds in 2013, Grenada has been trying to negotiate a restructuring deal with its creditors. Now, according to sources close to the discussions, a deal may be approaching following meetings between the government and its creditors in Washington last month. But Grenada’s debt woes go far beyond the hundreds of millions it owes in US dollar bonds.

China’s central bank is considering changing the way it calculates banks’ loan-to-deposit ratios, a government official briefed on the matter said, signaling efforts to boost credit as the economy falters. Savings that banks hold for non-deposit-taking financial institutions may be classified as deposits, the person said, declining to be identified as he’s not authorized to speak publicly about the matter. Money that banks lent to such institutions would be classified as loans, according to the official. The changes may take effect Jan. 1.

Austerity cuts are an “inescapable reality” in the short term in Northern Ireland but a lower rate of corporation tax could deliver “game changing” private sector growth, the president of a leading business body has said in Belfast tonight, the Irish Times reported. Kevin Kingston, president of the Northern Ireland Chamber of Commerce and Industry, said the next few years would be difficult but without the catalyst of a lower rate of corporation tax the North would face a vicious circle of cuts and austerity.

Bulgaria’s parliament Tuesday approved a revised fiscal budget for this year that allows the state to borrow several billion dollars’ worth of foreign and domestic debt via syndicated loans to prop up the country’s deposit insurance fund and fill holes in the strained budget, the finance ministry said, The Wall Street Journal reported. Lawmakers in Sofia approved total new debt of up to 4.5 billion lev ($2.88 billion), of which a maximum of 3 billion lev could come from foreign markets and the remainder from domestic lenders.

Kazakhstan's Alliance Bank has completed a $1.2 billion debt restructuring and the country's sovereign wealth fund will put 220 billion tenge ($1.2 billion) of special deposits into the bank to support the deal, Alliance's chief executive said on Wednesday. Alliance Bank next plans to merge with two other Kazakh banks, Temirbank and ForteBank, controlled by Kazakh billionaire Bolat Utemuratov, also a minority stake holder in Alliance, a process which will lead to a number of job losses.

How can a midsize bank torpedo an entire economy? It was the first question asked by the new president of Cyprus, Nicos Anastasiades, on March 1, 2013, when he assumed power and was immediately confronted with the implosion of Cyprus Popular Bank and the rescue package that followed just two weeks later, the International New York Times DealBook blog reported. To that end, Mr. Anastasiades has since commissioned a 40-page study that examines in detail how the collapse of the second-largest bank in the country could have such a devastating effect on the Cyprus economy.

A Swiss financial company embroiled in the Espírito Santo saga is in the process of largely shutting down, according to people familiar with the matter, The Wall Street Journal reported. The Lausanne-based company, Eurofin Holding SA, is selling or spinning off businesses and winding down asset portfolios, these people said. It is possible that parts of the company will emerge in some form under a different name, one person said.

Industrias Metalurgicas Pescarmona SA, the Argentine wind-turbine maker owned by the Pescarmona family and known as Impsa, agreed to sell holdings in wind parks in Brazil to a local developer as it prepares to restructure its debt, Bloomberg News reported. Ventos de Sao Jorge Energias Renovaveis SA, a Fortaleza, Brazil-based wind-power developer owned by the Salus investment fund, agreed to buy stakes in five wind farms from Impsa-run Energimp SA, according to a filing to Brazil’s antitrust regulator. The price wasn’t disclosed.

German television maker Metz has filed for insolvency, a spokesman for the company said on Wednesday, adding that about 600 jobs would be affected, Reuters reported. Joachim Exner, who co-managed the insolvency of German peer Loewe, has been appointed as insolvency administrator, the spokesman said, adding that the company's production and customer services would continue for the time being. Peer Loewe sought protection from creditors in July 2013 and filed for insolvency in October after a strategy to combat the economic downturn by focusing on premium customers failed.

One Hong Kong-based hedge fund has accumulated the prospectuses of no fewer than 250 of the trust companies that sit at the heart of the Chinese shadow banking system. These contain virtually no disclosure except on the value of the real estate that backs loans whether committed or proposed. In some ways, China today resembles Japan in the early to mid-nineties or the US in 2007 to 2008 on the eve of their respective financial crises, both triggered by overvalued property.