Headlines

China’s economy is sputtering as evidence mounts that a nationwide property bubble is on the point of bursting, the Financial Times reported. Virtually every indicator for economic growth in China turned down in April as the all-important real estate market saw sales fall 7.8 per cent in renminbi terms in the first four months from the same period a year earlier. Investment in real estate is the single most important driver of the Chinese economy and a crucial factor in global commodity demand and pricing.

With $7.3 billion up for grabs, Nortel's Canadian, U.S. and European divisions began staking out their claims to the cash that is all that's left of the former telecommunications giant, Dow Jones Daily Bankruptcy Review reported. Courtrooms in Toronto and Wilmington were twinned with some $1 million worth of technology to allow judges in each city to jointly make the call on who gets the money from the going-out-of-business sale of a company that operated in more than 100 countries and left unpaid bills in all of them.

Canadians are being bombarded with mixed messages on how much debt they should take on, The Wall Street Journal Canada Real Time blog reported. Stimulated by rock-bottom interest rates in place since the financial crisis, Canadians have strapped on a lot of debt in the last few years, and that’s been a big concern for policy makers. Household borrowing was at record highs in the fourth quarter, with the oft-quoted debt-to-disposable-income ratio hitting a record 164.2% in that period.

Ukraine could be forced to restructure or reissue its debt if further devolution of its provinces takes place, according to a new report, Forbes reported. Today Bank of America Merrill Lynch analyst Vadim Khramov outlined a range of separation scenarios and their likely impact on the Ukrainian economy and, consequently, bonds. In his base case, Ukraine is pressured into deep constitutional reform which could lead to a more federal and decentralized Ukraine without formal separation.

Gambling company Codere SA said it has until early Wednesday to secure a debt restructuring agreement and avoid bankruptcy, having agreed with creditors on a two-day extension to the deadline, The Wall Street Journal reported. The previous deadline, agreed with creditors holding around €1 billion ($1.4 billion) worth of debt, expired at the weekend, but a Codere spokesman said Sunday that talks were ongoing. Codere has been in a so-called preliminary bankruptcy since earlier this year, following complex negotiations with the bondholders and other creditors.

A number of lenders to struggling French retailer Vivarte have submitted proposals to restructure the company's 2.8 billion euro ($3.85 billion) debt, banking sources said on Monday, Reuters reported. The plan would lead to an injection of fresh cash and wipe out a portion of existing debt in return for equity, the sources said. Vivarte entered into a four-month conciliation process with its lenders in March to negotiate a way forward after the borrower failed to get an agreement from a majority of its lenders to suspend loan covenant tests.

European banks are being urged to boost their ability to withstand losses before the conclusion of a stress test that is drawing criticism for its design, Bloomberg News reported. Axel Weber, the chairman of Zurich-based UBS AG and a former head of Germany’s Bundesbank, said yesterday that stress-testing banks that have depleted capital is akin to expecting a patient recovering from a heart attack to pass a rigorous physical exam. Moody’s Analytics Inc. said last week that the tests aren’t internally consistent.

In euro zone countries most damaged by the long financial crisis, small and medium-size businesses are struggling to get the loans that would help them rebuild. Such businesses typically represent two-thirds of all jobs in those countries, so a full-fledged economic recovery is unlikely to take hold as long as such lending remains tight, the International New York Times reported. “It’s demotivating and almost impossible for an entrepreneur to work with these conditions,” Portuguese business owner Lúcio Machado said.

China’s broadest measure of new credit fell last month as authorities extended their campaign to tame financial dangers even as construction and manufacturing data point to risks that the economy’s slowdown will worsen, Bloomberg News reported. Aggregate financing was 1.55 trillion yuan ($249 billion) in April, the People’s Bank of China said yesterday in Beijing, compared with 2.07 trillion yuan in March. New local-currency bank loans were 774.7 billion yuan, down from 1.05 trillion yuan the previous month.

Malaysian Airline System Bhd and its key stakeholders are in talks with banks for a strategic overhaul that could include the partial sale of its engineering unit and an upgrade of its ageing fleet, sources involved in the discussions said. Even before the loss of its flight MH370 from Kuala Lumpur to Beijing on March 8 there was talk that loss-making MAS might need a financial rescue from state investor Khazanah Nasional Bhd, which owns 69 percent of the company. "They are sending all these feelers to banks to try and test the waters," said a banking source familiar with the situation.