Headlines

Portugal on Sunday announced its exit from a three-year bailout program that has forced deep spending cuts and set off mass protests — but has also helped the country clean up its public finances and return to the bond markets after halving its budget deficit, the International New York Times reported. Prime Minister Pedro Passos Coelho said that Portugal had built up sufficient financial reserves to end the program on schedule and without requesting any additional line of credit from its European counterparts.

Australians need to share the burden of reducing the country’s debt in a budget due May 13, Prime Minister Tony Abbott said, after an opinion poll found most voters think he’s broken a promise on tax, Bloomberg News reported. “A strong budget is the foundation for a strong country” and Australians need to “chip away” at public debt, Abbott said in an e-mailed statement yesterday. A temporary levy increasing the top rate of income tax would be a broken promise, said 72 percent of people in a Galaxy poll for the Sunday Telegraph newspaper yesterday.

Smaller Chinese banks have ramped up their shadow lending activity, adding to the financial risks that threaten to trip up the world’s second-biggest economy. The 2013 results of unlisted banks, published over the past week, reveal that city-based lenders have been among the most aggressive in China in using complex credit structures to evade regulatory controls and issue higher-yielding loans. These shadow loans have been profitable for banks so long as growth has been strong.

The Co-operative group’s stake could fall to about a fifth from 30 per cent as it sells share options to avoid injecting more cash, the Express reported. The group has admitted it will have to go to lenders if it wants to put in another £120million needed to keep the stake at 30 per cent. It is believed to be a better option than selling all its rights and would avoid the possibility of the stake falling below 20 per cent which would remove any effective control over the bank.

The district court at Itzehoe in northern Germany said insolvency proceedings had begun with regard to the Prokon's renewable energy division. Other segments of the firm's business were not facing bankruptcy, Deutsche Welle reported. The court said the company's regenerative energy business faced claims of 391 million euros ($542 million), compared with liquid funds of just 19 million euros. Insolvency administrator Dietmar Penzlin had indicated investors still had a chance of seeing at least some of their money back.

Corporate receivers Ferrier Hodgson are trying to sell off the assets of collapsed Melbourne internet service provider ispONE for the second time in less than a year, after the remaining subsidiaries entered voluntary administration on Friday, The Australian Financial Review reported.

Loans between companies is the fastest-growing category of shadow banking in China, but with next to no data on where such loans are going, their effect on the economy is a black box, The Wall Street Journal China Real Time blog reported. But two academic papers published over the last year on such lending – known as entrusted loans – offer a rare glimpse into how these loans work. The findings? Entrusted loans may have become the single most important factor keeping China’s property developers afloat.

Troubled Mexican homebuilder Homex has filed for bankruptcy after gaining the support of a majority of its creditors, the company said on Thursday, Reuters reported. The Culiacan-based company, which has struggled with a heavy debt load and slumping home sales, said it was seeking additional financing during the bankruptcy proceedings. Mexican homebuilders have been hit hard since the government shifted to a policy in the last few years that gives priority to subsidies for apartment purchases by new home buyers, hurting sales of cheap houses built by Geo, Homex, and Urbi.

Pescanova SA is said to have won backing from a majority of creditors to restructure its debt a year after the Spanish fishing company entered bankruptcy protection, Bloomberg News reported. More than 60 percent of creditors voted in favor of the plan, which would hand control of the company to its biggest lenders, according to two people familiar with the results. At least 50 percent of creditors had to back the restructuring proposal. The operator of 90 ships as well as fish farms and processing plants from Spain to Chile needed to reach a deal with lenders by April 30 to avoid liquidation.

Australia risks unleashing a debt crisis similar to Europe's unless the government reins in spending and considers privatizing some state assets, according to an advisory body charged with assessing the nation's finances, The Wall Street Journal reported. The National Commission of Audit said the government needed to make the changes to shield the world's 12th-largest economy from the sorts of sovereign-debt problems that certain European nations such as Greece and Spain have recently faced.