Headlines

The Grenada government says the international community is willing to restructure the debt owed to it but insists that the island would have to make sacrifices, Caribbean 360 reported. “We expect significant reduction in our debt size and debt programme, we expect to see reduction through a haircut, we expect to see the debt move over a long period with a lower interest rate,” Prime Minister Dr. Keith Mitchell has said.

Eurozone watchers are all too preoccupied with saddling German taxpayers with the bill for the bloc’s financial woes. Yet if the more recent euro area convulsions are any guide, it is private investors that usually end up feeling the pinch first, the Financial Times reported in a global insight. All the political chest-beating over common backstops, shared safety nets, banking union and the like has belied a slow march in Europe towards making private creditors swallow more risk, often under duress. That is Berlin’s preferred definition of mutualisation.

Spanish loss-making consumer appliance company Fagor filed for protection from creditors while it tries to refinance its debt, the company said on Wednesday, after suffering a prolonged period of falling sales. Fagor said in a statement it had begun "negotiations with creditors to reach a refinancing agreement to guarantee its financial stability." Under Spanish bankruptcy rules it has four months to reach a deal. Its total debt has risen to 1.1 billion euros ($1.5 billion) according to Thomson Reuters data.

Minister for Finance Michael Noonan has insisted the door has not been shut on the State’s hopes of the ESM providing funds to directly recapitalise the Irish banks, the Irish Times reported. German finance minister Wolfgang Schäuble yesterday said retroactive direct recapitalisation for Ireland was “not probable” and he did not “see any necessity” for such a measure as Ireland was doing very well.

Banca Monte dei Paschi di Siena will sound out foreign investors in London over the next few days to raise support for a hefty 2.5 billion euro (2.11 billion pounds) capital increase that the troubled Italian bank must complete next year. UBS, which is advising the Tuscan lender on the much-needed cash call, is to lead the round of contacts that will in any case be preliminary, a financial source told Reuters on Wednesday.

A move by the Bank of Tokyo to challenge the Solid Energy debt restructuring deal could backfire, leaving the bank being owed even more money, says Finance Minister Bill English, The New Zealand Herald reported. A debt restructuring process aimed at rescuing the struggling state-owned coal miner Solid Energy was announced on October 1. The Auckland branch of Bank of Tokyo-Mitsubishi UFJ is recorded as the second-largest lender to Solid Energy and is opposing the proposed deal. Last week It lodged proceedings in the High Court in Auckland challenging the process.

Orient Corp., the Japanese consumer credit firm being probed for lending to crime groups with Mizuho Financial Group Inc., said it’s cooperating with police to prosecute gangsters who obtained loans fraudulently, Bloomberg reported. The company is in talks with lawyers to consider action against borrowers who signed 37 loan contracts by falsely declaring they have no mob ties, Orient said in a statement on its website yesterday. It is seeking to cancel the transactions.

Italian Prime Minister Enrico Letta reshaped the country’s two-year commitment to austerity by approving a labor-tax cut and relying on 3.5 billion euros ($4.7 billion) of spending reductions to meet 2014 deficit targets, Bloomberg reported. The central government will bear 2.5 billion euros of the expense cuts and regional administrations will deliver 1 billion euros, Letta said in a press conference in Rome after his cabinet approved next year’s budget yesterday. The labor-tax cut will give an extra 1.5 billion euros to workers next year and a total of 5 billion euros through 2016, he said.

Germany has insisted that eurozone countries impose losses on all bondholders in ailing banks before taxpayers’ money can be used to clean up the financial system, a move that would make it harder to activate Europe’s common safety net for lenders, the Financial Times reported. At a meeting of EU finance ministers in Luxembourg, Wolfgang Schäuble, Germany’s finance minister, hardened his position on deploying common eurozone funds to cover any big capital shortfalls exposed in next year’s European bank stress test. Berlin is able to veto use of the funds.

Shareholders in the Alitalia airline have agreed to a 300 million-euro ($400 million) capital increase to save Italy's flagship carrier from bankruptcy, the Associated Press reported. It is still unclear which shareholders will contribute. The airline said in a statement Tuesday that the 21 Italian shareholders and Air France-KLM, the largest stakeholder, have 30 days to decide whether to exercise their options to contribute money and increase their stakes. The capital increase can already count on 75 million euros from Italy's postal service and a 100-million-euro bridge loan.