Headlines

India's capital markets regulator yesterday approved rules for the creation of real estate investment trusts and infrastructure-investment trusts in the country, the Wall Street Journal reported today. The step comes a month after Finance Minister Arun Jaitley said that these trusts would be given a tax pass-through status, meaning that they wouldn't have to pay any federal taxes as long as they pass most of their income to shareholders in the form of a dividend.

Though European companies have been able to access a flood of high-yield loans and bonds over the past few years – so far with remarkably few defaults, thanks partly to low interest rates, rating agencies and lawyers warn that investors may not appreciate the complexity of the different European insolvency procedures they may have to deal with, when the market returns to more normal conditions, the Financial Times reported today. Moody’s says that the default rate among high-yield issuers was 2.2 percent in the second quarter, down from 3.4 percent at the same stage last year.

China’s slumping property market is fueling speculation the industry is set for a shakeout as small developers face difficulty raising funds to pay off debt, Bloomberg News reported yesterday. Yield premiums on Chinese real estate bonds denominated in dollars have jumped 35 basis points this month to 582 basis points over Treasuries, the sharpest increase among emerging Asian countries, according to Bank of America Merrill Lynch indexes. That compares with a 19 basis-point advance for Indonesian builders.

The number of Spanish companies seeking protection from creditors has fallen to the lowest in three years as the economy recovers and changes to the nation’s bankruptcy rules help heavily-indebted borrowers, Bloomberg News reported yesterday. Insolvency proceedings dropped 28 percent to about 4,000 this year, according to the Spanish rating company Axesor. The nation overhauled bankruptcy rules in March to help troubled companies avoid proceedings, known as concurso, and prevent liquidation.

Vietnam may change rules to quicken bad-debt sales that have been stalled by a reluctance to accept losses, hampering an economy that risks missing its growth target this year, Bloomberg News reported today. “Right now, everyone seems to be afraid of taking responsibility for creating losses to the state, so no one dares to make decisions to sell any debt at very low prices,” Nguyen Duc Kien, deputy head of the National Assembly’s Economic Committee, said in an interview yesterday.

Brazil's Oleo e Gas Participacoes SA, the bankrupt oil company controlled by Eike Batista, said yesterday that Brazilian buyout firm Cambuhy Investimentos bought shares worth 199.9 million reais ($87 million) that it held in Parnaíba Gás Natural, formerly known as OGX Maranhão, Reuters reported yesterday. The 245,728,660 shares were auctioned on Wednesday, the company said in a securities filing. Parnaíba was separated from OGX in October in an operation that generated 344 million reais, which was crucial for the survival of Batista's oil company.

The European Central Bank has said that it will use information gathered as part of its review of the assets held on the balance sheets of the eurozone’s largest banks to ensure its stress tests of the lenders are more credible than previous exercises, the Financial Times reported today. The central bank will use a traffic light system to check the results from banks in stress tests, with a red light forcing banks to redo their work. Amber signals mean lenders will either have to restate their results or provide further evidence supporting the outcome.

Bond investors in African Bank Investments Ltd., who sent prices down by more than 50 percent this week, are joining shareholders in signaling the South African provider of unsecured loans is running out of options, Bloomberg News reported today. The price on African Bank’s $350 million of bonds due February 2017 slumped to 45 percent of face value yesterday, from 99 on Aug. 1, according to data compiled by Bloomberg. That drove the yield to 47.49 percent, surging more than 29 percentage points the past two days. The extra yield investors demand to hold the bonds rather than equivalent U.S.

The French economy will keep expanding at a slow pace in the third quarter of the year, the Bank of France said today, while other statistics showed industrial production rising more than expected in June, but no improvement in public finances, the Wall Street Journal reported today. France's economy will grow 0.2 percent in the third quarter from the second, the Bank of France said in its monthly business climate survey. That follows the same quarterly expansion in the second quarter, according to the central bank's previous survey.

Argentina has filed suit against the U.S. at the International Court of Justice in a high-stakes debt dispute between the South American nation and some of its creditors, the Wall Street Journal reported today. Argentina's lawsuit contends that decisions by U.S. courts in the dispute have violated its sovereignty, The Hague-based court said today. Argentina defaulted on some of its restructured debt July 30 after marathon talks with hedge funds suing to collect on bonds the country stopped paying in 2001 ended without a deal.