Headlines

Brazilian airlines are seeking government aid to help curb losses stemming from a weakening currency, in the first sign that the rapid sell-off of emerging market assets is beginning to hurt the country’s corporate sector, the Financial Times reported. The plea was swiftly followed by further declines in the real, which closed at R$2.4543 against the US dollar, the lowest level since December 2008, after US Federal Reserve minutes showed officials in support of slowing its monthly asset purchases later this year.

When European leaders engineered a harsh bailout deal for this tiny Mediterranean nation in March, they cheered the end of an economic model fueled by a flood of cash from Russia. Wealthy Russians with money in Cyprus’s sickly banks lost billions. But the Russians, though badly bruised, are now in a position to get something that has previously eluded even Moscow’s most audacious oligarchs: control of a so-called systemic financial institution in the European Union, the International Herald Tribune reported.

The European Central Bank was checking up on how well Greece is meeting its international bailout obligations Wednesday, a day after Germany’s finance minister said a third aid programme would be needed to keep Athens afloat, the Irish Times reported. Joerg Asmussen, a member of the ECB’s executive board, was to meet Greece’ prime minister, finance minister and central bank governor, and to have talks with Greek business leaders. His immediate concern is with the next tranche of aid from Greece’s second international bailout, due in October.

Ireland is set to end its three-year reliance on international aid at the end of this year, but that achievement will be of little immediate benefit to many Irish people trapped with home loans they will likely never be able to repay, The Wall Street Journal reported. The painful legacy of the property market and banking collapse that forced Ireland to seek a €67.5 billion ($90 billion) bailout from the European Union and the International Monetary Fund has left house prices at nearly half their boom-time levels of 2007, according to official data published this week.

Portugal raised 1 billion euros ($1.34 billion) in an auction of short-term debt Wednesday amid signs the country's deep recession has bottomed out, though investors remain wary of the political and economic risks of planned new austerity measures, the Associated Press reported. The government debt agency said it sold 700 million euros in 12-month Treasury bills at a cost of 1.619 percent, which was down from 1.72 percent at an equivalent auction last month. It also raised 300 million in 3-month bills at 0.766 percent, but that was slightly higher than 0.743 percent paid in April.

McCarthy & Stone announced on Tuesday it has completed the restructuring of 518.9 million pounds ($813.55 million) of debt, reducing the debt burden of the UK retirement home developer by 350 million pounds, Reuters reported. As part of the transaction, a group of 24 institutional investors in the company have injected 367 million pounds into the business and refinanced a further 160 million pounds with a new five-year term loan facility. A core group of these investors comprising Goldman Sachs, Anchorage, TPG and Alchemy Partners now own over 50 percent of the business.

IVG Immobilien AG (IVG), the German property company that’s lost most of its market value, said it will file for court protection to reorganize 3.2 billion euros ($4.3 billion) of debt after talks with creditors failed, Bloomberg reported. IVG will apply today with the Bonn District Court to initiate a proceeding similar to U.S. bankruptcy reorganization, the company, based in the same city, said in a statement. The procedure protects companies from claims while they try to reach a court-approved agreement.

German Finance Minister Wolfgang Schäuble said Greece will need a third bailout, in the bluntest admission by a top German official that the €246 billion ($328 billion) of international aid loans pledged so far won't be enough to save Greece from bankruptcy, The Wall Street Journal reported. "There will have to be another program in Greece," Mr. Schäuble told an election rally of his Christian Democratic Union party near Hamburg, news agencies reported.

The government has come under fire for abolishing a tax on top earners after data released on Tuesday showed companies delayed paying employees 1.7 billion pounds in bonuses until the tax cut took effect, Reuters reported. Bonuses are traditionally paid between December and March, the so-called "bonus season", but an Office of National Statistics (ONS) report revealed that a number of companies deferred payouts until April, after the top income tax rate was reduced from 50 percent to 45 percent.

Portugal’s emergence from its long recession is a sign that the European austerity recipe may work, but it also poses a dilemma for Lisbon and its lenders as a new dose of planned budget cuts may kill a fragile revival, the Irish Times reported. As a result, many economists expect the government to negotiate a new easing of the budget deficit targets during a bailout review next month with its European and IMF lenders, who could in return demand longer-term commitments on spending cuts.