Headlines

Portugal’s government almost disintegrated last week but has now managed to shore up its support, bringing some calm to the country’s bond market. But the political chaos could still have far-reaching implications, the Financial Times reported. Its chances of regaining full market access now look much slimmer. That means the country will need more money from its troika of international lenders. But that could lead to a debt restructuring – potentially upsetting the tentative peace that the European Central Bank has brought to the continent’s bond markets.

The debts of Spanish fishing firm Pescanova were more than double what it stated when it entered insolvency proceedings in April, the company said on Wednesday citing a KPMG audit, making it one of Spain's biggest ever bankruptcies, Reuters reported. Pescanova's debt was 3.3 billion euros ($4.2 billion) at the end of December, the company said. This compares with the 1.5 billion euro debt mentioned in the company's insolvency filing. The former management of Pescanova acted to conceal the company's true debt position for many years, the audit said.

Cash-strapped Seat Pagine Gialle (SPG) said on Wednesday an Italian court had admitted the Italian yellow pages publisher to a "composition with creditors" procedure, which is similar to Chapter 11 bankruptcy, Retuers reported. A meeting of creditors to give their final green light to the company's debt restructuring proposals is scheduled for Jan. 30, 2014, the company said in a statement. The board of SPG approved at the end of June a debt restructuring proposal intended to reduce its consolidated debt by about 1 billion euros ($1.3 billion).

Germany swiftly rejected the European Commission's proposal for a single authority to wind down failing euro-zone banks Wednesday, signaling a rift between the European Union's executive and its biggest economy over the next step in exiting the region's debt crisis, The Wall Street Journal reported. The proposal on bank resolution—the so-called "single resolution mechanism"—announced Wednesday was to form the second pillar in the euro-zone's banking union project which aims to sever the toxic link between troubled euro-zone banks and their sovereigns.

Praktiker AG (PRA), a German home-improvement retailer, said it’s considering insolvency for itself and units after some of its creditors didn’t approve more financing. Excessive debt and lack of liquidity are reasons for declaring insolvency, the company said in a statement today. Alternative financing became necessary after the company failed to sell a stake in Luxembourg-based unit Batiself SA because the buyer’s board didn’t approve a deal, Praktiker said. Proceeds from a sale had been “firmly included” in the retailer’s financing plan from last year, it said.

Sean Dunne’s biggest creditors were blocked from questioning the bankrupt developer at a meeting in the US following a new legal complaint filed against him by the National Asset Management Agency, the Irish Times reported. Mr Dunne appeared at a second creditors’ meeting in Connecticut Wednesday but avoided questions from Nama and Ulster Bank as his lawyers said that a legal complaint filed by the State loans agency prevented him from answering them.

In Seoul's upscale Gangnam neighborhood, made famous by pop star Psy's viral music video, government curbs on real-estate lending froze a market in which home prices had been rising as fast as 25% a year, The Wall Street Journal reported. In Toronto, housing prices reversed their rapid rise and fell for five months after the government changed rules to effectively increase monthly payments on new loans.

The European Commission will propose itself as the single authority for winding down banks in the euro zone, a step that will set the European Union's executive on a collision course with the bloc's most powerful member, Germany, The Wall Street Journal reported. Berlin insists that such an authority—whose actions could force national governments to spend money to help rescue failed banks—would breach EU treaties. That, it says, could lead to legal challenges over bank restructurings and create uncertainty for financial markets at a sensitive time.

Insolvency experts are predicting more pain to come over the next six to 12 months as the shakeout in Australia's mining sector takes hold, ABC News reported. Restructuring firm Ernst & Young is expecting to see more receiverships and distressed sales as miners end their investment and construction phase to focus on production. The forecast comes after almost half of the listed companies exposed to mining services issued profit downgrades as projects are deferred and market conditions falter.

German and French businesses will see their borrowing costs tumble by tens of billions of euros over the coming years thanks to aggressive central bank action to lower the cost of funding. Countries in the credit starved periphery – the main target of easy monetary policy – will continue to struggle however, and will benefit far less from a projected €42bn reduction in debt payments over the next five years, according to an FT analysis of European Central Bank data.