Headlines

European Union countries and the European Parliament agreed today to introduce limited controls on credit ratings agencies after their judgment was called into question in the debt crisis, the Irish Times reported. Michel Barnier, the European commissioner in charge of regulation who helped broker a deal on the new law, said it aimed to reduce the over-reliance on ratings and establish a civil liability regime. The new rules should make it easier to sue the agencies if they are judged to have made errors when, for example, ranking the creditworthiness of debt.

Portugal's Parliament on Tuesday approved unprecedented tax increases despite a broad public outcry and concerns that the latest austerity package will prolong the bailed-out country's recession, the Associated Press reported. The center-right coalition government used its overall parliamentary majority to pass its 2013 budget. All opposition parties voted against the deficit-reduction measures which will cost most workers the equivalent of at least a month's income next year.

Holders of Argentina’s restructured bonds asked for an emergency stay to block orders by U.S. District Judge Thomas Griesa that prevent the country from paying interest on the debt next month without paying $1.3 billion to owners of defaulted notes, Bloomberg reported.

The Bank of Spain has approved the restructuring plans for four of the country's nationalised banks due to receive aid from Europe, Spanish restructuring fund FROB said on Tuesday. The FROB, which controls the banks bailed out by Spain, added that the European Commission was expected to give its definitive approval to the plans on Wednesday. The banks involved are Bankia, Novagalicia Banco, CatalunyaCaixa and Banco de Valencia. The FROB said it expected to receive European funds in the first half of December, and it would then inject them into the banks.

Greece's international creditors reached a deal to end an impasse over the country's rescue program and unlock long-delayed loan payments, though the plan left officials with a host of challenges to cut the government's debt burden, The Wall Street Journal reported. Finance ministers from the 17-country euro zone and the International Monetary Fund struck a deal in Brussels to cut Greece's debt to a level below 124% of gross domestic product by 2020, officials said.

Though the crisis in Europe has been pushed aside in recent months, the new year is likely to bring new concerns that a slew of nations are in line for debt defaults, The Christian Science Monitor reported. Citigroup released a fresh analysis Monday in which the firm estimates that at least five nations along the periphery of the euro zone will need to restructure their onerous debt burdens.

Kuwait's Global Investment House secured backing from the majority of bank creditors for its restructuring on Monday, a move the debt-laden firm hopes will be a significant step in ending its financial troubles, Reuters reported. The Kuwaiti investment company and asset manager, undergoing its second debt restructuring in three years, may be able to implement the plan as soon as next week if it wins the approval of a High Court of Justice in London scheduled for Dec. 3.

The Kenyan government has approved a restructuring plan to bolster the operations of stricken fixed line operator Telkom Kenya, Standard Digital reports. The new proposals include the recapitalisation of the firm via a KES10 billion (USD115.6 million) cash injection from co-owners France Telecom-Orange (FT-Orange) and the government of Kenya. Other plans include the writing-off of around KES30 billion worth of shareholder loans by FT-Orange and a retrenchment of the company’s ‘bloated workforce’.

Banks face hidden risks from their links to China's fast-growing "shadow-finance" industry, a term for all types of credit outside formal lending channels. Shadow finance in China totals about 20 trillion yuan, according to Sanford C. Bernstein & Co., or about a third the current size of the country's bank-lending market. In 2008, such informal lending represented only 5% of total bank lending. The sector is lightly regulated and opaque, raising concerns about massive loan defaults amid a softening economy, with ancillary effects on the country's banks.

The Ontario Court of Appeal has upheld a lower court decision that ranked indemnity claims by the auditors and underwriters of Sino-Forest Corp. with other equity claims in the company's restructuring, The Canadian Press reported. Several class-action lawsuits have been filed against the company, its auditors and its underwriters. The company's auditors and underwriters made indemnity claims against Sino-Forest under its Companies Creditors Arrangement Act restructuring for any damages they may have to end up paying if the class-action lawsuits are successful.