Headlines

The Spanish government presented €13 billion ($16.7 billion) of spending cuts and tax increases for 2013 and said it will place new limits on early retirements as political turmoil heightens investor concerns over Prime Minister Mariano Rajoy's ability to slash a towering budget deficit and stabilize one of Europe's largest ailing economies, The Wall Street Journal reported. The government's budget plan for next year includes a share of the spending cuts and tax increases it presented in July designed to cut the deficit by €65 billion through the year 2014.

The euro zone's permanent bailout fund will charge only a symbolic fee on top of its costs for loans to troubled sovereigns and only slightly more for loans to recapitalize banks, ESM pricing policy guidelines showed. The guidelines, obtained by Reuters on Thursday, said that while the price of help from the European Stability Mechanism (ESM) would be the same for every euro zone government, it would differ depending on the instrument chosen, because of different risks the instruments entailed.

Plans agreed between Zabeel Investments and its creditors to restructure individual loans included in around USD 1.6bn of liabilities have been overturned as Wasl Asset Management tries to renegotiate terms, according to two creditors, the Financial Times reported on a dealReporter story. The move has led one lender, Abu Dhabi Commercial Bank (ADCB), to begin legal action, they claimed. ADCB was expected to file its case in mid-September, the creditors said, without providing details of the nature of the action.

A decision by Brazil's central bank to reduce reserve requirements for commercial banks was not motivated by the liquidation of troubled consumer lenders Banco Cruzeiro do Sul and Banco Prosper, a senior government official said on Thursday, Reuters reported. The bank lowered some requirements on deposits on Sept. 14, the same day it folded the banks for accounting fraud and losses. "The reserve requirements decision has nothing to do with the troubles facing some small banks.

Troubled Chinese forestry company Sino-Forest Corp., which has been accused of being a massive fraud, said Thursday that its former chief financial officer David Horsley is no longer employed by the firm, The Canadian Press reported. Horsley, who stepped down as chief financial officer in April after receiving an enforcement notice from the Ontario Securities Commission, had continued to work at the company to help with its restructuring. No reason was given for his departure in the brief statement by Sino-Forest announcing the change.

Sanicare, Germany's largest mail-order pharmacy, has filed for insolvency due to problems that have arisen following the recent death of its founder and head, the company said on Wednesday, Reuters reported. A statement said the insolvency was for the mail-order pharmacy activities of the company and would not affect the rest of Sanicare's businesses, which include the online unit. The mail-order business would be run by court-appointed administrator Ralph Buenning after the family of founder and former head Johannes Moenter filed for insolvency on Sept. 25 with the court in Osnabrueck city.

The construction affiliate of the Woongjin Group, a mid-tier conglomerate, was declared bankrupt Wednesday and filed an application to undergo a court-managed workout program, The Korea Times reported. The move is expected to strike a severe blow to the group, which is already suffering from a liquidity shortage. Woongjin Holdings also filed for court receivership with the Seoul Central District Court the same day, saying it was the only option to save the entire group.

Spain's borrowing costs rose and its stock market fell sharply on the eve of Madrid's announcement of new austerity measures, putting the shaky economy again at the center of Europe's race to preserve its currency union, The Wall Street Journal reported. The government's 10-year borrowing costs rose nearly one-third of a percentage point, to above 6%, placing renewed pressure on Madrid to find a way out of its debt crisis and appearing to crimp its prospects for avoiding a bailout from its euro-zone partners.

Greece's international official lenders are at loggerheads over how to solve Athens' debt crisis, threatening more trouble for the euro, Reuters reported. Officials from Greece and the "troika" of European Union, European Central Bank and International Monetary Fund have told Reuters tensions have risen in recent weeks as negotiators wrangle over further budget cuts, with the IMF adamant that Greece reduce its debt further.

Corporate defaults have risen in Europe and may climb further because of economic and political uncertainty, deteriorating growth and looming debt maturities, Standard & Poor’s said in a report, Bloomberg Businessweek reported. S&P’s speculative-grade default rate rose to 5.3 percent at the end of the second quarter, from 4.7 percent at the end of March, the ratings company said. The trailing 12-month default rate will increase to 6.3 percent by the end of June 2013 and could surge to more than 8 percent if Europe’s recession is worse than expected, report author Paul Watters said.