Headlines

The Greek government and its private-sector creditors appeared to be closing in on a debt-restructuring deal on the basis of new proposals, raising hopes it would pave the way for another multibillion-euro bailout for the country, The Wall Street Journal reported. That optimism helped fuel a rally in financial markets across Europe, with the Athens stock exchange rising 2.9% and Greek banking stocks gaining 5%. Greece's efforts to get relief from its private-sector creditors recently have faltered.

Kingfisher Airlines said it is in talks with Hong Kong-based SC Lowy and some other investors to raise funds, as the financially beleaguered airline expedites steps to stay afloat. The discussions come at a time when Kingfisher, controlled by liquor baron Vijay Mallya, is struggling with depleting cash flow, high debt and unpaid bills. The financial troubles have forced the airline to cut dozens of flights, ground several planes, stop its low-fare operations and seek government help to sustain its business.

The British arm of children's clothing retailer Pumpkin Patch has appointed administrators, the latest in a string of store groups to run into trouble as cash-strapped shoppers cut back spending, Reuters reported. Business advisory firm Deloitte said on Thursday it had been appointed to oversee the administration, a form of protection from creditors. It has closed five stores, making 60 staff redundant, but hopes to continue trading others while strategic options are explored. Pumpkin Patch Ltd, based in Reading, southern England, has 36 UK stores, employing about 400 staff.

Lenders to Air India on Thursday were unable to reach a decision on the ailing national carrier's $4 billion debt restructuring, three sources with direct knowledge of the matter said, further delaying the airline's long-pending proposal, Reuters reported. Last week, the lenders -- a consortium of 13 banks led by State Bank of India -- deferred Air India's debt restructuring proposal, seeking a revision as they were reluctant to accept equity in the airline. One of the options discussed by the banks on Thursday was to convert the airline's debt into a government-backed bond, the sources said.

European companies are less likely to default on debt in 2012 than during the global recession in 2009 because they have built up financial buffers and are relying less on bank lending, Standard & Poor’s said, Bloomberg reported. Moves to increase free cash flow to ensure payments to creditors should protect companies in any economic decline in the region this year, Tobias Mock, S&P’s lead analytical manager of European, Middle Eastern and African corporate ratings, said at a news conference yesterday in Frankfurt.

The International Monetary Fund has asked its member countries for an extra $500bn in firepower to combat the world’s spreading fiscal emergencies, which it estimates will generate demand for bail-out loans totalling $1tn over the next two years, the Financial Times reported. The estimate was presented by Christine Lagarde, IMF managing director, to the fund’s executive board this week, according to people familiar with the discussions, and would most likely be financed by voluntary ad hoc loans rather than mandatory contributions. The IMF currently has $387bn in available resources.

Greece is due to continue on Thursday talks with banking representatives aimed at agreeing a haircut for private investors holding Greek debt, Ekathimerini.com reported. Charles Dallara, head of the International Institute of Finance representing private creditors, and Greece's prime minister Lucas Papademos met on Wednesday to pick up discussions from where they had left off last week, when the two sides failed to agree on the interest rate Greece will offer on new bonds and a plan to enforce investor losses. No statements were made after Wednesday’s meeting.

Hedge funds have been known to use hardball tactics to make money. Now they have come up with a new one: suing Greece in a human rights court to make good on its bond payments, The New York Times reported. The novel approach would have the funds arguing in the European Court of Human Rights that Greece had violated bondholder rights, though that could be a multiyear project with no guarantee of a payoff. And it would not be likely to produce sympathy for these funds, which many blame for the lack of progress so far in the negotiations over restructuring Greece’s debts.

China’s banking regulator is weighing a plan to relax capital requirements for lenders after the world’s second-largest economy expanded at the slowest pace in 10 quarters, four people with knowledge of the matter said, Bloomberg reported. The China Banking Regulatory Commission is delaying implementing the most stringent capital adequacy ratios and may lower risk weightings for loans to small businessmen and companies, the people said, declining to be identified as the matter is confidential.

Struggling Catalyst Paper Corp. has received the go-ahead from a court in British Columbia to begin a planned restructuring, while at the same time filing for protection from creditors in the United States, The Globe and Mail reported. The Richmond, B.C.,-based company said Wednesday a B.C. court had issued an initial order under the Canada Business Corporations Act to begin the restructuring process. The plan would see bondholders take control of the firm. It would also reduce its overall debt by $315.4-million and cut annual cash interest payments by $25.5-million.