Headlines

Portugal’s credit rating was cut to below investment grade by Moody’s Investors Service on concern the country will need to follow Greece in seeking a second bailout. The euro dropped for the first time in seven days, Bloomberg reported. The long-term government bond ratings were lowered to Ba2, or junk, from Baa1, and the outlook is negative. Discussions to involve private investors in a new rescue plan for Greece make it more likely that the European Union will require the same pre-conditions in the case of Portugal, Moody’s said in a statement.

Allan Hubbard's Southbury Group and Southbury Corporation owe South Canterbury Finance nearly $190 million, receivers' reports show, The Timaru Herald reported. The receivers, Kerryn Downey and William Black of McGrath Nicol, released the second report of Southbury Group and of Southbury Corporation yesterday, both in receivership, for the period from November 3 last year to May 2 this year. The receivers' report said Southbury Group owed South Canterbury Finance $84.7m on the date of their appointment, November 3, last year. Southbury Corporation owed SCF $103.9m on November 3.

Bidders for over 600 Lloyds Banking Group branches have less than a week to pitch for a deal that could incur costs of 1 billion pounds ($1.6 billion) for the part-nationalised British bank, Reuters reported. The costs of transferring and implementing the branches are likely to be far higher for Lloyds if it sells the branches to a start-up bank, which potentially gives an edge to established rivals who have infrastructure in place. Lloyds has been told to sell 632 branches by European regulators as the price of being bailed out by the taxpayer.

Argentina's President Cristina Fernandez has signed into law modifications to the country's bankruptcy code that will give workers greater power to take over bankrupt firms at the expense of creditors such as banks, Dow Jones Daily Bankruptcy Review reported. Among the more controversial aspects of the law published Thursday in the Official Bulletin is a provision that allows the workers of a bankrupt firm who set up a cooperative to ask a judge to suspend for up to two years the ability of creditors to execute guarantees backed by the company's property or assets.

A restructuring of billions of dollars of debt at a leading Saudi Arabian steel manufacturer has set a new precedent for complex financial restructurings in the kingdom, lawyers say. Last week, Al-Ittefaq Steel Products Company and 18 banks reached an out-of-court agreement to refinance about SR7.5bn ($2bn), the Financial Times reported. Under the arrangements, none of the banks will take write-offs and the company will be able to continue some of its expansion plans.

German and French proposals to restructure up to €30bn (£28bn) of Greek government debts were thrown into disarray after ratings agency Standard & Poor's said they amounted to a "selective default", The Guardian reported. The decision placed Germany and France on a potentially disastrous collision course with the European Central Bank (ECB). The proposals would have seen investors inject billions of euros into Greece by rolling over maturing Greek debt into new 30-year bonds. They are part of a broader €110bn rescue package, the details of which have yet to be finalised.

Bailouts of Europe's debt-stricken countries face a legal challenge on Tuesday as Germany's top court begins hearing a lawsuit against German contributions to the rescues of Greece, Ireland and Portugal, Reuters reported. The Karlsruhe-based Constitutional Court is not likely to block the German government's participation in bailouts altogether, or force the government to withdraw its commitments to current rescue plans, legal experts say. But most experts, including government sources, say they expect the court to impose conditions making it harder for the government to provide fresh aid.

Two paper manufacturers in Victoria - where paper helped build national businesses - are facing big problems, the Herald Sun reported. Yesterday about 300 workers at Australia's biggest envelope maker, Australian Envelopes, were made redundant after the Notting Hill-based company entered voluntary administration. A skeleton staff of about 30 have remained thanks largely to secured creditor ANZ's largesse, paying their wages.

Nortel Networks and its subsidiaries sold 6,000 patents to a consortium consisting of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony, Datacenter Dynamics reported. The winners emerged after a multi day auction with a cash bid of $4.5bn. In a statement the company said: ‘The sale includes more than 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patents.

Mexican glass maker Vitro SAB said a Texas bankruptcy judge's ruling that lifts an injunction against creditors showed a "mistrust of the Mexican judicial system" and is likely to severely harm the company if bondholders are allowed to continue lawsuits against certain subsidiaries, Dow Jones Daily Bankruptcy Review reported. Vitro filed papers Wednesday with the U.S. Bankruptcy Court in Dallas appealing the ruling. The company is demanding that its subsidiaries, which are not part of ongoing reorganization cases in the U.S.