Headlines

Allied Farmers, the finance company hobbled by the collapse in value of its loan book, may not be able to repay $7.5 million owed to its failed Allied Nationwide Finance unit when it comes due on July 1, The New Zealand Herald reported. Managing director Rob Alloway is seeking talks with the receivers of ANF about the potential default, which would be the third such event. The ANF receivers, Kerryn Downey and Andrew Grenfell of McGrath Nicol, have reserved their position and are considering options, according to Alloway's statement.

Speculation intensified last week that European officials are inching closer to a decision to allow Greece to restructure its US$350bn of government debt, International Financing Review reported. If it does so, Greece will become the first Western European country to restructure debt in 60 years. The longer Greece waits, the more of its obligations will be held by official creditors and the less room for manoeuvre it will have.

EU economics commissioner Olli Rehn brushed off a push from Portugal to rethink European demands on the country’s political leaders to agree a common economic policy before a general election in June, the Irish Times reported. Saying a rapid cross-party agreement was important both for Portugal and for Europe, Mr Rehn said such an accord was crucial if an EU/IMF bailout deal was to be reached by mid-May. Experts from the EU Commission, the European Central Bank (ECB) and the IMF will meet Portuguese civil servants tomorrow to assess the country’s aid requirement.

Just over a year after General Motors engineered a sale that saved Saab from oblivion, the carmaker is facing a fresh bout of financial troubles that threaten to spread pain across Sweden, The New York Times reported. Production has been halted since Tuesday at the Saab plant in Trollhättan, near Gothenburg, following several disruptions last week and amid disputes with suppliers over payments and contracts. Saab said Thursday that assembly lines would not resume until early next week as it scrambled to find funds to pay its suppliers.

The European Central Bank raised interest rates on Thursday for the first time in nearly three years to tame rising prices just as the euro zone debt crisis claimed Portugal as its latest victim, The Sydney Morning Herald reported. The increase in the ECB's benchmark refinancing or "refi" rate to 1.25 per cent was the first since July 2008 and the first change either way since it was cut to a record low of 1.0 per cent in May 2009.

Financial regulator Matthew Elderfield says he expects legal challenges to fitness and probity tests from executives and directors who served in Irish banks before the financial collapse and who wish to serve in senior posts after January 2012, the Irish Times reported. Such tests would examine their individual performances before the crisis and could lead to them being removed from office and barred from serving as company directors.

A majority of Icelanders will block an accord with the U.K. and the Netherlands on depositor guarantees, a Capacent Gallup poll published by RUV showed, Bloomberg reported. The poll showed 52 percent of voters will reject the bill in the April 9 referendum, compared to 54.8 percent in a Frettabladid newspaper poll published earlier today. Forty-eight percent of voters will support the pact on April 9, Capacent’s poll showed, compared to 45.2 percent of voters in the Frettabladid poll.

Portugal’s caretaker government has said it will submit a formal written request for a financial rescue package to the European Commission on Thursday, becoming the third eurozone country to seek a bail-out after Greece and Ireland, the Financial Times reported. Pedro Silva Pereira, minister for the cabinet, said the request would take into account the fact that Portugal was being administered by a caretaker government until a general election on June 5.

Portugal's request for a bailout from the European Union hasn't so far rattled its neighbor Spain, which was able to sell bonds comfortably on Thursday, The Wall Street Journal reported. In a sharp shift from last year, when financial bailouts of Greece and Ireland shook the whole euro-zone periphery, the stability of Spain's borrowing costs suggests markets currently don't believe the country will be the next domino to fall. In a closely watched auction on Thursday, the Spanish government sold €4.130 billion of three-year bonds, offering around 3.57% interest.

Portugal’s caretaker government gave in to market pressures on Wednesday and joined Greece and Ireland in seeking an emergency bailout. The decision came after the government was forced to pay much higher rates to sell more debt, the International Herald Tribune reported. José Sócrates, Portugal’s prime minister, said in a televised address Wednesday night that he had requested aid from the European Commission after recognizing that borrowing costs had become unsustainable. “I had always considered outside aid as a last recourse scenario,” he said.