Headlines

Moody's Investors Service warned it may lower Portugal's credit rating by as much as two notches, dealing another blow to investor confidence in the euro zone, the Wall Street Journal reported today. Moody's warning came less than a week after the ratings agency said that it may downgrade its ratings on Spanish government debt. In putting Portugal's A1 long term and Prime-1 short-term government bond ratings on review, Moody's cited uncertainties over the longer-term health of Portugal's economy, which could suffer from the government's fiscal austerity plans.

Spain said that its regional governments are on track to meet their budget targets this year, its latest effort to quell investor fears that it could be the next European country to need a financial bailout, the Wall Street Journal reported today. Facing intense market pressure, Spain for the first time opened its regions' books before year-end in a bid to address investor worries that the regions' deteriorating accounts could derail the government's austerity drive.

Creditors of Vietnam Shipbuilding Industry Group, better known as Vinashin, are seeking a commitment from the government that it will not let the state-run shipbuilder fail, Dow Jones Daily Bankruptcy Review reported today. Vinashin is seeking a standstill agreement on a $600 million international loan arranged by Credit Suisse in 2007 as a $60 million principal repayment was due Monday.

The British Office of Fair Trading (OFT) has today launched a crack down on doorstep loan providers, warning more than 50 firms they have three months to prove they are in compliance with the Consumer Credit Act, or they could lose their operations license, the Guardian (U.K.) reported today. Over the past 18 months the OFT and Trading Standards officers visited 200 doorstep loan providers and said half of them failed to fully demonstrate competence in a number of different ways.

Shanghai regulators ordered banks in Shanghai, China's financial center, to halt loans for fixed-asset investments—likely affecting construction and property development—for the rest of the year, in a fresh move to contain the flood of credit that has helped accelerate inflation, the Wall Street Journal reported on Friday. Shanghai's banking regulator may be feeling the pressure to rein in the banks under its jurisdiction after new loans in the city grew particularly strongly in November.

George Osborne, the British finance minister, insists he does not aim to boost London by soft-pedaling on U.K. regulation of banks in the wake of new U.S. rules, the Wall Street Journal reported today. "I'm not looking for regulatory advantage or arbitrage. If anything, I think we had too much of that in the run-up to the banking crisis," Osborne said. The chancellor, who met with the heads of Wall Street's biggest banks during his visit to the U.S. last week, declined to say whether the British government intends to force banks to make structural changes, as the U.S.

Analysts and investors said that France risks losing its top AAA grade as Europe’s debt crisis prompts a wave of downgrades that threatens to engulf the region’s highest-rated borrowers, with Belgium also facing a possible cut, Bloomberg News reported today. Moody’s Investors Service said on Dec. 15 that it may lower Spain’s rating, citing “substantial funding requirements,” and slashed Ireland’s rating by five levels on Dec. 17. Standard & Poor’s is reviewing its assessments of Ireland, Portugal and Greece.

The European Central Bank warned Ireland that proposed legislation revamping the country's financial system could threaten some of the ECB's operations, and pressed Irish officials for assurances that the central bank's collateral rights will be protected, the Wall Street Journal reported today. "The ECB has serious concerns that the draft law is insufficiently legally certain on a number of critical issues" including rules on collateral posted by banks seeking emergency loans from the ECB, the central bank said in an opinion paper posted on its website.

Many smaller Spanish companies are fighting for survival amid the country's biggest economic slump in decades, Dow Jones Daily Bankruptcy Review reported today. Spain is also at the heart of a sovereign-debt crisis in Europe, which has been boiling over in recent weeks. Financial markets fear Spain will follow Greece and Ireland and eventually need a bailout, but a bailout for the larger Spanish economy is the worst-case scenario for markets that fear it could destabilize the euro zone.

Creditors of Conergy have agreed to a debt restructuring of the German solar company, which would likely hand over control to hedge funds Sothic Capital and York through a debt-for-equity swap, Reuters reported yesterday. The company said on Friday that it plans to reduce its capital stock by 88 percent, virtually wiping out existing shareholders, in order to then raise fresh equity amounting to as much as 188 million euros ($250.2 million). By taking a stake of nearly 70 percent in exchange, Conergy's credit burden would be reduced from a current 323 million euros to just 135 million euros.