Headlines

The U.K. Treasury is planning a new initiative to buy billions of pounds of corporate bonds issued by small and midsize companies to free up capital for struggling firms unable to tap banks for loans, The Wall Street Journal reported. Chancellor of the Exchequer George Osborne unveiled the new "credit easing" initiative during his address to the Conservative Party's annual conference here on Monday.

Listed small- and medium-sized enterprises (SMEs) struggled with cash shortages in the first half of this year amid the faltering economic recovery, a non-profit organization said Monday. The nation’s top-10 business groups added more cash to their wallets during the same period, The Korea Times reported. According to the Korea Listed Companies Association (KLCA), the cashable assets of Korea’s 632 listed companies stood at 48.13 trillion won ($40.76 billion) as of the end of June, compared with 52.94 trillion won at the end of last year, a 7.6 percent contraction.

Lenders to Ferretti are exploring a second debt restructuring as the Italian luxury yacht maker is running short of liquidity and could breach covenants on its 600 million euros ($805 million) of loans, banking sources said, Reuters reported. The lenders, which own Ferretti following a 2009 debt for equity swap, are working with the debt advisory group at Rothschild and Ernst & Young to determine how much new money the company needs and how much more debt it needs to write down, the sources added.

Few doubt any more that the European banking system needs to be recapitalised. The debate has moved on to who will get hurt in the process. And unlike in the last round of government recaps in 2007 and 2008, where most holders of bank debt escaped largely unscathed, the pain is likely to be felt by bondholders, International Financing Review reported. Surprisingly, therefore, financial indices have rallied on suggestions that governments are getting closer to shoring up banks’ balance sheets – but the bounce may prove short-lived.

Greece will miss a deficit target set just months ago in a massive bailout package, according to government draft budget figures released on Sunday, showing that drastic steps taken to avert bankruptcy may not be enough, Reuters reported. The dire forecasts came while inspectors from the International Monetary Fund, EU and European Central Bank, known as the troika, were in Athens scouring the country's books to decide whether to approve a loan tranche. Without that installment, Greece would run out of cash as soon as this month.

Troubles among small manufacturers in the bellwether Chinese city of Wenzhou are putting a cloud over a key part of China's economy, further shaking investor confidence and underscoring the stakes as Beijing tries to strike a balance between fostering growth and containing inflation, The Wall Street Journal reported. More than two-dozen small, private businesses in the eastern city known for its entrepreneurial success have gone belly up in recent days because they couldn't repay maturing bank loans, according to state media reports.

With little fanfare, Spanish taxpayers have become substantial bank proprietors since the collapse of Lehman Brothers three years ago marked the start of Europe’s financial and economic crisis. The Fund for Orderly Bank Restructuring, known as the Frob from its Spanish initials, has seized control of six groups of cajas or savings banks and is threatening to take stakes in two more if they fail to find private investors in the next month, the Financial Times reported.

Shares in Norway's troubled oil production equipment contractor Sevan Marine ASA traded 63% higher Friday after the company said it will sell three production, storage and offloading vessels to Canada's Teekay Corp. in a deal that will give the cash-strapped company long-term financing, Dow Jones Daily Bankruptcy Review reported. Teekay, a provider of marine services to the petroleum industry, will also subscribe to a new issue of Sevan Marine shares to gain a significant shareholding, Sevan Marine said, but declined to give further details.

New Zealand and the companies that cut its credit rating last week have a different view of the country’s ability to curb government and household debt, Finance Minister Bill English said, Bloomberg reported. Standard & Poor’s, which reduced New Zealand’s long-term foreign currency rating to AA from AA+ on Sept. 30 said there’s a likelihood household and corporate debt will continue to rise even as earthquake-related spending pressures and fiscal stimulus to support growth strain the government’s ability to curb borrowing.

Austria's insolvent A-TEC Industries will be broken up and sold off in parts after sale talks with a potential buyer failed, the Austria Press Agency said on Friday, Reuters reported. "Due to the time restrictions and differing expectations of the involved parties, the negotiations have fallen through," APA quoted Czech investment group Penta Investments as saying. Last week an offer fell through for the troubled Austrian group from another suitor, Contor Industries GmbH.