Headlines

Peer-to-peer lender Zopa in on track to secure a £130m capital lifeline it needs to become a challenger bank days just before its conditional banking licence expires, the Financial Times reported. Britain’s oldest peer-to-peer lender is hoping to clinch the funding from an entity linked to IAG Capital Partners, a US-based fund, and its UK investment vehicle Silverstripe early next week, according to a person close to the matter. The deal, first reported by Sky News on Saturday, would close just before Zopa’s banking licence expires on Tuesday.

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Rating agencies have soured on India Inc as a credit crunch leaves businesses struggling to raise funds and pay debts, pushing default rates to their highest in five years, the Financial Times reported. Moody’s has a negative outlook on more than half of the non-financial companies it provides ratings on, its highest level in 10 years. The New York-based agency, which in early November downgraded its credit outlook for India to negative, has lowered its outlook for oil and gas companies such as Bharat Petroleum and information technology groups Infosys and Tata Consultancy Services.

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Lebanon may have just repaid $1.5 billion of Eurobonds, but its chances of escaping a default still look grim. It will probably come down to how far it can stretch its foreign reserves while containing the worst currency crisis since it pegged the pound over two decades ago, Bloomberg News reported. On both counts, recent developments have been negative. The central bank’s reserves dropped by nearly $800 million in the first two weeks of November alone.

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Next China: The Ticking Debt Bomb

It turns out trade wars are not just painful but also very loud, so much so that they can drown out some fairly consequential things, Bloomberg News reported. One of those is debt. And in the Chinese context, we should note that there is a lot of it and it has increased very quickly. Bloomberg Economics estimates that the country’s total debt ballooned about five-fold in the decade through 2018 to roughly $35 trillion.

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The number of Chinese companies failing to make payments will continue to rise in the year ahead as economic growth sputters and the government attempts to rein in support to indebted companies, according to Moody’s Investors Service, Bloomberg News reported. The credit ratings company expects 40-50 new defaults in 2020, up from 35 this year, according to Ivan Chung, head of greater China credit research and analysis at Moody’s. He expects the total value of defaults would be below 200 billion yuan ($28 billion), representing less than 1% of the size of China’s bond market.

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Having just signed a deal with Middle Eastern suitor Utico FZC, crisis-hit Hyflux Ltd. is facing a fresh challenge -- how to allocate S$40 million ($29 million) of fees among restructuring advisers, Bloomberg News reported. The Singapore water treatment company needs to get its advisers to agree on how to split the pot, or Utico has the right to walk away, according to the deal terms. The problem was discussed in a court hearing in Singapore on Friday. Lawyers and consultants have been working for more than 1 1/2 years on Hyflux, the nation’s most high-profile debt restructuring.

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PizzaExpress Ltd. is something of a British national treasure having delivered quasi-Italian cuisine to the High Street for 54 years, a Bloomberg View reported. It’s found itself in a battle for survival in the U.K.’s uber-competitive “casual dining” arena, and has consequently been caught up in a proper tussle in the bond market. Commercially, the restaurant chain is battling on two fronts: that ferocious fight in its domestic market and coping with an unsuccessful expansion in China. Comparable sales outside of the U.K. fell 7.5% last year.

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An investment holding company linked to Russian billionaire Viktor Vekselberg pledged to invest “as much money as necessary” in Schmolz + Bickenbach AG to avert a restructuring of the ailing Swiss steelmaker’s $800 million debt pile, Bloomberg News reported. Liwet Holding AG, which holds a 26.9% stake in Schmolz, said in a statement Sunday that the pledge is conditional on there being no change in control of the company.

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Speculation that South African Airways is in danger of going under could become self-fulfilling. The national carrier has been given 57 billion rand ($3.9 billion) in bailouts since 1994 and last made a profit in 2011, Bloomberg News reported. The company’s already precarious finances took another hit last month when workers staged a week-long strike that grounded a number of flights, and customers have canceled bookings on others.

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The Reserve Bank of India has filed an application to begin bankruptcy proceedings against shadow lender Dewan Housing Finance Corporation Ltd (DHFL), it said here on Friday, Reuters reported. DHFL, once one of India’s top shadow lenders, owes its creditors - which include mutual funds, banks, pension funds, insurance firms and retail investors - close to 1 trillion rupees ($13.93 billion). The country’s shadow banking sector, a key source of credit to millions, has been plagued by a credit crunch triggered by the collapse of lending major IL&FS last year.

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