Headlines

One in six Japanese companies have become “zombie” firms unable to keep up with debt payments from profits alone, putting them in a vulnerable position should the central bank raise interest rates this year, as is widely expected, Bloomberg News reported. The number of zombie companies hit 251,000 or 17% of the total number in the 12 months to March, jumping almost a third from the previous year, according to a report by Teikoku Databank on Friday. The number was the highest since 2011, when Japan’s economy was battered by an earthquake, tsunami and nuclear disaster, the firm said.

UBS Group AG has moved away from Credit Suisse’s original plan to sell its $250 million distressed-debt business to a single bidder after it failed to attract enough interest, and is instead planning to dispose of the assets individually, Bloomberg News reported. The sale was called off late last year because bids were scarce and too low, according to people familiar with the matter. The assets have been added to UBS’s special wind-down unit for Credit Suisse and are being sold on an individual basis, said the people, who asked not to be named as the details are private.

Debt-stricken Sri Lanka’s economic reform program is yielding the first signs of recovery, but the improvements still need to translate into improved living conditions for its people, the International Monetary Fund said on Friday, the Associated Press reported. Sri Lanka has been struggling with an economic crisis since declaring bankruptcy in April 2022 with more than $83 billion in debt, more than half of it to foreign creditors. The crisis caused severe shortages of food, fuel and other necessities. Strident public protests led to the ouster of then-President Gotabaya Rajapaksa.

The rupture of one of the world's busiest shipping routes has exposed the vulnerability of China's export-reliant economy to supply snarls and external demand shocks, Reuters reported. In a speech at the World Economic Forum in Davos on Tuesday, Premier Li Qiang emphasised the need to keep global supply chains "stable and smooth", without referring specifically to the Red Sea.

Canada's banking regulator is to step up its focus on money laundering issues and will work with the country's financial intelligence agency to tackle such incidents, the regulator's head said on Friday, Reuters reported. "The intensity of money laundering risk is under-appreciated ... what you can expect from us is more focus on that issue," Peter Routledge, superintendent of Financial Institutions (OSFI) said at TD Securities annual conference.

Brazil should end 2024 with a primary deficit of 55.3 billion reais ($11.2 billion), the federal audit court (TCU) said, in the latest sign of skepticism that President Luiz Inacio Lula da Silva's government can meet its pledge to eliminate the fiscal deficit, Reuters reported. After Lula upped spending on social measures in his first full year in office, the market is worried his administration won't meet its fiscal goals. Despite falling interest rates, long-term future interest rates remain high, underlining market discomfort with the government's fiscal situation.

Colombia’s economy grew at its fastest pace in nine months in November, beating all forecasts and calming fears of a recession, Bloomberg News reported. The ISE economic activity index, a proxy for gross domestic product, rose 2.3% from a year earlier, the statistics agency reported Thursday. That was its first expansion in four months, and exceeded all 15 forecasts of economists surveyed by Bloomberg. Agriculture, oil and mining, government services and the financial sector led the expansion, while manufacturing and construction contracted.

British retailers suffered the biggest drop in sales for almost three years during December, raising the risk that the economy slipped into recession late last year, official data showed on Friday, Reuters reported. The Office for National Statistics (ONS) said people doing Christmas shopping earlier than usual - especially for food - contributed to retail sales volumes shrinking 3.2% between December and November. It was the biggest monthly drop since January 2021 and left the level of sales at its lowest ebb since May 2020.

Unifin Financiera SAB de CV has submitted a restructuring deal before a Mexican bankruptcy court that will turn control over to creditors and infuse the lender with government financing, Bloomberg News reported. A judge in Mexico City is weighing the plan, which the company filed last week after winning support from a majority of creditors. A Unifin representative confirmed the submission of the plan to the court. Unifin earned their backing after sweetening the offer for unsecured debt holders — including those with $2.4 billion of foreign bonds.

Germany’s Galeria Karstadt Kaufhof department store chain is attracting interest from buyers looking to lap up assets hit by the insolvency of Rene Benko’s Signa empire, Bloomberg News reported. “There are more than two interested parties,” insolvency administrator Stefan Denkhaus said in emailed comments to Bloomberg, declining to give further details. A creditor committee is discussing the sale process and will swiftly proceed with negotiations, he said.