North America

Coupons on 525 million pounds ($701.40 million) of debt underpinned by retirement home operator Four Seasons will not be paid, the issuers of the notes said on Wednesday. The owners of Four Seasons recently agreed a deal with investment firm H/2 Capital Partners to restructure the group, transferring ownership to a new owner controlled by its creditors, Reuters reported. The boards of Elli Finance (UK) Plc and Elli Investments, the issuers of the notes, said their respective boards “have concluded that they will not be in a position to pay the coupons due under the Notes on 15 June 2018”.
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Mexico’s credit risk is at the highest level since the days after Donald Trump’s inauguration. Five-year credit-default swaps that hedge against a drop in the value of Mexico’s sovereign debt have soared as the July 1 presidential election nears, Bloomberg News reported. Leftist Andres Manuel Lopez Obrador holds a commanding lead in the polls, and traders are concerned his victory could upend the economy just as the country is roiled by increasing trade tensions with the U.S. Other Mexican assets are also showing signs of stress as the election approaches.
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Barbados must prepare for a long and painful journey back to financial and economic health, after announcing a radical plan to tackle the fourth-biggest debt burden in the world, according to the country’s new premier. The Caribbean island is still reeling from prime minister Mia Mottley’s revelation on Friday that it had discovered previously undisclosed financial liabilities, which lifted the country’s overall debt from 137 per cent of gross domestic product to more than 175 per cent, the Financial Times reported.
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The Mexican peso sank to its weakest in more than a year on concern the U.S. may leave the Nafta agreement and try to negotiate two separate free-trade deals with Mexico and Canada, Bloomberg News reported. The currency slid for a fourth day, dropping 1.6 percent to 20.4031 per dollar as of 3:46 p.m. in New York, the second-sharpest retreat among major peers. The cost of insuring Mexican bonds in the credit-default swaps market for five years surged nine basis points to 146.501, climbing for a ninth day in the longest streak since June 2013. Stocks halted a two-day rally.
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Birds Eye owner Nomad Foods took on additional debt to fund the €225 million acquisition this year of Irish frozen pizza-maker Goodfellas, before receiving the threat of a credit downgrade on Monday after sealing another leveraged deal, the Irish Times reported. Standard & Poor’s (S&P) downgraded the outlook on its rating on Nomad Foods creditworthiness on Monday to “negative” from “stable” after the company announced the new €240 million debt-funded purchase of UK-based frozen food manufacturer of Yorkshire pudding and roast potatoes Aunt Bessies.
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Barbados has announced an “emergency plan” to tackle its mounting economic crisis, including restructuring its public debt, after the Caribbean country’s new government discovered that its liabilities were much worse than thought, reaching 175 per cent of gross domestic product, the Financial Times reported. The Barbados Labour Party, led by Mia Mottley, came to power in an election in late May, propelled by the failure of a tough austerity programme implemented by her predecessor to turnround the island’s economic and fiscal crisis.
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Cambridge Analytica, the U.K. political consulting firm that closed its doors after a scandal over how it harvested data to influence the last U.S. presidential election, now faces a group of Facebook users in its bankruptcy, Bloomberg News reported. “Data Breach Plaintiffs" filed a notice on Tuesday to appear in the company’s New York bankruptcy. The group is involved in two lawsuits against both Facebook and Cambridge Analytica that seek class-action status on claims that about 87 million Facebook users had their personal information taken without permission.
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The Bank of Canada has highlighted elevated household debt and imbalances within the nation’s real estate market as the two chief vulnerabilities to the financial system in the event of a recession, Bloomberg News reported. But what could trigger such a downturn? Macquarie Capital Markets offers one simple answer: the housing market itself -- highlighting that the share of employment tied to construction as well as finance, insurance and real estate is nearly two standard deviations above its long-term average.
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The Bank of Canada is paying more attention to smaller lenders as an area of potential risk in the financial system, a shift that comes amid concerns about a national housing slowdown, The Wall Street Journal reported. The central bank said it is looking to broaden the scope of its in-house stress testing to include smaller financial institutions and mortgage insurers, at a time when tighter mortgage rules are helping to drive some of those lenders’ growth.
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The International Monetary Fund moved on Friday to formally begin negotiations on a bailout of Argentina, without any objection from the Trump administration, The Wall Street Journal reported. The crisis in Argentina has prompted the U.S. to once again embrace the type of multilateral and global institutions that have often come under heavy criticism from the Trump White House. IMF Managing Director Christine Lagarde presented the program Friday in Washington to the IMF’s executive board, where the U.S.
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