Heavily indebted Chinese developer proposes restructuring

AP, Business, PMN Business

Article content BEIJING (AP) — A Chinese real estate developer whose struggle to manage more than $300 billion in debt rattled global financial markets announced a long-awaited plan Thursday to restructure what it owes to foreign bondholders. The Evergrande Group, the global real estate industry’s most heavily indebted company, ran short of cash after Beijing tightened controls on corporate debt the ruling Communist Party worries is dangerously high. Some other Chinese developers collapsed, leaving half-finished apartment blocks standing empty. Article content Evergrande’s struggle prompted fears about possible shockwaves for the global financial system. The Chinese central bank tried to reassure investors, saying its problems could be controlled and were unlikely to spill over. A deputy central bank governor, Pan Gongsheng, said this month the real estate industry finally was recovering following a wave of defaults. Pan said financing conditions for healthy developers had “improved significantly.” Evergrande’s plan would cover foreign bondholders who are owed about $20 billion. They would receive new bonds and other debt linked to two Evergrande subsidiaries that make electric cars and manage real estate. It wasn’t clear how much bondholders might lose compared with a full payout under the original terms. Article content The proposed terms are a “substantial positive milestone in achieving the restructuring” and represent “significant progress,” the company said in a statement through the Hong Kong stock exchange. It said investors would be asked for approval by the end of March. The announcement comes at a time when Chinese leaders are trying to revive economic growth that fell to 3% last year, its second-lowest level since the 1970s. The ruling party set an official growth target of “around 5.5%” for this year. Chinese regulators stepped in to supervise Evergrande’s debt restructuring, but economists said they rejected a bailout to avoid sending the wrong message to companies about the need to reduce their debts. Foreign creditors were left guessing whether they would receive anything after the company missed two earlier deadlines to announce repayment terms. China’s economic growth slid in mid-2021 after Evergrande and other heavily indebted developers were blocked from borrowing more money. That added to disruption from anti-virus controls. Local governments took over some unfinished projects to make sure families got apartments that already were paid for. Evergrande reported 2.3 trillion yuan ($330 billion) in assets, or more than its 2.1 trillion yuan ($305 billion) in debt to banks and bondholders. But the company said it was struggling to convert that into cash to repay lenders.

London stocks fall ahead of BoE rate decision, banks down

Business, PMN Business, REU

Article content The exporter-heavy FTSE 100 fell on Thursday, dragged down by a strengthening pound, while financial stocks were among the top decliners ahead of what will likely be the Bank of England’s eleventh straight interest rate hike later in the day. The FTSE 100 fell 0.7%, after recording its highest closing level in more than a week on Wednesday. Article content The pound rose against the dollar after the U.S. Federal Reserve raised interest rates by an expected 25 basis points (bps) on Wednesday, but indicated it was on the verge of pausing further increases after a global banking rout. Article content The focus now shifts to the BoE, which is widely expected to also raise its lending rate by 25 bps at 1200 GMT. Expectations had shifted sharply after data on Wednesday showed an unexpected rise in UK inflation. “It’s highly unlikely that the BoE would diverge from other central banks,” said Julien Lafargue, chief market strategist at Barclays Private Bank. “We do expect the bank to adopt a similar strategy, which is to hike, while acknowledging potential risks.” UK banks lost 1.7% after two straight days of gains. Ahead of its decision on interest rates, the BoE said in a letter to lawmakers that more sharp moves in asset prices could expose weaknesses in parts of Britain’s financial system. The more domestically focussed FTSE 250 midcap index fell 0.3%. Helping limit losses were precious metal miners , which gained 2.1% as gold prices gained on the softening of the dollar. Fears of a banking crisis after the collapse of two U.S. regional lenders and troubles at Swiss bank Credit Suisse have rattled global markets recently The FTSE 100 has erased most of its gains for the year and is now up 1%. Informa dropped 2.7% after Morgan Stanley cut its rating on the events organizer’s stock to “equal-weight” from “overweight.” (Reporting by Shashwat Chauhan in Bengaluru; Editing by Savio D’Souza and Anil D’Silva)

Food security, ammunition in focus as EU leaders discuss Ukraine war with UN chief

Business, PMN Business, REU

Breadcrumb Trail Links PMN Business Author of the article: Reuters Andrew Gray and Gabriela Baczynska Published Mar 23, 2023  •  3 minute read Join the conversation Article content BRUSSELS — European Union leaders will discuss the war in Ukraine with U.N. chief Antonio Guterres on Thursday, including food security and sanctions, and also endorse a plan to ramp up the supply of artillery shells to Kyiv, diplomats and officials said. Guterres will be a guest at an EU summit in Brussels, days after the renewal of a deal brokered by the United Nations and Turkey on the safe export of Ukrainian grain through the Black Sea. Financial Post Top Stories Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc. By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 Thanks for signing up! A welcome email is on its way. If you don’t see it, please check your junk folder. The next issue of Financial Post Top Stories will soon be in your inbox. We encountered an issue signing you up. Please try again Article content That will be discussed over lunch with Guterres before the U.N. secretary-general takes his leave and EU leaders get an update on the war from Ukrainian President Volodymyr Zelenskiy via video link, officials said. Advertisement 2 Story continues below This advertisement has not loaded yet, but your article continues below. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account Get exclusive access to the National Post ePaper, an electronic replica of the print edition that you can share, download and comment on Enjoy insights and behind-the-scenes analysis from our award-winning journalists Support local journalists and the next generation of journalists Daily puzzles including the New York Times Crossword SUBSCRIBE TO UNLOCK MORE ARTICLES Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account Get exclusive access to the National Post ePaper, an electronic replica of the print edition that you can share, download and comment on Enjoy insights and behind-the-scenes analysis from our award-winning journalists Support local journalists and the next generation of journalists Daily puzzles including the New York Times Crossword REGISTER TO UNLOCK MORE ARTICLES Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Article content “We will, as always, reaffirm our unwavering commitment to assist Ukraine,” declared Charles Michel, president of the European Council of EU leaders. The leaders will give their blessing to a plan – agreed by foreign ministers on Monday – to send 1 million artillery shells to Ukraine over the next year by digging into stocks and making a landmark move into joint procurement. Washington pushed back on Russian demands that Western sanctions be eased before it allows Ukrainian Black Sea grain exports beyond mid-May, saying there were no restrictions on Russian agricultural products or fertilizer. Inside the EU, the issue of fertilizer exports was also blocking more sanctions against Kremlin ally Belarus. The bloc says new sanctions are needed to stop Belarus from serving as a circumvention route for existing Russia trade restrictions. Article content Advertisement 3 Story continues below This advertisement has not loaded yet, but your article continues below. Article content But Lithuania was against what it dubbed “fertilizer oligarchs” exemptions proposed to ensure fertilizers from Belarus continue flowing to third countries, saying that would weaken the sanctions regime overall, diplomats said. Proponents said such carve-outs, similar to those the EU has in place under its sanctions against Russia, were necessary to ensure food security and refute accusations from Moscow that EU measures were driving a global food crisis. Diplomats involved in preparing the summit of the 27 national EU leaders were skeptical of an imminent breakthrough. “Nobody wants abuse and no-one wants the pockets of oligarchs to be filled with money, but sometimes there are justified requests from third countries,” said one senior EU diplomat, explaining the exemption would cover some potassium exports. “But so far there is no sign of movement.” Advertisement 4 Story continues below This advertisement has not loaded yet, but your article continues below. Article content AMMUNITION Beyond food security and sanctions, the leaders will also discuss bringing those responsible for the 13-month war to justice, as well as providing more military aid to Ukraine. Zelenskiy’s government has told its Western allies that it urgently needs large amounts of 155mm shells as it fights a fierce war of attrition with invading Russian forces. Officials have warned that Ukraine is burning through shells at a faster rate than its allies can produce them, prompting a renewed search for ammunition and ways to boost production. The EU devised a scheme earmarking 1 billion euros ($1.1 billion) for the swift supply of shells – and possibly missiles – from existing stocks and another 1 billion euros for joint orders by EU countries for more rounds. Advertisement 5 Story continues below This advertisement has not loaded yet, but your article continues below. Article content The money will come from the European Peace Facility, an EU-run fund that has already provided billions of euros for military aid to Ukraine. Leaders at the summit may begin a discussion on a further top-up to the fund, diplomats said. “We will need to take measures to boost the manufacturing capacity of the European defense industry,” Michel said in his letter inviting fellow EU leaders to the summit. ($1 = 0.9212 euro) (Reporting by Kate Abnett, Philip Blenkinsop, Gabriela Baczynska, Andrew Gray and Jan Strupczewski; Writing by Andrew Gray and Gabriela Baczynska; Editing by Jonathan Oatis and Emelia Sithole-Matarise) Share this article in your social network Comments Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. 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