KeNo's Housing and Economic Portal: Wednesday May 5 Housing and Economic stories

TOP STORIES:

Glorious Property Seen Close to Default After Kaisa Tumble - (www.bloomberg.com) After Kaisa Group Holdings Ltd. defaulted on its dollar bonds earlier this week, the market got to wondering, who could be next? They didn’t have to look very far. Attention has rapidly shifted to Glorious Property Holdings Ltd., whose controlling shareholder is billionaire Zhang Zhirong. Moody’s Investors Service cut its senior unsecured rating to Ca, just one step from the lowest grade typically signaling default, on April 20 citing sliding sales. It settled $19.5 million of interest Friday on its $300 million of 13 percent notes due Oct. 25, which have dropped 6.3 cents this month to trade at 78.4 cents on the dollar. Investors got a reminder of the risks of investing in Chinese companies’ some $275 billion of dollar bonds outstanding when Kaisa missed a grace period to pay $52 million of overdue interest on two of its U.S. currency notes, making it the first developer from the nation to default on its dollar debt. China’s weakest economic growth since 1990 and a slumping real estate market are only adding to concerns.

Bankruptcies Suddenly Soar Across Corporate America, Worst First Quarter Since 2009 – (www.thestreet.com) This isn't the list of a single troubled sector that ran out of luck. This isn't a single issue, such as the oil-price collapse. It's a broader phenomenon: too much debt across a struggling economy. And now the reckoning has started. The list only contains publicly traded companies that have already filed. But the energy sector, for example, is full of companies that are owned by private equity firms, such as natural gas driller Samson Resources, which warned in March that it might resort to bankruptcy to restructure its debt. Similar troubles are building up in other sectors. While stockholders get wiped out and creditors at the lower end of the capital structure lose their shirts, restructuring specialists like Snyder in Houston are licking their chops. For years, the Fed's flood of money kept these companies afloat no matter how badly they were leaking. Now reality is setting in. For restructuring specialists, opportunity has finally arrived.

Merkel Calls for Calm as Greek Talks Descend Into Name-Calling - (www.bloomberg.com) German Chancellor Angela Merkel called for calm after a euro-area finance ministers’ meeting on Greece descended into acrimony and name-calling. Finance chiefs meeting in Riga, Latvia, on Friday, let loose at Yanis Varoufakis, their Greek counterpart, as they ruled out making a partial aid payment in exchange for a narrower program of reforms. “It’s important that we show understanding for each other,” Merkel told a crowd at a campaign event in Bremerhaven, Germany. While all sides are working toward a deal, “we don’t know if this will work out,” she said. Attention now returns to Athens where the cash-strapped government needs to paypensions and salaries to civil servants before the end of the month. In the first week of May, the European Central Bank will discuss whether it needs to tighten the rules on emergency funding to Greek banks, and a loan from the International Monetary Fund of about 201 million euros ($218 million) comes due.

EU Frustration Mounts as Greeks Try to Bypass Aid Process - (www.bloomberg.com) Euro-area finance ministers voiced their frustration with Greece after Prime Minister Alexis Tsipras tried to bypass their veto on financial aid with an appeal to Angela Merkel. With Greece running out of money and stalling over commitments to reform, euro-zone finance chiefs meeting in Riga, Latvia, Friday said the country’s authorities still haven’t shown sufficient progress on plans to revamp the economy to justify a loan payout. “I demand very urgently that we get results on the table,” Austrian Finance Minister Hans Joerg Schelling said before sitting down for talks. “If you follow the media of the past days you hear time and again that ‘Tsipras says’ and ‘Tsipras thinks’, so apparently this has been moved to leaders’ level.”

ECB Buys Negative Yield Covered Bonds; Trade Guaranteed to Blow Up - (globaleconomicanalysis.blogspot.com) In a move 100% guaranteed to blow up at a later date, the ECB Said to Start Buying Covered Bonds With Negative Yields. The European Central Bank started buying covered bonds with negative yields as its asset-purchase program reduces the supply of the highly rated debt, according to two people familiar with the matter. The central bank bought the debt in the past two weeks, said the people, who asked not to be identified because the information is private. The notes were from Germany, one of the people said. The ECB has bought 69.7 billion euros ($75.5 billion) of covered bonds since October as part of its latest measures designed to stimulus growth in the euro area. The accumulation of assets is driving down yields and the central bank now holds about 15 percent of the market, according to ABN Amro Bank NV.

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