Tuesday December 8 Housing and Economic stories

TOP STORIES:

Spain's Abengoa starts insolvency proceedings, shares dive - (www.reuters.com) Spain's Abengoa started insolvency proceedings on Wednesday after a potential investor said it would not inject fresh capital into the energy firm, sending its share price tumbling by 54 percent. Under Spanish law, companies can enter into pre-insolvency proceedings, giving them up to four months to reach an agreement with creditors to avoid a full-blown insolvency process and a potential bankruptcy. Failure by Abengoa to reach such a deal could lead to Spain's largest bankruptcy on record. The company employs around 24,000 people worldwide. Spanish and international banks' total exposure to Abengoa stands at around 20.2 billion euros ($21.4 billion), including financing for projects, a source familiar with the matter said at the end of September.

BTG Pactual stops making new loans to conserve liquidity - (www.ft.com)  BTG Pactual, the investment bank headed by Brazilian billionaire André Esteves, has stopped making new loans and is taking other measures to conserve liquidity following the sudden arrest of its chief executive this week. Pérsio Arida, the interim chief executive of BTG, Latin America’s largest independent investment bank, said redemptions had been “normal” and less than he expected given the circumstances. But he added that the bank, which also has a large asset management business, was taking the “usual actions” in such a situation. These included “reducing the concession of credit”, Mr Arida, a BTG board member who assumed the interim chief executive position on Wednesday when Mr Esteves was arrested, told the Financial Times. The bank said it will also reduce its liquid market positions if necessary. Mr Arida declined to give figures on the level of redemptions, citing regulatory restrictions on divulging the information.

Brazilian Senator and Banker Are Arrested as Petrobras Scandal Widens - (www.nytimes.com) A broad investigation into corruption at Petrobras,Brazil’s state-owned oil company, widened on Wednesday with the arrests of a sitting senator and a billionaire investment banker who is one of the country’s top finance executives. The federal prosecutor’s office said in a statement that Senator Delcídio do Amaral, a member of the governing Workers’ Party and an important ally of President Dilma Rousseff, had been arrested in Brasília on Wednesday morning. Ms. Rousseff’s popularity has already eroded since her re-election in October of last year because of a prolonged recession and the Petrobras scandal. There have been calls for her to resign, and the Amaral arrest is likely to complicate her efforts to govern and move economic proposals, including unpopular austerity measures, through Congress.

Junk-Bond Issuance Surges to $26 Billion in the Last Stages of Boom - (www.bloomberg.com) The U.S. junk bond market reopened for business in November -- but only for a select group of companies. Speculative-grade borrowers raised about $26 billion of debt this month, more than double what was sold in October. That made it the busiest month for the riskier borrowings since May. Issuance was dominated by companies whose credit profile is on the rise and those who were willing to pay up. KKR & Co.-backed First Data Corp. issued $3.2 billion of bonds on the heels of an initial public offering. American Energy – Permian Basin LLC, an oil-and-gas business owned by Aubrey McClendon’s American Energy Partners, lured investors to a $530 million note sale with a 13 percent yield.

How Brazil's Banking Golden Boy, Arrested in Rio, Built an Empire - (www.bloomberg.com) Andre Esteves, the brash banker who once joked his firm’s name, Grupo BTG Pactual, stood for ‘better than Goldman,’ became the latest high-profile executive dragged into Brazil’s widening corruption scandal. The 47-year-old billionaire was arrested Wednesday in Rio de Janeiro, along with Senator Delcidio Amaral, police said. Esteves allegedly sought an agreement with Amaral to interfere with testimony from a jailed former executive of oil producer Petroleo Brasileiro SA, according to a court document. Esteves made a splash on the international financial stage -- and became Brazil’s youngest self-made billionaire -- when he sold Pactual to UBS for $2.6 billion in 2006. He and partners bought it back three years later and set off on an expansion, snapping up businesses including the Swiss private-banking unit of Assicurazioni Generali SpA. The firm sold shares to the public in 2012.

OTHER STORIES:

Brazil Markets Slide as Corruption Probe Ensnares BTG's Esteves - (www.bloomberg.com)
UMich Survey Director: We're Witnessing the Decline of American Economic Aspirations - (www.bloomberg.com)
Junk-Bond Issuance Surges to $26 Billion in the Last Stages of Boom - (www.bloomberg.com)

Puerto Rico's Dec. 1 Deadline: A Guide as Possible Defaults Loom - (www.bloomberg.com)
How Brazil's Banking Golden Boy, Arrested in Rio, Built an Empire - (www.bloomberg.com)
Political Turmoil Makes Life Tough for Brazil's Central Bank - (www.bloomberg.com)