KeNo's Housing and Economic Portal: Thursday February 11 2016 Housing and Economic stories

Wednesday, February 10, 2016

Thursday February 11 2016 Housing and Economic stories

Puerto Rico Proposes 46% Reduction of Debt in Restructuring - (www.bloomberg.com) Puerto Rico is seeking to cut its debt load by 46 percent in its first offer to investors, a proposal that may face revisions as bondholders fight to get the most repayment. The commonwealth unveiled its plan on Monday to reduce the island’s obligations and help restart an economy that’s failed to grow in the past decade. The proposal for a voluntary exchange would cut the island’s debt to $26.5 billion from $49.2 billion, put off all interest payments until the 2018 fiscal year and affect even general-obligation bonds, which have the strongest repayment pledge, according to a restructuring proposal posted on the Government Development Bank website. The plan may pit the commonwealth’s investor groups against each other. In the proposal, general-obligation bonds get more money back than sales-tax debt, called Cofinas by their Spanish acronym. Cofina investors may take issue with that, said Lyle Fitterer, head of tax-exempt debt in Menomonee Falls, Wisconsin, at Wells Capital Management, which oversees $39 billion of municipal bonds, including Puerto Rico securities.

Puerto Rico Proposes Plan to Delay Its Debt Payments to Free Up Cash - (www.nytimes.com) Puerto Rican officials, meeting with creditors on Friday, proposed a broad debt exchange program meant to ease the island’s painful cash crisis by slowing down the payments it owes on its $72 billion debt. But as much as the plan had a financial purpose, it also had a political one: It was intended at least in part to help persuade skeptical members of Congress that the island’s government was working in good faith to resolve its financial crisis and deserved Washington’s help. Puerto Rico, which has already defaulted on some bonds, has large bond payments due this spring — payments it says it will not be able to meet without a reprieve from bondholders and some assistance from Washington, ideally in the form of access to bankruptcy court that the island, as a United States commonwealth, does not now have.

Hong Kong January Home Sales Hit 25-Year Low, Centaline Says - (www.bloomberg.com) Hong Kong home sales slumped to the lowest in at least a quarter-century last month, Centaline Property Agency Ltd. estimated, adding to evidence that prices have further to fall. Centaline estimated January sales of new and secondary homes would reach 3,000 units, the lowest monthly figure since it started tracking data in January 1991. The previous low was 3,786 units in November 2008, according to a Jan. 31 release. "The Hong Kong residential market is all about sentiment," Joanne Lee, senior manager of the Hong Kong research and advisory team at Colliers International Group Inc., said. "Falling stock-market prices, the economy weakening, China’s economy weakening and increases in the interest rate will all have an impact."

China police arrest 21 over $7.6 bln online financial scam - (www.reuters.com) Chinese police have arrested 21 people involved in the operation of peer-to-peer (P2P) lender Ezubao, the official Xinhua news agency said on Monday, over an online scam it said took in some 50 billion yuan ($7.6 billion) from about 900,000 investors. Ezubao was a Ponzi scheme, the Xinhua report said, and more than 95 percent of the projects on the online financing platform were fake. Among those arrested were Ding Ning, the chairman of Yucheng Group, which launched Ezubao in July 2014.

Mid-tier Chinese banks piling up trillions of dollars in shadow loans - (www.reuters.com) Mid-tier Chinese banks are increasingly using complex instruments to make new loans and restructure existing loans that are then shown as low-risk investments on their balance sheets, masking the scale and risks of their lending to China's slowing economy. The size of this 'shadow loan' book rose by a third in the first half of 2015 to an estimated $1.8 trillion, equivalent to 16.5 percent of all commercial loans in China, a UBS analysis shows. For smaller banks, the rate is much faster.

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