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

TOP STORIES:

Eminent domain: Whose land is it anyway? - (www.cnbc.com) Nine years ago, James Dupree bought a rundown warehouse and onetime horse stable in Philadelphia so he could convert it into an art studio. The 64-year-old muralist and painter knew he would have to spend thousands of dollars to fix it up. What he didn't know was that the city was going to use the power of eminent domain to take the property and convert the block where Dupree's studio sits into to a high-end shopping area. "It started right after I purchased the building," explained Dupree, who has been fighting the seizure in court. "They had called this area a blight several years ago, but didn't move on it until 2005." "It's nothing more than a land grab," said Dupree. "And the kicker is the developer who was going to build the shopping area backed out of the deal." While the number of eminent domain cases are hard to pin down, according to experts, Dupree is part of what appears to be a growing caseload of homeowners and businesses facing the loss of their property over government seizures.

China defaults mount among inter-company loans - (www.reuters.com) Chinese companies that have lent money to other companies are facing a potential wave of defaults, with several listed firms already reporting missed loan repayments. Shipbuilder Sainty Marine Corp Ltd on Tuesday became the latest listed firm to report that it had failed to receive principal and interest repayments on a 900 million yuan ($144.7 million) loan to a property developer. The same day, Qiaqia Food Co Ltd announced that it would launch a lawsuit against another food producer for failing to pay interest on a 40 million yuan ($6.4 million) loan. Chinese companies granted a net 2.55 trillion yuan ($411 billion) in so-called entrusted loans in 2013, nearly double the 1.28 trillion yuan total in 2012, making them the second- biggest source of domestic credit behind bank loans, according to Reuters' calculations based on published central bank data. Entrusted loans require banks to serve as an intermediary, but a company serves as the ultimate lender and records the loan asset on its balance sheet.

Junk Buyout Loans Eclipse ’07 Record in Dealmaking Frenzy - (www.bloomberg.com) The U.S. junk-loan market has never fueled so much dealmaking. A total of $85 billion of loans have been raised this year to finance acquisitions, topping 2007’s record pace, data compiled by Bloomberg show. Issuance is set to accelerate as Avago Technologies Ltd. locks in the year’s second-biggest loan for its takeover of chipmaker LSI Corp. as soon as today and Men’s Wearhouse Inc. (MW) borrows $1.1 billion to fund its deal for Jos. A. Bank Clothiers Inc. Leveraged loans are booming as the value of takeovers in the U.S. reaches levels last seen in 2008. While regulators have warned excesses may be emerging in riskier parts of the market as the Federal Reserve’s zero-interest rate policy extends into a sixth year, the loan surge underscores renewed confidence in the ability of the least-creditworthy companies to expand as the world’s largest economy strengthens. “There’s a lot of money waiting to be put to work,” Judith Fishlow Minter, co-head of U.S. loan capital markets at Royal Bank of Canada, said in a telephone interview from New York. “The market is exceptionally strong.”

Chinese Police Confront Trust Investors Demanding Repayment - (www.bloomberg.com) Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. (939) branch. People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer. “We have been cheated by CCB,” said Wang Fengying, 60, a Shanxi resident who said her husband had invested 1 million yuan in the product. “Our parents are very old. We need the money for their medical bills and to buy a home for my child. We are so miserable and they won’t even let us demand our money back.”

Detroit reaches deal with retirees on pension cuts - (www.cnbc.com) Detroit reached its first deal with a retired workers group on Tuesday over pension and healthcare benefits and was close to a deal with its two pension funds, giving a major boost to the city's plan to exit bankruptcy in October. Momentum for the city's plan to adjust its $18 billion debt burden was building after Detroit last week won court approval for a crucial settlement over interest rate swaps and reached an agreement with bond insurance companies over the treatment of voter-approved general obligation bonds. Under the deal with the Retired Detroit Police and Fire Fighters Association announced by U.S. Bankruptcy Court mediators on Tuesday, pensions for retired police and fire workers would not be decreased, but cost-of-living increases would be cut in half. A separate voluntary employee beneficiary association plan or VEBA will be established for retiree healthcare, according to a court statement.

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Ukraine Says Russian Forces Among Separatists as Battles Ensue - (www.bloomberg.com)