Wednesday May 25 2016 Housing and Economic stories

TOP STORIES:

Valeant Gets Notice of Default From Bondholders on Delayed 10-Q - (www.bloomberg.com) Valeant Pharmaceuticals International Inc. received a notice of default from some of its bondholders because of a delay in filing its first-quarter financial results, the company said Thursday. The notice from holders of the company’s $1 billion of 5.5 percent notes that mature in 2023 started the clock on a 60-day grace period, giving Valeant until July 18 before the bondholders can demand immediate repayment if the company hasn’t filed the statement, according to a regulatory filing Friday. The default notice also triggers a provision in its credit agreement that allows its most senior lenders to demand repayment if the financials aren’t filed by July 3, bringing forward the July 31 extension previously worked out with lenders. There is no grace period under the amended agreement, meaning loan investors will be able to demand accelerated repayment on $12.7 billion of loans if the new deadline isn’t met.

Shipbuilding Industry Collapses, Hits China and South Korea - (www.wolfstreet.com) In the first quarter, South Korean shipbuilders saw their orders collapse by 94.1% to 170,000 compensated gross tons (CGT), compared to the prior year. In terms of dollars, orders collapsed 94% from $6.5 billion in Q1 2015 in to just $390 million. Global orders for new vessels in Q1 have collapsed too, but slightly less, according to the Export-Import Bank of Korea, cited by IHS Fairplay: down 71% year-over-year to 2.32 CGT. “Their business slump may continue throughout this year, and demand for oil tankers may improve slightly during the second half of the year,” Korea Eximbank said in the report. Current order backlog will provide work for about two years. For all of 2016, orders are expected to plunge by 85%, from $23.7 billion in 2015 to just $3.5 billion. Chinese shipyards are in even deeper trouble.

Chicago Pension Liabilities Jump 168%, Understated By $11.5 Billion - (www.zerohedge.com) New accounting rules show Chicago has understated its pension liabilities by $11.5 billion. At the end of 2015 the stated liability was $7.1 billion. Today it’s $18.6 billion. That’s a jump in net liabilities of 168%. Mayor Rahm Emanuel has hopes pinned on union concessions and help from the state legislature. Neither is likely. Let’s stop pretending there is another solution, because there isn’t.

Balance Due: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic - (www.online.wsj.com) U.S. credit-card balances are on track to hit $1 trillion this year, as banks aggressively push their plastic and consumers grow more comfortable carrying debt. That sum would come close to the all-time peak of $1.02 trillion set in July 2008, just before the financial crisis intensified, and could signal an easing of frugal habits ingrained by the recession. The boom has been driven by steady economic conditions and an improving job market that have made creditworthy consumers less reluctant to take on debt. In addition, lenders have signed up millions of subprime consumers who previously weren’t able to get credit. Consumers are taking on other forms of debt, too. Auto-loan balances surpassed $1 trillion in the first quarter, a record for the industry, according to a report Thursday from credit bureau Experian.

The Iron Mountain on China’s Doorstep Tops 100 Million Tons – (www.bloomberg.com)  There’s a mountain of iron ore sat right on China’s doorstep. Stockpiles at ports have climbed above 100 million metric tons, offering fresh evidence of increased supplies in the world’s top user that may hurt prices. The inventories swelled 1.6 percent to 100.45 million tons this week, the highest level since March 2015, according to data from Shanghai Steelhome Information Technology Co. The holdings, which feed the world’s largest steel industry, have expanded 7.9 percent this year, and are now large enough to cover more than five weeks’ of imports.

OTHER STORIES:

Not Much Worries Bond Traders as Term Premium Falls to 1962 Lows - (www.bloomberg.com)
Lipper fund flows IG US$1.146bn inflow; HY US$1.135bn inflow - (www.reuters.com)
Asian Stock Futures Signal Drop After Global Slump; Crude Climbs - (www.bloomberg.com)

Brazil’s Financial Chief Says Economy Worse Off Than He Imagined - (www.bloomberg.com)
Defaults Throw Wrench in China’s $3 Trillion Company Bond Engine - (www.bloomberg.com)
China says it's ready if US ‘stirs up any conflict’ in South China Sea - (www.cnbc.com)