Creditors

"We Won't Be Lectured" - Italy's Renzi To Defy Brussels Over Banking Bailout

With all eyes distratcted by the post-Brexit euphoria, the last week has seen a far more existential crisis accelerating in Europe. Italy's banking system is in tatters (from a EUR40bn bailout 6 days ago, to EUR150 emergency support 3 days ago, to chatter of further support from pension funds Friday) but, in what seems like a clear admission that things are really bad, The FT reports that Italian prime minister Matteo Renzi is prepared to defy the EU and unilaterally pump billions of euros into its troubled banking system if it comes under severe systemic distress, a last-resort move that would smash through the bloc’s nascent regime for handling ailing banks.

Puerto Rico Defaults On $2 Billion In Debt Payments

As expected, Puerto Rico will default on about $2 billion in debt payments Friday, including $780 million in constitutionally-backed general obligation bonds, as governor Alejandro Garcia Padilla has issued an executive order authorizing the suspension of payments. In addition, Garcia Padilla also declared states of emergency at the island's biggest public pension - the Commonwealth's Employee Retirement System - which is more than 99% underfunded.

Bad Earnings, Balance Sheet Rot, & The "Brelief" Rally

Despite mainstream economists hopes that somehow “this time will be different,” the ongoing massaging of economic data through seasonal adjustments to obtain better headlines did not translate into actual prosperity.  Of course, “reality” is a cruel mistress and despite ongoing hopes and overstatements, “fantasy” eventually gives way.

Puerto Rico To Default On July 1 After Senate Passes Bailout Bill

Moments ago, following the overwhelming passage of a Puerto Rico bailout bill by the US House of Representatives, Congress found itself on the edge of sending the PR debt relief Bill for the president signature, when the Senate, in a 68-32 vote, likewise passed the measure. This makes final passage of the legislation a virtual certainty as sixty votes were needed to clear the procedural hurdle, but only a majority vote is necessary on final passage. It also means that Puerto Rico will officially default on Friday, July 1.

Germany Just Blew Up Italy's Bank Bailout Plan

Germany opposes any attempt to shield private bank investors from losses if Italy pushes ahead with plans to recapitalize lenders. Merkel’s government says that European Union rules on handling struggling banks should apply in any rescue effort, including forcing losses on shareholders and some creditors before public money can be injected. The government in Berlin rejects the argument that the U.K. vote to leave the EU constitutes an “exceptional circumstance.”

The First Casualty Of Brexit: Italy Prepares €40 Billion Bank Bailout

Barely has the market had time to digest last week's Brexit vote by the UK, a vote which may never actually be implemented if the "sturm und drang" campaign unleashed by the EU and the ECB on UK capital markets succeeds in changing the mind of enough "Leavers" to the point that the entire referendum is called off and Boris Johnson never triggers the Article 50 clause, and already Europe's most financially troubled nation, Italy, is using Brexit as a pretext to unleash a €40 billion ($44 billion) bailout of its insolvent banks.

Some Bad And Some Worse News For Stock Buybacks

For those 17-year-old hedge fund managers used to BTFD on hopes corporate buybacks will "have their back" and provide the bid on which momentum-chasing HFT algos will piggyback, we have some bad news and some worse news.

Chinese Bankruptcies Surge More Than 50% In Q1; Worse To Come

Chinese bankruptcies have surged this year "as the government uses the legal system to deal with “zombie” companies and reduce industrial overcapacity as part of a broader effort to restructure the economy." In just the first quarter of 2016, Chinese courts have accepted 1,028 bankruptcy cases, up a whopping 52.5% from a year earlier, according to the Supreme People’s Court.

Frontrunning: June 23

  • ‘Brexit’ Vote: U.K. Heads to the Polls in Historic Referendum on EU Membership (WSJ)
  • The Brits Have No Good Options on Europe Vote (BBG)
  • Stocks Rise With U.S. Futures as Pound Gains While U.K. Votes (BBG)
  • Trump and Clinton Place Bets to Woo Undecided Voters (BBG)
  • China brushes off doubts over support on South China Sea, says it is growing (Reuters)

Voting Begin: Stocks Surge, Sterling Hits 2016 Highs, Futures Flirt With 2100

On the day voting for the UK referendum finally began, what started off as a trading session with a modest upward bias, promptly turned into a buying orgy in painfully illiquid markets shortly after Europe opened as an influx of buy orders pushed European stocks 2% higher, propelled by cable which was above 1.49 for the first time since December and USDJPY climbing over 1.05 in sympathy, following the release of the final Ipsos Mori poll which showed Remain at 52% to 48% for leave.

Brazilian Telecom Giant Files Largest Bankruptcy In Nation's History

Brazil’s troubled telephone company Oi SA on Monday filed the largest bankruptcy protection request in the country’s history just days after debt restructuring talks with creditors collapsed. The filing of Oi and six subsidiaries lists 65.4 billion reais ($19.26 billion) in debt.

Stocks, Sterling Rise As "Brexit" Fears Forgotten; Dollar Drops Ahead Of Yellen Speech

Tuesday's overnight price action has been a continuation of yesterday's Brexit relief rally, as investors focused on the two latest polls favorable to Remain in Thursday's referendum (while ignoring the YouGov poll which gave Leave a small lead), and hoping the doom and gloom by George Soros will convince the undecideds to vote against Leaving. As a result, global stocks continued their advance while pound extending the biggest rally since 2008.

Brexit: All Eyes On European Banks

England’s upcoming vote on June 23rd may be the first of several votes that reveal the deep flaws embedded in the European Union. In particular, Europe’s undercapitalized and overleveraged banks are dangerously exposed to rising political unrest.