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Cost of insuring Europe’s riskiest companies against debt defaults surges

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Cost of insuring Europe’s riskiest companies against debt defaults surges

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The cost of insuring the debt of Europe’s riskiest companies against default has soared to the highest levels in 18 months as investor alarm rises in response to Donald Trump’s tariffs.

The spread on the iTraxx Crossover index, which measures the cost to insure junk-rated companies against defaults, has surged 93 basis points to 421bp since April 2. This means it costs €421,000 a year to insure €10mn of debt over five years.

The widely followed index, which tracks the credit-default swaps of 75 companies in Europe such as carmaker Jaguar Land Rover and French telecoms group Iliad, reflects growing fears about their health.

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Fund managers said that the sharp rise in the index, used to hedge against market moves in lower-rated debt, had not translated to disorderly or large sales of junk bonds.

“The weaker structures are struggling,” said one high-yield bond investor, who added that the selling “isn’t panicked . . . it’s more of a steady repricing”.

However, higher-rated companies are coming under pressure, too. The spread of the iTraxx Europe index, which tracks 125 investment grade groups such as Heineken and UK retailer Marks and Spencer, has also risen to its highest levels in 18 months, although at a slower pace. It has risen by 20bp to 83bp since April 2.

The market for new debt issuance by riskier European companies has stalled as investors sit on the sidelines in volatile conditions.

New issuance in the space had “ground to a halt”, said one high-yield bond investor, while another credit investor said that “primary bond land is closed”.

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A number of credit investors described the €2.2bn loan deal backing Bain Capital’s acquisition of facility management company Apleona as the only live leveraged finance deal in Europe.

A group of banks running the debt deal — Citigroup, Deutsche Bank and UBS — on Wednesday had to offer higher interest rates to potential investors to compensate for the market turmoil.

The three banks began marketing the junk-rated loan deal on March 31, before US President Donald Trump unveiled steep tariffs on imports that roiled global markets.

Bain announced it had agreed to acquire Apleona from rival private equity firm PAI in February.

Fitch said on Wednesday that adding “blanket US tariffs on imports . . . will increase pressure on corporate issuers without leverage headroom”.

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The rating agency added that the impact on automotive, technology hardware and chemicals companies would be “particularly acute”.

The cost of insuring against debt defaults in Europe’s car industry soared at the beginning of this week.

The cost of insuring Volkswagen’s debt against default in the next five years rose by 30bp to 154bp — the highest level since the Covid-19 pandemic — between Friday and Monday.

European companies exposed to a potential influx of cheap Chinese goods have also been hit particularly hard as investors anticipate retaliatory measures from the world’s second-largest economy.

Spreads on the bonds of Amara NZero, a supplier of renewable products used for solar, wind and hydro power, and PVC manufacturer Kem One continued to rise on Wednesday.

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Video: Mexico Navy Sailing Ship on Good Will Tour Crashes Into Brooklyn Bridge

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Video: Mexico Navy Sailing Ship on Good Will Tour Crashes Into Brooklyn Bridge

new video loaded: Mexico Navy Sailing Ship on Good Will Tour Crashes Into Brooklyn Bridge

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Mexico Navy Sailing Ship on Good Will Tour Crashes Into Brooklyn Bridge

There were 277 people on board when the ship drifted directly into the underside of the bridge on Saturday night, the authorities said. Two crew members were killed.

Today, about approximately 2020 hours, the ship was departing from, from Pier 17, where it was heading out to sea. The pilot, the captain that was maneuvering the ship, lost, I guess, power of the ship in the current. A mechanical function caused the ship to go right into the pillar of the bridge, hitting the masts of the ship where there was a couple of sailors on top of it. These sailors were injured as a result of the masts striking the bridge.

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UK and EU locked in intense talks over key terms of post-Brexit reset

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UK and EU locked in intense talks over key terms of post-Brexit reset

Britain and the EU are locked in intense haggling over key details of their revamped relationship, including on fisheries, food trade and youth mobility, ahead of a historic first joint summit since Brexit.

The summit at Lancaster House in London on Monday will see both sides sign a security and defence partnership, the centrepiece of the “reset” in relations, but talks in Brussels on other details ran late into Sunday night.

The EU offered Britain a new open-ended deal to lower barriers to trade in agrifood, but only in exchange for a 10-year rollover of a current deal allowing EU fishermen to operate in UK waters.

Downing Street, which had previously offered a five-year extension, declined to comment on the offer, confirmed by officials on both sides. Sir Keir Starmer, UK prime minister, knows he risks being accused of “selling out” by British fishermen.

The summit is due to start at 10am on Monday, and EU ambassadors will meet early on Monday to consider the results of the last-minute horse-trading by UK officials and European Commission negotiators.

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One senior EU diplomat said there would be a deal, adding: “They will need to find a solution, even if it takes the whole night.”

Starmer is scheduled to sign the defence pact and a communiqué promising deeper economic co-operation during a two-hour meeting with European Commission president Ursula von der Leyen and European Council president António Costa.

The EU-UK summit, the first since Brexit took effect in 2020, is expected to emphasise a spirit of reconciliation, but the tense talks in Brussels on Sunday were a reminder that the relationship is now highly transactional.

British officials said on Sunday evening that “huge progress” had been made in some areas but that “negotiations are going down to the wire”.

Details of the EU-UK deal are highly politically sensitive. Conservative leader Kemi Badenoch has warned that Starmer is about to “surrender” British interests.

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British officials admitted that the EU would not agree to an open-ended deal to remove post-Brexit barriers to trade in food and animals — one of the biggest “asks” of the UK — unless Brussels was satisfied with a deal on fish.

“We want to give confidence to business,” said one UK official, admitting that a time-limited veterinary deal — known as a sanitary and phytosanitary (SPS) agreement — would leave too much uncertainty for farmers and supermarkets.

Brussels had insisted that any SPS deal should only last for as long as Britain agreed to maintain current fishing rules for EU boats. European diplomats viewed the offer of an unlimited SPS deal in exchange for a 10-year fisheries agreement as a significant concession.

Meanwhile Britain has conceded that removing barriers to trade in foodstuffs will require the UK to “dynamically align” with rules made in Brussels, and also make payments to the EU to fund work on food and animal standards. Conservatives claim this is a “betrayal” of Brexit.

The EU is also trying to get Britain to sign up to an ambitious youth mobility scheme — including better access for students to UK universities — in a “common understanding” communiqué to be issued alongside the defence pact.

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The EU has warned Starmer that it will not make it easier for British touring musicians to travel across national borders in Europe or for UK travellers to use passport e-gates unless he is bolder on youth mobility, according to officials briefed on the talks.

Starmer has conceded that a youth mobility scheme will happen, but is trying to keep the language in the communiqué vague, allowing detailed talks about controversial areas such as numbers and student fees for further negotiations later this year.

Downing Street said the Lancaster House summit would include an agreement to cut “queues on holiday”, with European relations minister Nick Thomas-Symonds confirming on Sunday he was looking for a deal to allow the use of e-gates at borders.

But a second EU diplomat denied the request — which was also previously made by Starmer’s predecessor Rishi Sunak — had been granted.

“Starmer sees some of the outcomes of the summit as a done deal already which is not the case, and he wants to appear as a dealmaker,” the diplomat said. “UK negotiators need to show they really want a reset on a ‘win-win’ basis, and not only look at potential gains for one side only.”

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One person involved in talks on the EU side said the discussions had always been expected to go to the wire. “The British are tough negotiators. But we should get a deal in the end.”

EU diplomats complained of Starmer’s recent tactics to force a deal. Last week British ministers called counterparts in EU capitals to push for a deal, bypassing the commission — which one diplomat dubbed a “divide and rule tactic”.

Issues that are unresolved overnight could be “kicked into the long grass” for further talks, British officials say, although the EU wants to extract as many firm commitments as possible from London now.

Details of the final text are due to be published at midday on Monday, but Starmer and his EU interlocutors will be at pain to stress areas of agreement, rather than tensions exposed by the painful last-minute talks.

Additional reporting by Barbara Moens in Brussels

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FBI says primary suspect in Calif. fertility clinic bombing likely died in the blast

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FBI says primary suspect in Calif. fertility clinic bombing likely died in the blast

A damaged building is seen after an explosion in Palm Springs, Calif., on Saturday.

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Eric Thayer/AP

Guy Edward Bartkus, 25, has been identified as the primary suspect in the fatal explosion outside a California fertility clinic Saturday morning.

Investigators also said that they suspect Bartkus was the sole fatality in the Palm Springs blast, which injured four others.

“We are working through some other technical means to positively identify the decedent here, but we believe at this moment based on the evidence that we’ve gathered that that is Mr. Bartkus as the decedent here,” Akil Davis, assistant director in charge of the FBI’s Los Angeles Field Office, said at a Sunday morning press conference.

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Davis reiterated that law enforcement is treating the bombing as an act of terrorism and said investigators have gathered some clues showing Bartkus’ state of mind, including online posts and other writings that investigators are now examining. “The subject had nihilistic ideations, and this was a targeted attack against the IVF facility.”

FBI spokesperson Laura Eimiller confirmed that the agency was also investigating evidence “indicating antinatalist views.” Antinatalism refers to a belief system that suggests it is wrong to have children.

Davis added that investigators believe Bartkus was attempting to live stream the bombing.

Law enforcement officials also executed a search warrant in Bartkus’s hometown of Twentynine Palms, nearly 60 miles northeast of Palm Springs.

Davis said this was the first time Bartkus had appeared on the FBI’s radar but that he may have had contacts with other law enforcement agencies.

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The bomb used was powerful enough “to throw pieces of vehicle hundreds of feet in the air and then several blocks away. You can use your imagination for how big that that bomb device was,” Davis said. He would not comment on the type of materials used in the bomb, saying it was still under investigation. Bartkus was driving a silver 2010 Ford Fusion sedan, Davis said.

A firefighter stands at the scene of an explosion in Palm Springs, Calif., on Saturday.

A firefighter stands at the scene of an explosion in Palm Springs, Calif., on Saturday.

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Eric Thayer/AP

Palm Springs Police Chief Andrew Mills said Sunday that the public was not in any more danger. “I am absolutely confident that this city is safe. There is no continuing threat to our community as a result of this incident,” he said.

American Reproductive Centers said Saturday in a post on Facebook that a vehicle had exploded in the parking lot near its Palm Springs facility earlier in the day. The clinic said no staff members were hurt and there was no damage to any of its eggs, embryos and reproductive material.

“This moment has shaken us—but it has not stopped us,” the post reads. “We will continue to serve with strength, love, and the hope that brings new life into the world.”

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Attorney General Pam Bondi said Saturday evening that she had been briefed on the explosion. “We are working to learn more, but let me be clear: the Trump administration understands that women and mothers are the heartbeat of America,” she said in a post on X. “Violence against a fertility clinic is unforgivable.”

Bomb technicians were scouring the blast site over the weekend as part of the ongoing investigation, which was being led by the Joint Terrorism Task Force.

First responders arrived at the scene around 11 a.m. local time Saturday morning to find a debris field stretching over 250 yards, Davis said.

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