Asia Pacific

Chinese bondholders facing the prospect of a debt default by a state-owned enterprise will receive a bailout, the company said on Tuesday, a sign that Beijing remains unwilling to impose market discipline on lossmaking state groups, the Financial Times reported. China National Erzhong Group, a unit of one of the elite club of 112 big enterprises directly owned by the central government, employed a workforce of more than 13,000 in 2012, when it had assets of Rmb25bn ($3.9bn).

For decades, an army of migrant workers drove China’s boom times, flocking to its cities to sew T-shirts, assemble iPhones, or build apartment blocks and Olympic stadiums, The Wall Street Journal reported. The arrangement helped millions of poor, rural Chinese join a new consumer class, though many also paid a heavy price. Now, many migrant workers struggle to find their footing in a downshifting economy. As factories run out of money and construction projects turn idle across China, there has been a rise in the last thing Beijing wants to see: unrest.

Local financing networks are unravelling across China as the economic slowdown bites into one of the weakest but most enduring links in the financial system — pulling hundreds of thousands of investors down with it, the Financial Times reported. These networks flourished as long as sentiment was high and rapid economic growth persisted. Now, however, investors are taking to the streets across the country as they seek to recoup their losses. Money ploughed into financing schemes that went bust in 2014 amounted to more than Rmb100bn ($16bn).

A Chinese probe found evidence that Citic Securities Co., the nation’s biggest brokerage, engaged in insider trading connected to the government’s rescue of the stock market, people familiar with the matter said, Bloomberg News reported. A preliminary investigation concluded that the brokerage used advance knowledge of government-orchestrated stock purchases to execute trades that benefited the firm, said the people, who asked not to be identified because the matter is private.

Sahaviriya Steel Industries has reached an agreement with its creditors to enter debt-restructuring for the massive Bt50 billion it owes them and has pulled the plug on its upstream plant in Britain as part of its strategy to keep its core business in Thailand afloat, The Nation reported. "The huge loss of the UK base is crimping the cash flows of SSI in Thailand, so we had to keep the hot-rolled coil steel business in Thailand going by opening negotiations with lenders," Win Viriyaprapaikit, president of SSI, said yesterday.

The Australian Securities and Investments Commission (ASIC) has suspended the credit licence of PAID International Ltd until April next year because it is insolvent and stopped providing loans, ABC News reported. An external administrator was appointed in January this year and the company kept trading. Last year, the administrator agreed to repay nearly $1 million to 6,650 customers who paid excessive fees on more than 20,000 loans. The company, which used to be called First Stop Money, has so far refunded nearly $240,000 of that money to consumers under an agreement with ASIC.

South Korea plans to open a government-led corporate restructuring market to speed up the liquidation of "zombie" companies and resuscitate marginal firms suffering a "temporary" financial stress, Xinhua reported. "Corporate restructuring led only by creditor banks faced limitations. It needs to encourage various market players to join it, and market-centered restructuring is preferred," Lee Myung Soon, director general of Financial Services Commission's financial and corporate restructuring policy bureau, told foreign correspondents in Seoul Friday.

Baoding Tianwei Group Co. and three of its business units are filing for bankruptcy, five months after the maker of electrical transformers became the first state-owned Chinese company to default on an onshore bond, Bloomberg News reported. Tianwei and its units are insolvent and cannot pay their debts, the company said in a statement posted on Chinamoney.com.cn, a website of the China Foreign Exchange Trade System. Tianwei said it plans to meet its backers to discuss the bankruptcy.

With its market dominance, banking talent, global ambition and sterling political connections, Citic Securities fancied itself the Goldman Sachs of China, the International New York Times reported. Citic Securities, the brokerage arm of the biggest state-owned financial conglomerate, rode China’s stock market boom and a surge in corporate borrowing. The company’s stock price tripled in six months.

Tokyo’s 2020 Olympic Games will be the first of a leaner type of competition that will limit spending on big-ticket venues to avoid alienating the public, Chief Executive Officer Toshiro Muto said, two months after debt-ridden Japan canceled plans for a futuristic main stadium, Bloomberg News reported. The International Olympic Committee last year set out a new agenda that favors existing venues over purpose-built stadiums, as concerns mount in potential host countries over the burden of holding the event.