Asia Pacific

Concerns are growing in India that a worsening economic slowdown in Asia’s third-largest economy may be increasing debt burdens at some of the country’s most important industrial companies to unsustainable levels, the Financial Times reported. New research from Credit Suisse reveals that 10 of the country’s most heavily indebted industrial conglomerates, including billionaire Anil Ambani’s Reliance companies along with the Vedanta and Essar groups, had combined gross debts of $102bn at the end of the last financial year, up 15 per cent from the year before.

Vietnam is the world's biggest producer of the strong-flavoured robusta beans, used for instant coffee, and has experienced a decade of solid growth which has seen coffee exports reach $3 billion a year, Reuters reported. But its coffee industry is now in crisis, plagued by tax evasion, mismanagement, insolvency, high interest rates and a credit squeeze. Many coffee operators are trapped with crippling debt and banks are reluctant to lend them more money.

One of Australia’s leading bedroom product companies, Sleepmaster, has gone into receivership as the tough retail sector claims another victim, The Motley Fool reported. Sleepmaster is the owner of iconic brands including Jason, a pillow and quilt brand, blanket brand Onkaparinga and Trailmaster camping equipment. It describes itself as Australia and Asia’s leading manufacturer of bedroom product including quilts, pillows, mattress protectors, underblankets and underquilts.

With record numbers of business bankruptcies this year, cash flow management in private enterprises has come back into focus as business owners try to offset poor economic conditions, the Financial Review reported. The Insolvency and Trustee Service Australia (ITSA) says the proportion of debtors reaching a business-related debt agreement in the June quarter – 25 per cent of all debt agreements – was the highest business proportion since the September quarter 2003.

Banks may see some of their restructured assets turning into bad loans this fiscal with gross NPAs touching around 5 per cent of the system, which calls for an urgent need to revamp the corporate debt restructuring mechanism, according to a BCG-Ficci report, The Economic Times reported.

Jaypee Group, owner of India’s most indebted cement maker, plans to sell some of its plants and real estate in a bid to cut liabilities by about 25 percent. The builder of India’s only Formula One racing track seeks to reduce debt by 150 billion rupees ($2.5 billion) by selling its cement plants in southern and western India, some of its power generation units and property in a year, Suren Jain, managing director at Jaiprakash Power Ventures Ltd. said in an interview. The flagship Jaiprakash Associates Ltd. has $10 billion of total debt, according to data compiled by Bloomberg.

China’s broadest measure of new credit fell to a 21-month low as Premier Li Keqiang extended a campaign to curb a record expansion of lending that’s added dangers to the nation’s financial system. Aggregate financing was 808.8 billion yuan ($132 billion), the People’s Bank of China said in Beijing, compared with the 925 billion yuan median estimate of analysts surveyed by Bloomberg News. New yuan loans exceeded forecasts and accounted for about 87 percent of the total, the most since September 2011. M2 money supply growth unexpectedly accelerated to 14.5 percent.

Raghuram Rajan, the incoming governor of the Reserve Bank of India, once called modernising the country’s inefficient and under-developed financial sector a “moral and economic imperative”, the Financial Times reported. Proposing detailed reforms of the sector in a 2008 report, Mr Rajan bemoaned that the primary source of loans for most Indian households was still usurious informal moneylenders, while the financial system was “not able to meet the scale or the sophistication” of India’s large companies, smaller businesses or public infrastructure projects.

Vietnam’s state asset management company, tasked with cleaning up bad loans, said it will acquire as much as 10 trillion dong ($474 million) of spoiled debt over the next two months as it considers possible foreign funding, Bloomberg reported. Vietnam Asset Management Co. will issue special bonds to about 10 banks in exchange for as much as 10 trillion dong of non-performing loans in the next two months, Chief Executive Officer Nguyen Huu Thuy said in an interview in Hanoi yesterday. The lenders will be able to use the bonds to secure funding from the central bank, he said.

The International Monetary Fund on Monday made a fresh call on Japan's government to bring its flow of red ink under control, saying the central bank's monetary easing could backfire if investors believe it is "monetizing" the growing mountain of government debt, a step that often leads to financial turmoil. The IMF has recently hardened its rhetoric toward Japan, suggesting the rest of the world is worried that Prime Minister Shinzo Abe's cabinet appears divided over whether to stick to a plan to raise its sales tax from next April.