Asia Pacific

China's central bank said risks from the country's local government financing vehicles are controllable, underscoring Beijing's effort to dispel growing concerns about potential default risks associated with local government debt, The Wall Street Journal reported. The statement released late Monday by the People's Bank of China came after the National Audit Office rejected criticism of its estimate of local government debt, saying its assessment was accurate and made independently.

An unidentified bondholder last week called for an event of default on Gajah Tunggal's outstanding dollar bonds, raising the possibility of another debt restructuring for the Indonesian tyre maker, Reuters reported on an International Financing Review story. Gajah Tunggal has not defaulted on its interest payments, but one unnamed bondholder has claimed that a Rp42bn (US$4.9m) dividend payment on June 30 constituted a technical breach of covenants on its US$435m due 2014 paper.

The directors of failed Nathans Finance have been found guilty of lying to investors in a prospectus, investment statement and two advertisements - when Nathans sought $100 million from investors 2006, The National Business Review reported. But the three directors - Mervyn Ian Doolan, Kenneth Roger Moses and Donald Menzies Young - were found not guilty on a charge arising out of a letter to potential investors dated July 12, 2007, on the basis the letter did not meet the statutory definition of "advertisement".

In the last few years, Chinese cities’ efforts have helped government infrastructure and real estate spending surpass foreign trade as the biggest contributor to China’s growth. Subways and skyscrapers, in other words, are replacing exports of furniture and iPhones as the symbols of this nation’s prowess, the International Herald Tribune reported. But there are growing signs that China’s long-running economic boom could be undermined by these building binges, which are financed through heavy borrowing by local governments and clever accounting that masks the true size of the debt.

In their recent plan to tackle high levels of household debt, South Korea’s regulators included steps to prevent overspending using credit cards. For good reason, The Wall Street Journal Real Time Korea blog reported. South Koreans are particularly fond of plastic money, with almost one million credit cards issued each month in this nation of around 48 million people, and every economically active Korean holding on average 4.8 cards. That’s up from 4.3 in 2002, when excessive borrowing using credit cards caused a lending bubble.

Allan Hubbard's Southbury Group and Southbury Corporation owe South Canterbury Finance nearly $190 million, receivers' reports show, The Timaru Herald reported. The receivers, Kerryn Downey and William Black of McGrath Nicol, released the second report of Southbury Group and of Southbury Corporation yesterday, both in receivership, for the period from November 3 last year to May 2 this year. The receivers' report said Southbury Group owed South Canterbury Finance $84.7m on the date of their appointment, November 3, last year. Southbury Corporation owed SCF $103.9m on November 3.

Two paper manufacturers in Victoria - where paper helped build national businesses - are facing big problems, the Herald Sun reported. Yesterday about 300 workers at Australia's biggest envelope maker, Australian Envelopes, were made redundant after the Notting Hill-based company entered voluntary administration. A skeleton staff of about 30 have remained thanks largely to secured creditor ANZ's largesse, paying their wages.

Creditors in failed managed investment schemes would be given new rights and those in financially troubled schemes would have access to a new voluntary administration procedure under sweeping reforms proposed by the federal government's corporate law adviser, The Australian reported. A discussion paper issued yesterday by the Corporations and Markets Advisory Committee puts forward a number of proposals on the winding up of managed investment schemes.

Debenture holders in Irongate Property may have to write off as much as a third of their investment, according to the failed property investor's receivers, Business Day reported. The receivers expect to repay between 67 cents and 83 cents in the dollar to 1,500 debenture holders owed $46.1 million, according to the first report by Barry Jordan and David Vance of Deloitte. The firm's assets were valued at about $78 million, leaving a shortfall of almost $20 million from the $97.9 million of total debt on Irongate's books.

Hong Kong-based Grande Holdings Ltd., which owns such global consumer electronic brands as Nakamichi, Akai and Sansui, is seeking court protection from its U.S. creditors, Dow Jones Daily Bankruptcy Review reported. Grande reported assets and debts each in the range of $100 million to $500 million in the Chapter 15 bankruptcy petition it filed Tuesday with the U.S. Bankruptcy Court in Manhattan, court papers show.