Asia Pacific

The Air India board, in a meeting in Mumbai yesterday, cleared the debt restructuring plan of the airline, the Business Standard reported. The plan was prepared by SBI Capital market Ltd (SBICAPS) and vetted by financial advisory firm Delloite, after the Reserve Bank of India asked the airline to get it done by an independent firm. “The plan will now be discussed by the civil aviation ministry and the RBI, and our high-cost debt will be converted to low-cost.

Ferrier Hodgson, voluntary administrators for Whitcoulls' parent, REDgroup, yesterday sought High Court approval to extend the time available to consider its options, The New Zealand Herald reported. Under the voluntary administration rules, a so-called "watershed" meeting, where creditors are advised of the state of play with the company, needs to be held five weeks after the appointment of a voluntary administrator, which would have made it March 24.

The cost of insuring Japanese government debt against default spiked by a third on Tuesday as world stock markets tumbled, The Guardian reported. Investors have calculated that the chance of a Japanese default has risen significantly since Friday's earthquake. As Japan battled to prevent a major nuclear crisis, the country's five-year credit default swap rose 31 basis points to 125bps. That means it would cost $125,000 to insure $10m of Japanese debt against default.

With the scale of the disaster in Japan still being measured, concerns are growing that last week's earthquake and tsunami could lead to a long-term disruption in the world's supply of automobiles, consumer electronics and machine tools, the Los Angeles Times reported. Japan is the world's third-largest economy and a huge exporter of cars, electronic components and industrial equipment as well as steel, textiles and processed foods. In turn, it's a voracious consumer of petroleum, imported agricultural products and luxury consumer goods.

On Sunday night, Japan's Prime Minister Naoto Kan was urging the public not to be pessimistic because Japan will enjoy "a New Deal-like" economic recovery on the back of the massive reconstruction task ahead. Any dividend from reconstruction and reform looked distant on Monday, however. Japanese stocks fell 7.6 percent, on track for the biggest daily loss since October 2008, and bond yields rose as investors expected the disaster to take a huge economic toll and require heavy government borrowing, according to a Reuters Special Report.

Private equity group TPG and its partners won't be the biggest losers if Alinta Energy's dissident shareholders vote down their $2 billion bailout plan for the company next week, The Australian reported. Alinta chief Ross Rolfe has made it clear the company, with 5 per cent of Australia's electricity generation capacity spread across 10 power stations and more than 500,000 retail gas and electricity customers in Victoria and WA, will be placed in administration if the deal does not succeed.

On Thursday, Reserve Bank governor Alan Bollard cut the official cash rate to 2.5% from 3%. But the cut, which was widely anticipated following the Christchurch earthquake last month, may be a relatively short-lived one, The National Business Review reported. The Reserve Bank’s forecasts accompanying the decision suggest the economic recovery has been pushed back to the latter part of 2011 but also highlight increased inflationary pressures compared to the previous outlook.

It turned a few heads Tuesday when an analyst at Fitch was quoted saying that China has a 60% probability of experiencing a banking crisis by 2013, the China Real Time Report blog reported. The analyst, Richard Fox, a London-based senior director at Fitch, told Bloomberg News that Fitch sees risks of “holes in bank balance sheets” should a property bubble burst. The jarring assessment was based on the Macro-Prudential Risk Monitor, a sort of analytical tripwire system that Fitch developed in 2005 to flag potential bank crises.

New Chinese government figures show its national debt load remains low compared with other major economies. But including the debts of local governments and many parts of the state-owned banking sector, as many economists say is proper, shows the constraints facing Beijing in the fight against inflation, its top economic priority, The Wall Street Journal reported. In a report issued during the annual session of the National People's Congress, China's legislature, the Ministry of Finance said central government debt at the end of 2010 was $1.03 trillion.

Bond sales by companies outside the financial industry are so scarce in Australia that the nation’s largest retailer, Woolworths Ltd., is paying less to borrow than banks and General Electric Co., Bloomberg reported. Relative yields on Australian company bonds are the lowest in three years, reflecting the paucity of non-financial corporate debt in the nation’s credit market, at less than three percent of the A$32 billion of notes sold in 2011, Bloomberg data and Bank of America Merrill Lynch’s Australian Industrial Index show.