Asia

Bank of Japan board member Hitoshi Suzuki on Thursday warned that profits in the country’s financial institutions could be significantly hurt by rising credit costs if the economy slides into recession, Reuters reported. With their margins squeezed by years of ultra-low interest rates and a dwindling population, Japan’s regional lenders have increased loans to borrowers with low credit standings that could sour if economic conditions deteriorate, Suzuki said. “If the default rate of borrowers rises, banks would have to set aside more allowances for bad debt.

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India’s Jet Airways Ltd said on Wednesday it grounded seven more aircraft as the carrier failed to make payments to its lessors, taking the tally of planes hamstrung by the defaults to 13, Reuters reported. Jet is "actively engaged" with all its aircraft lessors, the airline said, adding that its aircraft lessors have been supportive of the company's efforts to improve liquidity. With debts of more than $1 billion, Jet has defaulted on loans and has not paid pilots, leasing firms and suppliers for months.

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A family office that manages money for India’s wealthy Jhunjhunwala family is looking to invest in finance companies which have been pummeled by the crisis in the country’s shadow banking sector, Bloomberg News reported. Singapore-based AJ Capital Asset Management Pte sees good value in the shares of the downtrodden non-bank lenders, according to the firm’s Chief Executive Abhinav Jhunjhunwala. He said he’s also looking to invest in private companies in the sector, including through acquisitions.

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A Chinese state-owned enterprise from the country’s remote north-west has failed to repay a US dollar bond in Hong Kong, the first offshore default in 20 years and the latest sign investors can no longer rely on Chinese authorities to bail out state groups, the Financial Times reported.

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Singapore’s troubled water treatment company Hyflux Ltd., formerly celebrated as a hallmark of entrepreneurship in better times, is set for a humbling week, Bloomberg News reported. Creditors are due to file proof by Friday of the obligations that Hyflux owes them, putting the company’s S$2.7 billion ($2 billion) unsecured debt load under an even brighter spotlight. The firm this month unveiled a proposal to impose 75 to 90 percent haircuts on unsecured creditors, following a tumble triggered by an ill-timed expansion into energy in recent years.

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South Korean cryptocurrency exchange Coinbin has declared bankruptcy after suffering millions of dollars in losses, in part due to claimed embezzlement, CoinDesk reported. Coinbin published a notice on its website on Wednesday, stating that “increased debt” and “government regulation” led to the firm having to halt its business operations. Specifically, it said regulators’ suspension of its ability to issue virtual accounts to users was part of the cause, as well as increased operating expenses and liabilities from its collapsed subsidiary exchange Youbit.

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Bankruptcy proceedings usually involve protecting a firm’s assets from creditors. An Indian tribunal has turned the concept on its head by offering protection to the lenders. The National Company Law Appellate Tribunal ordered that no lender can declare its exposure to embattled IL&FS Group as nonperforming without its permission – even if there is a default, a Bloomberg View reported.

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China has met its target for reducing debt levels but will keep cracking down on riskier types of financing to contain risks to its financial system, the banking and insurance regulator said on Monday, urging banks to step up lending to smaller companies, Reuters reported. Concern about China’s debt is rising again as Beijing ramps up support for a slowing economy. New bank loans hit a record in January despite increasing bad loans and record defaults in 2018.

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The European Bank for Reconstruction and Development may start discussions with the International Bank of Azerbaijan (IBA) over its privatisation later this year, the EBRD’s manager in the South Caucasus country said. Azeri President Ilham Aliyev ordered in 2015 the privatisation of the oil-rich country’s biggest bank after a clean-up to get rid of distressed assets resulting from poor management, Reuters reported. Two years later the state-run IBA proposed a plan to restructure $3.3 billion of its debt, later receiving approval from creditors holding 93.9 percent of the affected debt.

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Billionaire Anil Ambani’s telecom unit is still fighting to get approval for the sale of its airwaves, indicating that the company hasn’t given up on selling the assets outside India’s bankruptcy process, Bloomberg News reported. India’s Telecom Disputes Settlement and Appellate Tribunal on Monday heard arguments on Reliance Communications Ltd.’s petition to allow it to sell its airwaves without past liabilities from the asset being passed to the buyer. The issue was behind the unraveling of RCom’s deal to offload its assets to Reliance Jio Infocomm Ltd., owned by Anil’s older brother.

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