Asia

Norwegian Air Shuttle has sealed a long-awaited joint venture with one of China’s biggest banks in a deal designed to bolster a balance sheet strained by the low-cost carrier’s breathless pace of expansion, the Financial Times reported. The joint venture, 70 per cent owned by a subsidiary of state-controlled China Construction Bank, will be responsible for financing 27 Airbus A320neo aircraft that Norwegian expects to be delivered in 2020-23.

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Japan’s financial system is becoming more susceptible to the effects of financial stress abroad, the Bank of Japan has warned, as stagnant returns at home prompt its lenders to ramp up their exposure to US leveraged loans, the Financial Times reported. In its semi-annual Financial System Report, the central bank said that the ratio of overseas to domestic loans at Japanese banks had reached a record high, as the banks fill the gap in international markets left by retreating European rivals.

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Chinese defaulted bonds just sold at a discount of as much as 97% in an anonymous auction. Six defaulted notes changed hands, with the cheapest selling for as little as 3 yuan in an auction organized by the China Foreign Exchange Trade System on Wednesday, Bloomberg News reported. That’s a record low for a sale of this type. One didn’t sell, according to an exchange statement on its official WeChat account. The sale is a sign of investors’ increasing tolerance of risk in China’s nascent distressed debt market amid a broader boom in onshore high yield trading.

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Suspend your disbelief, and like the protagonist of the popular Bollywood movie “3 idiots,” keep muttering: “All is well, all is well.” If it isn’t yet, it will be. That seems to be the whole approach behind the ongoing efforts to restructure an Indian financier, Dewan Housing Finance Corp., which some months back started defaulting on its outstanding debt of $12 billion, a Bloomberg View reported. Trouble is, the rescue is entirely fictional. The only reason it’s even being attempted is to delay — as long as possible —  the collapse of this large shadow lender.

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With its interest rates back at an all-time low, speculation is mounting that the Bank of Korea may be forced to join other central banks in using unconventional tools to stimulate one of the hardest-hit economies in the trade war, Bloomberg News reported. While Governor Lee Ju-yeol said last week it was too early to consider unconventional steps, he also acknowledged that the BOK was constantly reviewing and updating its “contingency plans” and studying actions previously taken by other nations should it run out of room to lower interest rates.

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Indian companies have defaulted on a record 76 billion rupees ($1.1 billion) of local-currency and international bonds so far this year after the shadow bank crisis triggered a credit squeeze, and it doesn’t look like the worst is over, Bloomberg News reported. Those firms that delayed or missed debt payments in 2019 still have the equivalent of $17 billion of notes and loans outstanding including the defaulted securities, according to company documents, exchange filings and data compiled by Bloomberg. In the latest instance, tycoon Anil Ambani’s Reliance Capital Ltd.

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China’s $13 trillion bond market seems calmer this year, with fewer defaults than 2018. Underneath the surface, though, is a churning current that threatens to swallow investors who aren’t careful, a Bloomberg View reported. The case of Xiwang Group Co. is one such cautionary tale. Just days ago, this distressed industrial conglomerate in the northeast province of Shandong thought it could borrow for peanuts. The company, whose business operations span corn-oil processing to steel manufacturing, tried to raise 450 million yuan ($63.5 million) at a coupon range of 7.5% to 8.5%.

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Exclusive talks between the U.K.’s Insolvency Service and Turkey’s Ataer Holdings about a sale for British Steel have ended without a deal, Bloomberg News reported. The official receiver for the company, who is managing the sale, will hold discussions with other parties and the potential buyers are expected to visit British Steel sites in the coming days, the insolvency service said on Wednesday. Talks with Ataer, which co-owns steelmakers in Turkey, are continuing as well.

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India will spend about 410 billion rupees ($6 billion) on two unprofitable state-run telecommunication companies in a bid to help the firms take on competition, Bloomberg News reported. The government also approved a plan to combine Mahanagar Telephone Nigam Ltd., which provides services in Mumbai and New Delhi, with Bharat Sanchar Nigam Ltd., that services the rest of the nation, Telecom Minister Ravi Shankar Prasad said at a briefing in New Delhi on Wednesday. MTNL has reported losses in nine of the past 10 years, according to data compiled by Bloomberg.

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About 25 group companies to which Dewan Housing Finance Corp. Ltd (DHFL) had lent a total of ₹14,000 crore had an average profit of about ₹1 lakh, a forensic audit of the company has found, raising suspicion that the mortgage lender may have diverted funds, Mint reported. Out of the around ₹27,000 crore worth of loans raised by DHFL from banks for on-lending to home buyers, around ₹10,050 crore was invested in mutual funds, the findings of the audit revealed.

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