Asia

Japan needs to remain vigilant about its banks’ overseas investments in bundled credit products because the underlying loans may be less spread out across industries or individual companies than they appear, a senior regulatory official said, Bloomberg News reported. ‘’Even if banks individually think they are well-diversified, it is possible that overall risks in the market are concentrated in the same sector or the same debtors,” said Tokio Morita, director-general of the Financial Services Agency’s Strategy Development and Management Bureau.

Troubled Chinese conglomerate HNA Group Co. faces a crucial test -- avoiding its first public bond default. Once a front-runner in China’s debt-fueled global spending spree, HNA is scheduled to repay a 1.3 billion yuan ($185 million) local bond Tuesday, Bloomberg News reported. Earlier this month, HNA said it would halt trading of this bond from Dec. 6 till its maturity due to an unspecified “major event that has yet to be finalized”. It didn’t give any details. The suspended bond last traded at 97.55 yuan on Dec. 5.

Lenders to an Indian shadow bank at the center of an industry crisis since it started defaulting three months ago have called for binding bids from potential rescuers by mid-January, people familiar with the matter said, Bloomberg News reported. Altico Capital India Ltd. is one of the latest caught up in the nation’s shadow banking crisis, which has deepened as lenders already reeling from one of the world’s worst bad loan piles balk at extending more credit.

After winning Istanbul’s local election in a landslide, Mayor Ekrem Imamoglu said he’s had to fight through a budgetary “black hole” of about 14 billion liras ($2.4 billion), Bloomberg News reported. Speaking on Monday at a news conference in Istanbul to mark his sixth month in power, Imamoglu said the municipal government of Turkey’s largest city had 6 billion liras of overdue debt and ran a budget deficit of 7.9 billion liras when he took over.

Defaults across Asia may be headed even higher next year, with trouble seen especially in China and India. Many investors expect fewer bailouts by the Chinese government after it recently let commodities trader Tewoo Group default in the biggest failure on a dollar bond by a state-owned firm in two decades, Bloomberg News reported. Companies in the region have been on a buying spree fueled by debt. Those factors could make things even worse in 2020 after China onshore defaults rose to a record in 2019.

These are perilous times for holders of Chinese corporate bonds. Record domestic defaults and the biggest dollar-debt delinquency by a state-owned company in two decades have jolted investors this year, underscoring the need for increased vigilance as the economy slows and Chinese policy makers scale back support for a slew of cash-strapped businesses, Bloomberg News reported. As bondholders adjust to a new -- and arguably more healthy -- environment where companies are allowed to default, these are some of the indicators they’re watching to avoid getting burned.

One of the key issues in the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (code), is the status and resolution of disputed claims, Vantage Asia reported. This has now been set to rest by the Supreme Court in the recent Essar Steel case. The National Company Law Appellate Tribunal (NCLAT), in the Essar Steel case, had held that disputed claims can be decided by the appropriate forums after the expiry of the moratorium period.

Insolvency proceedings have been initiated against another company of crisis-hit 3C real estate group, The Times of India reported. In the wake of a plea by a buyer who has not received his plot, the National Company Law Tribunal (NCLT) appointed an insolvency resolution professional (IRP) to resolve the financial liabilities of Three C Homes Pvt Ltd, the 3C group subsidiary that is building Lotus City, a residential plot scheme in Sector 22A of Yamuna Expressway. The IRP has a maximum 270 days for the resolution, following which the project could be pushed into liquidation.

The Ministry of Education (MOE) has sent inspectors to investigate the finances of the Chang Jung Girls’ Senior High School in Tainan after school dean Tai Chih-hsun confirmed that the school is on the brink of insolvency and cannot pay its faculty, the Taipei Times reported. In August, the school’s board of directors declared a salary cut, which led to the dismissal of two board members: Wang Chao-ching, who doubled as the school’s dean, and Chen Tsung-yen, the deputy minister of the interior.

China’s economy started the decade in a boom and will end it suffering the worst slowdown since the early 1990s, Bloomberg News reported. What comes next? Bloomberg asked some of the world's most prominent China watchers, several of which distinguished themselves over the past 10 years with prescient forecasts or market-beating returns. Predictions of even slower economic growth were near unanimous among the group, though most respondents also said policy makers have the tools to avoid a crisis.