India

The financial health of Indian firms is worsening, adding pressure on Prime Minister Narendra Modi to come up with more measures to kick-start a sputtering economy, Bloomberg News reported. Debt quality deteriorated for the fourth straight month in August, the Care Ratings Debt Quality Index showed. That’s the longest losing streak for the gauge that tracks 1,601 domestic firms since April 2014, and puts it at a 20-month low. India’s economic growth cooled for a fifth straight quarter to 5% in the three months ended June, the slowest pace since March 2013. Read more about that here.

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India’s plans to expand its corporate bond market are running up against a yearlong credit crisis, in another obstacle for Prime Minister Narendra Modi’s efforts to jumpstart a sputtering economy, Bloomberg News reported. Sales of rupee bonds rated below AAA have halved so far this year to 691 billion rupees ($9.6 billion) as a wave of debt defaults and a funding crunch in the shadow banking sector make investors reluctant to buy riskier notes.

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India’s Auto Boom Goes Bust

Passenger car sales have contracted for 10 straight months, plunging to 115,957 units in August, a 41% drop from the previous year—the biggest decline on record. Automakers are cutting investment and production; hundreds of dealerships have shut down, Bloomberg Businessweek reported. Nationwide, job losses in the sector, which employs more than 32 million people directly and indirectly, have climbed to more than 580,000 in the past 18 months, according to estimates from labor unions and auto dealers. R.C.

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Car sales in India tumbled more than 40 per cent in August as the worst industry slowdown in recent memory deepened, intensifying concern that months of steep declines could spark a full-blown crisis, the Financial Times reported. Passenger car sales for the month came in at 115,000, down 41 per cent from a year earlier, according to the Society of Indian Automobile Manufacturers. That marked the fifth month of double-digit losses, the sizes of which have beaten anything recorded since the turn of the millennium.

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A prolonged shadow-banking crisis and hurdles in bankruptcy rules are set to keep India atop the world’s worst bad-debt pile, even as Italy, which held the title previously, quickens the clean-up of its lenders, Bloomberg News reported. Moody’s Investors Service to Credit Suisse Group AG. warned that more loans may sour in the Asian nation’s banking system. More than 2.4% of total loans in India’s banking system may be under stress on top of the 9.6% bad debt ratio as of June, the highest among major economies, Credit Suisse estimates shows.

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An Indian court on Thursday cleared JSW Steel Ltd’s takeover plan for debt-ridden Bhushan Power and Steel, bringing an end to a bankruptcy case that has dragged on over two years, Reuters reported. The move paves the way for JSW Steel, which has the biggest steel capacity in India, to take control of a steel asset in the east of the country where rival Tata Steel Ltd and Steel Authority of India Ltd have long dominated. The National Company Law Tribunal (NCLT) in New Delhi said it approved the debt resolution plan of JSW Steel, according to a copy of the judgment.

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Reliance Naval & Engineering Ltd., controlled by Indian tycoon Anil Ambani, said it is facing an acute cash-flow crunch after orders dried up amid efforts to restructure a pile of debt, Bloomberg News reported. The disclosure in the company’s annual report came just before a court pushed hearing on whether to put the debt-laden company under insolvency proceedings to Oct. 3, people familiar with the matter said, asking not to be named as they are not authorized to speak to media. His wireless carrier slipped into bankruptcy earlier this year.

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Creditors of India’s bankrupt Jet Airways are likely to recover less than 10% of the carrier’s total outstanding dues in a liquidation scenario if no suitor succeeds in buying the airline, two sources told Reuters. The airline’s financial and operational creditors, who are owed nearly 300 billion Indian rupees ($4.20 billion) are likely to recover only $300-$400 million from the sale of Jet’s assets, the sources, who have direct knowledge of the matter, said, Reuters reported.

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India’s shadow banks are getting increasingly squeezed by a crisis of confidence at home, forcing them to cough up more for funds overseas. And that’s just for the lucky ones, Bloomberg News reported. The non-bank financing companies have struggled to raise as much abroad this year, as defaults in India’s credit market spread after a shock failure by major shadow lender IL&FS Group last year. They’ve signed $1.5 billion of foreign-currency loans so far in 2019, down from $2 billion in the same period last year, according to data compiled by Bloomberg that excludes state-run lenders.

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The shipyard controlled by embattled Indian tycoon Anil Ambani is facing the prospect of bankruptcy after failing to get creditors’ approval for restructuring 70 billion rupees ($970 million) of debt, people familiar with the matter said, Bloomberg News reported. India’s bankruptcy tribunal will consider putting Reliance Naval & Engineering Ltd. in bankruptcy on Wednesday as no new repayment plan was submitted after lenders led by IDBI Bank Ltd. rejected an earlier offer in July, the people said, asking not to be named as the information is not public.

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