India

One of India’s top microlenders is seeking about 60 billion rupees ($900 million) from banks and non-bank lenders to fund loan growth as demand from borrowers living in small towns and rural areas bucks the slump in the nation’s overall credit offtake, Bloomberg News reported. Satin Creditcare Network Ltd., whose assets exceed 70 billion rupees, needs the cash to meet its credit-growth target of about 40% for the year ending March, Chairman H. P. Singh said by phone.

Indian shadow banks’ woes are worsening by the day with investors now demanding the highest premium in six years to hold their short-term debt. Spreads on top-rated one-year bonds of Indian non-bank lenders over government bonds of the same maturity have risen 63 basis points since India’s mini-Lehman moment when the systemically important Infrastructure Leasing & Financial Services Ltd. was cut to default in September, Bloomberg News reported. This is the widest level since 2013, according to data compiled by Bloomberg. Trouble has only spread across the sector in recent months.

A travel planner in India backed by the world’s second-largest asset manager Vanguard Group has defaulted on debt and its shares fell to a record low, as cracks in the nation’s credit market spread, Bloomberg News reported. Cox and Kings Ltd. has paid only 500 million rupees ($73 million) of the two billion rupees due June 26 on unsecured commercial papers, according to an exchange filing late Thursday evening. Shares of the company dropped by their daily limit of 10% on Friday, the lowest since its trading debut in 2009.

Lenders to Suzlon Energy Ltd. find themselves back where they started about six years ago, Bloomberg Quint reported. The renewable energy firm, which had restructured debt under the Corporate Debt Restructuring programme in 2013, is once again in financial trouble. This time, though, lenders are not keen to restructure the company’s debt and see equity infusion from an outside investor as the only feasible option. The company owes banks about Rs 10,000 crore.

India clarified on Thursday that plans to sell debt-laden state-run carrier Air India were still on track, hours after a junior minister told parliament the privatisation was on hold because of high oil prices and volatile exchange rates, the International New York Times reported on a Reuters story. India failed last year in its attempt to sell a 76% stake in loss-making Air India due to a lack of interest from bidders, but said it would return with an alternative proposal soon.

India’s market regulator prohibited mutual funds not to sign pacts with stressed companies that delay margin calls, because such deals hurt investors, Bloomberg News reported. The Securities & Exchange Board of India’s ban comes after companies such as Essel Group reached so-called standstill agreements with money managers. Under such deals, fund managers agree not to sell shares pledged by the founders as collateral for loans even if the stock tumbles.

Waning investor confidence in India’s troubled shadow lenders is sapping demand for corporate debt, Bloomberg News reported. Companies sold 1.2 trillion rupees ($17.3 billion) of bonds so far in the April-June period, down 57% from the previous quarter and the weakest since the year-ago period, despite the decline in borrowing costs, according to data complied by Bloomberg. Liquidity risk in the nation’s credit markets roared back this month after non-bank financier Dewan Housing Finance Corp.

Jet Airways share price sprang a surprise today after days of thrashing after the ailing airline found itself stuck in muddy waters of debt trap invoking lenders to approach insolvency court to recover their dues, Business Today reported. Jet Airways share, which hit a fresh 52-week low of 27 in trade today rebounded 133% amid short covering to hit an intra day high of 77.35 on BSE. The sudden rise in Jet Airways stock comes ahead of an order to be passed by National Company Law Tribunal (NCLT) on insolvency plea filed by country's largest lender SBI.

Indian mortgage lender Dewan Housing Finance Corp Ltd (DHFL) said it had only been able to make a 40 percent payment on unsecured commercial papers due on Tuesday, but vowed to pay the remaining 2.25 billion rupees ($32.49 million) in the coming days, Reuters reported. India’s shadow banking sector has been thrown into disarray after a series of defaults at large lender Infrastructure Leasing and Financial Services last year triggered fears about contagion in the financial sector.

Banks have just about a couple of weeks to decide the fate of more than 150 borrowers, which include sugarmaker Bajaj Hindusthan, energy companies RattanIndia Power and Suzlon and other infrastructure and road builders as the 30-day review period for these loans ends on July 7, The Economic Times reported.