Rajah & Tann Singapore LLP, Southeast Asia’s largest law firm, reckons the region’s rising bond defaults will inflict as much pain on creditors as the financial crises of 2008 and 1998.
As distress spreads from shipping to mining and retail to construction industries, the law firm said in an interview that recovery rates will be similar to those seen in the global credit meltdown and Asian financial crisis.
Secured creditors recover only less than US$0.33 on the dollar from insolvencies in East and South Asia, compared with more than US$0.80 in the US, according to World Bank studies.
Rival law firm Hogan Lovells US LLP said in an interview that regional banks will likely boost sales of bad loans in coming months.
“The trough in the mining cycle seems to be continuing and some say it will be a while more before any significant recovery is expected,” Singapore-based Rajah & Tann head of restructuring and insolvency Sim Kwan Kiat said. “From experience, the lower end of the spectrum for recovery rates this time round in 2016 is unlikely to be much different from those in 2008 or 1997-98.”
Bad loans in Singapore rose to a six-year high last year. Rating firms last month placed energy and mining companies globally on review for downgrades, the Baltic index of shipping rates last week reached the lowest since its 1985 inception and Singapore home sales had the worst start to a year since 2009.
Energy firms dominated 112 global bond defaults last year, according to Standard & Poor’s, as the slowest Chinese growth in two decades helped drive prices for commodities from oil to iron ore and coal to multi-year lows.
In Southeast Asia, Indonesia’s PT Berau Coal Energy and PT Trikomsel Oke and Thailand’s Sahaviriya Steel Industries PLC have missed bond and loan repayments.
Sembcorp Marine Ltd, the world’s second-largest oil-rig builder, had its first quarterly loss in at least 12 years as clients canceled orders.
Berau Coal flagged the depth of distress in regional credit markets when it bought back US$150 million of bonds at US$0.303 cents in December last year.
That was the lowest since China’s Asia Aluminum Holdings Ltd repurchased notes at US$0.225 before it collapsed in March 2009.
The price of distressed buybacks in Asia since 2008 averaged US$0.48 on the dollar, Bloomberg data show.
Offshore investors have challenged PT Bakrie Telecom’s restructuring in US courts, saying their principal would be trimmed to between US$0.07 and US$0.19 on the dollar under the Indonesian firm’s local proposal.
In 2009, bondholders recovered less than US$0.07 on the dollar from the failure of Singapore-listed Celestial Nutrifoods Ltd and Asia Aluminum Holdings, according to estimates by Greenwich, Connecticut-based Gramercy Funds Management LLC.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained