Asian defaults expected to continue rising - Bloomberg
As reported by Bloomberg, markets are bracing an expected upswing in the rate of debt defaults as higher refinancing costs push high-risk borrowers out of the market.
In India, a landmark default by shadow lender Infrastructure Leasing & Financial Services Ltd. has tightened liquidity for non-bank lenders, while China’s deleveraging campaign and push to cut the number of zombie companies have prompted more failures. Mounting nonpayments may sour sentiment in the credit market, but could boost business for investors in problem assets.
“We are setting up the business on the premise that we will see an increase in defaults in 2019,” said John Batchelor, Asia head for corporate finance and restructuring at the firm, adding that the company is looking to increase its headcount in Hong Kong and China.
The crackdown on China’s $10 trillion shadow banking market is also contributing to a rise in defaults, as many entrepreneurs have limited access to the nation’s banking system, according to Ron Thompson, a managing director at Alvarez & Marsal Asia who leads the firm’s Asia restructuring practice.