|
A review of what is happening in the Asian non-performing loan ("NPL") market
Since our last issue in May, global financial markets have experienced a period of extraordinary turbulence. Several governments have initiated rescue efforts but financial markets are likely to remain volatile for some time.
While over the past 18 months or so the NPL market probably favoured sellers, recent events are reversing this and it is likely to be a buyers' market for the foreseeable future. Opportunities for buyers lie in the upcoming NPL portfolio sales across Asia which are likely to include, the sale of Lehman Brothers' Asian assets (their NPL portfolios in Europe are already in the process of being sold), the disposal of various AIG businesses and the sale of positions held by numerous funds and investment banks needing to raise cash. Several single credit opportunities are expected to arise as businesses look to recapitalise balance sheets in an increasingly difficult economic environment.
According to market feedback, there is an increase in expectations of returns from NPL portfolios investments, at least in the short to medium term. This is due to the number of opportunities coming on to the market that offer equal or higher returns than those that are traditionally achieved from NPL portfolios. These alternative opportunities are prompting some distressed debt players to shift away temporarily from NPL portfolios. However, these players are being replaced by new participants who see Asian NPL portfolios, particularly secured portfolios, as investments that continue to offer attractive rates of return.
A number of NPL and NPA portfolios were recently brought to the market in Thailand with all but one portfolio closing unsold. We understand the main reason for the failure to transact was around bid prices being under the sellers expectations. This further reinforces the view that the market has shifted to a buyers' market and sellers' price expectations will need to be adjusted accordingly.
In our discussions with various banks across the region, NPL sales are still in the pipeline for 2009, with sales also likely to occur in Malaysia, the Philippines and India. This edition sees our first article on Australia and New Zealand, which are likely to attract interest due to their stable legal environments. The presently weak Australian dollar is also likely to attract potential buyers.
All in all, the next 6 to 12 months are likely to yield significant opportunities for distressed debt players.
The information contained in NPL Asia has been obtained from numerous sources in the market and is believed to be accurate at the time of going to print. We trust that you will continue to find this publication useful and welcome any comments you may have.
Get Your Copy Here
Read more by downloading our NPL Asia (Issue 10) (pdf file, 273KB) for your reference.
Other Issues of NPL Asia
|
 |
