Asia Roundup
Asian Banks’ Billions in Gulf Loans at Risk Amid Mideast Turmoil
The multibillion dollar ramp-up in loans by Asian banks to the Middle East faces growing uncertainty as Iran’s escalating conflict raises the risk of broader financial fallout, Bloomberg reported.
Asian and Chinese banks, which have emerged as the Gulf’s top financiers, extended more than USD 15 billion in loans last year – a record high and triple the previous year – with most of the capital flowing to Saudi Arabia and the United Arab Emirates, according to Bloomberg-compiled data.
That surge now faces a critical test, as the Iran crisis threatens to reshape lending strategies and cast uncertainty over the banks’ pursuit of opportunities in the region.
Mongolia Prices $500 million Six-Year Bond
Mongolia has priced a USD 500 million six-year sovereign bond at par with a 5.95% yield, Capital Markets Mongolia (CMM) wrote, noting that the final pricing “tightened meaningfully” from initial price thoughts in the 6.3% area.
The transaction is mainly for the repurchase of outstanding tender offer bonds, repayment of 2026 bonds at maturity, and potential allocation for further debt management activities, according to CMM.
SEC Complaint vs Villars Moves to Preliminary Investigation, Subpoenas Served
Filipino property tycoon Manny Villar and members of his family have been subpoenaed for alleged violations of the Securities Regulation Code in connection with a criminal complaint filed by corporate regulator Securities and Exchange Commission (SEC), Rappler reported.
The Department of Justice (DOJ) said on 2 March that the SEC complaint underwent initial evaluation, and the agency decided it would proceed to preliminary investigation.
Indonesia Roundup
Indonesia Will Keep Budget Deficit Below 3% of GDP, Finance Minister Says
Indonesia is ready to adjust budget expenditure to keep its fiscal deficit below 3% of GDP, as the conflict in the Middle East threatens to drive up oil prices and pile more pressure on the economy, Finance Minister Purbaya Yudhi Sadewa told Reuters.
“Assuming the worst case, if the oil price goes as high as USD 90 to USD 92 per barrel, in those conditions, without adjusting our current budget, the deficit will increase to around 3.6% of GDP,” he said.
“Of course, we’ll cut expenditure that creates the least impact to the economy,” he said, adding that the ministry has already drawn up contingency plans. Purbaya said expenditure on Indonesia’s free meals program could be scaled back, saving the country about USD 6 billion.
Ratings agency Fitch also met Purbaya and other officials in Jakarta last week as it prepares its own review of the country. “They (Fitch) are concerned about how Danantara affects our fiscal condition,” he said, referring to Indonesia’s new sovereign wealth fund.
“Their (Danantara’s) debt is not affecting our debt, their project is not affecting our financing. If they fail, they can finance their failure with their dividend that they receive from their companies.”
Indonesia Cuts Shareholder Disclosure Threshold to 1% After MSCI Warning
Indonesia has cut the disclosure threshold for listed-company shareholders to 1% from 5%, as Jakarta races to reassure MSCI that its market meets international governance standards, Business Times reported.
The policy took effect on Tuesday (3 March), a day before the Indonesia Stock Exchange (IDX) is due to meet MSCI again for talks on market accessibility and governance standards.
Jeffrey Hendrik, IDX’s interim president director, said that from market close on Tuesday, the names of shareholders owning more than 1% in any listed company were made publicly available on the websites of the exchange and the Indonesia Central Securities Depository (KSEI).
Danantara and INA to Jointly Invest USD 200 Million in Chandra Asri’s Strategic Project
Danantara Indonesia and Indonesia Investment Authority (INA) will jointly invest USD 200 million in Chandra Asri Group’s national strategic project, according to their statement.
Danantara, INA and Chandra Asri have signed a conditional share subscription agreement to support the development of the chlor alkali – ethylene dichloride (CA-EDC) plant in Cilegon, which has a total project value of USD 800 million.
“The project aims to reduce reliance on imports of critical raw materials across various industries, while advancing downstream industrialization as part of Indonesia’s long-term economic transformation agenda.”