Finance

Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.

As goes Wall Street, so do Asian markets. The latest exhibit: turnaround experts, who are in demand in the U.S.  even as investment bankers face endless job cuts in most areas, as Bloomberg News reports .

The same can be said across the Pacific, where a record amount of high-yield debt is coming up for redemption and there aren't enough people to help these increasingly troubled companies restructure.

China's onshore market alone faces an unprecedented 2.2 trillion yuan ($341 billion) of debt maturing in the second half. Asia as a whole has $8 billion of junk-rated offshore debt up for repayment this year , a figure that will almost double next year and triple by 2019: all this just as global rates are rising and local currencies have dropped significantly.

Bump Ahead
After years of small maturities, junk companies in Asia face record foreign-currency redemptions
Source: Bloomberg

Call it the perverse side of the interest-rate cycle: All the money raised when it was cheap usually has to be repaid when it's expensive. Unless companies don't need to refinance, many end up restructuring. If investment-banking jobs on the debt issuance side drop as a result, the number needed to help turn around companies increases. Sometimes, these are the same firms that the banks helped to sell debt. Asia has just started this part of the cycle.

Increasing Pain
The amount of offshore bonds on which companies missed payments this year is already higher than 2015
Source: Bloomberg

Money is getting tighter. Moody's said in April that its Asian Liquidity Stress Index had reached 34.2 percent, the highest since March 2009. The gauge dropped in May, mostly because some companies with the weakest liquidity scores asked the rating company to withdraw its public evaluations. 

Quick Stress
The percentage of Asian high-yield companies rated by Moody's facing liquidity issues hit the highest since 2009 in April
Source: Moody's Investors Service

Asia is ill prepared to deal with this crunch. For the past six years, with the exception of a few high-profile cases, there has been a dearth of restructuring activity. As a result, many experts have either retired or moved on to other markets.

It's no solution simply to import bankers. Bankruptcy laws in Asia are unique: understanding them and how to negotiate local judicial systems is a key requirement. Some of the more active firms are resorting to on-the-job training. With the guidance of the few old hands still in the market, they are preparing new people to take over the rising number of turnaround situations.

That investment is sure to pay off. There will be more than enough debt distress in the region to keep everyone employed. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Including debt that has already matured

To contact the author of this story:
Christopher Langner in Singapore at clangner@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net