The morning after: Jakarta's private banks nurse sickly loan portfolios

Article Abstract:

Indonesia's financial sector was surprised when the government let privately-owned Bank Summa fail, causing the bank's owners to lose control of their corporation, Astra International. Indonesia's new privately-owned banks, in many cases set up by business groups to fund intra-group projects, have been allowed to operate with very high loads of non-performing debt and low capital reserves. Regulators have been slow to put needed controls on the deregulated banking system. Recent changes in monetary policy drove up interest rates, causing both individuals and banks to default.

Banking industry, Finance, Cover Story, Economic policy, Indonesia, Private banking

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In their prime...

Article Abstract:

Asian junk bonds offer many investors an attractive if illiquid alternative to equities, and many low-rated bonds are issued by prime companies. These cannot get a higher rating than the country in which they are based, so San Miguel in the Philippines has a 9% coupon and Indonesia's Indorayon Finance pays 10% on its bond. Indonesia may offer the most attractive set of bond plays in the region, in part because by Apr 1996 it had already depreciated the rupiah against the dollar as much as it usually does in an entire year.

Investments, Asia, Junk bonds

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Two-fold test

Article Abstract:

Goldman Sachs Asia is facing considerable challenges as it manages its investment in Hong Kong fabric manufacturer Fountain Set and Thai concern Dusit Hotels and Resorts. There are uncertain prospects for the Thai hotel industry following the collapse of the baht, and many experts believe that the Dusit chain could encounter substantial difficulties. Fountain is seeking to become an international player, but is highly indebted, with a debt-to-equity ratio of 115%.

Hotels & Motels, Hotels (except Casino Hotels) and Motels, Hotels and motels, All Other Miscellaneous Textile Product Mills, Textile goods, not elsewhere classified, Textiles NEC, Management, Investment banks, Hospitality industry, Textile industry, Textiles, Fountain Set Holding Ltd., Goldman Sachs (Asia) LLC, Dusit Hotels and resorts

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