Asian resilience helps cap-ex deals

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22 October 2009

Capital equipment financing in Asia-Pacific has remained buoyant and is developing strongly with the help of intra-Asian business. Michele Martensen examines the scene.

Data accrued over the past 18 months suggests Asia is proving far more resilient to the economic storm than many of its global counterparts. This is partly attributable to sizeable foreign exchange reserves held by several countries – most notably China and Japan, stable domestic demand and government stimuli.

Domestic bank liquidity, for instance, is resuming more rapidly than elsewhere, in large part due to central governments’ injection of capital and liquidity.

Over the past six months, participants report a significant improvement in liquidity from the local banking sector, through export credit agency (ECA) support and, in the last quarter, local bond markets.

Sumanta Panigrahi, head of export finance for Asia (ex-Japan) at Citi based in Hong Kong, agrees that while funding difficulties faced by banks inevitably resulted in reduced availability of financing to borrowers earlier this year, the situation has improved dramatically over the latter half of the year, with...

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Poll

Will Russia’s recent ban on grain exports result in a significant rise in private risk insurance claims from grain traders unable to fulfil their contracts?

Yes – there will be more claims. The government’s actions allow traders, with PRI cover, to make claims through contract frustration.

No - the majority of Russia’s wheat production, some 70%-80%, is used for domestic consumption so the contracts represent only a small portion of the total wheat market, limiting the amount of potential claims.

23%

No - traders had a week’s notice before the ban allowing them to secure alternative supplies to fulfil contracts stated as optional origin.

23%

Maybe - but claims are likely to be limited to traders dealing in soft wheat whose contracts demand they source wheat only from Russia.

46%