Bank of America/Bloomberg
As India battles with the worst non-performing loan ratio among the world’s major economies, foreign investors are vying for a piece of the $190 billion pile of soured and stressed debt.
Tuesday 19, March 2019
(Bloomberg) --Bank of America has bought its biggest distressed asset in India, adding to a growing trend of foreign investors diving deeper into the country’s massive pile of bad debt.
A group of investors led by the US bank have paid INR 33 billion ($479 million) for soured loans of a beleaguered Indian maker of cast iron pipes, according to people familiar with the matter.
The group, which includes local bad debt buyer Assets Care & Reconstruction Enterprise, bought distressed loans of Jayaswal Neco Industries, with a face value of INR 47 billion. Lenders led by State Bank of India sold the debt, taking a haircut of 30 per cent on the all-cash deal, the people said.
Steelmakers have struggled to repay debt in recent years, with Essar Steel India among one of the most high-profile cases. Jayaswal Neco became stressed as a slump in demand for its products eroded its debt repayment capability.
Bank of America has been upping the ante on its investments in India. Its purchases of distressed loans in India include those of telecom tower firm GTL Infrastructure and Seven Hills Hospital. It was also the sole bidder for State Bank of India’s $2.2 billion Essar Steel loan, which was scrapped.
Representatives for BofA, Assets Care & Reconstruction and SBI could not immediately respond to an email seeking comment on the loan purchases.