Data Insight

APAC (ex-Japan) mandates mushroom as protracted workouts yield new advisory opportunities – Advisory Mandate Report 2Q23/1H23

The number of debt-restructuring-advisor appointments in APAC (ex-Japan) mushroomed in 2Q23 compared to the previous quarter, though this sharp increase wasn’t due to a spike in new distressed situations, but rather to additional appointments being made on restructuring processes that had begun before the quarter.

A total of 72 mandates were awarded in APAC (ex-Japan) in 2Q23 compared with 40 in 1Q23 and 70 in 2Q22. Of the 72 mandates, 51 came from situations in which a debtor had defaulted for the first time or where advisors were appointed prior to this year. The advisory roles awarded in 2Q23 were for situations that involved a total USD 50.1bn debt, up significantly from USD 18.1bn in 1Q23 but down slightly from USD 59.8bn in 2Q22.

The 2Q23 numbers bring the total number of mandates awarded in the first half of the year to 112 roles in situations involving an aggregate USD 66.9bn debt. By comparison, there were 174 mandates involving USD 172.9bn debt in 1H22 (see page 7 of the attached report for a detailed breakdown of mandates by quarter).


‘Legacy’ Chinese Property workouts provide significant restructuring work

As was the case in 2022, most of the mandates in 1H23 were PRC situations related to the real-estate sector. In 2Q23, Chinese real estate sector roles accounted for 35 of the total APAC (ex-Japan) mandates and involved debt of USD 34bn, or 67.9%, of the total debt for which roles were awarded in the region in the quarter. As a result, the number of mandates related to Chinese real-estate situations in 1H23 totaled 48 on USD 40.3bn of debt versus 85 roles in 1H22 on an aggregate debt of USD 121.3bn.

Almost all the 35 China property sector mandates in 2Q23 were those that arose out of situations in which the debtor had defaulted or where restructuring advisors had been appointed prior to the April-June quarter. Thus, out of the 35 mandates arising from situations involving 18 developers or property managers, only one — Guangzhou Fineland Real Estate’s appointment of China CITIC in June for a potential liability management exercise for its 340m due-27 July 2023 bonds – was a mandate involving a new stressed or distressed situation. (Click here to view these cases on Debtwire’s Restructuring Database).

Five of these ‘legacy’ (i.e., situations where mandates or defaults had occurred prior to 2Q23) situations involved Chinese property companies that were each seeking to restructure more than USD 2bn in debt. The cohort included four developers – China Aoyuan GroupKWG GroupJiayuan International Group and Powerlong Real Estate – as well as financial services and real estate conglomerate Oceanwide Holdings


New restructuring situations

Only five restructurings processes began during 2Q23 – the two largest of which were Indonesian state-controlled construction company Wijaya Karya (Persero) Tbk and Indian budget airline operator GoAirlines (India) Pvt Ltd, both of which are seeking to recast over USD 1bn of debt.



Country breakdown

Including the 35 property-related mandates, Chinese companies from all sectors accounted for a total of 45 mandates on USD 43.5bn debt, or 62.5% and 86.9% of the respective 2Q23 totals. As the chart below shows, Chinese companies have provided a huge chunk of the work handed out to APAC restructuring professionals since about mid-2021, when the property sector began to collapse.

After PRC-related situations, the second highest number of mandates awarded in 2Q23 arose from just one Australian-related insolvency: cancer care provider GenesisCare Pty Ltd’s Chapter 11 process, which began on 2 June and generated nine mandates.  The Sydney-headquartered company had pre-petition debt of 1.7bn.



Top advisors

Alvarez & Marsal – which was awarded five mandates in 2Q23 involving USD 4.1bn of debt – won the most roles of any financial advisory firm during the quarter. By amount of debt, PwC appears to have towered above other financial advisors with the Big Four firm advising on situations involving USD 18.2bn debt. However, USD 16.83bn of the USD 18.2bn amount came from PwC’s role as Aoyuan’s monitoring accountant.

Sidley Austin won the most mandates of any law firm with seven roles involving USD 7.8bn of debt.


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