Moody's: Debt issuance in Asia likely to remain slow

KUALA LUMPUR: Moody's Investors Service forecast debt issuance in
Asia would likely remain slow for the rest of the year if uncertainty
in the euro area continues after its Asian Liquidity Stress Index (LSI)
deteriorated in August.
"If the sovereign-debt problems hurt
economic growth in Asia or cause lenders to tighten their lending
standards further, this will impact lending rates to speculative-grade
companies and may result in deteriorating liquidity for some," it said
on Thursday.
The international ratings agency also pointed out
its Asian LSI deteriorated in August, with 21.8% of its
speculative-grade portfolio demonstrating weak liquidity versus 16.8%
in July.
A Moody's senior vice president Laura Acres
said the LSI decline was the largest month-on-month change since
September 2010, and it reflected a net increase of five companies to
the lowest speculative-grade liquidity score category (SGL-4), which
now totals 22 companies.
"The index, which increases when
speculative-grade liquidity appears to decrease, is at its highest
level since the first quarter of 2010, but is also well below the high
of 37% posted during the fourth quarter of 2008 amid the financial
crisis," she said.
Acres was speaking on the release of Moody's latest report on the index, entitled "Asian Liquidity Stress Index."
The
report noted the steady improvement of the liquidity sub-index for
Chinese speculative-grade companies had also reversed in August.
At
20.4%, the sub-index was at its highest level since Moody's began
publishing it in April 2011, and it was up from 16.3% in July.
"The
liquidity sub-index of Chinese property companies also rose to 25.0%
from 17.9% in July, but it is still lower than in March, when it
touched a peak of 26.9%. Now, almost one in four of the high-yield
Chinese property companies we rate is considered to have weak
liquidity," Acres added.
During July and August, the ratio of
corporate family rating downgrades to upgrades was 5:1. It was the
fifth consecutive quarter where downgrades outpaced upgrades, and Q3
also showed the highest ratio of downgrades to upgrades since Q2, 2009.
Moody's
said the percentage of speculative-grade companies with a negative
rating outlook or on review for downgrade remained nearly unchanged
from July at 35.6%.
In August, the net amount of high-yield debt
rated by Moody's in Asia rose slightly to US$40.9bil versus US$40.7bil
in July, as a result of Sound Global's (Ba3 stable) US$150mil senior
unsecured bond due 2017.