KL shares continue downtrend

Moody's Investors Service's monthly Asian Liquidity Stress Index fell to a record low in August, with just 9.7 per cent or some 10 names, of its rated speculative-grade portfolio demonstrating inadequate liquidity.

Its Vice President and Senior Credit Officer Laura Acres said that the index, which declines when corporate liquidity increases, has been between 11 and 13 per cent since the start of the year, and was at 11.4 per cent in July.

"At the same time, the August improvement was issuer-specific, rather than a broad improvement across the high-yield spectrum," she said in a statement, today.

She also said that the high level of corporate liquidity in Asia continues to suggest a low probability of default for the region's speculative-grade companies.

"However, looking ahead, we think speculative-grade companies could face higher costs, and weaker ones could find access to credit more limited if investors, particularly those outside the region, decide that it is too risky to lend to low-rated companies.

"Investors are increasingly concerned about the fallout from problems some European sovereigns are facing, and fears there could be another global recession," she added.

With the Asia-Pacific, excluding Japan, trailing 12-month speculative-grade default rate, Moody's expects the index could fall further in the third quarter of this year to as little as 0.38 per cent, Laura said.

However, she said, there is a risk that it could rise if there is a material change in the banking-system stress, due to the ongoing European sovereign debt crisis or adverse developments for specific issuers.

The Asian Liquidity Stress Index, which Moody's publishes each month, examines liquidity trends throughout the Asia-Pacific region (ex-Japan and Australia) for the speculative-grade companies rate and quantifies the proportion of companies with inadequate liquidity. -- Bernama