Asian Liquidity Stress Index Continues to Rise in January

Moody's Investors Service says that its Asian Liquidity Stress Index (Asian LSI) rose for a second  month in January, to 22.4% from 20.0% in December.


The index measures the percentage of high-yield companies with an SGL-4 score and increases when speculative-grade liquidity  appears to decrease. The reading decreased gradually during 2013 after hitting a recent high of 28.6% in December 2012.


"The January increase reflects both the net addition of three companies (to 26) to the roster of those with our lowest (weakest) speculative-grade liquidity score (SGL-4) and a net increase of one (to 116) in the number of companies with speculative-grade ratings," says Laura Acres, a Moody's Senior Vice President.


Acres was speaking on the release of Moody's latest report on the index, entitled "Asian Liquidity Stress Index."


The reading remains well below the record high of 37% reached during the fourth quarter of 2008 amid the global financial crisis  and is just above the long-term rolling average (20%) and in line with the trailing 12 month average (22.5%) for the Asian LSI.


The liquidity sub-index for Chinese speculative-grade companies rose for a third consecutive month, jumping to 27.0% from 22.2% in December. The increase reflects the addition of three companies with SGL-4 scores while the number of rated high-yield Chinese companies remained 63.


China's high-yield property index rose to 23.7% from 21.1% in December as the number of companies with an SGL-4 score increased by one to 9 and the number of rated high-yield property developers remained 38.


The Indonesian sub-index inched up to 4.0% from 3.8%, ending three months with no change. The number of SGL-4 companies was  unchanged at one, but the number of speculative-grade Indonesian companies decreased by one to 25.


The Australian index, which doesn't factor into the Asian LSI, declined for a second month, to 26.7% from 28.6% in December, as the number of speculative-grade companies rose by one to 15 and the number of those with an SGL-4 score remained four.


Moody's had assigned speculative-grade ratings to 116 issuers in Asia (excluding Japan and Australia) covering $65.1 billion of rated debt by the end of January, up from 115 issuers and $61.7 billion of rated debt by the end of December.

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