Moody's Investors Service says that its Asian Liquidity Stress Index (Asian LSI) declined to 27.2% in January from 28.6% in December.
The fall reflected a drop to 28 from 30 in the number of companies with Moody's lowest or weakest speculative-grade liquidity score of SGL-4, while the number of companies in the index also fell by two to 103.
The index -- which decreases when speculative-grade liquidity appears to increase - remains historically high, but is still below the record high of 37% seen in the fourth quarter of 2008 following the global financial crisis.
"Four companies shed their SGL-4 scores in January, either because their corporate family ratings were withdrawn, or because their liquidity improved following bond issuances in January, and two companies received SGL-4 scores," says Laura Acres, a Moody's Senior Vice President.
At the same time, the liquidity sub-index for Chinese speculative-grade companies declined in January to 29.4% from 31.4% in December, reflecting the fact that two companies exited the SGL-4 rating category and one company entered it.
Meanwhile, the sub-index for Indonesian companies edged up to 12.5% from 12%, ending a 3-month streak of no change in the percentage. The increase reflected the withdrawal of one company's corporate family rating, but the number of Indonesian companies with an SGL-4 score is unchanged at three.
"We also note that while corporate family rating downgrades exceeded upgrades in January, positive outlooks are gaining momentum. We changed the outlooks of seven companies in January, six in a positive direction and one in a downward direction," says Acres.
"We further note that the current market environment is highly favorable towards issuance," says Acres.
The report says that a total of 19 rated deals closed in January, raising a total of $8.0 billion, the highest amount of high-yield debt issued in a single month in Asia. It also included the largest bond deal for a company with a single-B rating: MCE Finance Limited (Ba3 stable) raised an eight-year B1-rated bond of $1 billion at 5%.
"The diversity of funding choices has also broadened and the high-yield bond markets are providing financing in ever greater volumes. Chinese corporates in particular have access to trust loans and a growing domestic bond market. As a result, while defaults are expected to increase, they remain relatively low," says Acres.
As of end-January, Moody's had assigned speculative-grade ratings to 103 issuers in Asia (excluding Japan and Australia), covering $52.8 billion, up from $45.8 billion as of end-December.