Asian Liquidity Stress Index Rises in March, Says Moody's

Moody's Investors Service says that its Asian Liquidity Stress Index (Asian LSI) increased to 26.9% in March from 24.8% in February, reversing the downward trend seen during the first two months of 2013.


"The higher reading reflects a net increase in the number of companies with our lowest (weakest) speculative-grade liquidity score (SGL-4), to 29 from 26 in February," says Laura Acres, a Moody's Senior Vice President.


"The total number of rated high-yield companies also rose, to 108 from 105, as Moody's assigned corporate family ratings (CFR) to China Minzhong Food Corporation Limited, Tianneng Power International Limited and Sunac China Holdings Limited. In addition, both the number of ratings and the amount of rated debt, at $56.9 billion, are at all-time highs," she adds.


The index -- which rises when speculative-grade liquidity appears to decrease -- has increased steadily since late 2011, and has held in a tight range since reaching a high of 29.1% in October 2012.


This level was below the record high of 37% seen during the fourth quarter of 2008, or during the global financial crisis, but well above the all-time low of 9% seen in November 2011.


The liquidity sub-index for Chinese speculative-grade companies also rose in March, after declining for the first two months of the year. It edged up to 30.9% from 26.9% in February, with the addition of three companies with SGL-4 scores to the list of speculative-grade rated Chinese companies.


China's high-yield property index also rose to 32.4% from 30.3% in February with the addition of one rated Chinese property developer with an SGL-4 score.


On the other hand, the Indonesian sub-index was unchanged for a third straight month at 12.5%, just slightly higher than the 12.0% seen from October through December.


High-yield bond issuance picked up in March after a quiet February in which just one rated deal closed. Ten companies issued bonds, and eight closed deals totaling $2.8 billion. One deal remained in market at the end of the month, while, in early April, Tianneng Power International Limited (Ba3 stable) postponed its proposed issuance.


The number of Corporate Family Rating downgrades (5) outnumbered upgrades (4) during the first quarter of the year - the seventh straight quarter of such a trend. However, positive momentum is building and in March upgrades (3) surpassed downgrades (2).


Furthermore, the percentage of companies with negative rating outlooks or those on review for downgrade fell to 23.1% during the first quarter from 34.3% in the previous quarter, while the number of companies with positive rating outlooks rose to 10 in the first quarter from eight in the fourth quarter.


Moody's had assigned speculative-grade ratings to 108 issuers in Asia (excluding

Japan and Australia) covering $56.9 billion of rated debt by the end of March, up from 105 issuers and $54.3 billion in February.

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