Moody's: Asian Liquidity Stress Index Falls Again in February

Moody's Investors Service says that its Asian Liquidity Stress Index (Asian LSI) declined to 24.8% in February from 27.2% in January.

 

"The fall -- the second monthly decline in a row, after it eased back in January from December's 28.6% -- reflected a net decrease in the number of companies with Moody's lowest, or weakest, speculative-grade liquidity score of SGL-4 to 26 from 28 in January," says Laura Acres, a Moody's Senior Vice President.

 

"At the same time, the total number of rated high-yield companies rose to 105 from 103 as Moody's assigned corporate family ratings to Chinese property company CIFI Holdings (B1 stable) and Indian BPO service provider iEnergizer Limited (B2 stable)," says Acres, speaking on the release of Moody's latest "Asian Liquidity Stress Index" report.

 

At the same time, the index -- which decreases when speculative-grade liquidity appears to increase - remains high, but is still below the record high of 37% seen in the fourth quarter of 2008 during the global financial crisis.

 

The liquidity sub-index for Chinese speculative-grade companies also decreased in February, for a third month, to 26.9% from 29.4% in January.

 

China's high-yield property index declined, to 30.3%, after holding at 31.3% from November through January. Both changes reflected the addition of CIFI Holdings to the roster of speculative-grade Chinese companies.

 

The Indonesian sub-index remained flat at 12.5%.

 

The report says that high-yield-bond issuance stalled in February after a blistering January. Just one rated deal closed -- a $250 million, five-year note issuance by Glorious Property Holdings Limited (B3 negative) - compared to 19 rated deals in January that raised a total of $8.0 billion. That figure was the largest amount of high-yield debt issued in a single month in Asia.

 

Looking ahead, the high-yield default rate for Asia Pacific (ex-Japan) corporates will stay at a low 2% in 2013, according to Moody's Credit Transition Model (CTM). It will trend downward during the first half of the year and rise mildly in the second half. The 2% translates into to one or two potential defaults.

 

Rating downgrades surpassed upgrades again in February. Moody's downgraded Bumi Resources and Mongolian Mining Corporation and upgraded Gajah Tunggal Tbk.

 

Moody's also changed the outlooks of three companies in February, two in a positive direction and one was removed from being on review for downgrade. The number of companies with a positive outlook has held steady at eight since 4Q 2012. The number of those on review for upgrade was unchanged at four compared to January, and up from two in 4Q 2012.

 

Moody's had assigned speculative-grade ratings to 105 issuers in Asia (excluding Japan and Australia) covering $54.1 billion of rated debt at end-February, up from 103 issuers and $53.8 billion at end-January.
 

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