Bangkok--18 Apr--Moody's Investor
Moody's Investors Services says in a new publication that Asian speculative-grade liquidity is in good shape overall,despite some global challenges in the wings.
"Overall, liquidity for speculative-grade issuers in Asia is weaker compared to other regions, in part simply because its debt capital markets arestill evolving, and also because of the greater reliance on local bank markets for funds," says Laura Acres, a Moody's Vice President and SeniorCredit Officer.
Acres spoke upon the release of the inaugural edition of Moody's new "Asian Liquidity Stress Index," which examines liquidity trends throughoutAsia Pacific (excluding Japan and Australia) for the rated speculative-grade universe.
"The index, which we plan to publish monthly, covers 100 rated companies in 12 countries and 22 core industry groupings, and accounts formore than USD43.4 billion of rated debt."
"In the US, we've published individual liquidity scores since 2002, and they've proved to be a very reliable leading indicator of defaults -- by somenine months," writes Acres.
"But the market in Asia is quite different, given the predominance of relationship banking, whereby banks tend to habitually roll over short-termand uncommitted lines, rather than provide committed funding."
This was most evident during the global financial crisis, when companies with extremely high levels of short-term debt were able to roll overcredit lines.
"Regardless, liquidity in Asia -- excluding Japan -- seems to have rebounded completely over the last year," Acres goes on to say. "It's now atthe strongest levels in more than three years, fuelled in part by an improving macro-economic environment, as well as overseas investordemand for diversity and yield."
The result is a growing body of names coming to the debt capital markets to secure long-term funding.
"Moody's Asian Liquidity Stress Index" can be accessed at www.moodys.com.
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