Bangkok--18 Apr--Moody's Investors
Moody's Investors Services says in a newpublication that Asian speculative-grade liquidity is in good shapeoverall, despite some global challenges in the wings.
"Overall, liquidity for speculative-grade issuers in Asia is weakercompared to other regions, in part simply because its debt capitalmarkets are still evolving, and also because of the greater reliance onlocal bank markets for funds," says Laura Acres, a Moody's Vice Presidentand Senior Credit Officer.
Acres spoke upon the release of the inaugural edition of Moody's new"Asian Liquidity Stress Index," which examines liquidity trendsthroughout Asia Pacific (excluding Japan and Australia) for the ratedspeculative-grade universe.
"The index, which we plan to publish monthly, covers 100 rated companiesin 12 countries and 22 core industry groupings, and accounts for morethan USD43.4 billion of rated debt."
"In the US, we've published individual liquidity scores since 2002, andthey've proved to be a very reliable leading indicator of defaults -- bysome nine months," writes Acres.
"But the market in Asia is quite different, given the predominance ofrelationship banking, whereby banks tend to habitually roll overshort-term and uncommitted lines, rather than provide committed funding."
This was most evident during the global financial crisis, when companieswith extremely high levels of short-term debt were able to roll overcredit lines.
"Regardless, liquidity in Asia -- excluding Japan -- seems to haverebounded completely over the last year," Acres goes on to say. "It's nowat the strongest levels in more than three years, fuelled in part by animproving macro-economic environment, as well as overseas investor demandfor diversity and yield."
The result is a growing body of names coming to the debt capital marketsto secure long-term funding.
"Moody's Asian Liquidity Stress Index" can be accessed at www.moodys.com .