Bangkok--4 Nov--Moody's Investors
Moody's Investors Service says that itsAsian Liquidity Stress Index (LSI) remained stable in October, with 9.6%of its rated speculative-grade portfolio demonstrating inadequateliquidity against 9.7% in September.
"The index, which declines when corporate liquidity increases, has beenbetween 9.6% and 13% since the start of 2011, and the marginal change inOctober was due to the addition of an issuer, rather than any improvementin the number of companies in the SGL-4 category, which remains at 10,"says Laura Acres, a Moody's Vice President and Senior Analyst.
SGL-4 is the lowest speculative-grade liquidity score an individualcompany can receive.
"Looking ahead, the peak of the credit cycle has passed and from now onwe are likely to see stability and then a gradual deterioration of theAsian LSI, as companies have to raise money to address upcoming debtmaturities, although such refinancing risk is expected to remainmanageable," says Acres.
"We note that no issuer has accessed the bond markets during the secondhalf of 2011, and instead issuers are looking to domestic and regionalbanking markets to refinance lines of credit and funds for capitalexpenditure," says Acres.
The total amount of rated debt outstanding in October remained stable at$48.8 billion, versus $48.9 billion in September.
The liquidity of Chinese property companies -- a key focus of thefinancial markets -- remained stable at 11.5% in October. And Moody'sbelieves that most of the rated developers are adequately positionedagainst near-term liquidity challenges.
Historically, the percentage of speculative-grade Indonesian companieswith inadequate liquidity has been higher than the overall Asianportfolio, but the report notes that for the past three months, it has
remained stable at 8%, reflecting support from domestic and regionalbanks with committed term financing.
The monthly index looks at looks at liquidity trends throughout theAsia-Pacific region (excluding Japan and Australia) for thespeculative-grade companies Moody's rates, and quantifies the proportionof companies with inadequate liquidity.
The report is entitled Moody's Asia Liquidity Stress Index. It can befound at www.moodys.com