Bangkok--8 Nov--Moody's Investors
Moody's Investors Service says that theoverall rating trend for non-financial corporates in Asia Pacific --which includes Asia, Australia/New Zealand and Japan -- remained broadlystable in 3Q 2011 when compared with 2Q 2011.
"At the same time, some negative pressures have emerged for Asian(ex-Japan) rated corporates, while the rating trend for the ratedJapanese corporates is likely to remain negative," says Clara Lau, aMoody's Group Credit Officer.
"During the quarter, for the rated Asian portfolio (ex Japan), there werea total of 7 negative rating actions, outnumbering the two positiveactions," adds Lau.
Lau was speaking on the release of Moody's review of rating trends inAsia Pacific during 3Q 2011, and which she authored.
Specifically, for the Asian-rated portfolio, negative pressure was mostnotable in the real estate and shipping sectors, according to the report.
In this context, Chinese real estate developers accounted for the bulk ofthe negative trend due to tight liquidity and slowing sales, while fourof Moody's six rated shipping companies had negative outlooks. Theoutlook for these issuers reflects the possible deterioration in theircredit fundamentals as a result of weakening economic and operatingconditions.
For Australia and New Zealand, the overall trend is fairly balancedbetween negative and positive actions. During Q3 2011, there were threenegative actions,to the same number as in Q2 2011 while there were twopositive actions, up from none in the second quarter.
In Japan, the number of rating actions in the previous 2Q 2011 was skewedby actions prompted by the review for possible downgrade of the sovereignrating. As a number of corporate ratings were confirmed after Japan'sdowngrade, the number of negative rating actions on Japanese corporates
declined significantly in 3Q 2011.
Nonetheless, the rating trend for Japanese corporates remains negative,the Moody's report says. After disregarding the sovereign-relatedactions, the number of negative rating actions only dropped slightly tosix in 3Q 2011 from seven in 2Q 2011, and still outnumbering the twopositive actions.
Looking ahead, Moody's expects the rating trend to remain broadly stablefor Asian- rated issuers -- except under a scenario of severe contagionfrom sovereign and banking stresses in Europe -- but with negativepressure increasing in the more cyclical sectors, namely the Chineseproperty and shipping sectors.
For Australia/New Zealand, negative rating pressure is likely fortelecommunications operators due to regulatory changes, as well as theairlines, which face a challenging operating environment.And for Japan, the negative rating trend is likely to continue, given theweak domestic economy, global economic uncertainty, and a strong yen,which weakens export competitiveness.
The report is entitled, Rating and Outlook Trends For Asia PacificNon-Financial Corporates 3Q 2011. It can be found at www.moodys.com