Bangkok--8 Nov--Moody's Investors
Moody's Investors Service says that the overall rating trend for non-financial corporates in Asia Pacific -- which includes Asia, Australia/New Zealand and Japan -- remained broadly stable 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 rated Japanese corporates is likely to remain negative," says Clara Lau, a Moody's Group Credit Officer.
"During the quarter, for the rated Asian portfolio (ex Japan), there were a total of 7 negative rating actions, outnumbering the two positive actions," adds Lau.
Lau was speaking on the release of Moody's review of rating trends in Asia Pacific during 3Q 2011, and which she authored.
Specifically, for the Asian-rated portfolio, negative pressure was most notable in the real estate and shipping sectors, according to the report.
In this context, Chinese real estate developers accounted for the bulk of the negative trend due to tight liquidity and slowing sales, while four of Moody's six rated shipping companies had negative outlooks. The outlook for these issuers reflects the possible deterioration in their credit fundamentals as a result of weakening economic and operating conditions.
For Australia and New Zealand, the overall trend is fairly balanced between negative and positive actions. During Q3 2011, there were three negative actions,to the same number as in Q2 2011 while there were two positive actions, up from none in the second quarter.
In Japan, the number of rating actions in the previous 2Q 2011 was skewed by actions prompted by the review for possible downgrade of the sovereign rating. As a number of corporate ratings were confirmed after Japan's downgrade, 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 to six in 3Q 2011 from seven in 2Q 2011, and still outnumbering the two positive actions.
Looking ahead, Moody's expects the rating trend to remain broadly stable for Asian- rated issuers -- except under a scenario of severe contagion from sovereign and banking stresses in Europe -- but with negative pressure increasing in the more cyclical sectors, namely the Chinese property and shipping sectors.
For Australia/New Zealand, negative rating pressure is likely for telecommunications operators due to regulatory changes, as well as the airlines, which face a challenging operating environment.
And for Japan, the negative rating trend is likely to continue, given the weak domestic economy, global economic uncertainty, and a strong yen, which weakens export competitiveness.
The report is entitled, Rating and Outlook Trends For Asia Pacific Non-Financial Corporates 3Q 2011. It can be found at www.moodys.com