Bangkok--Aug 26--Moody's Asia Pacific
Moody's Investors Service says that the very positive trend evident in the last 5 years for corporate ratings in Asia (x Japan, Australia and New Zealand) has so far continued into 2005, although signs of an apparent easing in momentum have recently emerged.
"First, of the 38 upgrades/downgrades recorded to end-July, 33 represented upgrades against just 5 downgrades," Moody's says in a new report, adding, "In dollar terms, the actions respectively affected corporate debt totaling US$36 billion and just over US$3 billion."
While over US$23 billion of the debt upgraded was due to Moody's recent
application of its Joint Default Analysis (JDA) to government related issuers (GRIs), the trend - after excluding the impact of this initiative - is still overwhelmingly positive.
The new Moody's report is entitled, Corporate Credit Rating Trends in
Asia (x Japan): Positive Story Continues into 2005, but Momentum Easing, and authored by Brian Cahill, Managing Director, Corporates Asia Pacific.
Secondly, the report says that a review of rating outlooks for Asia (x
Japan) corporates indicate that for this current cycle, rating improvements may have already peaked, although the credit trend is likely to remain stable to slightly positive for the next 12-18 months.
At the moment, 10% of companies exhibit positive outlooks, or are on
review for upgrade - against 16% at end-2004 - while 7%, against 5%, show negative outlooks, or are on review for downgrade.
If the outlooks prove accurate in their indications of likely rating
actions in the next 18 months or so, then the downgrade/upgrade ratio, while still below 1, may be trending upwards, the report says. As a result, and as stated, the current cycle may have already peaked in regard to improvements in credit quality.
Moreover, the report says that volatility -- in terms of multi-notch
rating changes - has been low. Of 38 rating changes, only 8 exceeded one notch, or 3 out of 22, when the impact of JDA is excluded.
In such cases, downgrades were either due to Philippine sovereign rating
actions or M&A-related activity. China Light and Power in Hong Kong is a high profile example of an M&A-related downgrade.
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Sydney
Brian Cahill
Managing Director
Corporate Finance Group
Moody's Investors Service Pty Ltd
612 9270 8100
Hong Kong
Thomas J. Keller
Managing Director
Asia Pacific
Moody's Asia Pacific Ltd.
Telephone: 852-2509-0200
Facsimile: 852-2509-0165 End.