Bangkok--3 Jul--Moody's Moody's Investors Service says that a negative rating trend prevailed in its corporate portfolio for Asia Pacific (ex-Japan) in 2Q2008 as negative actions outpaced positive actions 15 to zero. "The trend was essentially a continuation from previous quarters," says Clara Lau, a Moody's Senior Vice President, adding, "Of the 15 negative rating actions in 2Q2008, Asian companies accounted for 11 -- with over half being speculative grade issuers -- and Australian corporates four." "For the rest of the year, Moody's retains its negative credit outlook for corporates in the region in view of a continued tight credit environment and anticipated weakening of credit metrics, arising in turn from ongoing margin pressure and/or high interest rates," says Lau. Lau's comments were contained in Moody's just-released update of corporate credit trends in Asia Pacific (ex-Japan) for 2Q 2008. Looking ahead, Lau identifies three issues/developments as core drivers for regional corporate ratings. "These include ongoing tight liquidity, underscored by credit market volatility and the fragility of investor confidence; and increasing pressure on operating margins and thus a potential weakening in credit metrics in face of macro-economic uncertainties and spiraling raw material and fuel costs;' says Lau. "Thirdly, governments in the region are facing challenges in balancing fiscal discipline with the need to protect households from inflation, and the increasing pressure to contain inflation points to increases or potential rises in interest rates, which further add to the interest burdens of corporates," adds Lau. Looking back at 2Q2008, debt-funded acquisitions or expansions were the major driver for the negative actions followed by poor operating performances, the report says. Property firms accounted for 30% of the negative rating actions, the most for any sector. Meanwhile, telecom firms continue to constitute the only sector with as the most positive outlooks . As a non-cyclical sector with domestically focused sales, the telecoms business is less subject to the decline in global economic growth. The report, entitled "2Q 2008 Corporate Credit Trends in Asia Pacific (ex-Japan)", is available at www.moodys.com . Managing Director Corporate Finance Group Moody's Investors Service Pty Ltd JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Hong Kong Clara Lau Senior Vice President Corporate Finance Group Moody's Asia Pacific Ltd. JOURNALISTS: (852) 2916-1150 SUBSCRIBERS: (852) 3551-3077