Bangkok--29 Jul--Moody's Investors Service Moody's Investors Service projects that only some 7% of non-financial corporate issuers in the region with financial covenants in their loans are significantly more vulnerable -- when compared to the rest of the Moody's portfolio -- to breaching them in the next 12 months. "Such significant vulnerability is defined as a situation in which Moody's considers a company as having a 50% or greater likelihood of breaching a covenant, and such breaches have the potential to result in an acceleration in the repayment of loan obligations," says Clara Lau, Moody's Chief Credit Officer for corporate ratings in Asia Pacific (ex-Japan). "Aside from the 7% which are significantly more vulnerable to covenant breaches, Moody's does not have major near-term credit concerns with the other companies showing what we describe as 'tight' or 'restrictive' headroom relative their covenants," says Lau in a new Moody's report. "This is because the others in these two 'tight' and 'restrictive' categories have mitigating characteristics, such as very stable operating cash flows, meaning the actual risk of breaching covenants is relatively low, notwithstanding the low headroom, cash/committed liquidity reserves to take out their loans, if necessary, or strong business franchises," says Lau. "Furthermore, Moody's believes that the significant risk of covenant breaches is adequately captured in the ratings of the relevant 7%, the majority of which are speculative grade issuers, mostly rated single B," says Lau. "Vulnerability to breaches throughout Asia Pacific is company rather than industry specific; that is, spread over a wide range of sectors, and the corporates affected are geographically diverse with a slight concentration in Indonesian issuers," adds Lau. "In terms of commonalities, most of the more vulnerable companies show weak operating and financial profiles, including tight liquidity," says Lau. The new Moody's report also says in its explanation of the situation that given greater risk aversion, because of the tight credit environment, creditors appear to have become more reluctant to waive or amend covenants for some borrowers. The current situation contrasts sharply with previous few years when most firms easily negotiated waivers or amendments with minimal rises in loan pricing, or one-off fees, due to loose credit conditions and strong economic growth. The report is entitled "Asia Pacific Corporates Covenant Analysis: Only Small Number at Risk of Material Breaches." Copies can be found at www.moodys.com. NOTE TO JOURNALISTS ONLY: For a copy of these reports, please contact EMEA Press Information in London +44-20-7772-5456; New York Press Information +1-212-553-0376; Juan Pablo Soriano in Madrid +34-91-310-1454; Alex Cataldo in Milan +39-02-914-81-100; Eric de Bodard in Paris +331-5330-1076; Detlef Scholz in Frankfurt +49-69-707-30-700; Mardig Haladjian in Limassol +357-25-586-586; Alex Sazhin in Moscow +7495-641-1881; Petr Vins in Prague +4202 2422 2929; Tokyo Press Information +813-5408-4110; Hilary Parkes in Toronto +1-416-214-1635; Hong Kong Press Information +852-2916-1150; Hector Lim in Sydney +612 9270 8102; Luiz Tess in S?o Paulo +5511-3043-7300; Alberto Jones Tamayo in Mexico City +5255-1253-5700; Daniel R?as in Buenos Aires +54 11-4816-2332 ext. 105; Craig Jamieson in Johannesburg +27-11-217-5470; Jehad el-Nakla in Dubai +971 4 365 0284; or visit our web site at www.moodys.com Hong Kong Clara Lau Senior Vice President Corporate Finance Group Moody's Asia Pacific Ltd. JOURNALISTS: (852) 2916-1150 SUBSCRIBERS: (852) 3551-3077 Sydney Brian Cahill Managing Director Corporate Finance Group Moody's Investors Service Pty Ltd JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100