Bangkok--19 Jan--Moody's Investors
Moody's Investors Service says that intrinsic liquidity profiles of rated non-financial corporates in Asia Pacific (ex-Japan) have deteriorated as a result of the worse than expected deterioration in the banking and capital markets.
"The proportion of investment-grade issuers with projected funding needs -- meaning their internal available cash sources together with committed available standby facilities are not enough to cover forecasted committed cash obligations for the next 12 months -- rose materially to 47% of our rated investment-grade portfolio as of end-September 2008, from 34% in September 2007," says Clara Lau, a Moody's Group Credit Officer.
"Meanwhile, the proportion of speculative-grade issuers with projected funding needs in the coming 12 months has risen to 29% from 20%," says Lau.
Although the debt maturity profiles of high-yield issuers appear to be relatively light in 2009, actual refunding needs may be higher. This is due to the growing risk of covenant violations in anticipation of weakening operating performances as economic conditions deteriorate.
Lau was speaking on the release of a new Moody's report -- which she authored -- that provides an update on Moody's latest liquidity evaluations for over 220 rated non-financial issuers in Asia Pacific, and examines those sectors and issuers most vulnerable to liquidity and refinancing risk.
The report's assessment of corporate liquidity profiles is based on a Moody's survey of the issuers and an analysis of their financial statements as of the end of September 2008. The assessment is both current and forward looking, incorporating expectations for each issuer's financial performance and refinancing requirements over the next 12 months.
"Moody's expects capital market conditions in 2009 to remain challenging, limiting access to liquidity by corporate issuers," says Lau.
Moody's estimates that 8% of rated non-financial corporates, mainly consisting of low investment-grade and speculative-grade issuers in the region -- with weaker than expected performance and/or high leverage - are more exposed to liquidity and refunding uncertainties in the coming 12 months. These investment-grade issuers, most with their ratings carrying negative implications, could be exposed to large rating migrations in case their refinancing exercises do not eventuate as anticipated.
The report also notes that weaker players in cyclical industries, such as technology, property and shipping; and highly-leveraged industrial and energy companies, are among the more exposed to refinancing uncertainty over the next 12 months.
The report is entitled, Refinancing Risk Rises for Corporate Issuers in for Asia-Pacific (ex-Japan) as Liquidity Profiles Deteriorate, and can be found at .
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