Bangkok--12 Feb--Moody's Investors
Moody's Investors Service says in a new report that 2009 will be a challenging year for the credit profiles of Moody's-rated Australian non-financial corporates in view of deteriorating economic trends; meanwhile, it will also take some time to see if the stimulatory policies from various governments can successfully invigorate market confidence.
"Elevated aversion to risk among banks and investors and tightened access to cross-border funding has lead to increased refinancing risk, particularly in Australia where tight liquidity (and thus credit availability) has been exacerbated by offshore banks seeking to reduce loan books in Australia and onshore banks' restricted access to offshore funding markets," says Brian Cahill, Moody's Managing Director for Corporate Ratings Asia Pacific.
The Australian property sector -- and those construction firms closely related to the sector -- came under the most pressure last year, while the sudden and dramatic collapse in commodity prices has also affected some rated corporates, says the report.
The downward credit trend for corporates in Australia and New Zealand is expected to continue in line with the region's overall trend. About 30% of Asia-rated corporate portfolios carry negative rating implications compared to 20% at the beginning of the year.
"While the default rate among rated non-financial companies in Asia Pacific (ex-Japan) was low with only 2 defaults in 2008, the default rate is likely to rise in 2009 as weaker companies face liquidity pressure and declining demand," says Cahill.
"The number of distressed exchanges is also expected to increase as investors accept exchanges at a discount in recognition of sharply lower market prices for debt compounded by a lack of market access for some companies," he adds.
The report, entitled, "2009 Asia-Pacific (ex Japan) Corporate Credit Trends -- Choppy Ride Ahead as Markets await Resolution of Economic and Financial Woes," can be found at www.moodys.com.
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Sydney
Brian Cahill
Managing Director
Corporate Finance Group
Moody's Investors Service Pty Ltd
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Hong Kong
Clara Lau
Senior Vice President
Corporate Finance Group
Moody's Asia Pacific Ltd.
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