Moody’s Asian Liquidity Stress Index slips in May


  • Corporate News
  • Wednesday, 08 Jun 2016

The property, oil and gas, and metals & mining sectors account for over 60.0% of the SGL-4 scores.

KUALA LUMPUR: Moody’s Investors Service said its Asian Liquidity Stress Index (Asian LSI) fell to 33.6% in May from 34.2% in April and remains at elevated levels due to weak corporate liquidity profiles across Asia.

The international ratings agency said on Wednesday the reading in May was lower than the record high of 37.0% reached in December 2008 amid the global financial crisis but the result was still higher than the trailing 12-month average of 29.3%.
 
“The Asian LSI remains at elevated levels due to weak corporate liquidity profiles across Asia. “In particular, the property, oil and gas, and metals & mining sectors account for over 60.0% of the SGL-4 scores,” added Brian Grieser, a Moody’s vice president and senior analyst.

The total number of Moody’s-rated high-yield companies with SGL-4 scores fell to 39 from 41 in May from April, while the net number of Moody’s-rated high-yield companies fell to 116 from 120. 

The improvement in the Asian LSI during May was largely driven by high withdrawal activity as opposed to a fundamental improvement in underlying liquidity.

The Asian LSI measures the number of Moody’s-rated high-yield companies with the weakest speculative-grade liquidity score of SGL-4. The index rises when speculative-grade liquidity appears to deteriorate.

Moody’s analysis is contained in its just-released monthly report titled “Asian Liquidity Stress Index,” and is authored by Grieser.

The liquidity stress sub-index for North Asian high-yield issuers dropped to 35.1% in May compared to 36.8% in April. Within this portfolio, the Chinese sub-index fell slightly to 37.5% from 37.9%.

The Chinese high-yield property sub-index rose to 30.8% from 28.9%. As for the Chinese high-yield industrial sub-index, the reading fell to 48.0% from 50.0%, due to the high withdrawal level.

The liquidity stress sub-index for South and South-East Asian high-yield issuers increased to 31.0% in May from 29.5% in April; its highest level since Moody’s began tracking the index in September 2010.

The Indonesian sub-index remained at 20.0% month-on-month. During May , Moody’s downgraded six high-yield issuers. There were no upgrades. Between January 1 and May 31 May, Moody’s downgraded 27 high yield issuers and upgraded one.

Across Moody’s portfolio of 116 high-yield companies, the percentage of negative leaning outlooks—meaning ratings with either a negative outlook or on review for downgrade—increased to 40.5% in May from 39.2% in April; the highest tally since September 2010.

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