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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