Moody's outlook on the Korean banking system has been negative since May 2016.
KUALA LUMPUR: Moody's Investors Service's Asian Liquidity Stress Index (Asian LSI) has fallen for a fifth consecutive month to the lowest since August 2015.
The international ratings agency said on Thursday the Asian LSI was at 25.4% in April 2017 from 26.8% in March 2017.
Moody's Asian LSI measures the percentage of high-yield companies with the weakest speculative-grade liquidity score of SGL-4, and increases when speculative-grade liquidity appears to deteriorate.
"The strong high-yield issuance momentum continued in April 2017, with Moody's-rated high-yield issuance totaling US$3.2bil during the month," said a Moody's vice president and senior credit officer Annalisa Di Chiara.
She said the majority of the bond proceeds has been used for refinancing upcoming maturities, supporting some of the improvement in the Asian LSI.
Year-to-date bond issuance of US$13.2bil is at the strongest level for comparable periods since 2013.
"However, despite five straight months of improvement, the Asian LSI reading remains above the long-term average of 22.8%, highlighting ongoing weakness in liquidity for many companies in Asia," said Di Chiara.
Moody's analysis is contained in its just released monthly report titled "Asian Liquidity Stress Index: Asian LSI drops to 25.4% in April from 26.8% in March," and is authored by Di Chiara.
The liquidity stress sub-index for North Asian high-yield companies fell to 25.0% in April 2017 from 26.6% in March 2017. Within this portfolio, the Chinese sub-index fell to 25.7% from 27.5%.
The Chinese high-yield property sub-index fell to 10.0% from 12.5%, its lowest level since October 2011. The Chinese high-yield industrial sub-index fell to 46.7% from 48.3%.
The liquidity stress sub-index for South and Southeast Asian high-yield companies dropped to 26.1% in April 2017 from 27.3% in March 2017, with the Indonesian sub-index falling to 22.7% from 23.8%.
Moody's report points out that the number of Moody's-rated high-yield companies with Moody's weakest speculative-grade liquidity score of SGL-4 fell to 32 in April 2017 from 33 in March 2017, while the total number of rated high-yield companies increased to 126 from 123 during the same period.
At end-April 2017, Moody's rated 126 speculative-grade non-financial corporates in Asia — excluding Japan and Australia — with rated debt of US$69.7bil.
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