KUALA LUMPUR: Weak liquidity is still a concern for many companies in Asia though Moody's Investors Service's Asian Liquidity Stress Index (Asian LSI) showed an improvement in August.
The ratings agency said on Monday its Asian LSI improved in August, decreasing to 26.8% from 28.5% in July 2017.
The Asian LSI measures the percentage of high-yield companies with SGL-4 scores as a proportion of high-yield corporate family ratings (CFRs) and decreases when speculative-grade liquidity improves.
A Moody's vice-president and senior credit officer Brian Grieser said the reading remained above the long-term average of 23.0%, highlighting that weak liquidity is still a concern for many companies in Asia.
"Since the peak reading of 34.2% in April 2016, the number of companies with the weakest score of SGL-4 has declined by four, while the total number of high-yield companies increased by 18," he added.
Moody's analysis is contained in its just-released monthly report titled "Asian Liquidity Stress Index: Asian LSI decreases to 26.8% in August from 28.5% in July".
The Moody's report points out the liquidity stress sub-index for North Asian high-yield companies decreased to 25.0% in August from 27.6% in July.
Within this portfolio, the Chinese sub-index decreased to 25.6% from 28.6%.
Meanwhile, the Chinese high-yield property sub-index decreased to 9.5% from 9.8%, and the Chinese high-yield industrials sub-index decreased to 44.4% from 50%.
As for South and Southeast Asian high-yield companies the liquidity stress sub-index for remained at 30%, while the Indonesian sub-index remained at 26.1%.
Moody's pointed out the strong high-yield issuance momentum continued in August.
Rated high-yield issuance totaled US$4.4bil in August, raising year-to-date issuance to a record level of US$29.6bil.
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