Moody's Asian liquidity stress indicator improved in December

  • Economy
  • Friday, 15 Jan 2021

KUALA LUMPUR: The Asian Liquidity Stress Indicator (ALSI) decreased slightly to 32.6 per cent in December from 33.6 per cent in November, but remains well above the long-term average, Moody’s Investors Service said.

In a statement today, it said that the ALSI remains elevated as liquidity remains weak for 45 of 138 rated high-yield companies.

The ALSI measures the percentage of high-yield (HY) companies with Moody's weakest speculative-grade liquidity score as a proportion of the total number of corporate family ratings.

The indicator decreases when liquidity across the portfolio broadly improves.

As of Dec 31,2020, Moody's rated 145 HY companies, of which 138 are included in its indicator.

"Liquidity stress increased significantly in 2020 for the rated HY portfolio amid extensive coronavirus disruptions and tightening credit conditions.

"Despite some improvement in recent months, the ALSI remains well above the pre-pandemic level of 29.4 per cent, ” said senior vice-president Annalisa Di Chiara in a statement today.

She noted that the ALSI remains significantly weaker than the United States’ Liquidity Stress Indicator (LSI) and Europe, the Middle East and Africa LSI, as relationship banking - which relies on rolling over short-term and uncommitted credit lines rather than committed levels of funding - is far more common in Asia than in other major economic regions.

Meanwhile, Moody's South and Southeast Asian sub-indicator continued its improving trend to 37.5 per cent in December from 40.0 per cent in November and a record high of 54.8 per cent in June.

It added that the North Asian sub-indicator remained stable at 30.6 per cent in December, with the China industrials sub-indicator improving to 58.1 per cent in December from 60.0 per cent in November.

Rated HY issuance reached US$1.2 billion in December, pushing full-year issuance to US$37.7 billion - the second-highest annual level on record, with 76 per cent of total issuance coming from China property companies in 2020. - Bernama

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