Moody's Asian Liquidity Stress Index falls in July
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Moody's Investors Service's Asian Liquidity Stress Index declined for a third straight month to 20.2 per cent in July from 23.9 per cent in June.
The index, which decreases when speculative-grade liquidity appears to increase, is at its lowest level since July of last year, when it was 16.8 per cent, but remains historically high.
“The LSI has decreased gradually from its recent high of 29.1 per cent in October 2012. The July decline resulted from a net decrease in the number of companies with our lowest [weakest] speculative-grade liquidity score,” or SGL-4, Laura Acres, a senior vice president, said yesterday. “The total number of rated high-yield companies also increased by one to 114, which further contributed to the overall improvements in this month’s Asian LSI.”
The liquidity sub-index for Chinese speculative-grade companies fell to 25.4 per cent from 28.8 per cent in June as the number of Chinese companies with an SGL-4 score decreased by two.
The number of rated Chinese high-yield corporations was unchanged at 59. China’s high-yield property index also fell to 26.5 per cent from 29.4 per cent in June, as one company left the SGL-4 roster.
The Indonesian sub-index, which was 8.0 per cent in May and June, plunged to 3.8 per cent in July, reflecting the departure of one company from the SGL-4 list.
Australia was unchanged from June at 6.7 per cent.
High-yield-rated bond issuance slowed further after the strong start early this year. However, issuance so far this year, at US$17 billion (Bt584 billion), is still higher than the annual totals for each of the previous three years.
Looking ahead, the high-yield default rate for Asia-Pacific ex-Japan corporations will stay at a low 2 per cent this year, according to Moody’s Credit Transition Model. The rate trended downwards during the first half of the year and will rise mildly in the second half. The 2 per cent translates into one or two potential defaults.
