Asean debt market to see sustained growth next year: Moody's

 

In its latest edition of Inside Asean, a quarterly publication looking at major credit trends prevalent in the Southeast Asian region, Moody's expected real GDP growth to accelerate across the region next year. Political risk has subsided in Indonesia and Thailand, which will help to re-ignite domestic demand. Meanwhile, Vietnam is slowly emerging from a period of external rebalancing and banking system instability. In Malaysia, the only country where it sees a slight growth moderation from 2014, headline economic expansion will nonetheless remain firmly above trend.

"Generally supportive macroeconomic and market conditions, and the implementation of Basel III capital requirements will provide a favourable backdrop for issuers to tap the market," said Rahul Ghosh, a Moody's Vice President and Senior Research Analyst.

Moody's expects real GDP growth to accelerate across the region next year, as political risk subsides in Indonesia and Thailand, and Vietnam emerges from a period of external rebalancing and banking system instability.

However, Moody's says the regional average fiscal deficit should register 2.3 per cent of GDP in 2015, and ambitious infrastructure programmes will require 

heavy government funding, predominantly from onshore sources, but also from offshore funding.

Moody's analysis also explores the still-fragmented Asean corporate landscape, noting that deeper financial integration between Asean member 

states is needed to boost intra-regional corporate expansion, currently stymied by deep differences in regulations and corporate governance.