FRIDAY, March 29, 2024
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Corporate liquidity weakens, says Moody’s

Corporate liquidity weakens, says Moody’s

Moody's Investors Service has announced that its Asian Liquidity Stress Index (Asian LSI) weakened in July, rising to 29.1 per cent from 25.6 per cent in June 2017.

The result suggests a weakening of corporate liquidity. A lower percentage suggests improvement in speculative-grade liquidity.
“The reading moved above the trailing 12-month average of 28.8 per cent for the first time since August 2016, and the rise in the index was driven by an increase in the number of newly rated issuers looking to refinance upcoming maturities,” said Brian Grieser, a Moody's vice president and senior credit officer.
“However, we do not view last month’s deterioration as an indication that there was a broad-based weakening of corporate liquidity in Asia,” adds Grieser
Moody’s analysis is contained in its just-released monthly report titled “Asian Liquidity Stress Index: Asian LSI increases to 29.1% in July from 25.6% in June,” which is authored by Grieser.
The Moody’s report notes that the liquidity stress sub-index for North Asian high-yield companies increased to 27.9 per cent in July, up from 26.2 per cent in June. Within this portfolio, the Chinese sub-index increased to 28.9 per cent from 27 per cent.
Meanwhile, the Chinese high-yield property sub-index increased to 10 per cent from 7.5 per cent, and the Chinese high-yield industrials sub-index remained at 50 per cent.
The liquidity stress sub-index for South and Southeast Asian high-yield companies jumped to 31.3 per cent from 24.4 per cent due largely to the assignment of ratings to first-time issuers with refinancing requirements in the next 12 months. The Indonesian sub-index increased to 26.1 per cent from 19.0 per cent.
Moody’s further notes that the strong high-yield issuance momentum continued in July. Rated high-yield issuance totaled $2.1 billion (Bt 69.9 billion) in July, and year-to-date issuance increased to $23.6 billion, the strongest issuance level since 2013.

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