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Moody's Investors Service says that its Asian Liquidity Stress Index (Asian LSI) weakened in June, rising to 25.6% from 25.2% in May 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.
"The June figure ends six months of continuous improvement, and the reading now remains just above the long-term average of 22.9%, highlighting that weak liquidity is still a concern for many companies in Asia," says Brian Grieser, a Moody's Vice President and Senior Credit Officer.
The Moody's report points out that the liquidity stress sub-index for North Asian high-yield companies increased to 26.2% in June from 24.7% in May, and within this portfolio, the Chinese sub-index rose to 27% from 25.4%.
Meanwhile, the Chinese high-yield property sub-index remained at 7.5% in June, an all-time low.
The Chinese high-yield industrials sub-index also increased to 50% from 48.4%.
The South and Southeast Asian liquidity stress sub-index also improved to 24.4% in June from 26.1% in May, and the Indonesian sub-index decreased to 19% from 22.7%, the lowest level since November 2015.
Moody's further notes that the strong momentum seen in high-yield issuance this year continued in June. Rated high-yield issuance totaled $5.4 billion in the month, driven by China Evergrande Group's (B2 stable) issuance of $3.8 billion of new notes.
June's total also raised year-to-date issuance to $21.6 billion, which is near the $23.3 billion issued in 2013, the strongest level in the past five years.
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