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| Corporate defaults likely to rise in Asia-Pacific: S&P |
| Press Trust of India / New Delhi Jun 09, 2009, 14:05 IST |
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Global rating agency Standard & Poor's today warned that corporate defaults are likely to rise in the Asia-Pacific region over the next year due to contraction in economic output.
"The region (Asia-Pacific) has not escaped the turmoil in the global economy and the international financial markets," the rating agency said in a research report.
It further said, "Steep declines in exports, especially in East Asia, have led to significant contractions in economic output...In the next year or so, corporate defaults will likely rise as a result."
S&P further said that the worst of the economic dislocation in Asia-Pacific appears to be over, if recent indicators are to be believed.
However, fiscal deterioration resulting from stimulus and banking-sector support measures will continue to put pressure on a number of sovereign ratings in the medium term.
"Recent outlook revisions for India and Taiwan, to negative from stable, reflect the fiscal deterioration associated with providing support for their respective economies," it said. The rating agency further said that recently positive signs have emerged, adding, that the other encouraging signs include a partial recovery in commodity prices, the abatement of deflationary concerns, and less risk aversion among investors.
However, the pressures will mount on banking systems in the region, particularly those that are highly leveraged.
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