Moody's: Asian Liquidity Stress Index rises to 27.4% in October from 26.6% in September
The increase came as the number of rated high-yield companies with the weakest speculative-grade liquidity score (SGL-4) rose to 34 from 33, while the number of rated high-yield companies remained at 124.
The index measures the percentage of high-yield companies with SGL-4 scores and increases when speculative-grade liquidity appears to deteriorate.
"The October decline marks the third straight month in which the Asian LSI has deteriorated, bringing it to a level last seen in late 2012," says Brian Grieser, a Moody's Vice President and Senior Analyst.
"When combined with trends witnessed -- which includes downgrades consistently outpacing upgrades and the number of issuers with a negative leaning outlook rising -- the situation highlights the broad weakening of the credit profiles of high-yield issuers across the region," adds Grieser.
However, the October index remains well below the record high of 37% reached in December 2008 amid the global financial crisis.
The liquidity stress sub-index for North Asian high-yield issuers was 28.8% in October, compared to 27.4% in September 2015. Within this portfolio, the Chinese sub-index remained at 28.1%, as the number of Chinese companies with SGL-4 scores stayed flat at 18, while the total number of high-yield Chinese companies remained at 64.
The Chinese high-yield property sub-index was unchanged at 24.3% as the number of companies with SGL-4 scores remained at 9, and the total number of rated property developers stayed at 37.
Meanwhile, the Chinese high-yield industrial sub-index remained at 33.3%, as the number of industrial issuers was unchanged at 27, while companies with SGL-4 scores stayed at 9.
The liquidity stress sub-index for South and Southeast Asian high-yield issuers remained at 25.5% in October. The Indonesian sub-index was still elevated at 20.8% as the number of Indonesian companies with SGL-4 scores remained at 5 and the total number of high-yield Indonesian companies stayed at 24.
Moody's further notes the absence of any rated high-yield bond issuance in October, the third month in 2015 with no recorded issuance. In fact, Asian high-yield issuance in 2015 has slowed to the lowest level since 2012.
In addition, in October, Moody's downgraded three high-yield issuers and upgraded two, closing out the month with a downgrade/upgrade ratio of 1.50x.
Across Moody's portfolio of 124 rated high-yield issuers, the percentage of negative leaning outlooks -- meaning ratings with either a negative outlook or on review for downgrade -- increased to 30.6% in October from 28.2% in September.
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