Moody's: Asia Pacific corporates to see stable rating trend in 2H 2017

Moody's Investors Service says that the stable rating trend for non-financial corporates in Asia Pacific during 2Q 2017 (the three months ended 30 June 2017) will likely continue through 2H 2017 (the six months ending 31 December 2017).

"The stable rating trend for 2H 2017 will be supported by broadly-based global growth, stronger export demand, and the recovery of commodity prices," says Clara Lau, a Moody's Group Credit Officer.

Moody's report points out that the share of ratings with negative implications for non-financial corporates in Asia (excluding Japan, Australia and New Zealand) slid to 19% at end-June 2017 from 29% at end-March 2017.

 

As a result, the share of ratings with stable outlooks rose to 74% at end-2Q 2017, the highest since the 75% seen at end-1Q 2015.

In Moody's Japanese portfolio for non-financial corporates, the share of ratings with negative implications dropped to 24% at end-2Q from 29% the previous quarter.

And, in Moody's Australian portfolio for non-financial corporates, the share of ratings with negative implications stayed at 12%, which was notably lower than the peak of 23% at end-2Q 2016.

Moody's report also explains that the pressure on companies in the metals & mining industry is easing, as the industry bottomed out. In Moody's Asian (excluding Japan, Australia and New Zealand) portfolio, the share of ratings with negative implications for metals & mining issuers dropped to around 27% at end-June 2017 from 60% at end-March 2017.

By contrast, companies in the retail segment are under pressure, with more than 30% of retailers carrying ratings with negative implications.

For the property sector, 23% of developers' ratings show negative implications, because national sales are slowing and regulatory measures tightening.

During 2Q 2017, the share of negative rating actions (20) excluding 28 sovereign-driven actions slightly outpaced the 15 positive rating actions for Moody's non-financial corporates in Asia Pacific.

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