"The forecast for 2015 reflects our central macroeconomic scenario. We believe global GDP growth will not rebound significantly over the next two years, with the exception of the US and UK economies. In addition, while China's economic growth will slow, it should achieve a GDP growth rate of just below 7% in 2015," says Clara Lau, a Moody's Group Credit Officer.
"Our forecast for 2015 also incorporates our expectation that the liquidity levels of Asian high-yield corporates will remain sufficient given the recent signs of monetary easing by the Chinese, Japanese and European governments," adds Lau.
Moody's report points out that the total number of defaults in 2014 jumped to five from two in 2013. As a result, the trailing 12-month high-yield default rate for Asian non-financial corporates finished 2014 at 3.9%, up from 2.2% in 2013.
Three of the defaulters were from the metals and mining sector, reflecting the very challenging operating environment of the industry.
Of the five defaulters in 2014, three were Chinese issuers. Moody's report says that the trailling 12-month high yield default rate for its Chinese issuer portfolio was at 5.1% at end-2014, higher than the average default rate for its entire Asian portfolio.
As for a comparison between regions, the forecasted 2.9% default rate for high-yield corporates in Asia in 2015 is in line with the low estimated default rates for US corporates at 2.9% and for Europe at 2.1% , despite their slightly rising trend compared to the previous year.
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