Moody's: Asian Liquidity Stress Index improves to lowest level since August 2015

Moody's Investors Service says that its Asian Liquidity Stress Index (Asian LSI) has fallen for a fifth consecutive month, registering 25.4% in April 2017 from 26.8% in March 2017.

Moody's Asian LSI measures the percentage of high-yield companies with the weakest speculative-grade liquidity score of SGL-4, and increases when speculative-grade liquidity appears to deteriorate.

"The strong high-yield issuance momentum continued in April 2017, with Moody's-rated high-yield issuance totaling $3.2 billion during the month," says Annalisa Di Chiara, a Moody's Vice President and Senior Credit Officer. "The majority of the bond proceeds has been used for refinancing upcoming maturities, supporting some of the improvement in the Asian LSI."

 

Year-to-date bond issuance of $13.2 billion is at the strongest level for comparable periods since 2013.

"However, despite five straight months of improvement, the Asian LSI reading remains above the long-term average of 22.8%, highlighting ongoing weakness in liquidity for many companies in Asia," adds Di Chiara.

The liquidity stress sub-index for North Asian high-yield companies fell to 25.0% in April 2017 from 26.6% in March 2017. Within this portfolio, the Chinese sub-index fell to 25.7% from 27.5%. And, the Chinese high-yield property sub-index fell to 10.0% from 12.5%, its lowest level since October 2011. The Chinese high-yield industrial sub-index fell to 46.7% from 48.3%.

The liquidity stress sub-index for South and Southeast Asian high-yield companies dropped to 26.1% in April 2017 from 27.3% in March 2017, with the Indonesian sub-index falling to 22.7% from 23.8%.

Moody's report points out that the number of Moody's-rated high-yield companies with Moody's weakest speculative-grade liquidity score of SGL-4 fell to 32 in April 2017 from 33 in March 2017, while the total number of rated high-yield companies increased to 126 from 123 during the same period.

At end-April 2017, Moody's rated 126 speculative-grade non-financial corporates in Asia excluding Japan and Australia with rated debt of $69.7 billion.

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