Moody's: Asian Liquidity Stress Indicator improves; falls to 26.2% in Dec 2017 from 26.4% in Nov and 30.3% at end-2016

Moody's Investors Service says that its Asian Liquidity Stress Indicator (Asian LSI) fell to 26.2% in December 2017 from 26.4% in November and 30.3% at the end of 2016, signifying an improvement in liquidity for high-yield companies in Asia in December and from the end of 2016.

The Asian LSI measures the percentage of high-yield companies with Moody's weakest speculative-grade liquidity score of SGL-4 as a proportion of high-yield corporate family ratings. The indicator increases when speculative-grade liquidity deteriorates.

"Although Moody's Asian LSI reading remained above the long-term average of 23.1%, highlighting ongoing weakness in liquidity for many companies in Asia, the December figure also marks the strongest year-end reading since December 2014," says Brian Grieser, a Moody's Vice President and Senior Credit Officer.

 

The number of rated high-yield companies with Moody's weakest speculative-grade liquidity score (SGL-4) rose to 39 in 2017 from 37 in 2016. However, the total number of rated high-yield companies increased by 22% to 149 from 122, driving the improvement in the index.

Rated high-yield issuance totaled $0.6 billion in December, raising year-to-date issuance to a record $34.5 billion. The previous high was $23.3 billion in 2013.

The Chinese sub-indicator improved to 29.1% in December from 34.3% in 2016, while the high-yield Chinese property sub-indicator weakened to 23.4% compared to 20% in December 2016.

The Chinese high-yield industrials sub-indicator demonstrated the most significant improvement, falling to 35.9% in December 2017 from 53.3% in December 2016. The improvement was driven by a combination of the recovery in commodity prices and a high level of refinancing activity in 2017.

The liquidity stress sub-indicator for South and Southeast Asian high-yield companies decreased to 23.1% in December 2017 from 26.2% at December 2016. The Indonesian sub-indicator decreased to 22.2% in December 2017 from 26.2% in 2016.

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