Moody’s: Asian high-yield market shows record rated issuance in 2017

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Momentum to carry into Q1 2018

Hong Kong — Moody’s Investors Service says that the Asian high-yield bond market has shown record levels of rated issuance across all markets in 2017, with momentum set to carry into 1Q 2018.

“A total of $34.5 billion was issued in 2017 — up significantly from $11.4 billion in 2016 and well above the previous record high of $23.3 billion in 2013,” says Annalisa DiChiara, a Moody’s Vice President and Senior Credit Officer.

“Investor tolerance for low credit quality and issuers’ refinancing needs continued to drive rated issuance in the Asian high-yield market,” says

“And the ratio of companies rated B3 and below fell to 14.8% at 31 December 2017 from 15.4% at 30 September, as the number of corporate
family ratings (CFRs) climbed to 149 from 143 in this period,” says DiChiara.

Newly assigned CFRs also maintained momentum at 11 in Q4 2017, helping
drive the number of first-time CFRs assigned during the year to a record of 41.

The report “Asian High Yield Interest Chartbook” says that refinancing risks remain manageable as, absent any exogenous shocks, the market has the capacity to absorb upcoming maturities.

Meanwhile the Asian Liquidity Stress Indicator (ALSI) decreased to 26.2%
at 31 December 2017 from 27.3% at 30 September, indicating refinancing
risk remains for some existing issuers. Although the reading remains above the long-term average of 23.1%, it marks the strongest year-end reading since December 2014.

A total of $5.1 billion of rated bonds will mature by 31 December 2018 and $162.3 billion of rated and unrated bonds will mature through to 2021.

A total of 10 issuers accounted for 37.5% of the $76.7 billion of rated debt outstanding at 31 December 2017.