Singapore — Moody’s Investors Service says that its Asian Liquidity Stress Index (Asian LSI) weakened in July, rising to 29.1% from 25.6% in June 2017.
The Asian LSI measures the percentage of high-yield companies with SGL-4
scores as a proportion of high-yield corporate family ratings (CFRs) and
decreases when speculative-grade liquidity improves.
“The reading moved above the trailing 12-month average of 28.8% for the
first time since August 2016, and the rise in the index was driven by an
increase in the number of newly rated issuers looking to refinance
upcoming maturities,” says Brian Grieser, a Moody’s Vice President and
Senior Credit Officer.
“However, we do not view last month’s deterioration as an indication that
there was a broad-based weakening of corporate liquidity in Asia,” adds
Moody’s analysis is contained in its just-released monthly report titled
“Asian Liquidity Stress Index: Asian LSI increases to 29.1% in July from
25.6% in June,” and is authored by Grieser.
The Moody’s report points out that the liquidity stress sub-index for
North Asian high-yield companies increased to 27.9% in July from 26.2% in
June. Within this portfolio, the Chinese sub-index increased to 28.9%
Meanwhile, the Chinese high-yield property sub-index increased to 10%
from 7.5%, and the Chinese high-yield industrials sub-index remained at
The liquidity stress sub-index for South and Southeast Asian high-yield
companies jumped to 31.3% from 24.4% due largely to the assignment of
ratings to first-time issuers with refinancing requirements in the next
12 months. The Indonesian sub-index increased to 26.1% from 19.0%.
Moody’s further notes that the strong high-yield issuance momentum
continued in July. Rated high-yield issuance totaled $2.1 billion in
July, and year-to-date issuance increased to $23.6 billion, the strongest
issuance level since 2013.