Hong Kong, November 21, 2013 -- Moody's Investors Service says the overall
credit quality of sovereigns, corporations and financial institutions in
Asia Pacific will be stable over the next 12 months.

"The Asian region can withstand increased headwinds that are likely in
2014, including slower economic growth in China, the US Federal Reserve
scaling back on its bond-buying program and the potential bursting of
asset bubbles," says Michael Taylor, Moody's Managing Director and Chief
Credit Officer for Asia Pacific.

Moody's conclusions are contained in its just-released report titled
"Asian Credit Is Stable, Despite Strengthening Headwinds."

"We do not expect balance-of-payments crises when the US Federal Reserve
scales back its bond-buying program, even in countries which have
recently been under greatest exchange rate pressure," says Taylor.

"Sovereigns have built up large reserve buffers and used flexible
exchange rates to absorb shocks, and most banking systems are funded
with deposits and have little offshore wholesale funding exposure, with
the exceptions of Korea, Australia and New Zealand," adds Taylor.

On possible asset bubbles, Taylor says the banking sector has significant
buffers against falling real estate prices, owing to generally low
loan-to-value ratios and strong regulatory oversight.

"In addition, refinancing risk is manageable for the Asia Pacific
corporates that we rate, as most of the maturities are for
investment-grade companies that are blue chips in their home or regional
markets and will continue to have access to domestic banking systems and
local bond markets," says Taylor.

"However, in Japan, while evidence is growing that efforts to revitalize
the economy through Abenomics are gaining traction, the gains so far have
been temporary. Sustained growth can only be achieved through supply-side
measures, labor market reforms and deregulation," adds Taylor.

According to Moody's report, the slow pace of recovery in the advanced
economies is constraining demand for the region's exports, as the
advanced economies remain the most significant sources of external demand
for Asia.

The report points out that while China has grown in importance as a source
of regional demand, the US and EU are still much more significant
destinations for the region's exports. In addition, Moody's report says
growth in China should be slower in future than in the past three decades.

Moody's report also says that slower growth in China will have adverse
effects on the economic growth and government finances of countries that
export natural resources, and there have already been some signs of an
impact in Australia and Indonesia. Manufacturers' exports from Japan,
Korea and most ASEAN economies have also suffered from a drop in demand
from China.

In addition, Moody's report says the recent communique from the third
plenum of the 18th Congress of the Communist Party of China (CPC) --
which sets specific benchmarks for key social, environmental and economic
reforms -- is important in addressing China's main challenges, such as
the need for greater economic and financial reforms to sustain growth.