Moody's expects negative rating trend for Asian corporates
Reduced investor appetite for high-yield bonds will restrain the prospects for Asian corporate issuers, Moody's said adding that the availability of credit will tighten due to deleveraging by banks in developed markets, and risk aversion among investors a
Moody's expects a negative rating trend for Asian corporates this year amid a challenging global economic environment wherein both developed and emerging economies are witnessing slower growth.
The global rating agency believes there will be negative rating trend for Asian corporates in 2012, signalling that there will be more downgrades than upgrades this year.
Meanwhile, certain sectors and firms which are "most vulnerable to adverse policy tightening, cyclicality, and excess capacity" are at greater risk, Moody's said.
These sectors include Chinese property developers, and the regional steel, oil and gas, refining and marketing, as well as technology and semiconductor sectors.
"Looming sovereign-credit and financial crises have subdued business sentiment and consumer confidence, while expected austerity measures in developed economies further constrain prospects for economic growth in Asian countries that depend on exports," Moody's Vice President and Senior Analyst Simon Wong said.
Reduced investor appetite for high-yield bonds will restrain the prospects for Asian corporate issuers, Moody's said adding that the availability of credit will tighten due to deleveraging by banks in developed markets, and risk aversion among investors and lenders.
As loans become more expensive or harder to come by, domestic bond markets and an emerging, offshore Renminbi or "dim-sum" market will fund an increasing share of Asian companies' financial needs and finally, "default rates are likely to rise again after a two-year low" it said.
