Asian firms’ liquidity falls in May — Moody’s

Asian companies liquidity level fell slightly last May based on a regional indicator, Moody’s Investors Service (Moody’s) said yesterday.

Moody’s said its Asian Liquidity Stress Indicator (Asian LSI) weakened slightly to 29 percent in May from 28.8 percent in April.

Moody’s said the Asian LSI measures the percentage of high-yield companies with the 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.

“However, the Asian LSI remains above the 12-month average of 27.1 percent for the third consecutive month, indicating a weakening trend in liquidity for companies with speculative-grade ratings,” Brian Grieser, a Moody’s Vice President and Senior Credit Officer, said.

Moody’s analysis is contained in its monthly report titled “Asian Liquidity Stress Indicator: Asian LSI relatively unchanged at 29.0 percent in May compared to 28.8 percent in April,” which was authored by Grieser.

The Chinese high-yield sub-indicator increased to 33.7 percent in May from 33.3 percent in April, and the Chinese property sub-indicator increased to 26 percent from 25 percent.

However, the Chinese industrials sub-indicator improved to 42.2 percent from 43.2 percent in April.

The liquidity stress sub-indicator for South and Southeast Asian high-yield companies was unchanged at 23.6 percent in May.

The Indonesian sub-indicator decreased to 16.7 percent in May from 20 percent in April.

Moody’s added that high-yield issuance tempered in May, with refinancing activity driving total issuance to $1.4 billion during the same month, which was a significant decline from April’s $4.3 billion.

Issuance between January and May 2018 totaled $13.5 billion, well below the $16.2 billion raised over the same period last year, as credit conditions tighten for high-yield issuers.

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