Asian Liquidity Stress Index rises for 2nd month, Moody's reports

Economy February 07, 2014 00:00

By The Nation

The Asian Liquidity Stress Index (Asian LSI) rose for a second month in January, to 22.4 per cent from 20 per cent in December, according to Moody's Investors Service research.

"The index measures the percentage of high-yield companies with an SGL-4 score and increases when speculative-grade liquidity appears to decrease. The reading decreased gradually during 2013 after hitting a recent high of 28.6 per cent in December 2012," said Laura Acres, a Moody’s senior vice president.

The January increase reflects both the net addition of three companies (to 26) to the roster of those with Moody’s lowest (weakest) speculative-grade liquidity score (SGL-4) and a net increase of one (to 116) in the number of companies with speculative-grade ratings, she said.

Acres was speaking on the release of Moody’s latest report on the index.

The reading remains well below the record high of 37 per cent reached during the fourth quarter of 2008 amid the global financial crisis and is just above the long-term rolling average (20 per cent) and in line with the trailing 12-month average (22.5 per cent) for the Asian LSI.

The liquidity sub-index for Chinese speculative-grade companies rose for a third consecutive month, jumping to 27.0 per cent from 22.2 per cent in December. The increase reflects the addition of three companies with SGL-4 scores while the number of rated high-yield Chinese companies remained 63.

China’s high-yield property index rose to 23.7 per cent from 21.1 per cent in December as the number of companies with an SGL-4 score increased by one to nine and the number of rated high-yield property developers remained 38.

The Indonesian sub-index inched up to 4.0 per cent from 3.8 per cent, ending three months with no change. The number of SGL-4 companies was unchanged at one, but the number of speculative-grade Indonesian companies decreased by one to 25.

The Australian index, which does not factor into the Asian LSI, declined for a second month, to 26.7 per cent from 28.6 per cent in December, as the number of speculative-grade companies rose by one to 15 and the number of those with an SGL-4 score remained four.

Moody’s had assigned speculative-grade ratings to 116 issuers in Asia (excluding Japan and Australia) covering US$65.1 billion (Bt2.14 trillion) of rated debt by the end of January, up from 115 issuers and $61.7 billion of rated debt by the end of December.