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Liquidity for high-yield Asian companies improves, study says

Moody’s Investors Service has reported that its Asian Liquidity Stress Indicator (Asian LSI) fell to 26.2 percent in December 2017 from 26.4 percent in November and 30.3 percent at the end of 2016.
The movement signified an
improvement in liquidity for high-yield companies in Asia in December and from the end of 2016.
The Asian LSI measures the percentage of high-yield companies with Moody’s 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.
“Although Moody’s Asian LSI reading remained above the long-term average of 23.1%, highlighting ongoing weakness in liquidity for many companies
in Asia, the December figure also marks the strongest year-end reading since December 2014,” said Brian Grieser, a Moody’s VP and
senior credit officer.
The number of rated high-yield companies with Moody’s weakest
speculative-grade liquidity score (SGL-4) rose to 39 in 2017 from 37 in 2016. However, the total number of rated high-yield companies increased
by 22 percert to 149 from 122, driving the improvement in the index.
Moody’s analysis is contained in its just-released monthly report titled “Asian Liquidity Stress Indicator: Asian LSI improves to 26.2% in December from 30.3% at year-end 2016”.
Rated high-yield issuance totaled $0.6 billion in December, raising
year-to-date issuance to a record $34.5 billion. The previous high was $23.3 billion in 2013.
The Chinese sub-indicator improved to 29.1 percent in December from 34.3 percent in 2016, while the high-yield Chinese property sub-indicator weakened to 23.4 percent compared to 20 percent in December 2016.
The Chinese high-yield industrials sub-indicator demonstrated the most significant improvement, falling to 35.9 percent in December 2017 from 53.3 percent in
December 2016.
The improvement was driven by a combination of the
recovery in commodity prices and a high level of refinancing activity in 2017.
The liquidity stress sub-indicator for South and Southeast Asian
high-yield companies decreased to 23.1 percent in December 2017 from 26.2 percent at December 2016.
The Indonesian sub-indicator decreased to 22.2 percent in
December 2017 from 26.2 percent in 2016.

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