The Asian Liquidity Stress Index (LSI) is at its lowest level since October 2015. Moody’s Investors Service says its Asian LSI fell for the third straight month to 28% in February 2017, down from 29.4% in January.
The index measures high-yield companies with the weakest speculative-grade liquidity. A contributing factor for the low level is from improvements in North Asian subindices, says Moody’s Vice President and Senior Analyst Brian Grieser.
Another reason for the improvement is a strong bond issuance, which is nine times higher this year than last. In January and February, bond issuance was $5.1 billion compared to $560 million during the same timetable in 2016. Despite the improvement, the Asian LSI is still above the long-term average of nearly 23%. All North Asian subindices improved for February 2017, which includes the Chinese Property subindex. It fell from 17.5% in January to 17.1% in February.
The North Asian subindex also dropped 2.1% between the same two months. The South and Southeast Asian subindices stayed constant at 27.3% in February, as did the Indonesian subindex.
Minus Japan and Australia, Moody’s rated 125 speculative-grade nonfinancial corporates in Asia with a rated debt of more than $65 billion. The number of rated high-yield companies with the SGL-4 rating score dipped from 37 to 35 in February 2017, while the number of high-yield companies also decreased by one from 126 during the period.
– Michael Miller, editorial associate