Stability in Asia-Pacific Corporates to Continue through 2017

A stable rating trend among nonfinancial corporates in the Asia-Pacific region in the second quarter of 2017 is likely to continue through the rest of the year, according to a new report from Moody’s Investors Service.

“The stable rating trend for 2H 2017 will be supported by broadly based global growth, stronger export demand and the recovery of commodity prices,” said Clara Lau, a group credit officer at Moody’s.

The share of negative ratings among nonfinancial corporates in Asia, which excludes Japan, Australia and New Zealand, fell 10% from the end of March to the end of June. Ratings with stable outlooks reached a 74% share by the end of June, the highest since the end of the first quarter of 2015. Negative ratings actions outpaced positive actions from Moody’s in the second quarter of 2017.

In Moody’s Japanese portfolio, negative implications among nonfinancial corporates dropped to 24% from 29% at the end of the second quarter from the previous quarter. In the agency’s Australian portfolio, the share of negative ratings stayed at 12%, which reached a high of 23% a year ago.

The metals and mining industry in the Asia-Pacific region has bottomed out, resulting in easing of pressure on those companies, Moody’s said. Negative implications in that portfolio dropped to 27% at the end of the second quarter from 60% at the end of the first. Pressure continues in the retail sector, however, with more than 30% of retail companies holding negative implications. With national sales slowing and a tightening in regulatory measures, 23% of developers’ ratings in the property sector show negative implications.

– Adam Fusco, associate editor

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