Asian Liquidity Index for Speculative-Grade Companies Improved in December

Liquidity for high-yield companies in Asia in December improved from the prior month and year-over year, according to the latest Asian Liquidity Stress Indicator (Asian LSI) from Moody’s Investors Service.

The Asian LSI decreased to 26.2% in December 2017 from 26.4% in November, and 30.3% at the end of 2016, Moody’s said. 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," says Brian Grieser, a Moody's vice president and senior credit officer.

The number of rated high-yield companies with Moody’s weakest speculative-grade liquidity score increased to 39 in 2017 from 37 in 2016, the ratings agency said. It was the fact that the total number of rated high-yield companies increased by 22% to 149 from 122 that led to the improvement in the index.

In December, rated high-yield issuance totaled $0.6 billion, raising year-to-date issuance to a record $34.5 billion, surpassing the previous $23.3 billion high reached in 2013, Moody’s said.

In China, the subsector’s index improved to 29.1% in December 2017 from 34.2% in 2016. Still, the high-yield property sector weakened to 23.4% from 20% in December 2016, Moody’s said.
The South and Southeast Asian LSI subsector decreased to 23.1% in December 2017 from 26.2% a year prior.

 – Nicholas Stern, managing editor

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