KUALA LUMPUR – The Asian Liquidity Stress Indicator (ALSI) has been relatively steady so far in 2021, remaining at 32.1% in May 2021, which is the same level in the previous month, according to Moody’s Investors Service.
ALSI, which measures the percentage of high-yield companies with Moody’s weakest speculative-grade liquidity score (SGL-4) as a proportion of the total number of corporate family ratings, decreases when liquidity across the portfolio broadly improves.
In a statement today, the credit rating firm said that overall, 45 of its 140 rated high-yield companies had weak liquidity in May 2021 compared with 44 of 137 rated companies in April.
It said the South and Southeast Asia sub-indicator improved slightly in May 2021 to 38.1% due to the addition of one new Indian issuer with adequate liquidity while the North Asian sub-indicator remained relatively stable at 29.6% in May 2021, despite the weakening in liquidity of a Chinese property issuer as this was offset by the addition of two new Chinese issuers with adequate liquidity.
“ALSI remained stable in May following the addition of three new issuers with adequate liquidity, and with only one company’s liquidity weakening during the month,” analyst Stephanie Cheong said.
However, Moody’s said the liquidity in Asia remains weaker than in Europe, the Middle East and Africa, and the United States because companies rely more heavily on relationship banking in Asia, where banks rolled over short-term and uncommitted lines of credit rather than providing committed levels of funding.
Meanwhile, the credit rating firm said new rated high-yield issuance rose to US$3.6 billion (RM14.8 billion) in May 2021 from US$1.2 billion in April, with companies in the B-rating category making up 69% (US$2.5 billion) of the total rated issuance in May 2021.
It added that negative bias such as ratings with a negative outlook or on review for downgrade remained flat from April 2021, registering 30.6% in May 2021. – Bernama, June 8, 2021
