The credit trend for nonfinancial firms in Asia Pacific will remain stable for the remainder of 2022, said Moody’s recently.
However, a cloud still hangs over the credit trend for nonfinancial firms in Asia Pacific.
The risks which are rising on the back of slackening global growth and tight monetary policy as an effort to tame persistent inflation by most countries can't be ignored, the credit rating firm observed.
"Commodity prices are softening and global durable goods trade will likely slow as consumer demand declines and supply chain problems ease, while further energy shocks from the Russia-Ukraine crisis, monetary policy uncertainty and China's weak economic growth pose risks," said Clara Lau, a Moody's Senior Vice President and Group Credit Officer.
Moody's has further lowered its 2022 GDP growth forecast for G-20 advanced and G-20 emerging economies to 2.1% and 3.3%, respectively.
The credit rating agency’s GDP growth forecast for the US is down to 1.9% while it has lowered growth expectations for China to 3.5% amid the country's ongoing zero-COVID policy, property sector weakness and declining export demand as global economic growth softens.
As of end-Q3, the share of ratings with a stable outlook in Moody's APAC corporate portfolio stood at 82%.
The share of ratings with negative implications (meaning a negative outlook or a review for downgrade) remained at 15%, Moody’s pointed out.
About 50% of the ratings with negative implications were Chinese property developers, according to the company.
Negative rating actions outpaced positive ones in Q3, with 34 negative actions compared with eight positive actions, Moody’s noted.
Chinese property developers accounted for around 50% of all negative rating actions, as concerns about slowing economic growth and project completion risks weighed on property sales, the firm added.
The positive rating actions were mainly on metals and mining companies, driven by improving credit quality amid strong earnings, Moody’s said.
Gaming and property remain the most pressured sectors, with 100% and 56% of the ratings in the portfolio having negative implications, respectively, the firm noted.