Moody's Investors Service said recently that its Asian Liquidity Stress Indicator (ALSI) decreased to 39.7% in June from 40.7% in May, primarily reflecting improved liquidity at a Chinese property company and a slight change in the number of high-yield companies assessed.
The ALSI 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, said Moody’s, adding that the indicator increases when speculative-grade liquidity deteriorates.
"The coronavirus-induced economic slowdown continues to weigh heavily on credit fundamentals, with lower cash flows and higher refinancing risks driving weak liquidity for 58 of our 146 rated high-yield corporates in June, compared to 59 of 145 companies in May," said Annalisa Di Chiara, a Moody's Senior Vice President.
The North Asian sub-indicator decreased to 33.7% in June from 35.0% in May, primarily driven by the improving liquidity of a China-based property company and the addition of another one with good liquidity, the credit rating agency pointed out.
Meanwhile the South & Southeast Asian sub-indicator remained at 54.8% after six consecutive months of increase, according to Moody’s.
In addition, high-yield issuance picked up in June as China-based property companies tapped the US dollar bond markets, with seven Moody's-rated bond deals closing for a total of USD2.2 billion, said the company.
This indicates improving market access for some high-yield companies, following zero issuance in April and May, the company added.
At the same time, negative bias— those ratings with a negative outlook or on review for downgrade — continued to rise reaching 41.1% in June, the highest level since April 2012, Moody’s observed.
This reflects credit quality pressures stemming from weakening global economic conditions. Downgrades also continued but at a slower pace, Moody’s noted.