The default rate for Asian high-yield non-financial companies will rise modestly to 2.4% in 2020 from 1.1% in 2019, amid slowing economic growth and continued trade policy uncertainty, Moody’s Investors Service said recently.
“We expect global economic growth to remain sluggish in 2020 with pessimistic business sentiment and trade policy uncertainty, while the coronavirus outbreak, if prolonged, will add further downside risk," said Clara Lau, a Moody's group credit officer and senior vice president.
"Amid this weakened economic and credit outlook for 2020, the growth prospects and credit strength of non-financial companies will remain vulnerable" she noted.
In response to the growing risks, major central banks in both advanced and emerging market countries have eased their monetary policy stance, supporting near-term financing conditions, the rating agency said.
Nevertheless, highly leveraged and financially weaker companies remain vulnerable, given their limited access to funding and investors' increased risk discrimination, Moody’s added.
Moody's recorded four rated defaults in 2019, three of which were Chinese issuers.