Ongoing fiscal and monetary support in both advanced and emerging markets will also aid improving conditions, but renewed lockdowns in parts of the world have stalled the nascent global economic recovery and create uncertainty around improving credit conditions.

  • A combination of gradual economic recovery – driven by China – and ongoing fiscal and monetary support will abate the negative rating trend seen in 2020
  • The share of ratings with negative implications in the APAC corporates portfolio improved to 26% at the end of 2020 from 29% in Q2 2020

“The rating trend for APAC corporates was overwhelmingly negative in 2020, with the number of negative rating actions hitting a record high of 254, against a low of 30 positive actions during the year,” says Clara Lau, a Moody’s Group Credit Officer and Senior Vice President.

“That said, the negative rating trend somewhat abated in the second half of the year, with the share of ratings with negative implications improving to 26% at the end of 2020 from a high of 29% in Q2 2020.”

Clara Lau, a Moody’s Group Credit Officer and Senior Vice President.

Although the negative rating trend will continue to ease over 2021, credit conditions for APAC corporates will differ by sector and region.

China, as a result of early containment of the virus, is having a healthy improvement on the supply side and its increasing household consumption will help slowly broaden the recovery, offsetting the impact of slowing exports due to the resurgence of the virus elsewhere.

Moody’s expects central banks will likely keep interest rates at very low levels and continue to provide fiscal and monetary stimulus, such as asset purchase programs and lending facilities for banks to boost lending to the private sector.

These supportive measures will be credit positive across sectors as they will lower funding costs and support corporates’ debt repayment capacity. But companies with weak liquidity and/or high leverage will continue to face refinancing risk.

“Ultimately, a sustained economic recovery and thus a continued improvement in credit trends will depend on (1) effective pandemic management, (2) progress of vaccinations, and (3) government policy support,” concludes Lau.

About the author | Website

Siam News Network includes top references news sites, Job Board, Business Directory and Classifieds Portal

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Sign Up for Our Newsletter

Get notified of our weekly selection of news

You May Also Like

Bank of Thailand raises key rate from 1.50 to 1.75%

In an effort to lower inflation to its target range, Thailand’s central bank increased its key policy rate by 25 basis points (0.25%), to 1.75%, the highest level since August 2019

Bond Yields Rise in Emerging East Asia Amid Monetary Tightening

Global inflation, slower growth in the People’s Republic of China (PRC), and economic fallout from the Russian invasion of Ukraine continued to threaten the region’s short-term prospects.

China massive first-mover advantage in Central Bank Digital Currencies (CBDCs)

Central Bank Digital Currencies (CBDCs) have the potential to disrupt dollar dominance and transform the mechanics of the global financial system by providing faster and cheaper ways to settle international trade and financial transactions