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APAC corporates likely to improve in 2021

Moody’s Investors Service says in a new report that credit conditions in APAC will improve in 2021, supported by the gradual recovery of economic activity given the early containment of the pandemic in several Asian economies.



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.

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