Rating trends for Asia Pacific corporates stable

Hong Kong, November 08, 2011 — Moody’s Investors Service says that the

overall rating trend for non-financial corporates in Asia Pacific —

which includes Asia, Australia/New Zealand and Japan — remained broadly

stable in 3Q 2011 when compared with 2Q 2011.

 

“At the same time, some negative pressures have emerged for Asian

(ex-Japan) rated corporates, while the rating trend for the rated

Japanese corporates is likely to remain negative,” says Clara Lau, a

Moody’s Group Credit Officer.

 

“During the quarter, for the rated Asian portfolio (ex Japan), there were

a total of 7 negative rating actions, outnumbering the two positive

actions,” adds Lau.

 

Lau was speaking on the release of Moody’s review of rating trends in

Asia Pacific during 3Q 2011, and which she authored.

 

Specifically, for the Asian-rated portfolio, negative pressure was most

notable in the real estate and shipping sectors, according to the report.

 

In this context, Chinese real estate developers accounted for the bulk of

the negative trend due to tight liquidity and slowing sales, while four

of Moody’s six rated shipping companies had negative outlooks. The

outlook for these issuers reflects the possible deterioration in their

credit fundamentals as a result of weakening economic and operating

conditions.

 

For Australia and New Zealand, the overall trend is fairly balanced

between negative and positive actions. During Q3 2011, there were three

negative actions,to the same number as in Q2 2011 while there were two

positive actions, up from none in the second quarter.

 

In Japan, the number of rating actions in the previous 2Q 2011 was skewed

by actions prompted by the review for possible downgrade of the sovereign

rating. As a number of corporate ratings were confirmed after Japan’s

downgrade, the number of negative rating actions on Japanese corporates

declined significantly in 3Q 2011.

 

Nonetheless, the rating trend for Japanese corporates remains negative,

the Moody’s report says. After disregarding the sovereign-related

actions, the number of negative rating actions only dropped slightly to

six in 3Q 2011 from seven in 2Q 2011, and still outnumbering the two

positive actions.

 

Looking ahead, Moody’s expects the rating trend to remain broadly stable

for Asian- rated issuers — except under a scenario of severe contagion

from sovereign and banking stresses in Europe — but with negative

pressure increasing in the more cyclical sectors, namely the Chinese

property and shipping sectors.

 

For Australia/New Zealand, negative rating pressure is likely for

telecommunications operators due to regulatory changes, as well as the

airlines, which face a challenging operating environment.

 

And for Japan, the negative rating trend is likely to continue, given the

weak domestic economy, global economic uncertainty, and a strong yen,

which weakens export competitiveness.

 

The report is entitled, Rating and Outlook Trends For Asia Pacific

Non-Financial Corporates 3Q 2011. It can be found at www.moodys.com