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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
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
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