EXEMPT FUNDS | Staff Reporter, China

Moody’s Asian Liquidity Stress Index fell to 19.7% in September

Back on its downward trajectory.

According to a report, Moody’s Asian Liquidity Stress Index (Asian LSI) declined to 19.7% in September from 21.1% in August, resuming the downward trajectory seen from May through July. 

The LSI, which decreases when speculative-grade liquidity appears to increase, is at its lowest level since July 2012, when it was 16.8%.

It remains below both the recent high of 29.1% from October 2012 and the record high of 37% reached during fourth quarter of 2008 amid the global financial crisis. But the reading is elevated relative to historic levels and is well above the November 2011 all-time low of 9.0%.

Chinese Sub-Indexes Fall, Indonesia Is Flat and Australian Reading Surges
The liquidity sub-index for Chinese speculative-grade companies decreased in September to 21.0% from 25.4% in August. China’s high-yield property sub-index also fell, to 19.4% from 26.5%. The Indonesian reading edged down to 3.7% from 3.8% as one company joined the sub-index.

The Australian index, by contrast, surged to 23.5% from 6.3% in August as the number of companies with an SGL-4 score quadrupled to four from one.

High-Yield Default Rate Will End 2013 at Low Level
The default rate for Asia Pacific (ex-Japan) high-yield non-financial corporates will remain low, ending 2013 at 1.6%, according to Moody’s Credit Transition Model.

This represents a slight drop from the February 2013 forecast of 2%. The lower predicted default rate anticipates a continued narrowing of the high-yield spread and the more stable ratings of the portfolio, indicated by the significant fall in number of ratings with negative reviews or outlooks.

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