Moody's sees stable conditions for Asia Pacific corporate sector

20:53, January 28, 2010      

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Moody's Investors Service said Thursday that the outlook for most non-financial corporate sectors in Asia Pacific (ex-Japan and ex-Australia) is set to remain stable in 2010, as macro-economic and operating conditions continue to improve for most companies in the region.

"Moody's expects these Asian corporates to lead their Western counterparts in the extent of their recoveries as economic conditions in many Asian countries have proven more resilient than elsewhere," said Elizabeth Allen, Moody's vice president.

"Accordingly, Asian corporates have entered 2010 on a stronger footing than a year ago, reflecting the positive momentum started in second half 2009," said Allen.

Allen was speaking on the release of Moody's annual report on the outlook for Asian corporates over the next 12 months.

The report, entitled Asia Pacific Corporate Outlook for 2010 -- The Worst is Over for Most, reviews likely conditions and drivers for all rated corporates in the region.

"Stable rating outlooks dominated as of December 2009, but until we see sustained improvements in credit profiles, we do not expect to observe a clear migration to positive rating actions across Moody's rated portfolio," said Gary Lau, Moody's managing director for Corporate Finance in Asia.

The key challenges for the Asian economy include the timing of the withdrawal of government stimulus polices and any unexpected decline in China's growth dynamics, Lau said.

"Although we see a low probability of the latter happening, its effect on Asian corporates, if it did happen, would be profound," said the director.

The report also discusses the improvement in the liquidity profiles of Asian corporates and notes that overall refinancing risks have normalized.

Looking ahead, Moody's expects corporates, especially investment grade issuers, to continue seizing opportunities to rebalance their debt maturities and take advantage of the favorable interest rate environment since the global financial markets can still be volatile.

Source: Xinhua
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