Moody’s Investors Service said the Asian high-yield bond market has shown record levels of rated issuance across all markets in 2017, with momentum set to carry into first quarter of 2018.
“A total of $34.5 billion was issued in 2017—up significantly from $11.4 billion in 2016 and well above the previous record high of $23.3 billion in 2013,” said Annalisa DiChiara, a Moody’s vice president and senior credit officer.
“Investor tolerance for low credit quality and issuers’ refinancing needs continued to drive rated issuance in the Asian high-yield market,” DiChiara said.
“And the ratio of companies rated B3 and below fell to 14.8 percent last December 31, 2017 from 15.4 percent last September 30, as the number of corporate family ratings [CFRs] climbed to 149, from 143 in this
period,” DiChiara added.
Newly assigned CFRs also maintained momentum at 11 in the fourth quarter of 2017, helping drive the number of first-time CFRs assigned during the year to a record of 41.
Moody’s conclusions are contained in the latest edition of its “Asian High Yield Interest Chartbook.”
The report said that refinancing risks remain manageable as, absent any exogenous shocks, the market has the capacity to absorb upcoming maturities.
Meanwhile, the Asian Liquidity Stress Indicator decreased to 26.2 percent on December 31, 2017, from 27.3 percent last September 30, indicating refinancing risk remains for some existing issuers. Although the reading remains above the long-term average of 23.1 percent, it marks the strongest year-end reading since December 2014.
A total of $5.1 billion of rated bonds will mature by December 31, 2018, and $162.3 billion of rated and unrated bonds will mature through to 2021.
A total of 10 issuers accounted for 37.5 percent of the $76.7 billion of rated debt outstanding on December 31, 2017.