In an industry report card titled, "Outlook For Majority Of Asian Utilities Is Stable, But Some Challenges Are Ahead," Standard & Poor's said electricity, gas, and water companies benefit from favorable industry factors and demographic trends that point to increasing demand for utility services in the region.

"Economic growth in the region is faster than the world average, and domestic populations are large with low electricity consumption and urbanization is increasing," said Standard & Poor's credit analyst Allan Redimerio.

Utilities companies in Japan, on the other hand, are facing tougher situations, due to the March 11 earthquake, tsunami, and the developments stemming from the Fukushima nuclear plant crisis.

The potentially difficult issues ahead are the uncertain global economic growth, sustained increase in fuel costs, fuel sources and the competition for them, expansion opportunities, and the significant debt maturities and capital expenditures.

"Asian utilities face significant debt maturities over the next two to three years," Mr. Redimerio said. "We estimate the amount averages about US$34 billion per year between 2012 and 2014 for the utilities that we rate in the region. We also think that refinancing risk is rising due to the global economic uncertainty."

In our view, an economic decline alone is unlikely to result in downgrades of utility companies. Since electricity demand is not particularly elastic, declines in usage may not be as large as the overall economic contraction.

The more pressing issue is the ability of utilities to adapt to the changing economic and financial environment. Some countries in the region, such as Singapore, Thailand, and Philippines, rely heavily on export-driven income, and a global slowdown may affect their economic growth.