Moody's says ratings trend for Asia Pacific corporates improving

The ratings agency said the rating trend for Asia Pacific corporates (ex Japan) was mildly positive in 3Q 2010.

Clara Lau, Moody’s Group Credit Officer for Asia, said, "The number of positive actions broadly equaled negative actions, and 6 negative rating outlooks were changed to stable," adding, "this mildly positive trend is expected to continue as the global and regional economic recovery continues."

"For the same period, ratings stabilization among Japanese corporate became more apparent, resulting from growing operating efficiencies, and a recovery in demand in the major markets, in particular China and the US. This trend was most notable for some manufacturing companies and auto manufacturers," says Lau.
Lau spoke on the release of Moody's outlook for ratings and summary of rating actions during 3Q2010 for Asia Pacific's non-financial corporates, which she authored.

The report is entitled 3Q 2010 Rating Trends and Credit Outlook and Action Summary for Asia Pacific Rated Non-financial Corporates.

Across the region, there was one rated default in 3Q 2010 as a result of a distressed exchange, the report says. The trailing 12-month rated default rate continued to drop, falling to 5.2% among high-yield issuers.

"During 3Q 2010, for Asia Pacific (ex Japan), there were 9 positive actions versus 7 negative," says Lau. "Automotive or auto parts manufacturers and investment grade real estate investment companies accounted for most of these actions, mainly due to an anticipated strengthening in their credit metrics, in turn because of an improving operating environment for the former, and a demonstrated resilience to
the downturn for the latter."

"For Japan, the number of negative rating actions declined to 2, the lowest number since 1Q 2009, when the portfolio was most affected by the global financial crisis," says Lau.