Global rating agency Moody's Investor Service said on Wednesday the corporates in the Asia Pacific region excluding Japan, are not experiencing systemic problems in accessing lending despite volatility in credit markets triggered by the recent US sub-prime crisis, says a new report.
According to the report by Moody's Investor Service titled 'Asia Pacific Corporates Well Positioned for Liquidity Strain; Some Challenges Evident', the capacity of Asian banks to lend has not been really affected as their sub-prime exposures are low relative to earnings and capital.
Traditionally, regional companies have relied heavily on the banking system for funding than their counterparts in other parts of the world.
"Crucially, Asia's banks are generally showing no reluctance to lend to corporates in the current environment," Moody's Managing Director for corporate Finance in Asia Pacific Brian Cahill said.
Further, with the exception of Australia, Asia's banks are ample
The report also says that high-yield issuers only recently became active again in the region and many had taken advantage of easy lending conditions to pre-fund their capital expenditure and financing needs. As such, many do not face any refinancing risk in the coming months.
In such a backdrop, Moody's Senior VP and Chief Credit Officer Clara Lau notes that any emergent liquidity challenges would be company and not sector specific.
"For example, weak operating fundamentals, low ratings and large near-term debt maturities at a particular corporate may result in large near-term refinancing risk," adds Lau.
Till recently, such companies might have hoped to use the cross-border market to address this risk, but now this market has essentially shut down.
However, Moody's does not see any risk of a large number of rating actions for the Asian corporate sector.
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