Moody's Investors Service, a global rating agency, has said that its Asian Liquidity Stress Indicator (Asian LSI) fell to 26.2 per cent in December 2017 from 26.4 per cent in November and 30.3 per cent at the end of 2016, signifying an improvement in liquidity for high-yield companies in Asia in December and from the end of 2016. The Asian LSI measures the percentage of high-yield companies with Moody's weakest speculative-grade liquidity score of SGL-4 as a proportion of high-yield corporate family ratings.
The indicator increases when speculative-grade liquidity deteriorates. "Although Moody's Asian LSI reading remained above the long-term average of 23.1%, highlighting ongoing weakness in liquidity for many companies in Asia, the December figure also marks the strongest year-end reading since December 2014," says Brian Grieser, a Moody's Vice President and Senior Credit Officer. The number of rated high-yield companies with Moody's weakest speculative-grade liquidity score (SGL-4) rose to 39 in 2017 from 37 in 2016.
However, the total number of rated high-yield companies increased by 22 per cent to 149 from 122, driving the improvement in the index. Rated high-yield issuance totaled USD 0.6 billion in December, raising year-to-date issuance to a record USD 34.5 billion. The previous high was USD 23.3 billion in 2013. The Chinese sub-indicator improved to 29.1 per cent in December from 34.3 per cent in 2016, while the high-yield Chinese property sub-indicator weakened to 23.4 per cent compared to 20 per cent in December 2016.