Subprime not to affect fund raising: Moody's

International rating agency, Moody's Investors Service, said the volatility in credit markets following the sub-prime meltdown in the United States had not affected the ability of rated corporates in Asia Pacific, excluding Japan, to raise funds.

"While significant volatility has occurred in credit markets recently, no indications have emerged of rated corporates in Asia Pacific (excluding Japan) experiencing systemic problems in accessing lending in the wake of the US sub-prime crisis," said a Moody's report.

As the sub-prime exposures of Asian banks were low relative to their earnings and capital, their lending capacity has not been affected.

"Traditionally, regional companies have relied more heavily on the banking system for funding than their counterparts in other parts of the world," said Brian Cahill, Moody's managing director for corporate finance in Asia Pacific, adding, "Crucially, Asia's banks are generally showing no reluctance to lend to corporates in the current environment."

Asian banks, except in Australia, were largely funded by deposits rather than funds raised from the capital market, thus insulating them from the wholesale funding turmoil, said the report. Besides, companies continued to have access to large domestic bond markets, such as in Korea.

Moody's, which has already downgraded the ratings of G Steel in Thailand and Magnachip in Korea, does not see any risk of large number of rating actions for the Asian corporate sector.

"High-yield issuers, which are most exposed to any flight-to-quality risk in Asia, became active again in the region only recently. Many had taken advantage of the easy lending conditions, until recently, to pre-fund their capital expenditure and financing needs. As such, many do not face any refinancing risk in coming months," said Clara Lau, senior vice-president and chief credit officer.

According to Moody's, any emerging liquidity challenge will be company and not sector specific. Companies having weak operating fundamentals, low ratings and large near-term debt maturities could face large near-term refinancing risk.

"Until recently, such companies might have hoped to use the cross-border market to address this risk, but this market - as indicated - has now essentially shut down," said Lau. Further rating actions were possible in coming weeks, if the cross-border bond market remained shut or turned risk adverse, the report said.