Asian firms improved credit quality in last 7 months: S&P

The overall credit quality of rated corporates in south Asia and south-east Asia has improved in the last seven months with upgrades outnumbering downgrades by 12 to seven.

Also, the number of rated corporates with a negative outlook or under credit watch negative has decreased to four from 13, said a report from rating agency Standard & Poor's (S&P), which was released today.

The distribution of rated companies in the south and south-east Asian region continues to correlate with the ratings on regional sovereign.

The sovereign ratings on Singapore, Malaysia, and Thailand are at or above the 'BBB' category, whereas India, Philippines, and Indonesia are rated below the investment grade.

There has been a rise in interest among south Asian and south-east Asian corporates to tap the debt markets "" to refinance and to fund business expansion, and to take advantage of the low interest rate environment, said the report.

"This improvement was largely attributed to three factors: more favourable operating environments and business profiles, the conscious efforts of some corporates to deleverage or adopt more conservative capital structures, and higher sovereign ratings on Thailand, Malaysia, and Indonesia," said S&P's credit analyst Greg Pau and the Singapore-based director of the corporate and infrastructure ratings group.

Pau cautioned that a possible instability related to the coming presidential elections in Indonesia and Philippines, and the potential impact of any recurrence of the Severe Acute Respiratory Syndrome or the widespread Avian Flu could provide some uncertainty to the regional economic environment.