"Despite the improvement to 30.3% in December, the Asian LSI remains above the long-term average of 22.6%, highlighting the continued weakness in corporate liquidity across Asia," says Brian Grieser, a Moody's Vice President and Senior Analyst.
The index measures the percentage of high-yield companies with SGL-4 scores and increases when speculative-grade liquidity appears to deteriorate.
The Asian LSI reading of 30.3% in December is well below the record high of 37.0% reached in December 2008 amid the global financial crisis, according to the report.
During December, the liquidity stress sub-index for North Asian high-yield issuers decreased to 32.5% from 34.2% in November. Within this portfolio, the Chinese sub-index decreased to 34.3% from 35.7%.
At the same time, the Chinese high-yield property sub-index remained at 20.0% from, while the Chinese high-yield industrial sub-index decreased to 53.3% from 56.7%.
Meanwhile, the liquidity stress sub-index for South and Southeast Asian high-yield issuers increased to 26.2% from 25.6%, and the Indonesian sub-index remained at 26.3%.
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In December, Moody's downgraded two high-yield issuers, bringing the total downgrades of high-yield issuers in 2016 to 50, compared to seven upgrades. This results in an annual downgrade/upgrade ratio of 7.14x, the highest level since Q4 2009.
Across Moody's portfolio of 122 rated high-yield issuers, the percentage of negative leaning outlooks -- meaning ratings with either a negative outlook or on review for downgrade -- declined to 35.2% in December from 36.1% in November.
At the end of December, Moody's rated 122 speculative-grade non-financial corporates in Asia (excluding Japan and Australia) with rated debt of $61.4 billion.
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