Moody’s Investors Service says that its Asian Liquidity Stress Index (LSI) rose to 31.1% in December, from 28.5% in November, and is at its highest level since Q2 2009.The increase came as the number of rated high-yield companies with the weakest speculative-grade liquidity score (SGL-4) increased to 38 from 35 while the number of rated high-yield companies decreased to 122 from 123.The index–which increases when speculative-grade liquidity appears to decrease–remains below the record high of 37% reached in December 2008 amid the global financial crisis.”However, the index has been weakening throughout 2015, a trend that keeps it well above the index’s long-term average of 21.1% and its trailing 12-month average of 25.5%,” says Brian Grieser, a Moody’s Vice President and Senior Analyst.”In addition, both the North Asia and South & Southeast Asia regional sub-indices peaked in December,” adds Grieser.Grieser was speaking about conclusions contained in Moody’s just-released report, Asian Liquidity Stress Index, a monthly publication.The liquidity stress sub-index for North Asian high-yield issuers was 32.4% in December, compared to 30.1% in November 2015.Within this portfolio, the Chinese sub-index increased to 31.3% from 28.1% in December as the number of Chinese companies with SGL-4 scores increased to 20 from 18, while the total number of high-yield Chinese companies remained at 64.The Chinese high-yield property sub-index declined to 23.7% from 24.3% in December, as the number of companies with SGL-4 scores remained at 9, and the total number of rated property developers increased to 38 from 37.The Chinese high-yield industrial sub-index increased to 42.3% from 33.3%, as the number of industrial issuers decreased by one to 26, while companies with SGL-4 scores rose to 11 from 9.The liquidity stress sub-index for South & Southeast Asian high-yield issuers increased to 29.2% from 26.0% in December.The Indonesian sub-index increased to 23.8% from 17.4% in December as the number of Indonesian companies with SGL-4 scores rose to 5 from 4 and the total number of high-yield Indonesian companies decreased to 21 from 23.Finally, we downgraded seven high-yield issuers in December, closing out the quarter with a downgrade/upgrade ratio of 4.0x. For 2015 the downgrade/upgrade ratio was 2.67x, the highest level since 2012.
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