Singapore: Companies in the Asia Pacific region are not affected by the credit market rout caused by losses related to US subprime mortgages, according to a report by Moody’s Investors Service.
The region’s borrowers will not face a shortage of funding because they can continue to rely on bank lending and domestic bond markets, even though most have difficulties accessing offshore debt markets, according to the report.
High-yield issuers, who have non-investment grade ratings, have issued bonds recently taking advantage of rising investor appetite for riskier assets before the credit rout and so do not have refinancing needs in the coming months, the report said.
“Moody’s is seeing no evidence so far of a reduction in the ability or willingness of the banking sector in Asia to lend to corporates,” Sydney-based analyst Brian Cahill and Hong Kong-based analyst Clara Lau, said in the report out on Wednesday.
ICICI Bank Ltd, India’s biggest lender to consumers, said in a statement on Tuesday that it raised $1.5 billion (Rs6,150 crore) in overseas loans to meet growing credit demand in the world’s second most populous nation.
The Mumbai-based bank got its loans with spreads comparable to the cost when ICICI borrowed the yen equivalent of $1billion in December, according to an email from Paris-based investment bank Calyon, which was one of the arrangers.
Suzlon Energy Ltd, an Indian wind-turbine maker, and Hindalco Industries Ltd, India’s biggest aluminium maker, secured $4.85 billion of loans to pay for recent acquisitions in August, according data complied by Bloomberg.
More than 60% of the non-investment grade companies in Asia that Moody’s rated are likely to be able to meet their obligations in the next 12 months through committed funding or internal cash. Many of these companies are considered very “bankable credits” in their home countries, the report said.
A few companies in Asia will be downgraded or will have their ratings changed, the Moody’s report stated. These companies have low ratings and imminent refinancing needs.
The rating company has changed the outlook on the B2 rating of G Steel Public Co. Ltd, Thailand’s second largest hot-rolled coil steelmaker, to negative, indicating a possible downgrade.
It has also placed the B2 rating of MagnaChip Semiconductor Llc., the South Korean chipmaker bought by two Citigroup Inc. buyout companies, under review for possible downgrade. B2 is five levels below investment grade.
Among the corporate borrowers in the Asia Pacific region, Australian companies are most affected by the subprime crisis, Moody’s said in the report.
Companies in Australia may face rising borrowing costs because they actively tap commercial papers and banks rely more on the capital market than other Asian banks, which depend more on bank deposits, the report said. Bloomberg