Asia Pacific 2007 corporate credit rating outlook seen negative

Asia Pacific 2007 corporate credit rating outlook seen negative - Moody's

	Published : Wed, 16 May 2007 07:00 By : Agencies Print this Story

BEIJING (XFN-ASIA) - Moody's Investors Service said the negative trend that affected ratings for corporate issuers in Asia Pacific (ex-Japan) last year has continued into the first quarter of 2007 and will likely persist for the rest of this year because of risks from mergers and acquisitions.

'The negative credit trend is mainly the result of event risk, primarily from mergers and acquisitions,' Moody's chief credit officer for corporates in the region, Clara Lau, said.

In a note, Lau said Moody's also expects more rating changes in the next 12 months.

In the first quarter this year, the percentage of credits with stable outlooks fell to 72 pct from 76 pct a year ago, the note said.

'Moreover, despite a narrowing of the gap between the number of ratings on review for upgrade and for downgrade to six in the first quarter of 2007 from nine in fourth quarter 2006, overall statistics suggest that the negative credit trend is not weakening,' Lau said.

Lau added that the first quarter this year was dominated by negative rating actions as Moody's placed nine ratings on review for downgrade and only three on review for upgrade.

Leisure and entertainment, utilities and infrastructure accounted for most of the negative actions in the quarter, while telecoms stood out as a robust sector due to strengthened operational performances, Moody's said.

An improving credit trend was also evident for the technology and semiconductor sector, it noted.

Australia faces a more negative outlook than the rest of Asia Pacific in the foreseeable future due to active merger and acquisitions in the country's corporate sector, Moody's said.

A total of 19 pct of Australian ratings now have negative outlooks, or are on review for downgrade, against only four pct with positive outlooks or reviews for upgrade, the rating agency said.

For Asia Pacific as a whole, 16 pct of ratings have negative outlooks or are on review for downgrade, while 11 pct have positive outlooks or reviews for upgrade, it said.

will.davies@afxasia.com

Asia Pacific 2007 corporate credit rating outlook seen negative - Moody's