Asia Pacific's Non-financial Firm Credit Trend Remains Stable

The credit trend for nonfinancial firms in the Asia Pacific will remain stable for the remainder of 2022.

FREMONT, CA:The credit trend for nonfinancial companies in Asia will be stable for the rest of 2022. The Asia Pacific lending trend for nonfinancial enterprises is still shrouded in uncertainty, though. The credit rating company noted that it is impossible to overlook the risks that are growing as a result of slowing global development and the tight monetary policy adopted by most nations to combat persistent inflation.

Commodity prices are softening, and global durable goods trade will likely slow as consumer demand declines and supply chain problems ease, while further energy shocks from the Russia-Ukraine crisis, monetary policy uncertainty, and China's weak economic growth pose risks. The G-20 advanced and G-20 emerging economies' respective GDP growth forecasts for 2022 have been further cut by Moody's to 2.1 per cent and 3.3 per cent, respectively.

The credit rating agency has downgraded its GDP growth prediction for the US to 1.9 per cent and China to 3.5 per cent due to the country's continued zero-COVID policy, the sluggish property market, and diminishing export demand as the pace of global economic growth slows.

At the end of the third quarter, 82 per cent of Moody's APAC corporate portfolio's ratings had a stable outlook.

The percentage of ratings with negative implications, a downgrade remained at 15 per cent.

Chinese real estate developers accounted for about 50 per cent of the ratings with adverse repercussions.

There were 34 negative rating actions in Q3 as opposed to only eight positive ones.

As worries about slowing economic growth and the likelihood of project completion weighed on real estate sales, Chinese real estate developers accounted for nearly 50 per cent of all negative rating actions, the business stated.

The majority of the positive rating actions were on mining and metals companies as a result of increasing credit quality and robust profitability.

The most stressed industries continue to be gaming and real estate, where 100 per cent and 56 per cent of the portfolio's ratings have negative consequences.