Cash Squeeze Worst Since ‘10 for Asia Junk Issuers

Speculative-grade companies in Asia face the worst funding situation in more than two years, according to Moody’s.

The rating company’s Asian Liquidity Stress Index rose to 21.8 percent in August from 16.8 percent in July, the highest since the first quarter of 2010, it said in a report.

The gauge measures the proportion of high-yield issuers that Moody’s assesses as having limited access to funding. Some borrowers have debt maturing soon with no confirmed refinancing plans, while others are grappling with falling cashflows after commodity prices slumped, the report said.

“The percentage of speculative-grade Asian companies with weak liquidity has been steadily deteriorating” since November, according to the report published today. “Liquidity in Asia is generally weaker than in other regions, partly because its debt capital markets are not as mature, and because they rely more on local bank markets for funding.”

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