Asia-Pacific credit conditions may improve

Dhaka,  Mon,  26 June 2017
Published : 20 Jun 2017, 11:21:26
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Asia-Pacific credit conditions may improve

FE Online Desk
MELBOURNE (S&P Global Ratings) June 20—Asia-Pacific's positive

fundamentals could lift credit conditions in the third quarter of 2017, S&P

Global Ratings said in an article published today, titled, "Asia-Pacific

Credit Conditions Q3 2017: Likely To Improve If Market Sentiment Holds".

"Macroeconomic trends and financing availability are improving in

Asia-Pacific. In addition, stabilizing trading conditions are easing negative

pressure in the region's metals and mining sector," said S&P Global Ratings

credit analyst Terry Chan. "These positive fundamentals would lift credit

conditions in Asia-Pacific for the coming quarter."

Nevertheless, tail risks remain for the region's credit markets. The top risk

in the region is the potential impact of higher interest rates, particularly

as regional issuers continue to borrow in foreign currency. This widens their

exposure to potential hikes by the U.S. Federal Reserve.

"We consider market reaction to political events as the second risk. The

possible imposition of country-directed trade tariffs, geopolitical conflicts,

and the rise of populist or extremist movements are looming threats," a statement said.

Risk number three is the potential impact of a property adjustment, given the

high asset valuations by global markets and ease of financing.

"China's debt overhang is now risk number four, moving from its number two

position in the previous quarter," said Mr. Chan. "This doesn't mean the risk

isn't substantial though. We regard the risk will gradually build up as debt

accumulates further."

Rounding off the top-five risks in Asia-Pacific's credit conditions is

corporate refinancing; this risk is partly tied to the preceding four risks.

-rmc//
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