Moody's: 2011 Set for Record Asian High-yield Bond Issuance

Taipei, Feb. 18, 2011 (CENS)--Moody's Investors Service said in a new report that issuance of high-yield bonds from Asia ex-Japan will be strong in 2011, with the potential for a record year.

"2010 was a bumper year for high-yield issuance in Asia -- deals amounting to $13.7 billion closed, nearly four times higher than in 2008 and 2009," said Laura Acres, Moody's vice president-senior credit officer and author of the report. "And growth looks set to continue in 2011; in January alone we saw $3.1 billion in rated deals price and close, many of which were significantly over-subscribed."

Moody's expects benign credit conditions to continue, with real GDP (gross domestic product) forecast to grow by 7.1% for Asia ex-Japan in 2011. Around $2.9 billion in bonds will fall due this year, but given the growth trajectory for Asia's high-yield market, refinancing will be manageable, in Moody's view. Macro-economic conditions have resulted in stronger credit profiles, as evidenced by higher cash holdings, and stronger financial metrics. Moody's thus sees no material refinancing risk for high-yield corporations over the next 12 months.

In addition, with more names coming to market, the rated universe continues to expand. Given Asian corporations' sound liquidity levels and the significant amount of funding available from increasingly less-risk-averse investors, many high-yield names are finding opportunities to lock in long-term funds at rather attractive rates -- and without the more stringent limitations frequently imposed by banks through maintenance covenants.