The Market Monitor Minding the Nation's Business
$1.1 trillion worth of Asia-Pacific financial and nonfinancial corporate debt will mature in the second half of this year through 2022, which is equivalent to about 11 percent of total debts maturing globally, ratings firm Standard and Poor’s (S&P) said in a report.
An article published by S&P Global Fixed Income Research, titled “Asia-Pacific Refinancing Study–$1.1 Trillion Of Rated Corporate Debt Is Expected To Mature Through 2022” said of the Asia-Pacific corporate debt, $110 billion is scheduled to mature in the second half of 2017, increasing to $205 billion in 2018 and $242 billion in 2019 before decreasing to $227 billion in 2020.
In addition, refinancing risk remains low as just 11 percent of the total Asia-Pacific rated debt maturing through 2022 is speculative grade (rated ‘BB+’ and lower), while the vast majority is investment grade (rated ‘BBB-’and higher), which is better placed to withstand market volatility and stress.
“For this study, we estimate the amount of corporate debt scheduled to mature through 2022 that S&P Global Ratings rates (with global-scale ratings) from Asia-Pacific issuers,” S&P said.
“Of the $1.1 trillion of Asia-Pacific rated financial and nonfinancial corporate debt set to mature between the second half of 2017 and 2022, and the majority is from issuers in Australia, Japan, and China,” Diane Vazza, head of S&P Global Fixed Income Research, said.
“Financial services companies account for 55 percent of this Asia-Pacific debt, compared with 45 percent for nonfinancial companies,” it added.
“The greatest sources of refinancing risk as we approach 2019 for these issuers include endogenous variables such as high and rising corporate debt in China, a rising interest rate trend, and a credit-growth path for China, and exogenous variables such as changes to trade or tax policy coming from the Trump Administration and the geopolitical situation regarding North Korea,” it added.
S&P said in contrast, credit quality could strengthen in some sectors in the region, as
commodity prices continue to rebound, which would be especially helpful to Australian exporters.
While strong credit growth in China contributed to its sovereign credit rating downgrade to ‘A+’ on Sept. 21, 2017, we expect that the country will maintain its robust economic growth, it added.
Continued steady growth from both Japan and Australia could reduce uncertainty in the coming years, it said.