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Moody’s — Defaults to remain high for APAC high-yield nonfinancial companies in 2022


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Research Announcement:

Moody’s — Defaults to remain high for APAC

high-yield nonfinancial companies in 2022

Hong Kong, February 28, 2022 —

» Economic recoveries in the US and APAC, less accommodative monetary policies and tough

conditions for Chinese property developers underpin the expected default rate

» The liquidity trend will differ across sectors and countries, with generally more favorable

conditions for companies except Chinese property developers

Defaults among high-yield nonfinancial companies in the Asia-Pacific will slightly decline but stay

elevated in 2022, reflecting the global economy’s expected transition toward more stable growth

as the coronavirus pandemic recedes, less accommodative monetary policies, and the continuing

liquidity pressure facing Chinese property companies, according to a new report by Moody’s

Investors Service.
“We forecast the APAC high-yield nonfinancial companies default rate to be at 6.2% for full-year

2022, slightly lower than the 7.5% trailing 12-month default rate at the end of 2021, but higher than

the pre-pandemic level and the average 3.9% for the past 10 years,” says Clara Lau, a Moody’s

Senior Vice President and Group Credit Officer.
Economic recovery in the US and China (A1 stable) will continue to underpin recovery in APAC,

which will stabilize despite risks from the pandemic and secular trends.
Fiscal policy across countries will shift from accommodative to strengthening long-term growth

potential and debt sustainability. As inflation rises, central banks will gradually tighten monetary

policy and normalize interest rates, removing the liquidity support put in place earlier in the pandemic

without impeding growth.
Liquidity will generally improve for companies in the region, albeit to different extents across sectors

and countries. Liquidity availability for most Chinese state-owned enterprises and financially

strong companies will be stable, but liquidity access for property developers and financially weak

companies will remain constrained. Furthermore, their access to offshore funding markets will

remain restricted for some time, and they may have only limited alternative funding options, such as

asset sales, equity raisings and/or shareholder support to address their refinancing needs.
Subscribers can access the report at:

http://www.moodys.com/researchdocumentcontentpage.aspx?

docid=PBC_1319587

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global

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us at mediarelations@moodys.com or visit our web site at www.moodys.com.
This publication does not announce a credit rating action. For any credit ratings referenced in this

publication, please see the ratings tab on the issuer/entity page on

www.moodys.com

for the most

updated credit rating action information and rating history.

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Clara Lau, CFA

Senior Vice President/RPO

Credit Strategy & Standards

Moody’s Investors Service Hong Kong Ltd.

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077
Michael Taylor

MD-Credit Strategy

Credit Strategy & Standards

Moody’s Investors Service Singapore Pte. Ltd.

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077
Releasing Office:

Moody’s Investors Service Hong Kong Ltd.

24/F One Pacific Place

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China (Hong Kong S.A.R.)

JOURNALISTS: 852 3758 1350

Client Service: 852 3551 3077

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