Greater refinancing strain ahead for Asia-Pacific borrowers: S&P

SINGAPORE: The funding environment in the Asia-Pacific region has worsened noticeably in recent weeks as the global credit crisis continues to unfold, according to Standard & Poor's.

S&P's estimates that a cumulative total of $368 billion of corporate debt rated by the agency--including non-financials and financials--will mature or come due for refunding beginning in the fourth quarter of 2008 and ending in 2011 in Asia. In contrast, $2.1 trillion is expected to mature across all rating categories in Europe, and $700 billion is due within the U.S. speculative-grade segment alone.

Maturities are disproportionately concentrated, with two countries (Japan and Australia) accounting for 94% of total rated corporate bond maturities coming due in the three years ending in 2011, the report says.

Notwithstanding low-rated corporate debt exposure, we note that refinancing risk remains an overall growing concern for the region.

"Banks are much more cautious about lending, causing credit growth to decelerate substantially relative to the past couple of years," said Diane Vazza, head of S&P's Global Fixed Income Research Group.

This pullback is perhaps keenest among global banks, though domestic banks in the region are not immune and are more likely to preserve relationships with the strongest credits.

"For issuers with weaker fundamentals, available financing options have shrunken considerably at a time when business is softening and financial strain is spreading," Vazza said.