South-east Asian corporates are following the lead of their European and US competitors as S&Ps reports an overall improvement in credit quality with upgrades outnumbering downgrades by twelve to seven. The number of rated corporates under CreditWatch or with a negative outlook has also decreased notably from thirteen down to four.
Greg Pau, an S&Ps credit analyst, comments: "This improvement was largely attributed to three factors: more favourable operating environments and business profiles; conscious effort of some corporates to deleverage or adopt more conservative capital structures; and higher sovereign ratings on Thailand, Malaysia and Indonesia."
Presidential elections in Indonesia and the Philippines, warns Pau, may prove a source of instability in the region, as might any reappearance of SARS or avian flu.
The report, "South and Southeast Asian Corporate Report Card", reviews corporate rating actions since June 2003 and industry overviews.