Subdued credit outlook for Asia-Pacific

The 2016 credit outlook for the Asia-Pacific region is “somewhat negative”, with borrower refinancing and new financing risks high on investors’ agendas.

According to Terry Chan, head of research for the Asia-Pacific region at Standard & Poor’s, credit risks have risen and some risk hotspots remain as we enter the New Year.

“We’ve earmarked the oil and gas, metals and mining, real estate development, financial institutions and retail sectors as having the highest risks of rating downgrades in 2016,” he said.

“Apart from risks related to China’s economic slowdown and tighter market liquidity, investors remain nervous about the prospects of ongoing falls in commodity prices and rising defaults.”

Looking more broadly, Standard & Poor’s is forecasting relatively sluggish economic growth for the Asia-Pacific region, including slower growth in China.

“The baseline scenario is for Asia-Pacific GDP growth of 5.3 per cent for 2016, and for 6.8 per cent growth in China in 2016,” the credit ratings agency said in a statement.

“For emerging Asia, growth is forecast to slide to 6.0 per cent in 2016 and 2017.”

[Related: Economic risks remain ‘tilted to the downside’ for 2016]

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