Asia-Pacific credit conditions ease as China loosens lending

March 28, 2019

MELBOURNE - The U.S. Federal Reserve's pause on interest rate hikes and China's loosening of its credit purse strings have eased credit conditions in Asia-Pacific, but economic growth remains soft and macro risks persist, says a report released today by S&P Global Ratings.

But S&P credit analyst Terry Chan said macro risks persist given a synchronous slowdown of major economies -- the U.S., Europe, and China -- and
worsening borrower credit quality as earnings growth tapers off.
The report says U.S.-China trade tension remains a top risk in Asia-Pacific given that the U.S. still seems determined to confront China strategically. Longer term
Bi-lateral relations between the two countries are likely to remain uncertain.
And the risk of a corporate refinancing squeeze remains high, given the threat of reduced liquidity and widening spreads in some pockets.
Elevated asset prices in Asia-Pacific raise the spectre of a correction in property values, the report says.
"Despite some correction as economies slow, real property valuations in the region still look generous.
"Other top risks in Asia-Pacific comprise commodity and currency volatility, China's leverage, and technology disruption and cyber-security. (ATI).