Asia-Pacific financial institutions to face more difficult year: S&P

HONG KONG - Potentially higher interest rates, as well as volatile domestic currencies, bond markets, and property prices, will make financing conditions more difficult for Asia-Pacific financial institutions in 2019, according to a report published today by S&P Global Ratings.

"High debt levels and lofty asset prices have evolved during what has been an extraordinarily long economic and credit cycle across much of Asia-Pacific," said S&P Global Ratings' credit analyst Gavin Gunning.
 
"These elevated risks set the scene for a potential deterioration in Asia-Pacific bank credit quality, over the short to medium term."
 
S&P says bank ratings in the region remained relatively stable over the course of 2018, and S&P's base case is that this trend will likely continue in 2019 despite -- credit conditions becoming more difficult.
 
"Last year, only 7% of our pool of rated banks in Asia-Pacific were either upgraded or downgraded. As of December 31, the median rating across the portfolio of over 200 rated banks remained unchanged from a year ago at 'A-', with about 87% of our bank ratings at 'BBB-' or higher," Gunning said.
 
"A significant and abrupt credit cycle downturn would likely result in negative ratings momentum for some Asia-Pacific banks.
 
"This is despite our expectation that most banks can contend with a moderate and gradual negative turn in the credit cycle at current rating levels."   www.standardandpoors.com (ATI).