Asia still a long way from precrisis ratings<\/p>\n
SINGAPORE (Reuters): Asia's unexpectedly speedy recovery has
\nsparked hopes of further ratings upgrades, but beyond the
\npositive headlines and data, much still needs to be done for a
\nreturn to pre-crisis credit ratings.<\/p>\n
Many countries -- notably Thailand, Indonesia and South Korea
\n-- need to clean up their messy financial sectors before they can
\nregain the confidence of investors, analysts say.<\/p>\n
In broader terms, the region's credit outlook hinges heavily
\non its ability to sustain growth and recovery.<\/p>\n
\"The economic cycle has started to recover rather faster than
\nanyone had expected,\" said Takahira Ogawa, Standard & Poor's
\ndirector of sovereign ratings.<\/p>\n
\"But the credit cycle normally lags the economic cycle. We
\nstill have some way to go to come back completely to the credit
\nquality before the crisis. It would depend on the future
\ndirection and structural reforms of individual countries,\" he
\ntold Reuters.<\/p>\n
The Asian crisis forced troubled countries to resort to
\ndrastic measures such as devaluing their currencies, imposing
\nexorbitantly high real interest rates and often painful corporate
\nreform, and seeking international aid.<\/p>\n
The severe stress sent their sovereign and corporate credit
\nratings plunging as default risks heightened.<\/p>\n
But the region bit the bullet and has managed to pull through.<\/p>\n
Most affected countries, particularly South Korea and
\nMalaysia, have had their ratings upgraded due to a stronger-than-
\nexpected recovery.<\/p>\n
Indonesia's credit quality remains under severe pressure amid
\npolitical risks faced by President Abdurrahman Wahid. S&P put its
\nrating on CreditWatch Negative to reflect concerns about the
\ncountry's political and fiscal challenges.<\/p>\n
Banking sectors in many countries are poorly supervised and
\nawash with non-performing loans that cramp their ability to lend.<\/p>\n
The Thai financial sector's non-performing loans stood at an
\naverage of 38 percent of total credits at end-1999 and markets
\nand analysts worry about restructured loans turning sour again.<\/p>\n
South Korea's non-performing loans were estimated at 10.1
\npercent of total credits in the third quarter of last year, but
\nthat level could surge if Daewoo's debt restructuring collapses.<\/p>\n
Credit analysts said they are closely monitoring Asia's asset
\nquality, recapitalization efforts and how the capital is used as
\ncriteria for further upgrades.<\/p>\n
\"Since the financial sector is enormously important to the
\nhealth of any economy, the quality of sovereign credits is
\nclosely linked to it,\" said David Marshall, managing director of
\nAsian financial institutions at Fitch IBCA.<\/p>\n
Despite the speed of the recovery, analysts point out that it
\nwill be difficult for countries like South Korea, Malaysia and
\nThailand to be restored to single-A status without clear signs of
\nsustainable growth.<\/p>\n
The risks of Japan's recession being prolonged or the U.S.
\neconomy facing a downturn also cloud Asia's ratings outlook.<\/p>\n
The following is a table of Asian countries' current ratings
\ncompared with pre-crisis levels:<\/p>\n
Standard and poors' rating<\/p>\n
Countries Long-term Outlook Pre-crisis
\nforeign currency
\nChina BBB Stable BBB+\/Stable
\nIndonesia CCC+ WatchNeg BBB\/Stable
\nMalaysia BBB Stable A+\/Positive
\nPhilippines BB+ Stable BB+\/Positive
\nSingapore AAA Stable AAA\/Stable
\nSouth Korea BBB Positive AA-\/Stable
\nTaiwan AA+ Stable AA+\/Stable
\nThailand BBB- Stable A\/Stable<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asia-still-a-long-way-from-precrisis-ratings-1447893297",
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