May 19, 2020 / 9:37 AM / 17 days ago

RPT-Distressed exchanges likely to rise in APAC this year - Moody's

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TOKYO, May 19 (Reuters) - The economic slowdown resulting from the coronavirus outbreak and large declines in commodity and asset prices will likely trigger more distressed exchanges in Asia, Moody’s said on Tuesday.

Asia has already seen two such cases of effective debt restructurings, the rating firm said, as companies struggled to secure cash flow as economic activity ground to a halt due to the pandemic.

Indonesian coal producer Geo Energy Resources Limited repurchased around $111 million, or 37% of the original $300 million note principal at a deep discount of around 40% to original par value.

Meanwhile property developer Yida China Holdings extended its bond maturity due April 2020 as it was unable to repay the debt.

Distressed exchanges, which Moody’s count as default, are likely to rise this year, the rating agency said.

“We forecast the trailing 12-month high-yield corporate default rate for APAC will rise to 6.4% at the end of 2020 from 1.1% in 2019,” Moody’s analyst said.

The global economy is expected to go through its worst recession in modern history as the pandemic and lockdowns to contain the virus have frozen many parts of the economy.

Among rated APAC high-yield corporate bonds, the transportation, metals & mining and manufacturing sectors have the greatest portion of bonds trading at deep discounts, Moody’s said.

Reporting by Hideyuki Sano, editing by Louise Heavens

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