1、 Asia-Pacific Sector Roundup Q1 2023 Cracks In The Wall November 14,2022 This report does not constitute a rating actionKey Takeaways Confluence of headwinds.Asia-Pacific is fighting on four fronts:the global economic slowdown,high inflation,rising interest rates,and weakening currencies.China is co

2、ntending with subdued growth amid its COVID policy stance and real estate sector woes.And some sectors and issuers in the region are feeling the heat from rising geopolitical tensions(e.g.,Asia-Pacific tech firms amid the U.S.Chips Act).These risks are forming cracks in Asia-Pacifics credit wall.A g

3、reater divide.Monetary policy remains divergent across Asia-Pacific central banks.Most continue to hike rates to slow inflation and stem capital outflows;China and Japan are exceptions.Concurrently,domestic currency depreciation has created winners and losers.The regions exporters benefit from being

4、 competitive,but midstream and downstream sectors dependent on imported materials could see costlier inputs,denting margins.The ability to pass through input costs will differentiate corporate sectors.Higher financing,tighter liquidity.The availability of and access to financing could tighten as inv

5、estors and lenders turn more selective.Demand for higher yields and a strong U.S.dollar could intensify debt burdens,particularly for offshore borrowers.To cope,borrowers could turn onshore by tapping bank loan facilities and domestic capital markets.While banks could see higher interest income from

6、 such loans,the economic downturn may entail higher loan-loss provisions.Negative net rating outlook bias.Risks remain firmly on the downside,underpinning the net rating bias at negative 3%as of October 2022.Chinas COVID policy and property sector downturn have hit consumption and discretionary spen