Moody’s Ratings  said US trade policy uncertainties pose risks to the stabilising credit trend of Asia Pacific nonfinancial corporates.

In Moody’s Ratings' published report titled “Credit Trends — Asia Pacific: US trade policy undermines global economic growth and APAC credit stability in 2025”, the share of ratings with a stable outlook for rated APAC nonfinancial corporate portfolio was 71%, while those with negative implications  was 24% at the end of 2024, compared with 68% and 29%, respectively, a year earlier.

While global economic growth stabilises at a slower pace and easing monetary policies improve liquidity, US trade policies, government downsizing, rising trade tensions and geopolitical conflicts pose uncertainty and risks to the region's credit trend.

Negative credit trend for Chinese corporates expected to moderate in 2025

The share of ratings with negative implications in the Chinese corporate portfolio remained high at 50% at year-end 2024, although notably down from the 63% at year-end 2023. This reflects our expectation that government support will stabilise the property market and ease local government financing vehicles' (LGFVs) funding pressures despite slow economic growth.
The policy rates of major central banks will stabilise in 2025. "We expect core inflation to align with central bank targets by midyear, enabling a return to neutral policy rates,"it said.

The Federal Reserve will gradually lower interest rates as inflation stabilises. Emerging market central banks will balance domestic economic goals with exchange-rate implications. The Bank of Japan will gradually exit its negative interest rate policy while maintaining an accommodative stance to support growth.
Negative rating actions  (90) outpaced positive rating actions (59) in 2024 for Asia-Pacific nonfinancial companies. This resulted in an increase in the rating trend tracker  to 0.66x in 2024 from 0.33x in 2023 (excluding the negative rating actions related to the change in China's sovereign rating outlook).

Around 23% of negative rating actions were on Chinese property developers, reflecting the ongoing downturn in China's property sector and the resultant strain on their credit strength. Positive rating actions were driven by improved performance of Japanese and Korean automotive companies, higher tariff revenue for Indian airport operators, and a strengthened business profile for Japanese manufacturers.

There were six defaults in 2024, resulting in a trailing-12-month default rate of 3.8%. Two-thirds of the defaults were distressed exchanges. By industry, half of them were Chinese property developers.

Re-disseminated by The Asian Banker