Credit tide may be turning in Asia-Pacific, says S&P

HONG KONG – Ratings agency Standard & Poor's says Asia-Pacific's credit cycle may be turning amid soft economic prospects, weak credit conditions, and a build-up of debt in the region. "As we near the end of 2014, credit conditions in Asia-Pacific appear to be slightly tighter," said S&P credit analyst, Peter Eastham.

"It seems that some investors and lenders are taking a breath to re-evaluate strategies amid slower economic growth in key parts of the region,” he says. “In our view, this suggests a less-optimistic view by the market, and a possible turning of the credit cycle."

S&P Ratings' baseline scenario is for Asia-Pacific GDP growth to level out at 5.3% for both 2015 and 2016, up from 5.1% for 2014. However, China's lower growth trajectory of around 7% in the near term is likely to continue to affect business confidence and investment plans to varying degrees.

"Asia-Pacific economies are ending 2014 on a relatively low note, with China's growth slowing under a weak property market, Japan slipping into recession, and external demand yet to meaningfully improve," says Paul Gruenwald, S&P’s Chief Economist, Asia-Pacific.

"Despite our sunnier disposition on the quality of regional growth in the next two years, the balance of risks remains tilted toward the downside." www.standadandpoors.com (ATI).