Moody's Investors Service yesterday said the liquidity remains fragile and availability of reliable external funding is still a question mark for many corporate issuers in the Europe, Middle East and Africa.
"Despite significant bond issuance volumes since the beginning of the year, liquidity remains fragile for corporate issuers in Emea," said Jean-Michel Carayon, a Senior Vice-President in Moody's Corporate Finance Group.
"The sustainability and availability of bond markets, particularly for issuers at the lower end of the rating scale, still must be proven, while bank lending activity continues to be dislocated." The next 12 months' total debt maturities are estimated to be around $615 billion ($2.25 trillion). Moody's expects that around 14 per cent of investment-grade issuers and 20 per cent of speculative-grade issuers will not have sufficient internal and external committed liquidity sources to cover their next 12 months' cash outflows, including but not limited to debt maturities.
"While some corporates have been able to successfully mitigate weakening operating cash flows, this is likely to be more challenging for others, particularly as economic prospects are expected to remain weak at least for the remainder of 2009," said Sabine Renner, an Analyst in Moody's Corporate Finance Group.
"While a continuation of the recent bond market activity helps mitigate – at least to some extent – liquidity pressures stemming from bank market stress and cash flow shortfalls, uncertainty will remain elevated until economic conditions fully recover."
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