Indonesian corporates ‘most at risk’ in rapid leveraging: Nataxis

HONG KONG – Global asset manager Nataxis says detailed analysis based on the 250 largest corporations in ASEAN confirms that Indonesian corporates are the most vulnerable to debt leveraging, ahead of Singapore and Malaysia, with Philippines and Thai corporates following at a distance.

Aggregate data shows that Singapore had the largest corporate debt-to-GDP ratio at 257% in 2014, but more micro level data indicates that Indonesian corporates are the most vulnerable, Nataxis says.

“The underlying reasons for the relatively small vulnerability of Singaporean corporate debt is that it is concentrated on financial institutions and that the stock of international reserves is larger so that it can cushion the debt burden in FC.”

Nataxis says that ASEAN corporate debt has been growing rapidly during the last few years, and constituted 75% of ASEAN-5 GDP in 2014, surging from 66% in 2010.

“The recent trend of capital outflows due to plunging commodity prices and the expectation of the FED’s monetary policy normalisation makes it very timely to analyse how worrisome corporate leveraging may be for the region,” it says. www.nataxis.com/ (ATI).