Asian Debt, Equities May See More Pressure, S&P Says

Asian companies are more likely to default next year as borrowing costs rise, and the region's stocks may fall because they are too expensive, Standard & Poor's said.

Rising costs and tighter access to funding, especially for companies with risk profiles weakened by acquisitions and expansion, will undermine borrowers, the rating assessor said in a report today.

Risk premiums in Asian bonds haven't increased as much as in the U.S. and Europe since record defaults on U.S. loans to people with poor credit histories brought global credit markets to a standstill in July.

``The balance of our rating outlooks on the corporate sector suggests there may be more rating downgrades than upgrades among Asia-Pacific companies in 2008, in sharp contrast to the general improvement in credit quality this year,'' Melbourne-based Ian Thompson, S&P's chief credit officer for Asia-Pacific, said in the report.

Equity markets in the region, having risen 16 percent this year according to the Morgan Stanley Capital International Asia- Pacific Index, will have less room to keep advancing next year as concerns about inflation and weakening U.S. and European economies intensities, the New York-based rating company said.
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