SINGAPORE, Aug 30 — Moody’s Investors Service said the JP Morgan Asia Credit Index (JACI), which tracks the total return performance of Asia’s fixed-rate US dollar bond market, remained concentrated in 10 issuers.

Moody’s senior vice president, Laura Acres said: “The top 10 issuers — whether corporate or sovereign — account for 28.3 per cent of the overall index on a weighted basis, although this level has declined from 31 per cent in February.

“Other features include the fact that the index is largely influenced by sovereigns and quasi-sovereigns, and stability predominates, although a mild negative bias remains,” she said.

Acres was speaking on the release of a Moody’s report updating its view of the index titled, “JACI: A Rating Perspective.”

The JACI, as of July 31, included some 660 bonds issued by 301 companies, with a total market capitalisation of US$420 billion (RM1.37 trillion). Moody’s rates 90.7 per cent of the index on a weighting basis.

This data compares with 560 bonds issued by 259 companies with a market capitalisation of US$390 billion in February 2013, the date of Moody’s last report on the JACI.

Furthermore, on the issue of concentration, at its simplest level, the JACI can be sub-divided into investment-grade and non-investment-grade and, in terms of weighting; it was heavily skewed towards investment-grade issuers, at 68.5 per cent.

This weighting may increase further, given the Philippines government, the largest issuer in the index, is Ba1 under review for upgrade.

The report also said that sovereign rating actions had the greatest influence on the JACI’s movements.

Sovereigns directly make up 15.6 per cent of the index, but their movement also affects government-related issuers (GRIs) and related entities whose ratings may automatically change as a direct result of a sovereign rating movement.

It said this situation was particularly true for the large number of state-owned or state-controlled utilities and oil and gas companies, which are so prevalent in the index.

In addition, the rating outlooks for companies in the index are currently broadly stable: 69.7 per cent have ratings with stable outlooks, substantially  unchanged from the February report.

The JACI examines credit trends and rating movements for debt issuers in  the JACI, most of which are rated by Moody’s.

 The report reflects Moody’s views and was not done in collaboration with JP Morgan, although it was based on JACI composition data the bank had provided as at Jan 31, 2013. — Bernama