ECONOMYNEXT – Supportive domestic liquidity and accommodative monetary policies can reduce refinancing risks for rated Asia–Pacific (APAC) emerging-market non-bank financial institutions, including those in Sri Lanka, despite economic uncertainty, Fitch Ratings has said.
“We expect the rated NBFIs in our APAC EMs – China, India, Indonesia, Thailand and Sri Lanka – to benefit from stable domestic liquidity and easing monetary measures, which should alleviate refinancing pressure,” Fitch said.
“APAC EMs maintain steady domestic liquidity, despite global economic uncertainty, illustrated by stable domestic short-term rates and consistent bond issuance in home markets, supporting local-currency funding.”
Authorities have eased monetary policy, including rate cuts, to ensure adequate domestic funding and liquidity, the rating agency pointed out.
The full statement is reproduced below:
Adequate Domestic Liquidity Reduces Refinancing Risk for APAC EM NBFIs
Fitch Ratings-Singapore/Taipei-16 June 2025: Supportive domestic liquidity and accommodative monetary policies mitigate refinancing risks for rated APAC emerging-market (EM) non-bank financial institutions (NBFIs) despite economic uncertainty and high refinancing needs, Fitch Ratings says.
We expect the rated NBFIs in our APAC EMs – China, India, Indonesia, Thailand and Sri Lanka – to benefit from stable domestic liquidity and easing monetary measures, which should alleviate refinancing pressure. Chinese asset-management companies, facing large refinancing needs, are bolstered by strong domestic bank support. Indonesian issuers have shifted towards shorter-tenor funding amid rising borrowing costs, but adequate short-term asset coverage and shareholder support mitigate repayment risks.
APAC EM NBFIs have more short-term debt than those in EMEA, Latin America and North America due to their shorter asset tenors or stable funding access supported by shareholders or governments. This helps manage borrowing costs. APAC EMs maintain steady domestic liquidity, despite global economic uncertainty, illustrated by stable domestic short-term rates and consistent bond issuance in home markets, supporting local-currency funding. Authorities have eased monetary policy, including rate cuts, to ensure adequate domestic funding and liquidity.
Chinese securities companies, with substantial liquid portfolios, retain the flexibility to liquidate assets for short-term obligations. Rated Indian finance companies benefit from well-matched asset-liability maturity profiles and diversified funding sources. Sri Lankan issuers’ predominantly deposit-funded balance sheets mitigate refinancing risks despite macroeconomic sensitivity. Thai issuers mostly focus on onshore funding, aided by low domestic borrowing costs, but some have tapped offshore debt to diversify funding.
Market volatility and high US dollar interest rates have slowed APAC NBFIs’ offshore bond issuance. We believe issuers with diversified funding sources will remain opportunistic, using offshore bank loans and non-US foreign-currency funding as alternatives. Domestic bank funding remains a steady backstop.
The report, “APAC Emerging-Market NBFIs: Refinancing Risks in 2025”, is available at www.fitchratings.com or by clicking the link.
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