KUALA LUMPUR, July 13 (Bernama) -- Moody's Investors Service has revised upwards its estimated high-yield default rate for corporates in Asia Pacific, excluding Japan, to five per cent in 2012 from an earlier estimate of 2.3 per cent, based on Moody's Credit Transition Model (CTM).

Moody's Group Credit Officer, Clara Lau said in a statement here today that the higher estimated rate reflected a faster-than-expected deterioration in the credit quality of the rated portfolio as the deepened and prolonged nature of the European sovereign crisis has prevented a return to stability in the credit market.

"The five per cent Asian high-yield corporate default forecast translates into a total of four potential defaults during 2012."

Lau was commenting on the release of a Moody's special comment, "High-Yield Default Rate for Asian Non-Financial Corporates to Rise Modestly in 2012."

"The region's estimate mirrors the global trend, and for which CTM forecasts a rise to three per cent by end-2012, against the 2.6 per cent estimated in March," Lau said.

"Looking back, Moody's notes that the Asia Pacific, excluding Japan, corporate default rate rose in first half 2012, ending the period at 2.6 per cent against zero defaults at end-2011," she said.

The report said that in terms of rating transitions for second quarter 2011- first quarter 2012, the ratings of investment-grade issuers in Asia Pacific, excluding Japan, were generally more stable when compared to the global corporate portfolio.

By contrast, for speculative grade issuers in the region, there was generally higher transition risk when compared to their global peers.

The difference was largest at the Ba1, Ba2, B3 and below rating levels.