Within minutes of US crude oil futures tumbling through $45 a barrel, signs of a broader risk-off swing started to emerge in markets, exacerbating what was already brewing as a worrying week for commodities.
Oil’s retreat to a level not seen since the Organization of the Petroleum Exporting Countries (Opec) forged its landmark agreement to cut output last November stoked declines from iron ore to industrial metals and losses that many commentators had been putting down to individual supply and demand factors.
The deterioration in sentiment carried through to the currency market, where the key risk barometer in Asia—the yen—spiked higher against the dollar as stock losses from Australia to Hong Kong gathered pace. Bloomberg
Corporate debt quality still wobbly
CARE Ratings’ debt quality index (CDQI) showed an increase in the month of April, indicating an improvement in the ability of corporates to service debt. This is encouraging since the index had shown a declining trend for the most part of the second half of 2016-17. Weak corporate debt quality is reflected also in mounting bad assets of banks and the resultant tightening of the rules of bad loans by the Reserve Bank of India.
CDQI’s data set comprises of 1,579 companies from CARE’s portfolio of 2,980 companies as of March 2012. Currently, the volume of debt of the sample companies stands at Rs30.65 lakh crore in April 2017.