Rating trends continue to be favorable across most sectors and geographies in Asia-Pacific, said S&P Global Ratings credit analyst Terry Chan. “Indeed, the net rating bias has eased to negative 1 per cent in May 2018 from –5 pepr cent in February 2018.”

However, tail risks from the US are rising, posing a threat to the Asia-Pacific. These US-related risks include: Potential trade interruption, Higher US-dollar interest rates and wider spreads, which would affect asset pricing and financial markets, and Global investors’ concerns about a turn in the US credit cycle, which could threaten an eventual pullback of liquidity in Asia-Pacific’s emerging markets.

“With China’s debt overhang risk relatively stable, the primary source of regional risks is external, mainly from the US,”said Chan.

“Front of mind is the US-China trade dispute, which is now in earnest following the recent tit-for-tat exchange of a 25 per cent tariff imposition, by the US and then China,” Chan said.