Manufacturers gain steadier funding as APAC and GCC banks hold state backing

Banks anchored by government support are also less prone to abrupt rating downgrades.

Manufacturers operating in the Asia Pacific and the Gulf may benefit from steadier bank funding conditions in downturns, as lenders in these regions are more likely to be supported by their governments, according to Fitch Ratings.

The agency said clearer state backstops in APAC and the GCC can help banks maintain credit availability for capex loans, working capital facilities, trade finance, and supply chain finance.

Banks anchored by government support are also less prone to abrupt rating downgrades, an important factor when choosing counterparties for letters of credit, guarantees, and receivables programmes.

Fitch’s latest infographic showed that government support remains a key component of bank credit profiles in several emerging and developed markets.

In APAC, 45% of bank Issuer Default Ratings are driven or underpinned by Government Support Ratings, compared with 3% in Western Europe and 1% in North America, where resolution regimes often place large banks at “no support.”

In many emerging markets, including China, India, Indonesia, Vietnam, and Oman, major banks’ support levels are aligned with sovereign ratings.