MOODY’S INVESTORS SERVICE SAID Asia-Pacific countries would find it more difficult to access funds from the international capital market because of the US credit crisis and high inflation.

The financial meltdown in the United States and the sharp increase in prices of commodities are expected to adversely affect income-generating capacities of governments and privately held companies in the region, thus encouraging investors to momentarily stay at the sidelines, Moody’s explained.

“Looking ahead, access to funding will remain challenging, especially for low investment grade and speculative grade firms as already tight market liquidity is further aggravated by the financial turmoil in the US,” said Clara Lau, Moody’s chief credit officer for Asia Pacific.

The credit-rating firm said the third quarter has become worse than the second quarter for the Asia-Pacific region as far as access to foreign funding was concerned because more firms have manifested vulnerability to global shocks and record-high inflation.

Increasing costs of goods, including raw materials, and the resulting slowdown in consumer demand were factors believed to have dampened corporate earnings and dragged down their credit image.

“Rising costs and a fall in consumer and industry demand regionally and globally undermined the operating performances and credit metrics of these issuers,” Lau said.

Some economists said earlier that the crisis in the United States might force American financial institutions to pull out funds from emerging economies like the Philippines to address their liquidity problems at home.

Still, others believed that risk aversion among foreign investors would increase to the disadvantage of emerging economies, which are perceived to have a lower credit standing.

The US financial crisis, which began in the middle of last year, was prompted by defaults experienced by banks that had huge exposure to the subprime mortgage market.

The Philippines is not expected to be affected by the tighter credit market as it has completed early this year its foreign, commercial borrowing program for 2008. It sold $500 million worth of sovereign bonds in January, an amount allocated for settling maturing obligations denominated in foreign currencies.