Further fall in oil prices would broadly benefit Asia

In terms of sovereign credit risk, lower oil prices are positive for Sri Lanka and Pakistan, as oil makes up 25-30% of their import bills. India and Indonesia also benefit via an improved current account position and reduced fiscal pressures. Lower oil prices are also marginally beneficial for China, Korea, the Philippines and Thailand, and are probably marginally negative for Malaysia, states Standard Chartered. 

If oil prices go lower, Asian oil and gas companies - particularly upstream participants - are likely to see a direct hit to revenue and profitability. This would warrant a spread correction to reflect both their own fundamentals and price corrections in other international oil and gas names, and China is the best example of this, according to Standard Chartered. US investors see China oil and gas names - which have significant involvement from US crossover investors - as comparable to US HG oil and gas names. 

Spread widening in US HG oil and gas would put pressure on China oil and gas quasi-sovereigns, despite the limited fundamental impact from sustained low oil prices. The impact on HY oil and gas companies would be significantly higher.