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Moody’s: One in five APAC companies face high exposure to coronavirus disruptions

  • A further 36% face moderate exposure to the coronavirus disruptions
  • Refinancing risk is high for 27% of the high exposure companies

 

Moody’s Investors Service says in a new report that out of 482 corporates it rates in Asia Pacific, 20% have high exposure to coronavirus-related disruptions, with these companies sensitive to shifting consumer demand and global travel restrictions.

“We have identified six sectors as most affected by the coronavirus outbreak, namely airlines, auto manufacturing and auto parts supply, oil and gas producers, gaming, global shipping, discretionary retail and hospitality,” says Laura Acres, a Moody’s Managing Director and Regional Head of Asia Pacific, Corporate Finance Group.

“This high exposure means that these companies are likely to see their credit quality weaken or ratings affected under our current macroeconomic and oil price forecasts,” adds Kaustubh Chaubal, a Moody’s Vice President and Senior Credit Officer.

Moreover, refinancing risk is high for just over a quarter of the high exposure companies, given their large debt maturities and the tightening capital markets. A further 36% of companies have moderate potential for implications to their credit quality or ratings.

Moody’s currently forecasts GDP growth of 3.3% for China, 2.5% for India, 3.7% for Indonesia and 0.1% for Korea in 2020. Australia’s GDP will be flat and Japan’s will contract by 2.4%.

Most of the companies with moderate exposure operate in sectors closely linked to consumer and industrial activity, such as property development, mining and steel, chemicals, refining and marketing.

Exposure is low for 44% companies. These companies operate in industries that provide essential goods and services or have diversified business models, such as telecommunication and media, and IT services and engineering and construction.

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