The coronavirus pandemic is a significant challenge to the global economy and particularly to infrastructure assets with demand risk. This report incorporates the significant reductions in economic activity and volumes to date, discusses its rating-case assumptions for medium-term recovery and one more severe sensitivity case for this subset of infrastructure credits. In addition, the report analyses the resulting financial metrics of these cases, including liquidity and leverage.
Fitch’s recent rating actions are displayed in the table on the left. Credit Profile of Assets Fitch-rated EMEA and APAC port operators comprise large and diversified port networks as well as smaller issuers operating either a single or only a few terminals. All assets are exposed to demand risk and are sensitive to both global trade flows and the economic performance of the territory they serve. Seaport operators typically issue corporate-style bullet debt, although refinancing risk is often mitigated by a diverse range of maturities, proven access to debt markets and sound liquidity.
Coronavirus Stress Tests The Coronavirus Rating Case assumes substantial volume losses in 2Q20 year on year, with knock-on effects through to end-2020. For EMEA issuers, these are expected to translate into volume declines of around 20% compared with 2019 levels in 2020 and a recovery to 2019 levels by the end of 2021.
For ports in APAC, the Coronavirus Rating Case assumes a volume shock of around 10% in 2020, although the stresses applied vary across the portfolio, with a recovery of throughput to 2019 levels by 2021-2022.
Source: Fitch Ratings