THERE seems to be a silver lining in the not so distant horizon even with the ‘invisible enemy’ still ravaging the global economy as evident of a spike in the number of COVID-19 infection rate worldwide.
Although 13 Asia-Pacific (APAC) corporates were downgraded in 4Q 2020 after 10 in 3Q 2020, the number of upgrades more than doubled to nine from four, according to Fitch Ratings.
For the whole of 2020, the credit rating agency downgraded 61 corporates, exceeding the 18 corporates it upgraded by a factor of 3.4 times.
“75% of 2020’s downgrades were COVID-19 related while two-thirds were specifically due to either weakened liquidity or sector-wide market changes – the two main areas in which the pandemic has pressured ratings,” the credit rating agency pointed out in its APAC Corporate Rating Action Heat Maps for 4Q 2020.
Notably, Fitch Ratings said CDL Hospitality REIT (real estate investment trust) became a “fallen angel” during 4Q 202 with its rating downgraded to ‘BB+’ owing to the negative effect that the pandemic is having on the global travel and lodging sectors.
The Heat Maps included in the report demonstrate that the combination of liquidity/homebuilding had the highest concentration of downgrades in 2020, followed by the sector-wide market change/retail, leisure & consumer products (RLCP) combination.
The nine upgrades during 4Q 2020 included Midea Group Co Ltd (A/Stable), China Aoyuan Group Ltd (BB/Stable) and Seazen Group Ltd (BB+/Stable) – all of which were upgraded by one notch to reflect their strong operating performance and market position relative to peers. – Jan 15, 2021
