SINGAPORE: A resurgence in Covid-19 cases during July and August across several Asia Pacific (APAC) markets could affect a number of corporates in the region in 2H21, which may weaken the prospects for the reversal of pandemic-related negative rating actions, said Fitch Ratings on Wednesday.
In its report titled “APAC Corporates: Coronavirus Impact August 2021,” Fitch has taken pandemic-related negative rating actions on a total of 78 entities, equivalent to 23 percent of its current portfolio of 344 publicly rated APAC corporates, since the beginning of March 2020. During 2Q21, there were 11 negative actions and 12 positive actions reversing pandemic-driven negative actions, which marked the first quarter during the pandemic when reversals outnumbered negative actions, said Fitch Ratings.
However, according to Fitch, July saw no reversals of pandemic-driven negative rating actions. “Of the APAC corporations that we have taken negative rating action on due to pandemic-related concerns so far, 17 remain on negative outlook.” This includes nine Indian corporates rated at ‘BBB-‘/negative that could be downgraded if India’s sovereign rating (BBB-/negative) is downgraded.
According to Fitch, “As we have previously stated, divergent recovery prospects among countries and companies will be evident in rating actions in 2021. Even as Covid-19 outbreaks challenge the outlook for some companies, prospects for others have improved. For example, we upgraded China’s Golden Eagle Retail Group Limited to ‘BB+’/Stable in 2Q21, compared with its ‘BB’/Stable rating prior to the pandemic.”
