4 Singapore firms among record number hit by Moody's ratings

Companies have suffered from deteriorating economic conditions.
Companies have suffered from deteriorating economic conditions.ST PHOTO: KUA CHEE SIONG

Frasers Hospitality Trust, Mapletree North Asia Commercial Trust among those affected by virus outbreak

Moody's Investors Service has downgraded or put on negative watch the ratings of debts issued by four local firms and a multinational with operations in Singapore.

It said those companies are among 96 firms worldwide that are now on the line between speculative grade and investment grade due to deteriorating economic conditions amid the coronavirus pandemic and the sharp declines in commodity prices.

The number of companies on that threshold is a record high, Moody's said.

The global agency - whose rating of debt owed by companies and countries is closely watched by investors worldwide - downgraded Singapore's Frasers Hospitality Trust and Mapletree North Asia Commercial Trust, among others, to that threshold.

It changed the outlook of its credit rating for Ascott Residence Trust, and has put under review for potential downgrade in the rating of GLP.

Moody's said Frasers Hospitality Trust's ratings were downgraded to Baa3 negative from Baa2 negative, reflecting expectation that a decline in global travel because of the coronavirus outbreak will weaken demand for the trust's hospitality assets and lower its earnings.

Baa3 rating refers to investment-grade debt with relatively high credit risk as compared with Baa2 or Baa1 ratings.

Mapletree North Asia Commercial Trust received a provisional Baa3 rating with a negative outlook, down from Baa2 negative, on the likelihood that the trust's credit metrics will weaken.

The real estate investment trust's debt dynamics may come under stress as the Covid-19 outbreak hits Hong Kong's economy at a time when it is already suffering from weaker global trade, softer Chinese economic growth and prolonged local protests, all of which have amplified the shock to the retail sector.

Ascott Residence Trust's ratings were kept at Baa3 but the outlook was changed to negative from stable, given the risk that the operating performance of the Reit's hospitality properties could weaken as international travel is being curtailed to varying degrees around the world.

GLP's Baa3 rating was put under review for possible downgrade amid concerns the investment management firm's recent acquisitions will hinder its ability to reduce its financial leverage amid volatile economic and capital market conditions, stemming from the rapid spread of the coronavirus.

GLP specialises in logistics, technology investments, real estate and private equity funds.

Moody's has also put under review for possible downgrade the Baa3 rating of United States-based Las Vegas Sands Corporation (LVSC) that operates Singapore's Marina Bay Sands Casino.

Moody's did not name the acquisitions, but GLP has most recently been named as part of a consortium that has offered $1.4 billion to help privatise Hong Kong's Li & Fung, the world's largest supplier of consumer goods.

 
 

Moody's has also put under review for possible downgrade the Baa3 rating of United States-based Las Vegas Sands Corporation (LVSC) that operates Singapore's Marina Bay Sands Casino.

The rating agency said the review for downgrade is prompted by steep declines in visitation and gaming revenue in LVSC's Macau and Singapore operations.

It said the spread of the coronavirus has restricted travel in the region as well as reduced travel, consumer and business activity in the US. LVSC headquarters are in Paradise, Nevada, and its shares are listed on the New York Stock Exchange.

The rating agency said the review for downgrade is prompted by steep declines in visitation and gaming revenue in LVSC's Macau and Singapore operations.

 
A version of this article appeared in the print edition of The Straits Times on April 24, 2020, with the headline '4 S'pore firms among record number hit by Moody's ratings'. Print Edition | Subscribe