Moody's downgrades record-high number of companies worldwide, including some Singapore firms

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

SINGAPORE - Moody's Investor Service said a record-high 96 companies worldwide are now on the line between speculative grade and investment grade.

It said the companies have suffered from deteriorating economic conditions amid the coronavirus pandemic and the sharp declines in commodity prices.

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 the rating of GLP Pte. Ltd.

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 to 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 its credit metrics will weaken.

The Reit'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, Moody's said.

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 Pte Ltd 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 markets conditions, stemming from the rapid spread of the coronavirus.

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

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

Moody's has also put under review for possible downgrade the Baa3 rating of US-based Las Vegas Sands Corp that operates Singapore's Marina Bay Sands Casino.

The ratings agency said the review for downgrade was prompted by steep declines in visitation and gaming revenue in LVSC's Macau and the 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 United States.

Las Vegas Sands Corp headquarters are in Paradise, Nevada and its shares are listed in New York Stock Exchange.

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