About 22% of 476 rated non-financial companies in Asia Pacific have high exposure to coronavirus disruptions, up from 20% in March, as the effects of the pandemic on companies' credit quality have become more apparent, said Moody's Investors Service recently.
"Airlines, automakers and auto part suppliers, casinos, discretionary retail and hospitality companies continue to bear the economic brunt of the outbreak, given their sensitivity to consumer demand and travel restrictions," said Laura Acres, a Moody's Managing Director and Regional Head of Asia Pacific Corporate Finance Group. "In addition, declining oil prices and weak industrial demand will continue to hurt oil and gas and shipping."
Of the 105 high exposure companies, nearly 90% face negative operating conditions and already have negative outlooks or are under review for downgrade, with almost 30% having weak liquidity, the credit rating agency noted.
"Steel and oilfield services have joined the list of sectors with high exposure, mainly because the halting of production and weakening demand from end-users have hindered steelmakers' operations, while sluggish demand and depressed oil prices are adversely affecting companies in oilfield services," said Kaustubh Chaubal, a Moody's Vice President and Senior Credit Officer.
Exposure is moderate for 39% of companies (183), up from 36% in March, according to Moody’s.
Most of these companies operate in the mining, property, refining and marketing, chemical, protein and agriculture sectors with just 4% having weak liquidity, the firm observed.
On the other end of the scale, exposure is low for 39% of companies (188), said Moody’s, adding that these include companies providing essential services or those with diversified business models, such as information technology, telecommunication and media, and engineering and construction companies.