Rated project, infrastructure firms in Asia well-placed to manage refinancing: Moody's

Coal, bound for a power plant in Indonesia.
Coal, bound for a power plant in Indonesia.
MAY 28, 2020 - 7:32 PM

COVID-19 pandemic notwithstanding, Moody's rated Asian project and infrastructure companies are well-positioned to manage their refinancing needs through 2022, said Moody's Investors Service in a May 28 report.

Upcoming bond maturities are concentrated at investment-grade companies, most of which benefit from government support or are in sectors less affected by the virus outbreak.

China and South Korea account for most of the outstanding bonds in Moody's portfolio. From Asean, Indonesia accounts for 4 per cent, Malaysia for 2 per cent, Singapore for 1 per cent, and the Philippines and Thailand for less than 1 per cent each.

Of the top 15 companies by size of outstanding bonds, only two are not from China or South Korea: Indonesian state-owned power company Perusahaan Listrik Negara, and Power Grid Corporation of India.

“The infrastructure sectors have remained attractive to institutional investors despite the uncertain funding environment, underpinned by companies’ ownership of long-term essential assets, such as power and gas utilities,” said Moody's assistant vice president and analyst Ralph Ng.

Power and gas utilities companies account for around 70 per cent of maturities through 2022, and typically benefit from cash flow predictability and manageable exposure to pandemic-related disruptions.

The transport sector, which has been harder hit by Covid-19, accounts for just 10 per cent of maturities through 2022. Most of these remain investment-grade, mitigating refinancing risks.

In South-east Asia, longer-tenor project bonds are becoming a more popular funding option for infrastructure companies, attracting long-term institutional investors, said the report. "Amortization debt payment schedules help mitigate refinancing risks. We expect this trend to continue and help issuers achieve better duration matching between asset lives and liabilities."