S&P predicts slowing negative credit trend for corporate and infrastructure sectors
(Australia and New Zealand) The negative credit trend that affected corporate and infrastructure companies in Australia and New Zealand in 2002 is showing signs of abating this year, according to Standard & Poor’s.
S&P associate director, Corporate & Infrastructure Finance Ratings, Peter Stephens, said aggregated credit quality and financial measures would stabilise in 2003 as businesses reaped the benefits of restructuring efforts, and sectors began to recover from the bottom of their business cycle.
'Despite the business challenges experienced by Australian and New Zealand companies in 2002, the key credit ratios highlighted in this report indicate relative consistency in the past five years despite challenging operating environments,' Stephens said.
However, he said some sectors would continue to suffer from industry-specific challenges.
'Transportation, media, retail, and global commodity industries face a less predictable operating environment, while other industries are exhibiting relatively stable trends,' Mr. Stephens added.
He attributed the downward ratings trend in 2002 to unforeseen event risk, poor financial performance, and liquidity issues.
Further, credit analysis in 2002 was affected by corporate governance, weak international equity markets, and unfunded employee pension liabilities.
'Despite this, the median rating for the rated Australian and New Zealand corporate and infrastructure sector has been stable at 'A-' for four years. This compares with a US median rating of 'BB-',' Stephens said.
'Despite the business challenges experienced by Australian and New Zealand companies in 2002, the key credit ratios highlighted in this report indicate relative consistency in the past five years despite challenging operating environments,' Stephens said.
However, he said some sectors would continue to suffer from industry-specific challenges.
'Transportation, media, retail, and global commodity industries face a less predictable operating environment, while other industries are exhibiting relatively stable trends,' Mr. Stephens added.
He attributed the downward ratings trend in 2002 to unforeseen event risk, poor financial performance, and liquidity issues.
Further, credit analysis in 2002 was affected by corporate governance, weak international equity markets, and unfunded employee pension liabilities.
'Despite this, the median rating for the rated Australian and New Zealand corporate and infrastructure sector has been stable at 'A-' for four years. This compares with a US median rating of 'BB-',' Stephens said.
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