[ET Net News Agency, 5 December 2019] Moody's Investors Service said in a new report
that rated ports in the Asia Pacific are well-positioned to withstand the impact of the
ongoing US-China trade tensions, even in a scenario where a further escalation results in
higher tariffs and other measures.
The report analyses the impact on rated ports in the region of three scenarios - (1)
Moody's current baseline of tensions persisting but not escalating (45% probability), (2)
a hardened stance (45%), and (3) a significant softening (10%).
"Throughput growth is set to slow under all three scenarios, although at different
rates, but the diversity of their operations and ability to take countermeasures provide
rated port operators with a buffer against even the impact of escalating trade tensions,"
said Ray Tay, a Moody's Senior Vice President.
"Ports most exposed to China trade are also most vulnerable to a potential escalation of
trade tensions," said Ian Lewis, an Associate Managing Director in Moody's Public Project
and Infrastructure Finance Group. "However, our rated portfolio benefits from mitigating
factors, such as portfolio diversification and financial headroom, that will help support
their credit quality."
Nevertheless, operators with key gateway port assets in China could become more directly
affected if escalating trade tensions or unexpected trade policies substantially erode
their competitive edge and financial buffers.
All three scenarios assume the relocation of some manufacturing capacity, although
Moody's regards a shock adjustment as unlikely, due to the difficulty for a near-term
massive relocation of manufacturing capacity. This gradual shift will allow affected ports
to take action to mitigate the impact.
Moody's rated portfolio of nine port operators in Asia Pacific has a stable
investment-grade credit quality, despite the ongoing trade tensions and slower global
growth.
Asia Pacific issuers accounted for 54% of total rated debt and 78% of total container
throughput across Moody's global portfolio of privately managed ports as of 30 June 2019.
(KL)