[ET Net News Agency, 11 February 2020] Moody's Investors Service explains in a newly
published report that the coronavirus outbreak is credit negative for port operators in
the Asia Pacific because it is disrupting domestic and global supply chains and lowering
discretionary consumer spending, which will reduce the throughput growth of these ports in
2020.
"Nevertheless, while rated container port operators in the Asia Pacific will face some
short-term throughput and revenue reductions, they are likely to weather the negative
credit effects because of their business scale, competitive market positions and financial
buffers," said Ralph Ng, a Moody's Assistant Vice President and Analyst.
"Moreover, capital expenditure related to expansions will likely be postponed until the
situation stabilizes," added Ng.
For Chinese ports, in particular, Moody's expects that they will receive timely support
from the government, including announced measures to improve access to funding for
companies.
With rated Indian ports, the share of China-linked container cargo is less than 5% by
volume. Furthermore, it is likely that manufacturers will seek alternative sources of
supply for components to the extent that supply chain disruptions in China persist.
However, port operators that have directly entered into contracts with China-based
commodity off-takers could face liquidity shortfalls if the latter seeks payment relief
under a force majeure clause, which relieves a company of its contractual obligations.
Moody's explains that while China announced last week that it would offer support to
companies that sought to declare force majeure on international contracts, the actual
exposure and financial impact will depend on the contracts between the off-takers and the
port. (KL)