20% APAC non-financial companies at high risk due to Covid-19: Moody's

MUMBAI: Only 20 percent of nonfinancial companies in the Asia Pacific region () face high exposure to disruptions and the resulting credit risks, Moody's Investors Service said Thursday.

He noted that while these 20% companies face high risks from the pandemic, as they are sensitive to changing consumer demand and travel restrictions globally, 36% face moderate exposure and 27% of they consider refinancing risks.

We have identified six sectors as the hardest hit by the coronavirus outbreak, namely airlines, auto OEM and auto parts supply, oil and gas producers, gaming, global shipping, discretionary retail and hospitality, the report said.

In addition, of the companies with a high exposure of 20 percent, 67 percent have a negative outlook or are under review for downgrade, weak liquidity, or both.

This high exposure means that these companies are likely to see their credit quality weaken or their ratings to be affected by our current macroeconomic and oil price forecasts, the report rating 483 APAC companies said.

However, just over a quarter of them face high refinancing risks due to their large debt maturities and the tightening of capital markets.

Moody's also said its growth forecast for 2020 is 3.3 percent for China, 2.5 percent for India, 3.7 percent for Indonesia, and 0.1 percent for Korea. Flat growth is expected for Australia and a 2.4% contraction for Japan.

It also expects the G-20 economies to experience an unprecedented shock in the first half of 2020 and for real GDP to contract 0.5 percent versus growth of 2.6 percent in 2019.

Additionally, oil will begin to gradually increase later this year, from its current levels of less than $ 30 a barrel, and an average of $ 40-45 in 2020.

Most companies with moderate exposure operate in sectors closely linked to industrial and consumer activity, such as real estate, mining, steel, chemicals, refining, and marketing.

But as many as 44 percent of companies have low exposure, as they operate in industries that provide essential goods and services or have diversified business models, such as telecommunications and media, and IT and engineering and construction services.