Corporate rating recovery may stall as Covid-19 cases rise across APAC markets: Fitch Ratings

A resurgence in Covid-19 cases during July and August across several Asia Pacific (APAC) markets could affect a number of corporates in the region in the second half of this year, which may weaken the prospects for the reversal of pandemic-related negative rating actions, says Fitch Ratings.

Fitch has taken pandemic-related negative rating actions on a total of 78 entities, equivalent to 23% of its current portfolio of 344 publicly rated APAC corporates, since the beginning of March 2020.

“During the second quarter of this calendar year, there were 11 negative actions and 12 positive actions reversing pandemic-driven negative actions, which marked the first quarter during the pandemic when reversals outnumbered negative actions,” the rating agency said in a note.


However, July saw no reversals of pandemic-driven negative rating actions. Of the APAC corporates that the rating agency has taken negative rating action on due to pandemic-related concerns so far, 17 remain on negative outlook.

This includes nine Indian corporates rated at 'BBB-' with a Negative outlook that could be downgraded if India’s sovereign rating (BBB-/Negative) is downgraded.

“As we have previously stated, divergent recovery prospects among countries and companies will be evident in rating actions in 2021,” Fitch said.