Latest news with #Fitch-rated
Bangkok Post
08-07-2025
- Business
- Bangkok Post
Thai corporates' high leverage a concern
Several major Thai corporate borrowers have high leverage relative to their Asia-Pacific peers following a long period of large debt-funded investments and weak growth, according to Fitch Ratings. The average ratio of net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) for Thailand's 10 largest bond issuers was 3.8 times at the end of 2024, according to Obboon Thirachit, senior director for corporate ratings at Fitch Ratings (Thailand). That rate was much higher than 2.1 times for all Fitch-rated Thai corporates and 2.4 times for Asia-Pacific peers, Mr Obboon told the recent Thailand Corporate Credit Outlook event in Bangkok. While PTT Group had the lowest leverage of 1.6 times, the other largest issuers had leverage ratios ranging from 3.8 to 15 times, he said. Any ratio greater than 3 is considered worthy of close monitoring. Prolonged high leverage and consistent negative free cash flow mean companies are more reliant on debt funding than on cash flows derived from operations, according to Fitch. This could result in a vulnerable capital structure that faces higher refinancing and liquidity risks, particularly during periods of market volatility. Weak corporate governance, such as inadequate board oversight, opaque group structures and poor disclosure, are other red flags of financial deterioration, noted Fitch. Resilient sectors, such as telecoms, should continue to benefit from less competition. Infrastructure development should also support earnings growth in the cement and building materials sector, said the ratings firm. The earnings of packaging companies should remain strong, supported by robust demand. However, petrochemical companies continue to face earnings pressure due to a prolonged downturn caused by weak demand and increased supply. Power companies are increasing investments and acquisitions as they seek to transition to renewable energy sources, which could worsen their already-high financial leverage. Fitch expects earnings for oil and gas companies to moderate from a high base alongside an expected softening in oil and gas prices, although earnings should remain robust.
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Business Standard
23-06-2025
- Business
- Business Standard
PSBs' loan growth to outpace private banks in FY26: Fitch Ratings
PSBs' loans grew by 12.4 per cent while private peers lagged with 7.5 per cent in FY25 Mumbai The loan book of public sector banks (PSBs) will continue to swell faster this financial year than that of private peers, which are grappling with asset quality pressures in unsecured portfolios and elevated loan deposit ratios (LDRs), rating agency Fitch said on Monday. PSB's loan book is estimated to grow at 12 to 13 per cent, while private lenders will expand their portfolio by about 10 per cent in the financial year 2026 (FY26), Saswata Guha, senior director, Banks, Fitch Ratings said. PSBs' loans grew by 12.4 per cent while private peers lagged with 7.5 per cent in FY25. 'We expect sector loan growth to rebound to 12 to 13 per cent in FY26 on accommodative monetary policy and easing funding conditions. However, improved deposit mobilisation will be needed to preserve rated banks' nearly 120 basis points (bps) improvement in LDRs in FY25, as deposit growth converged with -- or in some cases exceeded -- lending growth,' it added. Referring to financial profile, Fitch observed the sector reported improved asset quality, stronger capital buffers and stable profitability despite the slowest sector loan growth in four years. Banks can sustain steady performance across most credit metrics in FY26, except for earnings due to cyclical pressures on margins and credit costs. The sector's impaired-loan ratio fell by about 60bp to 2.2 per cent in FY25. Although write-offs and recoveries were lower than in previous years due to a shrinking stock of legacy bad loans, they remained sufficient to largely offset bad loan additions. The private banks reported higher bad loan formation, though all banks saw net improvements. Fitch-rated banks maintained 80 per cent loan loss coverage. The impaired-loan ratios and credit costs for most banks have bottomed. Some banks may still improve given scope for write-offs in legacy bad loans that will further reduce the bad loan stock. This and higher loan growth could reduce the sector's impaired-loan ratio by 20bp in FY26, it added.
BusinessToday
10-06-2025
- Business
- BusinessToday
Fitch Downgrades APAC Tech Sector Outlook To 'Deteriorating'
Fitch Ratings has revised its 2025 outlook for the Asia-Pacific (APAC) technology sector from 'neutral' to 'deteriorating', signaling increased downside risks primarily driven by the escalating global tariff environment. The ratings agency warns that tariffs are expected to directly hurt demand for hardware and trigger wider economic slowdowns due to reduced consumer confidence and spending globally. According to Fitch, the APAC tech sector is particularly vulnerable given its central role as the world's primary assembly hub for technology hardware and the dominant manufacturer of critical component parts across the supply chain. Consumer technology hardware, often a discretionary purchase, is highly susceptible to shifts in consumer confidence and spending habits. Fitch anticipates the United States will present a challenging market for consumer technology products this year, following its earlier revision of the US retail and consumer products sectors' outlooks to 'deteriorating' in April 2025. While some companies exposed to discretionary categories have already faced negative rating actions, most Fitch-rated US retailers and consumer product companies are believed to possess sufficient rating headroom to withstand current volatility. Beyond the US, APAC technology hardware businesses are also facing tough conditions in other major markets. Fitch forecasts weak consumer spending growth in 2025 for the eurozone (1%), Japan (0.7%), and the UK (0.9%). Although China's consumer spending growth forecast for 2025 remains relatively robust at 3.3%, this is still a downward revision from the 4.3% projected in December 2024. Within Fitch's rated portfolio, APAC technology hardware companies are generally expected to fare better than their non-rated peers due to their larger size, greater diversification, and enhanced financial flexibility. However, Renesas (BBB/Stable) and LG Electronics (BBB/Stable) have been identified as having the lowest rating headroom within this group. Divergent Trends Within Semiconductors and Internet Segments: The outlook for different segments within the APAC semiconductor sector continues to diverge. Fitch anticipates strong demand related to Artificial Intelligence (AI) will persist, but warns that non-AI demand will be weak, particularly due to the likely tariff-related fall-off in demand for consumer electronics. The semiconductor industry also faces ongoing supply chain challenges that could impact production timelines and cost structures throughout 2025. For the Chinese internet sub-segment, Fitch maintains a 'neutral' outlook for 2025. The agency expects major internet companies' strong business profiles, robust margins, and substantial net cash positions to support their credit profiles. However, their performance may diverge further due to an uneven impact from weak consumer spending, intense competition, and the increased deployment of AI across internet services. Lastly, the outlook for the Indian IT services sub-segment remains 'neutral'. While revenue growth is expected to be affected by the slowdown in global economic growth driven by tariff uncertainty and more cautious customer spending on external IT services, Fitch still forecasts positive revenue and EBITDA growth for the segment. Related
Fibre2Fashion
02-06-2025
- Business
- Fibre2Fashion
Tariff uncertainty adds pressure to US soft goods retailers: Fitch
Fitch Ratings has warned that ongoing trade tariff uncertainties continue to pose execution risks for US soft goods retailers, exacerbating pre-existing structural challenges in the sector. In April, the agency revised its 2025 outlook for the US retail and consumer products sectors to 'deteriorating' from 'neutral', citing the potential for increased trade barriers, rising retail costs, and waning consumer sentiment. Retailers reliant on imports from China, Vietnam, and Cambodia are especially vulnerable, with Fitch noting the absence of a long-term trade agreement and persistent uncertainty despite a recent US Federal court ruling. Soft line and department store retailers face heightened sourcing risks, which could affect holiday season planning and lead to markdowns, inventory issues, or lost market share, it said in a press release. Fitch Ratings has downgraded its 2025 outlook for the US retail and consumer products sector to 'deteriorating', citing tariff uncertainty, soft consumer demand, and sourcing risks, especially for soft goods retailers. Apparel and footwear sales are expected to decline mid-single digits, pressuring margins. While firms like Dillard's remain resilient, others like Capri Holdings face heightened risk. Fitch projects mid-single digit topline declines for discretionary spending, including apparel and footwear, in 2025. This could result in EBITDA declines of up to mid-teen levels due to sales deleverage, increased markdowns, and some absorption of tariff costs. However, Fitch also noted divergence across product categories and company strategies. Larger, higher-rated retailers such as Signet Jewelers (BBB-/Stable) and Dillard's (BBB-/Positive) are expected to better withstand volatility due to stronger vendor relations, design capabilities, and liquidity. In contrast, companies like Capri Holdings (BB/Negative), which is already experiencing EBITDA and topline pressure, may face greater challenges. Capri could benefit in the near term from the proceeds of its Versace sale. Fitch expects retailers to preserve liquidity by limiting share buybacks, capital expenditure, and dividends, as they did during past downturns. While most Fitch-rated issuers have sufficient rating headroom and manageable maturity risk, companies such as Levi Strauss, Macy's, Nordstrom, and Samsonite may see EBITDAR leverage trend near or above negative rating sensitivities in 2025 before improving in 2026, the release added. Fibre2Fashion News Desk (KD)
Web Release
17-05-2025
- Business
- Web Release
Ras Al Khaimah's strong economic and investment environment validated by Fitch affirmation of ‘A+' credit rating, with Stable Outlook
By Editor_wr On May 17, 2025 Ras Al Khaimah's strategic approach to sustainable, cross-sector growth and strong economic and investment environment has been validated by international credit rating agency Fitch, which reaffirmed the rating at 'A+' with a stable outlook. Ras Al Khaimah Government welcomed the announcement as an endorsement of the Emirate's resilient and expanding economy, sound fiscal management and the clear vision and unwavering commitment of its leadership to sustainable, long-term development and growth. The Emirate's landmark tourism projects, including a major integrated resort, luxury hotels and world-class leisure facilities, combined with a surge in real estate revenue, are creating opportunities for investors, driving further investment and strengthening the Emirate's economic resilience, according to Fitch. A Ras Al Khaimah Government spokesperson said: 'Ras Al Khaimah's consistent A+ credit rating is owing to its disciplined economic strategy, ambitious investment agenda and long-term commitment to building a sustainable and diversified economy. The Emirate has experienced significant growth over several years to become an attractive global investment and tourism hub, as well as a leading destination to live, work and explore.' In March, Ras Al Khaimah successfully issued a 10-year USD1 billion sukuk, while keeping total public-sector debt at just 11% of GDP – one of the lowest levels among Fitch-rated sovereigns. This is expected to fall to 9% by 2026. Fitch estimated that Ras Al Khaimah achieved real GDP growth of 6.7% in 2024, an increase from 3.6% the previous year. RAK Government anticipates this strong momentum to continue, with average growth projected at 6.1% into 2026. This growth is driven by key strategic initiatives, notably the development of the landmark $5.2 billion Wynn Al Marjan Island integrated resort. Set to open in 2027, the resort is poised to drive further economic expansion. Fitch also highlighted Ras Al Khaimah's high GDP per capita, strong governance, political stability and effective rule of law – key factors that contribute to the Emirate's attractive investment environment. The rating affirmation stands as an endorsement of the Emirate's solid public finances, robust growth trajectory and its status as a dynamic and secure global hub for business and investment. Next Post Messika Illuminates The 78th Annual Cannes Film Festival Comments are closed.
