A potential slowing in regional growth has not deterred Asia-Pacific’s transport infrastructure sector from mapping out expansion projects, according to Standard & Poors.
Research from Standard & Poors says transport and infrastructure companies have embarked on major capital-expenditure projects to enlarge long-term capacity; these companies are forecast to take a measured approach to growth capital expenditure.
The research, Asia-Pacific Transport Infrastructure Companies Embark On Expansion Route Despite Slower Growth report, says credit quality of the sector will remain stable for the foreseeable future.
Despite the build-up in capital expenditure, the region’s rated transport infrastructure companies continue to exhibit ratings stability and resilience, the report says.
Rating features are enduring characteristics of the sector, in Standard & Poor’s Ratings Services’ view. The ratings include 22 companies in Asia-Pacific that comprise airports, ports, railways, highways, and integrated infrastructure entities. The financial performance of many of these companies is linked to local economic conditions that are still buoyant, Standard & Poors says.
Transport infrastructure is invariably exposed to volume risk, the research says, performance is linked to global but typically more so domestic economic conditions.
Standard & Poors says the majority of rated companies in this sector have business risk profiles that are ‘strong or excellent’ - factors S&P forecasts will underpin the continued solid performance of the sector.
Looking ahead, subdued trading volumes from China, in an instance where Europe experiences a mild recession, could materially affect the sector.
Standard & Poors expects the slowdown to have a knock-on effect to varying degrees on each segment of the region’s transport infrastructure industry and potentially elevate risks.