PSA International’s ability to weather past economic cycles has prompted Moody’s to leave its credit rating unchanged for the Singapore terminal operator.
The ratings agency’s stance comes despite the growing trade war between the US and China which has impacted Asian container trades.
Tuesday saw PSA International’s (PSAI) Aa1 ratings and PSA Corporation’s (PSAC) Aa1 issuer rating affirmed. The outlook on all ratings was described as “stable”.
The ratings are said to reflect the PSA’s baseline credit assessment (BCA) and the very high level of support that Moody’s believes state-backed investment fund Temasek Holdings will provide in the event that extraordinary financial support would be required.
“PSAI’s underlying credit strengths, as reflected by its BCA, are mainly underpinned by its portfolio diversity and strong global market positions; its dominant position in Singapore; as well as a track record of strong profitability and resilience to economic down-cycles,” said Moody’s vice president and senior credit officer Ray Tay.
“Although there are risks to throughput resulting from continued global trade tensions, PSAI and PSAC have both maintained their credit quality through past trade cycles."
Tay, who is also Moody’s lead analyst for both PSAI and PSAC, said he expects them to maintain resilience through the current volatility in trade, aided by portfolio diversity, the increasing role of transhipment ports in facilitating adjustments to global trade routes, and robust financial metrics.
However, he said that PSAI’s BCA is constrained by the capital needs of some of its overseas ports, which are in start-up or expansion phases.
