Asia-Pacific Credit Outlook Points To Slower Earnings, S&P Says

S&P Global Ratings said slowing economies and weakening demand are set to dominate corporate operations across much of Asia-Pacific (APAC) in 2023.

Corporates face slower earnings amid a cocktail of high inflation, elevated costs, weak consumer demand and increasing debt-funding costs, but overall there’s likely to be slight credit improvement in APAC, S&P said in a report titled Asia-Pacific Credit Outlook 2023: Sand In The Gearbox.

“Companies have focused on capital management to help alleviate credit pressures, and debt due for refinancing is lower this year than in 2024 and 2025," S&P Credit Analyst Richard Timbs said. “Offshore funding will nevertheless remain a relatively expensive sticking point for many corporates."

The rating agency said the sector performance will be patchy. Australian oil and gas producers as well as metals and mining companies should experience continued elevated prices even if down from recent peaks, while Chinese manufacturing may take longer to recover if global conditions affect demand in export-related sectors, it added.

S&P said Indian airports are poised for strong performance on the back of healthy domestic traffic and a recovery in international traffic.

The outlook for real estate is bumpy amid higher interest rates, while lease and leverage profiles will determine susceptibility to rating changes, it noted.

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