Asia Pacific corporates portfolio suffer continued deterioration in 4Q23

Fitch Ratings yesterday said its portfolio of APAC corporates further deteriorated in 4Q23, bringing the cumulative net downgrades to a record high of 235 since early 2019. 

However, the number of net rating actions for the last 12 months reduced modestly to negative 25 in 4Q23, from negative 28 in 3Q23 and negative 70 in 4Q22.

The proportion of negative outlooks remained stable at around 9% at end-4Q23 compared with end-3Q23, an improvement from 12% at end-2022. However, the share of positive outlooks decreased to 7%, from 8%. This was partly explained by the upgrade of various companies previously with a positive outlook. The net outlook balance has remained broadly stable at around -1% to -2% since end-June 2023, improving continuously since late 2021.

The real estate and homebuilding sectors again dominated rating actions in 4Q23, while upgrades included a rising star, with Tata Steel Ltd. being upgraded to ‘BBB-’, from ‘BB+’. Weak liquidity was again the primary reason for rating actions in the quarter.