Fitch Ratings Reviewing Infrastructure Issuers for Coronavirus Vulnerability

The coronavirus pandemic represents a significant challenge to the global economy, and therefore, to the performance of transactions in the infrastructure and project finance space, according to Fitch Ratings.

“The wide range of transactions, from enterprise to project structures, single-assets to multi-asset, demand-based to contracted, and single jurisdiction to multi-jurisdiction provide for a wide variety of potential impacts,” says Cherian George, Global Head, Infrastructure and Project Finance.

“Given the fast-moving nature of events, this release outlines our approach to reviewing the infrastructure and project finance ratings monitored by Fitch in the context of this crisis,” adds George.

This may evolve over time as the situation changes. However, providing insight into Fitch’s approach to this crisis at this stage will provide visibility into our process and thinking in a volatile environment. It is Fitch’s view that demand-based transactions will be most affected at the outset with contracted transactions feeling the knock-on effects as the crisis evolves.

“The impacts of the coronavirus pandemic, while still evolving, create risks that are far beyond what has been experienced in the infrastructure and project finance sectors in many decades,” concludes George.

While the Global Financial Crisis provides a benchmark and demonstrated the stability of core infrastructure assets (enterprises and projects), the rapid shutdown of major global economies that is being experienced now creates the potential for the near-term economic impact to be materially worse, and creates uncertainty on the future collateral effects on contractual arrangements and the nature of the recovery.

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