Supply Chain Infrastructure Performs within COVID-19 “Stress Tests”

Nine months into the coronavirus global pandemic the road to recovery remains rocky with patterns diverging for global infrastructure, according to Fitch Ratings in a new report.

Performance of demand-driven infrastructure assets remains within Fitch’s initial “stress tests” assumptions issued earlier this year. But according to Global Infrastructure Head Cherian George, the prolonged coronavirus fallout is far from over.

“There is a limit even for infrastructure assets to withstand a prolonged crisis, though most countries have identified social norms that permit more open economies,” said George.

Coronavirus has tested infrastructure with rating actions to-date far exceeding any precedent over the last 40 years.

Fitch has taken 799 rating actions, reviewing some infrastructure projects more than once. Of these credits, 52% have a Stable Outlook. Fitch has downgraded 12% of its rated infrastructure credits, placed 11% on Rating Watch Negative and revised the Rating Outlook for 21% to Negative. Even in a crisis, positive developments occur, and Fitch has taken positive ratings actions on 29 credits, representing 4% of the overall actions.

Fitch plans to release updated rating and severe downside assumptions in the coming weeks for all transportation sectors in the major regions. “Assets focused on moving people have been most affected, while those focused on moving goods have been less affected,” said George.

With a tepid first half of 2021 likely for economies throughout the world, “toll roads will be quicker to benefit and recover, while seaports are exposed to general economic conditions,” said George. “Airports will take longer to recover with ongoing waves of infection, lockdowns and travel restrictions extending well into the second half of 2021.”

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