Moody's downgraded the issuer rating of Singapore's Mapletree North Asia Commercial Trust to Baa3 from Baa2, with a negative outlook.
The rating agency said the rapid and widening spread of the coronavirus outbreak, weakening global economic outlook, falling oil prices and declines in asset prices, which are creating a severe and extensive credit shock across various sectors, regions and markets. The downgrades reflects weaknesses in the trust's credit profile, including its exposure to Hong Kong and China, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions, the agency said.
Moody's base case scenario assumes the company's revenue will fall by around 10% year over year in the fiscal year ending March 31, causing its adjusted net debt/EBITDA to weaken to 11.5x and adjusted EBITDA/interest expense to weaken to 3.7x.
The negative outlook reflects the uncertainty around the extent of the coronavirus and its impact on the earnings and performance of the trust's properties, as well as its limited headroom to accommodate a drop in earnings.