Syncora Holdings Ltd. (fka SYCRF)

[DennyCrane550]

Moody's: Credit profiles for most rated Australian infrastructure to remain resilient during 2017

https://www.moodys.com/credit-ratings/Reliance-Rail-Finance-Pty-Ltd-credit-rating-808812181

https://www.moodys.com/research/Moodys-Credit-profiles-for-most-rated-Australian-infrastructure-to-remain--PR_359128


Announcement: Moody's: Credit profiles for most rated Australian infrastructure to remain resilient during 2017
Global Credit Research - 07 Dec 2016
Sydney, December 07, 2016 -- Moody's Investors Service expects the credit profiles for rated Australian infrastructure corporates to remain resilient during 2017, underpinned by their strong market or contractual positions and essential nature to the economy.

"IMPORTANT NOTICE: MOODY'S RATINGS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS. SUCH USE WOULD BE RECKLESS AND INAPPROPRIATE. SEE FULL DISCLAIMERS BELOW."

"In addition to the generally stable regulatory environment, the absence of demand risk benefits the regulated utility networks and public private partnerships (PPPs), while airport earnings are benefitting from strong inbound tourism, and business activity is supporting traffic growth for operating toll roads," says Spencer Ng, a Moody's Vice President and Senior Analyst.

"A total 90% of infrastructure issuer ratings are either stable or positive, underpinned by our expectation for subdued but steady macro-economic conditions in Australia in 2017," adds Ng.

Moody's conclusions were contained in its just-released, "Infrastructure -- Australia, 2017 Outlook -- Resilient Operating Environment Underpins Stable Outlook".

The outlook for the regulated networks is stable, with distributed generation and batteries unlikely to undermine their essential function over the short to medium term. However, Moody's notes that prolonged delays in tariff reform to a cost-reflective basis could raise the network's exposure to grid-defection risk over time.

Moody's expects the networks to implement countermeasures to preserve their credit profiles to counter downward pressure on their financial profile, should inflation and interest rates decline further from prevailing levels.

The outlook for the rated airports is stable. Revenue growth is supported by rising international passenger volumes, in particular, inbound tourism, but regional macroeconomic softness will dampen domestic volumes.

Airports with higher international passenger contributions and in faster growing regions are better positioned, with timely countermeasures increasingly important for other airports to offset such lower domestic passenger volumes.

With the toll roads, their essential role as urban commuter routes and rights to periodically escalate toll tariffs increases their resilience to macro-economic volatility. Moody's notes that traffic growth rates are moderating after several quarters of outperformance compared with Moody's expectations, but remain at supportive levels.

Moody's base case expectation for mature toll roads is low single digit percentage traffic growth.

With the PPPs, low cash-flow volatility associated with the PPP framework and the credit strength of government off-takers underpin the sector's credit profile. However, a minority of issuers face refinancing risk, flowing from bullet debt maturities bearing credit margins that remain materially below prevailing rates.

Moody's considers refinancing risk as manageable for the infrastructure sector, with an ongoing appetite apparent for most established infrastructure asset classes from the banks and capital markets. Newly privatized ports and energy network assets successfully raised more than AUD20 billion of new debt during 2016.

Subscribers can read the full report at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1052142