S&P Global Ratings is expecting debt linked to infrastructure assets that depend on consumer discretionary spending, such as airports and parking facilities, could face negative cash flows amid challenges presented by the COVID-19 outbreak, the ratings agency said on 9 March.
The S&P revised its COVID-19 expectation from earlier in the winter given the infection was able to break through China’s containment and spread globally. The revised scenario assumes that the outbreak will subside during the second quarter.
The ratings agency listed convention center hotels, construction projects with vulnerability to supply-chain issues, airports, parking facilities and stadiums and arenas as vulnerable assets.
Structural protections that projects typically have, such as reserves and distribution traps, temper this risk. As such, the duration of the outbreak and severity of the reduced cash flows will be key credit factors.