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Investing.com -- Moody’s Ratings has announced a downgrade of the ratings for Mapletree Pan Asia Commercial Trust (MPACT) and its subsidiaries, while maintaining a negative outlook. The downgrade affects several ratings, including MPACT’s issuer rating, which was lowered to Baa2 from Baa1. The senior unsecured rating on MPACT’s medium-term note (MTN) programs also experienced a downgrade to (P)Baa2 from (P)Baa1.
The backed senior unsecured ratings on the MTN programs of MPACT Treasury Company Pte. Ltd., Mapletree North Asia Comm’l Trst Trsy Co (S), and Mapletree N. Asia Comm’l Trsy Co (HKSAR) Ltd were also downgraded to (P)Baa2 from (P)Baa1. The backed senior unsecured ratings on the notes issued under the MTN programs by MPACT Treasury Company Pte. Ltd. were also lowered to Baa2 from Baa1.
These companies are all wholly-owned subsidiaries of MPACT, and their securities and programs are unconditionally and irrevocably guaranteed by MPACT. The downgrade and the negative outlook reflect Moody’s view that MPACT’s credit quality has deteriorated and could weaken further over the next 12 months. This is primarily due to declining earnings within its North Asia portfolio, where negative rental reversions and falling occupancy rates are expected to persist due to soft leasing demand and market oversupply, according to Yu Sheng Tay, Assistant Vice President and Analyst at Moody’s Ratings.
MPACT’s credit metrics will remain weak for an extended period because ongoing volatility in financial markets will limit its ability to strengthen its balance sheet through asset recycling, added Tay. Negative rental reversions and weak occupancies are expected to persist across MPACT’s properties in Shanghai, Beijing, Hong Kong SAR, China, and Japan over the next 12-18 months.
In contrast, MPACT’s property portfolio in Singapore has shown more resilience and supports the trust’s Baa2 rating. The portfolio is backed by a diversified mix of high-quality tenants and has consistently achieved high occupancy rates and positive rental reversions. However, the stable earnings from the Singapore portfolio are insufficient to offset the declining earnings in North Asia.
Moody’s projects MPACT’s consolidated EBITDA will decline to SGD615 million-SGD630 million over the next two fiscal years, down from SGD645 million in fiscal 2025. As a result, MPACT’s leverage, as measured by net debt-to-EBITDA, will remain elevated at around 10x over the next 12-18 months, up from 9.6x in fiscal 2025. EBITDA interest coverage will also stay below 3.0x during this period, as lower earnings offset the impact of gradually easing interest rates.
Despite the weak credit metrics, MPACT has excellent liquidity. As of March 31, 2025, the trust had SGD159 million in unrestricted cash. Together with undrawn committed credit facilities, these sources sufficiently cover MPACT’s debt maturities and capital spending through September 2026.
Moody’s stated that an upgrade is unlikely over the next 12-18 months due to the negative outlook. However, the outlook could be returned to stable if MPACT improves its operating performance or undertakes actions to strengthen its balance sheet. Conversely, the rating could be downgraded if MPACT’s earnings and credit metrics continue to deteriorate due to persistent weakness in its operating performance.
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