Research Update: Pacific National Holdings To Ride Out Weaker Economic Conditions; 'BBB-' Ratings Affirmed With Stable Outlook

Economic headwinds and COVID-19-related challenges are likely to weaken Australia-based rail haulage provider Pacific National Holdings Ltd.'s (PN) revenues, earnings, and reduce headroom in credit metrics through fiscals 2020-2022. We estimate that challenging operating conditions from the second half of fiscal 2020 to fiscal 2021 could lead to a decline in EBITDA of between 15% and 20% in comparison to fiscal 2019's, and constrain FFO to debt to 16%-18%. We anticipate recovery commencing from fiscal 2022. On July 28, 2020, S&P Global Ratings affirmed its 'BBB-' long-term issuer credit rating on the company. The stable outlook reflects our expectation that management will undertake actions necessary to preserve PN's credit metrics and the company will maintain its strong competitive position. The

...- Economic headwinds and COVID-19-related challenges are likely to weaken Australia-based rail haulage provider Pacific National Holdings Ltd.'s (PN) revenues, earnings, and reduce headroom in credit metrics through fiscals 2020-2022. - We estimate that challenging operating conditions from the second half of fiscal 2020 to fiscal 2021 could lead to a decline in EBITDA of between 15% and 20% in comparison to fiscal 2019's, and constrain FFO to debt to 16%-18%. We anticipate recovery commencing from fiscal 2022. - On July 28, 2020, S&P Global Ratings affirmed its '###-' long-term issuer credit rating on the company. - The stable outlook reflects our expectation that management will undertake actions necessary to preserve PN's credit metrics and the company will maintain its strong competitive position....

Research Update