Fitch: Higher commodity prices lower leverage for Australian corporates

The US-based Fitch Ratings said in its latest report, “stable-to-higher commodity-price assumptions are driving market expectations for further improvement in the aggregate credit profile of Australia's top-100 listed non-financial corporates (Fitch ASX100 portfolio) over the financial years ending June 2018 to 2019 (FY18-FY19).”

Additional Findings:

“Higher overall EBITDA stemming from the favorable commodity price environment is likely to be sufficient to offset a projected rise in overall capex and dividends,

Aggregate net debt/EBITDA leverage for the Fitch ASX100 portfolio over FY18-FY19 is projected to fall by 0.25 turns to 1.1x, after falling by 0.50 turns over FY16-FY17 to 1.3x. The metals and mining sector dominates the Fitch ASX100 portfolio, representing 47% of aggregate EBITDA generation in FY17, and hence is largely responsible for the projected improvement in overall average leverage.

Overall, the report places 74 of Australia's top-100 listed non-financial corporates in credit-positive zones, where EBITDA growth is projected to exceed the increase in net debt over FY17-FY19. The projections are based on Bloomberg consensus estimates (BEst).”