Infrastructure Ratings Generally Resilient Amid Banking System Turmoil
DBRS Morningstar does not anticipate near-term rating actions to any infrastructure finance credits, including public-private partnerships, container terminal operators, or airports, as a result of the recent failures of certain U.S. regional banks. We also do not expect the ensuing liquidity concerns of a few other banks, such as First Republic Bank and Credit Suisse AG (rated BBB with a Negative trend by DBRS Morningstar), within the broader banking industry, to have a material impact on our ratings.The credits in our portfolio are generally self-sufficient with regard to meeting their liquidity needs with internally generated cash flows, further supplemented by various reserves and letters of credits (LOCs) designed to weather unexpected revenue disruptions and stave off a payment default. While certain issuers may still be on the path to full recovery from the Coronavirus Disease (COVID-19) pandemic, their liquidity has generally been restored to healthy levels thanks to the significant traffic recoveries observed during H2 2022.
None of our infrastructure ratings have material direct exposure to any of Silicon Valley Bank, Signature Bank, First Republic Bank, or Credit Suisse AG, in their potential capacity as account bank, swap party, lender, LOC, or other liquidity provider. We believe any direct impact to our infrastructure finance ratings from any loss of access to external cash resources will be low.
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