2014 Outlook for Australian infrastructure sector stable - study
Moody's Investors Service says the outlook for the Australian infrastructure sector is stable, underpinned by a resilient economy.
Australia's stable economy and consistent GDP growth contrast with the volatility affecting most other developed economies. This provides the fundamental underpin for the stable outlook, as does the low risk nature of the sector's business profile.
Moody's conclusions were contained in a just-released report titled, "2014 Outlook -- Australian Infrastructure." The report was authored by Mary Anne Low, a Moody's Analyst, Arnon Musiker, a Moody's Vice President and Senior Credit Officer, and Spencer Ng, a Moody's Assistant Vice President.
On the Australian airport industry, Moody's expects mid- to high-single-digit revenue growth supported by continued robust international passenger growth, which is being partially offset by a slowdown in domestic passenger growth.
The outlook for the toll road industry is stable, given the essential function of toll roads as urban commuter routes and proven traffic histories.
Financial leverage for the toll road sector may increase in 2014 on the back of road development and likely merger-and-acquisition activity.
On the regulated networks sector, the uncertainty created by new rules governing the revenue-setting process is driving the sector's negative outlook.
The new rules, in place since late 2012, reduce the revenue predictability of utility networks which had been the cornerstone of the sector's stable profile. The pattern and consistency of regulatory decisions in 2014 will be key considerations going forward.
Finally, availability-style revenue streams from highly rated government offtakers underpin Moody's stable outlook for public-private partnerships. However, certain issuers in the sector face refinancing challenges, given our expectation that credit margins on new debt would be materially higher than the levels that currently apply to the maturing debt.