S&P shifts SingPost outlook to negative

S&P said it revised the outlook for Singapore Post Ltd. (SingPost) to negative from stable and affirmed the BBB+ issuer rating and the BBB- rating on S$250 million senior perpetual securities guaranteed by the company.

“We revised our outlook on SingPost to negative from stable, reflecting our view of intensifying structural hindrances to its postal and parcel business and the potential for sustained earnings weakness. This coincides with the company's rating buffer being largely depleted following its acquisition of Australia-based FMH,” S&P said in a press release.

“The pandemic has accelerated the structural decline in letter mail volumes in Singapore. Companies have moved toward online correspondence and reduced printed letter volumes. These behavioral changes persist post-pandemic. In addition, a labor shortage led SingPost to suspend its advertising mail services to focus on essential postal services early in the pandemic,” S&P added.

The agency said it forecasts a debt-to-EBITDA ratio of 3.4x-3.8x in fiscal 2023, 2.9x-3.3x in fiscal 2024, and 2.4x-2.8x in fiscal 2025, which is elevated for the company.

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