SingPost has limited rating headroom after FMH deal: S&P

Singapore

S&P Global Ratings expects Singapore Post (SingPost) to have limited rating headroom to weather industry troubles or any business underperformance over the next one to two years after it buys a stake in Freight Management Holdings (FMH). FMH is a fourth-party Australian logistics services firm in which mainboard-listed SingPost is looking to acquire a 38 per cent stake.

Although S&P's issuer credit rating on SingPost can accommodate the FMH acquisition, the debt-funded acquisition also coincides with a period of heightened earnings weakness, S&P said in its report on Tuesday. "SingPost's margins have weakened, given that limited international air traffic during the Covid-19 pandemic has raised operating costs for cross-border delivery," it added.