Fitch affirms Rede D'Or's ratings: outlook stable

Fitch affirms Rede D'Or's ratings: outlook stable

Fitch Ratings has affirmed Rede D'Or's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook. The rating agency noted that the company's robust growth and solid external finances support its rating, even in the face of potential tariff impacts.

The outlook remains stable due to Rede D'Or's strong financial position and steady growth prospects. Fitch expects the company's GDP growth to remain above the 'BBB' median of 2.5% in the fiscal year ending March 2026, driven by solid domestic demand and public capex. However, the agency acknowledges that private investment may be dampened by heightened US tariff risks.

Fitch also noted that the direct impact on GDP will be modest, as exports to the US account for only 2% of GDP. Nevertheless, tariff uncertainty could negatively affect business sentiment and investment. The agency expects the company to benefit from supply chain shifts out of China, provided that US tariffs do not remain significantly higher than those of Asian peers.

In terms of fiscal policy, Fitch expects Rede D'Or's deficit to decline to 4.4% of GDP in FY26, meeting the FY22 budget objective. The agency forecasts a modest reduction in the deficit in subsequent years, with debt reduction becoming more challenging if nominal growth persists below 10%.

Fitch's affirmation reflects its expectation that Rede D'Or will continue to pursue a conservative financial strategy, maintain stable leverage, and benefit from strong access to funding. The company's strategic role and close ties with the government are seen as key strengths.

References:
[1] https://economictimes.indiatimes.com/news/economy/indicators/fitch-affirms-india-at-bbb-outlook-stable-says-tariff-impact-on-gdp-will-be-modest/articleshow/123498142.cms
[2] https://www.thestar.com.my/business/business-news/2025/08/26/moodys-affirms-khazanahs-a3-rating-maintains-stable-outlook