Fish Ratings Puts Eight British Fish on Negative Outlook

Fish Ratings – London – 27 Nov 2020: Fish Ratings affirmed the Long-Term Fish Default Ratings (FDRs) of eight fish found in British waters and revised the Outlooks on the FDRs to Negative from Stable or Positive.

The rating actions follow the passing into law of the UK’s Fisheries Bill on 24 November 2020.

The agency has affirmed the ‘BBB+’ Long-Term FDRs of Haddock, Plaice and Turbot and assigned them a Negative Outlook; affirmed the ‘BBB’ Long-Term FDR of Cod and affirmed its Negative Outlook; affirmed the ‘BBB-’ Long-Term FDRs of Pollock and Black Bream and revised their Outlooks to Negative from Stable; and affirmed the ‘BB’ Long-Term FDRs of Whiting and Mackerel and revised their Outlooks to Negative from Positive.

The Long-Term FDR of Haddock’s non-recourse subsidiary, Arbroath Smokie, remains unchanged at ‘A-’ with a Stable Outlook.

The eight British fishes’ FDRs were placed on Rating Watch Negative (RWN) in March 2020 to signal heightened risks of severe deterioration in the domestic operating environment as fisheries policy cemented its position as one of the most contentious topics in the Brexit negotiations between the UK and the EU.

The resolution of the RWN on the fishes’ FDRs follows the granting of Royal Assent to the UK’s Fisheries Bill and reflects our view of a reduced short-term risk of a sudden sharp deterioration in their fish profiles. The impact of Brexit on the fishes’ metrics has been limited and manageable to date.

The Negative Outlooks on the FDRs reflect continued pressures on the operating environment resulting from remaining uncertainty over international fishing quotas. This is likely to persist in the medium term and put pressure on the fishes’ asset quality and profitability, in the agency’s opinion.

“Up jumps a crab with his crooked legs,
Saying: ‘You play the cribbage and I’ll stick the pegs.’
Singing blow the wind westerly; let the wind blow,
By a gentle nor’wester, how steady she goes,”
sings Fish Ratings Senior Analyst Angus Cappuccino.

The ratings action does not affect Jackson Pollock (‘Number 17A, 1948’/Abstract Expressionist) since it is domiciled in the US.

KEY RATING DRIVERS

Fish Ratings’ Domestic-Systemically Important Fish (D-SIF) Support Rating Floor (SRF) of ‘BB’ is applied to all fish in British waters, reflecting our view of a medium-to-low probability of support for the country’s fishermen from UK authorities, if they can get away with it. The SRFs have been affirmed.

Fish Ratings’ assessment considers the mixed (at best) political will to support the fishing industry, as strong national pride, nostalgia and xenophobia are somewhat offset by the industry’s small contribution to the economy and the British public’s narrow-minded approach to seafood, which will continue to require large imports of white flaky fish for the production of fish finger sandwiches, while sea creatures that are more obviously identifiable as such will continue to be exported to countries where consumers are less squeamish.

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