Fitch upgrades CATL to A-

Fitch upgrades CATL to A-

Fitch upgrades CATL to A- 1000 656 Energy Storage Journal

June 30, 2023: Fitch Ratings, the international credit rating agency, announced on June 26, it had upgraded CATL, the China-based battery producer to  a senior unsecured rating to A- from BBB+.

To put this into context this says the likelihood of defaulting on its debt is equivalent to that of Spain or Poland not paying their international obligations. Both countries are also rated A-.

Fitch says it expects the firm to have a compound annual growth rate of 18% over the next three years and its EBITDA (earnings before interest tax deductions and amortization) of around 15%.

Fitch says: “The company’s performance in 2022 and the first quarter this year demonstrates solidification of its dominant market share, technological capability and capacity leadership. These are commensurate with or stronger than peers’ in the respective industries.

“The ratings are constrained by the current nature of the volatile, evolving EV battery sector, which sees rapid changes in its competitive environment and technology. Regulatory risks in specific markets could also constrain CATL’s overseas growth, but Fitch believes the risks are manageable.”

Fitch believes CATL will continue to maintain its leading global market position and has a strong order book that supports future growth with adequate leverage headroom. 

According to SNE Research, CATL had a 37% share of the global EV battery market in 2022. “We expect CATL to continue overseas penetration through exports and growing localized production amid tighter geopolitical regulation,” Fitch said.

CATL’s EV battery is a leader in international markets with a non-China market share of 22.3% in 2022.