Moody’s Investors Service has reviewed the financial reports released by “rated” Australian corporates over the past month and found that their results were “generally supportive” of their credit profiles. Moody’s said non-discretionary retail companies, airlines and telecommunications companies will maintain their credit profiles. Natural resources producers, some real estate investment trusts and building materials suppliers “face more headwinds but material changes in credit quality are unlikely”. “Higher interest rates will flow through to weaker coverage metrics for some issuers but should remain within tolerance levels,” the ratings agency said. The commentary on REITs is surprising, given all the gloomy commentary about the office market.  Moody’s said: “Despite occupancy rates and valuations weakening in the office segment, rated REITs with office exposure reported earnings growth and maintained strong occupancy. “The retail segment recorded a strong recovery post pandemic and remains well position over the next 12 to 18 months, reflecting high occupancy and relatively long-weighted average lease expiries. The logistics segment continues to benefit from robust demand.” On the building materials industry, Moody’s said the slowdown in residential construction was being offset by public infrastructure projects. It said major retailers, such as Coles, Woolworths and Wesfarmers (owner of Bunnings and Kmart) all demonstrated the resilience of their business models, which focus on staples and less of discretionary spending. Natural resources had the weakest outlook. Moody’s said: “Mining companies’ earnings declined on lower commodity prices. We expect unit costs will remain elevated in the next 12 to 18 months on general inflationary pressure and lower volumes for some products. “With commodity prices remaining lower that the record levels in the financial year ending in June 2022 and a renewed focus on growth spending across the sector, earnings will decline and credit metrics will weaken from still strong levels.”