20171009-穆迪服务-CreditOutlook_Credit_Implications_of_CurrentEvents_32页_1mb

Credit Outlook Summary

Core Content Overview

This document outlines the credit implications of various corporate, infrastructure, and sovereign events as analyzed by Moody's Analytics. It includes assessments of how these events affect financial leverage, earnings, and overall credit quality of the involved entities.

Main Points by Sector

Corporates

• Mylan N.V.

  • Positive impact from FDA approval of generic Copaxone, leading to significant earnings and cash flow growth in 2018.
  • Expected adjusted debt/EBITDA to improve to under 3.5x by the end of 2018.
  • Mylan's approval for the 40mg dose may be eligible for 180-day exclusivity, reducing competition.
  • Teva Pharmaceutical Industries Ltd.
    • Credit negative due to Mylan's earlier launch of generic Copaxone.
    • EBITDA hit of $300 million in 2017 and $1 billion in 2018.
    • Adjusted debt/EBITDA is expected to exceed 4.5x by 2018.
    • Potential for further debt reduction through asset sales and cost-saving measures, but unlikely to offset earnings decline.
    • Ongoing patent litigation could expose Mylan to financial damages if Teva's patents are upheld.

• Laredo Petroleum, Inc.

  • Credit positive from the sale of its 49% stake in Medallion Gathering & Processing, LLC for $1.825 billion.
  • Proceeds will reduce debt/EBITDA ratio to less than 1.5x from 3.3x.
  • Sale of stake improves liquidity and reduces leverage.
  • The sale does not affect the $1 billion borrowing base senior secured credit facility.

• ADP

  • Credit positive from acquiring Global Cash Card for an undisclosed sum.
  • Enhances paycard business without raising incremental debt.
  • Integration allows cost savings and real-time payments for over 4 million accounts.
  • Paycards are popular among millennials and Generation Z, and among non-bank financial product users.

• Boparan Holdings Limited

  • Credit negative due to the temporary suspension of operations at Site D for quality issues.
  • Incurring costs related to wages, fixed costs, and production disruptions.
  • Risk of volume losses due to media publicity.
  • Margins could narrow further due to additional quality control costs.
  • Some major UK retailers have suspended chicken purchases from the affected plant.

• Merlin Properties SOCIMI S.A. and Inmobiliaria Colonial S.A.

  • Credit negative due to rising political tensions in Spain, especially in Catalonia.
  • Risk of reduced rental income, occupancy rates, and property valuations.
  • Merlin has greater exposure to Spain and is more vulnerable than Colonial.
  • Property valuations in Barcelona and Madrid have declined slightly, but are unlikely to reach critical levels.
  • Rental growth remains positive in both markets, with Barcelona CBD at 5% and Madrid CBD at 3%.

• Befesa Holding S.a.r.l.

  • Credit positive from planned IPO in Q4 2017.
  • Expected to reduce financial leverage and improve access to capital markets.
  • Refinancing of existing debt is anticipated, with potential cost reductions.
  • Adjusted EBITDA increased by 54% to €83 million in H1 2017, supported by favorable commodity prices.
  • Current gross debt/EBITDA is 3.8x, below the B2 rating threshold of 4.5x-5.0x.

• Nissan Motor Co., Ltd.

  • Credit negative due to a million-vehicle recall in Japan for re-inspection.
  • Estimated recall cost of around ¥25 billion (about 4% of fiscal 2017 operating income).
  • Recall affects operating margin, but impact is expected to be limited to less than 0.5 percentage points.
  • No signs of fundamental product quality issues so far, but further problems could affect operations.
  • The recall is limited to vehicles sold within the past three years, reducing the number of affected units.

Infrastructure

• Dayton Power & Light Company (DP&L)

  • Credit positive from exiting power generation by transferring assets to AES Ohio Generation LLC.
  • Reduces business risk and exposure to volatile power markets.
  • Expected to reduce debt to total book capitalization to nearly 50% by 2019 from 75%.
  • Financial performance depends on approval of the Electricity Security Plan and rate case.
  • Loss of capacity payments of $130 million annually from PJM auctions is a credit negative, but uncertain after 2019.

• TransCanada Corporation

  • Credit negative from terminating the Energy East Pipeline project.
  • Expected to take a $1 billion after-tax non-cash charge.
  • No recovery of invested capital.
  • This follows a similar write-down on the Keystone XL project in Q1 2016.
  • The non-cash charge does not affect key financial metrics.
  • Increased regulatory and political scrutiny is driving up project costs and risks.

Sovereigns

• Côte d'Ivoire
  • Credit positive from receiving a €2 billion concessional loan from France.
  • This loan is likely to support economic stability and improve credit profile.

Sub-sovereigns

• UK Government

  • Credit positive from increasing social housing grants and raising rents, benefiting housing associations.
  • Transfer of funds to local governments is also credit positive.

• Latvian Government

  • Credit positive from transferring funds to local governments.

Key Information Highlights

• Positive Credit Impacts:

  • Mylan's generic Copaxone approvals.
  • Laredo's sale of stake in Medallion.
  • ADP's acquisition of Global Cash Card.
  • Befesa's planned IPO.
  • CaixaBank and Banco Sabadell relocating outside Catalunya.
  • TEPCO's approval to restart two nuclear reactors.
  • Côte d'Ivoire's €2 billion loan from France.
  • UK's social housing grants and rent increases.

• Negative Credit Impacts:

  • Teva's Copaxone franchise decline.
  • Boparan's production suspension and quality issues.
  • Spain's political tensions affecting Merlin and Colonial.
  • Nissan's recall and internal control lapses.
  • TransCanada's termination of Energy East Pipeline.
  • Colombia's new bank loan regulations.
  • Russia's increase in deposit insurance fees.
  • UK airports affected by Monarch Airlines' insolvency.
  • UK's energy price interventions.

Summary of Credit Implications

Conclusion

The document highlights a mix of positive and negative credit impacts across various sectors. While some companies benefit from strategic moves like acquisitions and IPOs, others face challenges from regulatory issues, production suspensions, and political instability. The overall credit outlook is shaped by these developments, with a focus on financial leverage, earnings potential, and operational risks.