20160307-穆迪服务-Credit_Outlook_53页_1mb

Credit Outlook Summary - 7 March 2016

Core Content

This document provides an analysis of credit implications from various current events across different sectors, including Corporates, Infrastructure, Banks, Exchanges, Funds, and Sovereigns. It outlines rating changes, research highlights, and specific credit impacts of corporate actions and policy developments.

Main Points

Corporates

• McKesson's Rexall Acquisition: Credit negative due to increased leverage and exposure to a more regulated environment in Canada. The acquisition is expected to raise debt/EBITDA to 2.5x from 2.1x, but McKesson is likely to continue deleveraging.
• Cott's Equity Offering: Credit positive as the company plans to use proceeds to repay a portion of its asset-based lending facility, reducing leverage from 5.0x to 4.5x. However, future acquisitions may increase leverage again.
• AMC's Acquisition of Carmike: Credit positive, creating the world's largest theatre chain. The deal will increase leverage temporarily but is expected to return to pre-transaction levels by 2017. Synergies and market expansion are key positives.
• GameStop's Store Acquisitions: Credit positive despite raising debt, as it diversifies into consumer electronics and wireless services. The pro forma debt/EBITDA is 2.3x, which is within acceptable ranges for its Ba1 rating.
• Ceridian HCM's Joint Venture with WorkAngel: Credit negative as the joint venture retains LifeWorks' free cash flow, which is critical for Ceridian HCM's liquidity. The venture may limit Ceridian's ability to generate free cash flow.
• NMLK's US Import Duties on Steel: Credit positive for NLMK (Ba1 stable) as the duties reduce competition from Chinese steel producers, particularly in the US market. However, the duties are part of a broader trend of protectionism.
• Polsat's Acquisition of Midas: Credit positive as it enhances spectrum control and operating cost efficiency. The acquisition increases leverage slightly but remains within acceptable levels for its Ba3 rating.
• Evergrande's Shengjing Bank Investment: Credit negative due to increased financial and investment risk. The stake is small and lacks strategic synergy, but the company has sufficient liquidity to manage the impact.

Infrastructure

• NRG's Dividend Reduction: Credit positive as it allows the company to focus on debt reduction and growth investments. The dividend cut saves $145 million annually and reduces long-term debt from $19.5 billion to $18.4 billion by the end of 2016.

Banks

• Russian Consumer Loan Income Decline: Credit negative for Russian banks as declining incomes affect their ability to service debt.
• Kazakhstan Banks' Deposit Dollarization: Credit negative due to the record high level of deposit dollarization, which increases exposure to currency fluctuations.
• Mauritius' Deposit Insurance Proposal: Credit positive for banks as it enhances financial stability and deposit confidence.
• Malaysian Banks' Capitalization: Credit positive as improved capitalization offsets regional credit risks.
• Philippines' Liquidity Requirement: Credit positive for banks as it enhances liquidity management and risk mitigation.

Exchanges

• Pursuit of LSEG: Event risk is raised at US exchanges due to the potential acquisition of London Stock Exchange Group, which could impact market structure and regulatory environment.

Funds

• Icahn Enterprises' Fourth-Quarter Losses: Credit negative as losses reduce liquidity and increase leverage.

Sovereigns

• Turkey's Trade Data: Credit negative due to export weakness.
• Namibia's Budget Cuts: Credit positive as spending cuts address declining revenues.
• Japan's Fiscal Goals: Credit positive as the budget emphasizes fiscal discipline, though realization is expected to be challenging.

Securitization

• AT&T's Wireless Internet Video Launch: Credit positive for tower firms and their securitizations due to increased demand for infrastructure.

Key Information

• Rating Changes: Intelsat, Oi, Woolworths, Bank Muscat, Oman Arab Bank, National Bank of Oman, Bank Dhofar, HSBC Bank Oman, Monticello Insurance, Walter Investment Management, North West Redwater, and Terra-Gen Finance were downgraded. Armor Holdco and Central Nottinghamshire Hospitals were upgraded.
• Research Highlights: Reports were published on a wide range of sectors, including FAGE International, Asian steel producers, US Foods, US medical products and devices, and others.
• Credit Impacts: The analysis focuses on how specific events and transactions affect leverage, liquidity, and financial stability, with a clear distinction between credit positive and negative outcomes.

Summary of Credit Implications

This summary highlights the credit implications of various corporate, infrastructure, banking, and sovereign events, providing a structured overview of the key factors influencing financial stability and risk.