20151210-穆迪服务-Corporate_Credit_May_Bend_But_Not_Break_26页_480kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook provides a detailed analysis of credit markets, focusing on corporate credit conditions, economic forecasts, and market indicators across the US, UK/Europe, and Asia-Pacific regions. The report is authored by a team of analysts and includes insights on credit spreads, default rates, bond issuance, and macroeconomic trends.

Main Views

• Corporate Credit Resilience: Despite recent widening of high-yield bond spreads, the report suggests that corporate credit may not break but rather bend. The high-yield spread, while elevated, is not a strong indicator of an impending recession, as historical data shows that similar spreads have not always preceded economic downturns.

• Economic Recovery: The recovery is described as being at least two-thirds complete, supported by the surge in M&A activity. However, the report warns that the current economic environment is more uncertain than previous recoveries, which has pushed the high-yield spread above its predicted level.

• Credit Market Metrics:

  • Credit Spreads: The high-yield bond spread is expected to remain around 650 bp by year-end 2015, while investment-grade spreads are projected to be slightly below 158 bp.
  • Default Rates: The US high-yield (HY) default rate is forecasted to rise from 3.0% in November 2015 to 4.1% in November 2016.
  • Bond Issuance: US investment-grade (IG) bond issuance is expected to grow by 18.4% in 2015, while HY issuance is projected to decline by -15.5%.

• Market Indicators:

  • VIX Index and EDF: The VIX index and high-yield EDF (Expected Default Frequency) are key factors influencing the high-yield spread. The VIX is seen as a more accurate predictor of the spread, while the EDF suggests higher default risk.
  • M&A Activity: The report highlights that a record high in M&A for 2016 may reduce the risk of a recession in 2017.

Key Information

• High-Yield Spread Analysis:

  • The current high-yield spread of 658 bp is above the median of previous recoveries but does not signal a recession.
  • The spread is influenced by factors such as the VIX index and EDF, with the EDF suggesting higher default risk than the VIX would imply.

• Core Business Sales:

  • Core business sales have been slowing, with October 2015 showing a -0.3% month-over-month decline and a 1.3% year-over-year increase from October 2014.
  • The report warns that unless core business sales accelerate, the current recovery may not be sustainable.

• M&A and Economic Recovery:

  • M&A activity is seen as a sign of a mature recovery, with the report suggesting that a new record high for 2016 could reduce the risk of a recession in 2017.
  • The current recovery is described as at least two-thirds complete, based on the level of M&A activity.

• Regional Forecasts:

  • US:
    • Retail sales are forecasted to grow by 0.3% in November, with a 4% year-over-year increase expected for November.
    • The Producer Price Index (PPI) is expected to remain flat in November, with a core PPI increase of 0.1%.
    • The FOMC is expected to raise the fed funds target rate to 0.25%–0.5% by the end of 2016.
  • Europe:
    • Low oil prices are expected to keep inflation in the eurozone at 0.1% in November, with a potential increase to 0.9% in 2016.
    • The ZEW indicator for Germany improved in November, suggesting a slight rebound in economic sentiment.
    • The UK's unemployment rate is forecasted to remain at 5.3% in the three months to October, with a 25 bp increase expected by the end of 2016.
  • Asia-Pacific:
    • The report includes forecasts and analyses for the region, though specific details are less emphasized compared to the US and Europe.

Charts and Figures

• Figure 1: High-Yield Bond Spread's Recent Moving Three-month Average Falls Considerably Short of Assuring an Imminent Business Cycle Downturn
• Figure 2: If the Unemployment Rate Rises Amid a Mature Economic Recovery, a Recession Usually Follows
• Figure 3: Recessions Followed Each Treasury Yield Curve Inversion Since 1968
• Figure 4: Recessions Struck Within a Year Following the Last Two Record Highs for the Moving Yearlong Sum of US M&A
• Figure 5: Actual High-Yield Bond Spread Trailed Its Predicted Width by -52 bp, on average, From April 1996 through February 2001 and by -3 bp during 2002-2007's Upturn ... For Current Upturn Actual Spread Exceeds Predicted by +52 bp
• Figure 6: Median High-Yield Bond Spreads by Rating Category

Conclusion

Moody's Weekly Market Outlook underscores the resilience of corporate credit despite recent market stress, emphasizing that while high-yield spreads have widened, they do not necessarily indicate an imminent recession. The report highlights the importance of tracking core business sales, M&A activity, and macroeconomic indicators like the unemployment rate and the Treasury yield curve to assess the health of the credit market and economic recovery.