20150319-穆迪服务-Lower_Commodity_Prices_Menace_Benign_Outlook_27页_589kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook highlights the challenges facing the credit markets due to falling commodity prices and the implications for corporate credit and bond issuance. The report emphasizes the broader economic uncertainty, particularly in emerging markets, and the impact of these trends on credit spreads and debt issuance.

Main Views

• Commodity Prices and Credit Spreads:
  Industrial metals and crude oil prices have declined significantly, contributing to a widening of high yield bond spreads across multiple sectors. The industrial metals price index fell to its lowest level in nearly five years, while crude oil prices also saw a sharp drop. This decline reflects a subpar global economic activity and is likely to continue pressuring corporate credit conditions.

• Corporate Credit Outlook:
  The high yield bond spreads have broadened beyond just energy and base metals sectors. Sectors such as airlines, automotive, and even financial companies have seen increased spreads. This suggests a general tightening in credit conditions, despite the overall benign outlook for the economy.

• M&A and Debt Issuance:
  A surge in merger and acquisition (M&A) activity is supporting corporate debt issuance, particularly in the US. M&A is becoming a more significant driver of debt issuance compared to refinancing. High yield USD bond issuance has increased by 33% year-over-year, indicating a robust market despite the broader economic uncertainty.

• Interest Rates and Dollar Strength:
  The strong US dollar is reinforcing price disinflation and delaying the expectation of a higher fed funds rate. The FOMC has revised its projections downward, indicating a more accommodative stance on interest rates.

• Demographic Trends:
  The aging US population and slower growth in the working-age population are expected to curb household expenditures, potentially keeping interest rates lower than historical averages. This trend may also explain the lack of business start-ups and the subdued nature of the current recovery.

• Market Volatility:
  Market volatility has been higher in 2015 compared to 2014, but the reduction in Fed rate projections has eased some uncertainty. However, the situation in Greece remains a threat to global financial stability.

Key Information

Credit Market Metrics

• Credit Spreads:

  • Investment Grade: Expected to be under 140 bp by year-end 2015.
  • High Yield: Expected to dip to 450 bp by year-end 2015, with a recent spread of 495 bp.

• Defaults:

  • US HY default rate: 2.0% in February 2015, with an average of 2.2% in 2H/2015.

• Bond Issuance:

  • US$ IG bond offerings may grow by 9% to $1.226 trillion in 2015.
  • US$ HY bond issuance is expected to sink by 3% to $408 billion in 2015.
  • For 2015, USD-denominated corporate debt issuance reached a record $439 billion year-to-date, up 18% YoY.
  • High yield USD bond issuance reached $99 billion year-to-date, up 33% YoY.

M&A and Corporate Borrowing

• M&A activity is on par with 2014 levels, with a year-to-date volume of $750 billion.
• M&A is increasingly driving corporate debt issuance, with 41% of high yield bond issues citing mergers as a use of proceeds in the first two months of 2015.
• Investment grade debt also shows a shift, with 27% of issues in January and February related to M&A, up from 19% in 2013 and 2014.

Market Volatility and Outlook

• The VIX index and MOVE Index have shown higher volatility in 2015 compared to 2014.
• The recent high yield spread of 556 bp is wider than what is typically expected from current economic conditions.
• The Chicago Fed's national activity index, VIX, and EDF metric explain about 90% of the variation in the composite high yield bond spread.

Economic Forecasts

• US:
  • GDP forecast for Q4 2014: 2.4%.
  • Consumer Price Index (CPI) for February: 0.2% overall, 0.1% core.
  • University of Michigan Consumer Sentiment for March: 92.2.
• Europe:
  • Euro Zone current account surplus is expected to contract in January.
  • Germany's CPI: 0.1% m/m, 0.6% y/y.
  • France's GDP for 2014Q4: 0.1%.
  • Spain's industrial orders: 2.0% y/y.
• Asia-Pacific:
  • No specific forecast details provided, but the report mentions economic reports and forecasts from this region.

Conclusion

The report underscores the tension between the financial markets' optimistic outlook and the real economic challenges, particularly in commodities and emerging markets. While M&A activity supports corporate issuance, the broader economic environment remains uncertain. The aging population and weak demographic growth are expected to constrain future economic activity and keep interest rates low. The outlook for corporate credit remains cautious, with spreads widening across multiple sectors and a continued focus on the potential impact of geopolitical and economic factors.