20161020-穆迪服务-NEWS___ANALYSIS_19页_1mb

Credit Outlook Summary

Core Content

This document provides an analysis of credit implications of recent corporate, infrastructure, bank, asset manager, and sovereign events. It highlights the credit impacts of various acquisitions, sales, and regulatory decisions across different sectors, offering insights into how these developments affect financial stability and leverage.

Main Points

Corporates

• RSP Permian's Acquisition of Silver Hill Entities:

  • Credit positive due to increased production and acreage without significant leverage stress.
  • Pro forma production will reach ~45,000 barrels of oil equivalent per day, and net acreage will exceed 100,000 acres.
  • The acquisition is largely equity-funded, which should improve cash flow and production-based leverage metrics.
  • The company plans to close the transactions by the end of November 2016 and March 2017.
  • Rating review for upgrade is ongoing, with a potential one or two-notch increase.

• Ultrapar's Proposed Acquisition of Liquigás:

  • Credit negative due to increased leverage and strategic risk.
  • The deal may lead to a leverage increase of up to 0.8x if both acquisitions are debt-funded.
  • Antitrust challenges are expected, possibly requiring asset divestitures.
  • Liquigás' lower EBITDA margin compared to Ultragaz may dilute the combined EBITDA profile.
  • Despite strategic benefits, the deal could strain liquidity and financial flexibility.

• Naspers' Sale of Allegro and Ceneo:

  • Credit positive as the sale allows Naspers to reduce debt, increase cash reserves, and fund future growth.
  • Proceeds will increase cash to ~$4.8 billion, exceeding reported debt.
  • The sale is expected to be completed before the end of fiscal 2017.
  • The company plans to use the proceeds for investment and acquisitions, reducing the need for additional debt.

• Rosneft's Acquisition of Bashneft Stake:

  • Credit positive due to improved reserves, production, and refining capacity.
  • Bashneft's EBITDA contribution is expected to be around RUB130 billion.
  • Rosneft's net leverage is projected to decrease to ~3.1x by 2017.
  • The deal may help Rosneft increase production and refine throughput in 2017-18, despite declining refining margins.

Infrastructure

• IEnova's Capital Increase:

  • Credit positive for IEnova and its parent Sempra Energy.
  • The MXN29.86 billion proceeds will fund acquisitions and capital expenditure without incurring debt.
  • IEnova plans to use a portion of the funds to repay intercompany financing from Sempra.
  • The capital increase is part of Sempra's strategy to expand non-regulated operations.
  • Sempra's stake in IEnova will be diluted to 66.4% from 81%, but the impact on cash flows is expected to be minimal.

• SSE's Sale of Stake in Scotia Gas Networks:

  • Credit positive as the sale at a premium improves liquidity and reduces debt.
  • The sale price of £621 million is ~44% above the regulated asset value.
  • SSE may use the proceeds for share buybacks or investments, both of which are credit positive.
  • The transaction does not affect SGN's credit risk or its subsidiaries.

Banks

• Bank Dhofar's Termination of Merger with Bank Sohar:

  • Credit negative as the termination misses an opportunity to improve credit quality.
  • The merger would have enhanced capital base, lending capacity, and interest margins.
  • Dhofar's market share would have increased to ~20% from ~12.1%, challenging the dominant BankMuscat.
  • The bank continues to explore acquisition opportunities to enhance scale and profitability.

• China Construction Bank's Equity Injection into Yunnan Tin:

  • Credit positive as it increases the likelihood of Yunnan Tin's restructuring success.
  • Yunnan Tin has ~RMB14.8 billion in debt, with minimal collateral.
  • The equity injection is a temporary solution, with a three-year buyback commitment.
  • The deal benefits creditor banks by avoiding potential losses from liquidation.

Asset Managers

• SEC Rules on Open-Ended Funds:
  • Credit negative for retail asset managers due to increased liquidity requirements.
  • The rules may lead to higher capital needs and reduced flexibility for asset managers.
  • This could impact their ability to manage portfolios effectively and maintain liquidity.

Sovereigns

• Montenegro's Election Results:
  • Credit negative due to increased policy risk from inconclusive election outcomes.
  • Uncertainty in political leadership may lead to delayed or inconsistent policy decisions.
  • This could affect the country's economic stability and credit profile.

Key Information

• RSP Permian is expected to see a rating upgrade due to its acquisition of SHEP I and SHEP II, which are equity-funded and will improve leverage metrics.
• Ultrapar faces credit risks due to the potential increase in leverage and antitrust challenges.
• Manutencoop benefits from a significantly reduced antitrust fine, which improves liquidity.
• Rosneft gains from the acquisition of Bashneft, enhancing production and refining capacity, though refining margins are under pressure.
• Naspers is improving its financial position by selling mature investments, which allows it to fund future growth without additional debt.
• SSE is credit positive from the sale of its stake in Scotia Gas Networks, which provides liquidity and flexibility.
• Bank Dhofar misses an opportunity to improve credit quality by terminating the merger with Bank Sohar.
• China Construction Bank benefits from the equity injection into Yunnan Tin, which helps avoid potential losses from liquidation.
• SEC rules are credit negative for retail asset managers, increasing liquidity requirements.
• Montenegro faces credit risks due to political uncertainty following inconclusive election results.