20160725-穆迪服务-Credit_Outlook_34页_1mb

Credit Outlook Summary

Core Content

This document provides an analysis of credit implications arising from various current events affecting different sectors and entities. It includes assessments of corporate, infrastructure, banking, and sovereign credit risks, with a focus on financial performance, liquidity, and strategic moves.

Main Points

Corporates

• Concordia International Corp. (B3 stable): Losing sole-producer status for Nilandron Drug is credit negative. The company's revenue from Nilandron was around $50 million annually, and its loss could reduce EBITDA by $25–50 million. The British pound depreciation also impacts its EBITDA, with a potential $40 million reduction. However, strong liquidity and free cash flow are expected to mitigate the impact.
• US Silica Company Inc. (B2 negative): Acquisition of NBR Sand is credit positive. It adds a low-cost mine and improves production capacity. The company has good liquidity and no near-term debt maturities. The acquisition could reduce its adjusted leverage ratio and improve interest coverage.
• DynCorp International Inc. (Caa2 stable): A US civil complaint alleging contract fraud is credit negative. It may lead to increased legal costs and potential settlements. The company has limited reserves and may rely on its liquidity buffer for operational needs.
• Ryerson Holding Corporation (B3 stable): Paying down debt with share sale proceeds is credit positive. The debt paydown could reduce its leverage ratio to around 5.2x, improving interest coverage and liquidity.
• Belden Inc. (Ba2 stable): Issuance of preferred stock is credit positive. It improves liquidity and allows for de-leveraging through acquisitions. The company has a strong position in multiple markets and a diversified revenue base.
• Medi-Partenaires (B1 stable): Capital injection from Bpifrance is credit positive. It reduces leverage and provides funds for acquisitions. The company is expected to benefit from sector consolidation.
• SoftBank Group Corp. (Ba1 stable): Acquisition of ARM Holdings is credit negative. The transaction increases leverage and could negatively impact credit quality if liquidity is further depleted or if the company's debt level exceeds 5.5x.

Infrastructure

• Brazil's Hydro Generators: The revocation of ABRAGEL's legal injunction is credit negative. It may result in hydro generators having to pay around BRL1.0 billion in accumulated costs related to spot market exposure. The impact is expected to be on cash flows, not liquidity, as companies have sufficient cash reserves.

Banks

• Comerica Incorporated (A3 negative): Its restructuring initiative "Gear Up" is credit negative due to significant restructuring costs and uncertainty about its success in achieving ROE targets. The bank faces challenges in its stressed energy portfolio and commercial loans.
• Caixa (unrated): Efforts to stimulate mortgage lending will erode its thin capitalization, a credit negative.
• Egyptian Banks: Declining tourism is credit negative for the sector.
• Indian Overseas Bank and Central Bank of India: Government capital infusion is credit positive.
• New Zealand Banks: Tighter rules on high-LTV mortgage loans are credit positive.

Sovereigns

• Iran: Parliament rejecting the government's plan to support the banking system is credit negative.
• Abu Dhabi Sovereign Wealth Fund: Lower returns are credit negative for Abu Dhabi and the UAE.
• Mongolia: Strengthening ties with South Korea is credit positive.

US Public Finance

• State and Local Governments: Weak pension fund returns are credit negative.
• New York Local Governments: Limited revenue-raising ability due to low property tax cap is credit negative.

Key Information

Credit Positive Events

• US Silica's acquisition of NBR Sand
• Ryerson's debt paydown via share sale
• Belden's preferred stock issuance
• Medi-Partenaires' capital injection from Bpifrance
• New Zealand Banks' tighter mortgage rules
• Mongolia's strengthened ties with South Korea
• Indian Overseas Bank and Central Bank of India's government capital infusion

Credit Negative Events

• Concordia losing sole-producer status for Nilandron Drug
• US Civil Complaint against DynCorp
• Hapag-Lloyd's merger with United Arab Shipping
• SoftBank's ARM acquisition
• Brazil's hydro generators losing legal injunction
• Comerica's restructuring initiative
• Caixa's mortgage lending strategy
• Egypt's declining tourism
• US Public Finance weak pension returns
• New York's property tax cap

Summary of Credit Implications

The document highlights the mixed credit implications of various corporate and market events. While some acquisitions and capital injections are viewed as credit positive, others like the loss of sole-producer status, legal issues, and increased leverage are credit negative. The overall credit outlook for many entities is stable, but the potential for rating changes is noted based on their financial performance and strategic decisions.