20160317-穆迪服务-Credit_Implications_of_Current_Events_21页_1mb

CreditOutlook Summary

Core Content

This document provides an overview of credit implications arising from recent corporate, infrastructure, and banking developments. It includes analyses from Moody's Analytics on how these events affect the credit profiles of various entities.

Corporates

Key Developments

• Competing Unsolicited Offer for Starwood Is Credit Negative for Marriott and Starwood

  • Starwood received a $12.9 billion bid from Anbang Insurance Group, a 19% premium over Marriott's offer.
  • The counter-bid could push Starwood's leverage higher and risk Marriott's credit profile due to potential increased offer.
  • Marriott's current offer includes 0.92 shares and $2 in cash per Starwood share, totaling $10.8 billion.
  • If Starwood accepts the Anbang offer, it may lead to higher debt for Marriott, though it still has capacity to take on more debt.
  • The acquisition would enhance Marriott's brand and geographic diversification, but its market share would only increase to 7.2% from 4.8%.

• Equity Injection for Brazil Steelmaker Usiminas Would Improve Liquidity

  • Usiminas received a proposal for a BRL1.0 billion equity injection from its largest shareholder, Nippon Steel & Sumitomo Metal.
  • The injection is conditional on a standstill agreement with creditors and would help with liquidity.
  • Usiminas still needs further support from creditors to refinance BRL1.9 billion and BRL1.8 billion in debt due in 2016 and 2017.
  • The company's net debt/EBITDA ratio reached 20.1x in 2015 due to declining steel consumption and EBITDA.
  • Despite the equity injection, Usiminas will likely continue to breach financial covenants.

• COLI Acquires Properties from CITIC, a Credit Positive for Both

  • COLI acquired property projects from CITIC for RMB31 billion, with CITIC owning 10% of COLI post-transaction.
  • The deal is expected to reduce CITIC's debt and improve its leverage.
  • COLI's debt leverage is expected to increase to 25% from 12%, but it will still maintain a strong credit profile due to its substantial cash reserves.

• Shanghai Shimao's Proposed Share Issue Is Credit Positive for Shimao Property

  • Shimao Property will raise RMB6.67 billion through a share issue and transfer three commercial projects to Shanghai Shimao.
  • This will help reduce Shimao Property's debt/total capitalization to 48%-50% and improve liquidity.
  • The share issue will also clarify the company's business strategies by separating commercial and residential segments.

Infrastructure

Key Development

• FleetCor's Acquisition of STP Is Credit Positive for CCR
  • CCR sold its 34.24% stake in STP to FleetCor for BRL1.4 billion, reducing its leverage from 3.2x to 2.8x.
  • The transaction helps CCR meet its refinancing needs and maintain its dividend payout policy.
  • CCR's leverage has increased due to capital expenditures on new toll roads and infrastructure projects.

Banks

Key Developments

• Mexico's Banks Get Anti-Money Laundering Oversight, a Credit Positive

  • The introduction of SPID (Sistema de Pagos Interbancarios en Dolares) improves oversight of dollar transfers, reducing money laundering risks.
  • This enhances confidence in the Mexican banking system and improves correspondent banking relationships.
  • Reduced access to global financial systems could negatively impact Mexican banks, but SPID is expected to mitigate this.

• Uruguayan Banks' Higher Reserve Requirements Are Credit Negative

  • Uruguay's central bank increased reserve requirements to control credit growth and inflation.
  • This move increases liquidity pressures and operational costs for Uruguayan banks.
  • It may lead to reduced lending activity and weaken credit quality.

• Russia Considers Increase in Banks' Deposit Insurance Fees, a Credit Negative

  • The proposed increase in deposit insurance fees would raise operating costs for Russian banks.
  • This could negatively impact their credit profiles by reducing profitability and increasing financial pressure.

• Chinese Banks' Ability to Swap Debt for Equity in Unviable Companies Is Risky

  • Swapping debt for equity in unviable companies may not be a sustainable strategy for Chinese banks.
  • It could lead to increased leverage and reduced capital adequacy, thereby weakening credit quality.

Sovereigns

Key Development

• Malaysia's Tighter Migrant Labor Rules Will Sting Remittances to Bangladesh
  • New labor rules in Malaysia may reduce remittances to Bangladesh, impacting the country's foreign exchange inflows.
  • This could have negative implications for Bangladesh's balance of payments and economic stability.

Recently in Credit Outlook

• The document references recent articles from the previous Monday's Credit Outlook.
• Readers are directed to the Weekly Market Outlook for additional market analysis and financial predictions.

Summary of Key Information