20170216-穆迪服务-Credit_Outlook_Credit_Implications_of_Current_Events_28页_1mb

Credit Outlook Summary - 16 February 2017

Core Content

This document provides an analysis of credit implications from various current events affecting corporates, infrastructure, banks, sovereigns, and sub-sovereigns. It highlights credit positive and negative developments across different sectors and regions, focusing on debt reduction, regulatory changes, and operational improvements.

Main Points by Sector

Corporates

• Floor & Décor

  • Filed an S-1 registration for an IPO to raise up to $150 million.
  • Proceeds will be used to reduce debt, lowering debt/EBITDA to 5.1x from 6.1x.
  • Positive operating trends, competitive position, and management focus on debt reduction support the credit positive outlook.
  • Ratings are constrained by high initial leverage and geographic concentration in Florida and Texas.
  • The company's ratings are B2 stable.

• Gibson Energy

  • Sold its industrial propane business for CAD412 million, reducing debt by CAD237 million.
  • Pro forma debt/EBITDA ratio will fall to 4.8x from 5.0x, with further decline to 3.5x in 2017.
  • The sale improves the business risk profile, as infrastructure-related operations now account for 66% of operating profits.
  • EBITDA is expected to increase to CAD400 million in 2017 due to commodity price strength and new storage tanks.
  • The company's ratings are Ba2 stable.

• NXP

  • Plans to repay $2.7 billion in debt, including all senior secured term loans.
  • Debt/EBITDA ratio will fall to 3.0x from 3.6x, with unsecured debt structure improving capital structure.
  • Still faces risks due to ongoing integration of Freescale Semiconductor and potential acquisition by Qualcomm.
  • The Ba1 rating reflects its leadership in automotive semiconductors and consistent cash flow generation.
  • Ratings are under review for upgrade due to the Qualcomm acquisition.

Infrastructure

• Calpine Corporation
  • Announced a $2.7 billion debt reduction plan by 2019, equivalent to a 1.5x reduction in debt/EBITDA.
  • The plan aims to strengthen its balance sheet and improve its credibility as a disciplined operator.
  • Has the strongest generation asset portfolio among merchant power producers, with a focus on high-efficiency gas-fired plants.
  • Despite this, the power markets in California and Texas are considered distressed due to oversupply.
  • The Mid-Atlantic market is currently lucrative but may face a downturn soon.
  • Ratings are Ba3 stable.

Banks

• FPB Bank (Panama)

  • Seized by Panama's Superintendentcy of Banks (SBP) due to alleged involvement in money laundering and corruption.
  • The seizure raises concerns about Panama's anti-money laundering controls and may increase cross-border funding risks.
  • FPB has 70% of assets from foreign deposits, invested in non-Panamanian securities and offshore lending.
  • This event adds reputational risk for Panama's banking sector.

• Banrisul (Brazil)

  • Implemented a voluntary early retirement plan for 700 workers, reducing personnel costs and improving net income.
  • The plan is expected to generate BRL113 million in annual cost savings, offsetting potential severance payments.
  • Net income fell to 1.0% of total assets in 2016 due to a 14% drop in earnings and high credit costs.
  • The bank's capitalization was weakened by a BRL1.2 billion payment to the state for exclusive payroll loan services.
  • Ratings are Ba3 stable.

• Russia's Central Bank

  • Tightened supervision of auditors and senior managers, reducing fraud and improving financial reporting quality.
  • Revoked 308 bank licenses between 2013 and 2016, with 85% due to fraud or illegal activity.
  • Plans to reduce the number of certified auditors and increase senior management liability for misreporting.
  • The reforms aim to improve transparency and reduce the number of failed banks.
  • Ratings are not directly assigned, but the measures are credit positive for the banking sector.

• Poland's Banks

  • Benefit from the government's reversal on forced Swiss franc mortgage conversion.
  • The initial proposal would have significantly reduced capital adequacy and profitability.
  • The new approach includes reimbursing mortgage spreads, with a manageable cost of PLN4 billion.
  • The Financial Stability Committee proposed increasing risk-weighted assets for foreign-currency mortgages.
  • Banks are expected to transition to new requirements without needing additional capital.
  • Ratings are not directly assigned, but the measures are credit positive.

• Kazakhstan's Banks

  • Government allocated $6.5 billion to the National Distressed Asset Fund to buy problem assets from banks.
  • This will significantly reduce problem loans and improve asset quality.
  • The injection is larger than the overdue loan total of KZT1.9 trillion.
  • Kazkommertsbank, with the highest problem loan ratio, is expected to be the main beneficiary.
  • Banks are projected to see increased net interest income and loss-absorbing capacity.
  • Ratings are not directly assigned, but the measures are credit positive.

Key Information

• Credit Positive Events:

  • Floor & Décor's IPO and debt reduction.
  • Gibson Energy's sale of industrial propane business.
  • NXP's debt repayment.
  • Calpine's debt reduction plan.
  • Banrisul's voluntary retirement plan.
  • Russia's Central Bank reforms.
  • Poland's reversal on forced mortgage conversion.
  • Kazakhstan's capital injection into the National Distressed Asset Fund.

• Credit Negative Events:

  • Seizure of FPB Bank in Panama.
  • Japan's weak domestic loan demand.

Conclusion

The document outlines a mix of credit positive and negative developments across various sectors and regions. Corporates like Floor & Décor, Gibson Energy, and NXP are taking steps to reduce leverage and improve financial stability. Infrastructure companies such as Calpine are also addressing debt issues. Banks in Panama, Brazil, Russia, and Poland are facing both challenges and opportunities, with regulatory changes and government interventions playing a key role in shaping their credit profiles. Kazakhstan's efforts to resolve bank problems through capital injections are expected to improve the sector's overall health.