20180528-穆迪服务-Credit_Outlook__Credit_Implications_of_Current_Events_38页_1mb

Credit Outlook Summary

Core Content Overview

This document provides a detailed analysis of the credit implications of various current events across multiple sectors, including Corporates, Infrastructure, Banks, Insurers, Exchanges, Asset Managers, Sovereigns, US Public Finance, and Securitization. It outlines both positive and negative credit impacts, focusing on financial health, leverage, liquidity, and strategic moves of the entities involved.

Main Points and Key Information

Corporates

• Libbey Glass:

  • Suspended quarterly dividends to focus on deleveraging and strategic initiatives.
  • Credit positive due to improved cash flow and reduced leverage.
  • Expected debt/EBITDA to decline to 5.2x over 12–18 months.
  • Revenue growth is expected from new products, e-commerce expansion, and international operations.

• BBA's Acquisition of EPIC Aviation:

  • Credit positive as it increases FBO locations and enhances service offerings.
  • Pro forma debt/EBITDA expected to improve to 5.1x by year-end 2018.
  • Revenue will increase to $3 billion in 2018, with EBITDA margin diluted to 21% from 24%.

• Smurfit Kappa's Acquisition of Reparenco:

  • Credit positive as it aligns with strategic goals and does not significantly affect capital structure.
  • Addresses short position on recycled containerboard and provides cost synergies.
  • Pro forma debt/EBITDA is expected to remain within the strategic range of 1.75x–2.5x.

• Gazprom's Antitrust Settlement:

  • Credit positive as it eliminates regulatory uncertainty and avoids financial penalties.
  • Facilitates cross-border gas flows and improves market liquidity.
  • No material change to pricing policy in key markets.

• Sony's Acquisition of EMI Music Publishing:

  • Credit positive as it enhances Sony's music publishing position and profit margins.
  • Expected to improve EBITDA margin to over 18%.
  • Purchase price is within Sony's available cash reserves.

• ESR-REIT and Hyflux Restructuring:

  • Credit negative due to potential loss of rental income from Hyflux.
  • If Hyflux breaks the lease, adjusted net debt/EBITDA could rise to 7.9x.
  • However, the merger with VIT provides diversification and flexibility, limiting the impact.

• Cooling of US-China Trade Dispute:

  • Credit positive for Chinese corporates as it reduces risks from potential tariffs.
  • Only Yihua Enterprise has significant US export exposure.
  • US-China cooperation on agriculture and oil/gas exports could benefit Chinese companies.

Infrastructure

• Hawaiian Electric:

  • Credit unaffected by Kilauea volcano's lava flow due to reserve capacity and non-ownership of PGV.
  • Lava flow has damaged distribution facilities but is in a remote area.
  • Company may not need to rebuild the grid if the area becomes uninhabitable.

• Port of Oakland:

  • Credit positive due to lease extensions with its largest operator.
  • Extends revenue visibility for over 60% of maritime revenue by 10 years.
  • Reduces contract renewal risk for all four seaport leases.

Banks

• Higher SIFI Designation Threshold:
  • Credit negative as it may lead to increased M&A activity.
• Union Bank:
  • Credit neutral as robotic process automation improves efficiency.

Insurers

• Mitsui Sumitomo Insurance:
  • Credit positive due to the purchase of a stake in BoCommLife, benefiting both parties.

Exchanges

• CFTC Guidance on Virtual Currency Derivatives:
  • Credit positive as it provides clarity and regulatory support for exchanges and clearing houses.

Asset Managers

• European Commission's Sustainable Finance Proposal:
  • Credit negative due to increased execution risk and costs.

Sovereigns

• Jordan's Income Tax Law Amendments:
  • Credit positive as they are expected to improve fiscal stability.

US Public Finance

• Illinois witholding Revenue from City of Harvey:
  • Credit negative for municipalities, as it reduces financial support.

Securitization

• PACE ABS Market:
  • Credit positive as uncertainty around consumer claims is expected to decline with the Dodd-Frank rollback.

Credit In Depth

• Corporate Leverage Trends:
  • High corporate leverage signals potential future credit stress.
  • Despite low default rates, the number of speculative-grade companies has increased by 58% since 2009.
  • Investment-grade companies have expanded, moving further from Aaa to A ratings.

Recently in Credit Outlook

• The report highlights key developments and analyses from the previous week, including corporate actions, regulatory changes, and market trends.
• These updates are crucial for assessing credit risk and opportunity across different sectors.

Summary of Credit Impacts

Conclusion

The report emphasizes the mixed credit implications of recent events, with several positive developments in corporate strategy, regulatory relief, and market stability, but also highlights risks such as tenant debt restructuring and potential M&A activity. These factors collectively shape the credit landscape across different sectors, influencing leverage, liquidity, and overall financial health.