20151130-穆迪服务-Credit_Outlook_40页_2mb

Credit Outlook Summary

Core Content Overview

This document provides an analysis of credit implications from recent corporate, infrastructure, bank, and sovereign developments, highlighting credit positives and negatives based on Moody's assessment.

Main Points and Key Information

Corporates

• Pfizer's Allergan Deal:

  • Credit Positive: The acquisition is expected to improve Pfizer's business profile, provide access to global cash, and reduce exposure to patent cliffs.
  • Credit Negative: Share buybacks using the cash are expected to deplete liquidity and increase leverage, potentially reducing credit support.
  • Projected Debt/EBITDA: 2.6x at close in late 2016, expected to decline to 2.0x within two years.
  • EBITDA and Revenue Growth: Combined EBITDA is projected to be $32.5 billion, with annual revenue over $65 billion.
  • Tax Benefits: Pfizer's effective tax rate will decrease due to the merger with Allergan, which has an 8% tax rate.

• Deutsche Wohnen's Acquisition of Residential Units:

  • Credit Negative: The acquisition will increase the debt/assets ratio to 45% from 40.1%, and reduce unencumbered asset ratio to 15% from 20%.
  • Funding: Likely to be secured bank debt, which could limit future secured debt issuance.
  • Portfolio Expansion: The acquisition will increase portfolio size and diversification, leading to more stable cash flows.
  • Asset Disposal Plan: Management plans to sell 3,296 units to reduce leverage.

• China National Petroleum Corporation's Pipeline Assets Sale:

  • Credit Positive: The sale of half of its pipeline assets to Mindsoon for RMB15 billion will help offset the impact of low oil and gas prices.
  • Financial Impact: Proceeds will help fund capital expenditures and improve retained cash flow/net debt to 122% from 116% in 2014.
  • Strategic Move: Aligns with Chinese government reforms promoting mixed ownership and private sector participation in state-owned enterprises.

Infrastructure

• Connecticut's Approval of UIL Holdings-Iberdrola USA Merger:

  • Credit Positive: The merger, which is unlevered, will combine two midsize energy companies into a utility with a $9 billion rate base and over 3 million customers.
  • Regulatory Milestone: The draft approval by Connecticut's Public Utility Regulatory Authority (PURA) is a key step toward final approval.
  • Settlement Terms: Include customer rate credits, pipeline replacement acceleration, rate freeze, and ring-fencing mechanisms to protect UIL from financial changes at Iberdrola USA.

• SNCM Takeover and Veolia's Disposal of Transdev Stake:

  • Credit Positive: Veolia's disposal of its 50% stake in Transdev is credit positive, as it will free up capital.
  • Transdev's Financials: Veolia had €820 million tied up in Transdev, with €400 million in intercompany loans and €420 million in equity.
  • Impact on FFO/Net Debt: If Veolia disposes of all Transdev interests, its FFO/net debt ratio could increase by 150 basis points.
  • EU State Aid Repayment: SNCM is required to repay €440 million of illegal state aid, which could be avoided by the new company post-takeover.

Banks

• Argentina's Election Outcome:

  • Credit Positive: The election of Mauricio Macri signals a shift toward market-friendly policies, potentially supporting a return to sustainable growth and increased credit demand.
  • Economic Context: Argentina's banking system is small relative to the economy and has been affected by government policies like capital controls.
  • Confidence and Growth: Improved investor and consumer confidence could create new business opportunities for banks.
  • Funding Costs: Expected to rise with interest rate normalization, but deposit access is likely to improve.

• Italian Bank Resolution:

  • Credit Positive: Senior debt and deposits were protected, with no losses incurred.
  • Credit Negative: Subordinated debt was fully written off, affecting junior bondholders.
  • Resolution Fund: Created to fund the resolution, with capital and liquidity requirements for the bad and bridge banks.
  • Impact on Banks: The resolution process will require €3.6 billion from Italian banks, with most funds repaid by December.

Rating Changes

• Downgraded Entities: Petroleos Mexicanos, Tervita, TerraForm Global Operating, TerraForm Power Operating, Wisconsin Public Service, and some Banc of America Commercial Mortgage CMBS.
• Upgraded Entities: Four Ukrainian banks, Al Fujairah National Insurance Company, QBE Insurance Group, Kharkiv Ukraine, Ally prime auto loan ABS, AmeriCredit subprime auto loan ABS, Fifth Third prime auto loan ABS, and covered bonds issued by AIB Mortgage Bank and EBS Mortgage Finance.

Research Highlights

• Moody's published reports on various sectors, including Brazilian corporates, US poultry, Chinese property developers, GAIL (India), Filipino banks, Saudi Arabian banks, global systemically important banks, banks' deferred tax assets, Italian banks, Indian finance companies, Egypt, Uganda, Eurasian Development Bank, Senegal, International Finance Corporation, Japan, Argentina, Alberta Canada, Warsaw Poland, New Jersey & New York, Pennsylvania schools, cyber risk, Sydney Australia housing, and Italian covered bonds.

Sovereigns and Sub-sovereigns

• Sri Lanka's Fiscal Deficits: Continued high fiscal deficits are credit negative.
• Nuevo Leon, Mexico: Elimination of the vehicle tax is credit negative.
• Italian Regions: Bond buyback is credit positive.

Conclusion

The document outlines a range of credit implications across different sectors, emphasizing the balance between growth opportunities and financial risks. Key factors influencing credit ratings include leverage changes, liquidity management, regulatory shifts, and market conditions. While some developments are credit positive, such as the merger approvals and asset disposals, others like share buybacks and dividend cuts pose risks to credit profiles.