20170515-穆迪服务-Credit_Outlook_33页_628kb

Credit Outlook Summary

Core Content Overview

This document provides a summary of credit implications of various current events affecting different sectors and entities. It covers corporate mergers, infrastructure developments, banking activities, insurance, sovereign credit, and securitization. The key focus is on how these events influence financial health, leverage, liquidity, and credit ratings.

Main Points by Sector

Corporates

• INC's Merger with inVentiv:

  • The merger is credit negative for INC due to increased financial leverage, while credit positive for inVentiv due to lower leverage and greater scale.
  • Combined company revenue: $3 billion.
  • Pro forma adjusted leverage: 5.0x debt/EBITDA for the combined entity, 7.0x for inVentiv, and 2.2x for INC.
  • The merger is expected to close in Q3 2017.

• Teck's Sale of Dam Stake:

  • Credit positive for Teck as it improves liquidity.
  • Proceeds: CAD1.2 billion.
  • Sale supports Teck's $4.7 billion Quebrada Blanca copper mine project.
  • Teck's cash and undrawn credit facilities: CAD536 million and $3 billion respectively.
  • Teck's rating remains Ba3.

• Vivendi's Acquisition of Havas:

  • The acquisition is credit neutral for Vivendi as its Baa2 rating already accounts for M&A activity.
  • Vivendi's retained cash flow/net debt metric weakens to 32% from 160.7%.
  • Havas contributes 23% to the combined EBITDA.
  • Pro forma gross debt/EBITDA: 3.5x at year-end 2017, slightly above the 3.25x downward guidance.
  • Vivendi's cash balance post-acquisition: €1.7 billion.

• GSK's Delay of Generic Advair:

  • The delay is credit positive for GSK as it avoids competition from generic versions, maintaining revenue from the drug.
  • Hikma's revenue from generics is expected to be slightly above $700 million in 2017, down from previously estimated $800 million.
  • GSK's EBITDA growth and free cash flow are expected to improve in 2017.

• Fortescue Metals' Note Offering:

  • The $1.5 billion offering is credit positive as it extends debt maturities to 2022.
  • Proceeds used to repay $976 million of senior secured term loan and $478 million of senior unsecured notes.
  • Fortescue's adjusted debt/EBITDA improved to 1.2x in 2016, from 2.2x in 2016.

• Crown Resorts' Sale of Melco Stake:

  • The sale of the 11.2% stake in Melco Resorts is credit positive due to improved liquidity and debt reduction.
  • Proceeds: AUD1.34 billion.
  • Expected net proceeds: ~$987 million.
  • Crown plans to use proceeds for debt reduction, shareholder returns, and investment opportunities.

• Toyota's Weakening Profitability:

  • Toyota's profitability is expected to weaken further in 2017, with an operating margin of 5.8% compared to 7.2% in 2016.
  • Credit negative due to declining free cash flow and margin contraction.
  • Toyota's adjusted debt/EBITDA was 1.0x in 2016, and the company plans to maintain these levels in 2017.

Key Credit Implications

Other Highlights

• Russia's Car Loan Subsidy Extension:

  • Credit positive for Russian auto dealers like ROLF.
  • Subsidized interest rates: 8-10% vs. 15-17% market rate.
  • Program supports 350,000 car sales in 2017.

• Australia's RMBS:

  • Credit positive due to proposed expansion of regulator's powers over mortgage lending.

• US Banks' Tightening Lending Standards:

  • Credit positive as it improves credit quality and reduces risk exposure.

• Itau's Investment in XP Investimentos:

  • Credit positive for Itau, enhancing its financial position.

• Mauritian Banks:

  • Credit positive due to increased tourism activity.

• AXA's IPO of US Life Unit:

  • Credit negative for AXA Financial, as it may dilute equity and affect capital structure.

• Slovenia's Debt Buyback:

  • Credit positive for the sovereign, improving debt management.

• Saudi Arabia's Budget Update:

  • Credit positive due to increased transparency in fiscal policy.

• Egypt's IMF Vote of Confidence:

  • Credit positive as it reflects confidence in Egypt's reform efforts.

Summary of Credit Actions

• Credit Upgrades: inVentiv (B3 review for upgrade), Fortescue Metals (Ba1 stable), Crown Resorts (Baa2 stable).
• Credit Downgrades: INC (Ba2 review for downgrade), Teck (Ba3 positive), GSK (A2 negative).
• No Credit Action: Vivendi (Baa2 stable), AXA Financial (unrated), Slovenia (unrated), Saudi Arabia (unrated), Egypt (unrated).

Recent Analysis Highlights

• Moodys' Reports:

  • The document includes analyses from multiple analysts across different sectors.
  • Each report discusses specific credit implications, including leverage, liquidity, and financial performance.
  • The reports emphasize the importance of market conditions, regulatory changes, and company-specific strategies on credit profiles.

• Liquidity and Leverage:

  • Companies with strong liquidity and lower leverage, such as Teck and Fortescue, benefit from credit-positive actions.
  • Higher leverage and reduced liquidity, as in the case of INC and Calpine, are credit-negative.

• Market and Regulatory Factors:

  • The extension of car loan subsidies in Russia and the tightening of lending standards in the US are examples of how regulatory and market trends impact credit profiles.

Conclusion

The document outlines a range of credit implications across different sectors and entities, emphasizing how mergers, acquisitions, and regulatory changes influence financial health and credit ratings. Credit outcomes are mixed, with some companies benefiting from improved liquidity and reduced leverage, while others face challenges due to increased financial burden and market pressures. Overall, the report provides a detailed assessment of the credit impact of current events, highlighting both positive and negative outcomes based on financial metrics and strategic decisions.