20160208-穆迪服务-Credit_Outlook_Credit_Implications_of_Current_Events_67页_2mb

Credit Outlook Summary

Core Content

The document provides a comprehensive analysis of credit implications arising from various current events across different sectors and regions. It includes insights on corporate, infrastructure, banking, asset management, and sovereign credit risks, with a focus on how specific developments affect financial performance and creditworthiness.

Main Points and Key Information

Corporates

• Zika Virus Impact on Airlines: The Zika virus is unlikely to cause a prolonged decline in air travel, especially since it primarily affects pregnant women. However, airlines with significant operations in Latin America, such as Gol Linhas Aereas Intelligentes S.A. and LATAM Airlines Group S.A., are more exposed to demand risk due to their network presence in affected areas.
• Tribune Publishing: The company received a $44.4 million equity infusion from Merrick Media, which is credit positive. The funds will support digital growth and strategic acquisitions. The company is also suspending its dividend, improving its cash position.
• Symantec: The company's capital return plan, which includes issuing new debt, is credit negative. This is due to the timing of the plan, which coincides with its cost-cutting and stabilization efforts.
• Autodesk: The restructuring plan, aimed at reducing costs and improving efficiency, is credit positive. It supports the transition to a subscription-based model, though credit metrics will weaken during the transition.
• Lowe's Acquisition of RONA: This acquisition is credit positive, expanding Lowe's presence in Canada and providing operating synergies. The debt/EBITDA ratio is expected to increase temporarily but return to target levels within 12 months.
• China Property Developers: Reduced down payment requirements for homebuyers are credit positive, as they will boost demand in second-tier cities and support property developers with strong market positions.

Infrastructure

• Duke Energy: Considering the sale of its international energy business, which is credit positive. This move would reduce risk and increase stable cash flow from US regulated utilities.
• National Grid: The US rate filings by its subsidiaries KEDNY and KEDLI are credit positive, as they signal improved financial performance and support the company's ability to recover credit metrics.

Banks

• US Multifamily Loans: Expected to perform worse in 2016, which is credit negative. This sector had been a high-growth area for banks but is now at risk due to economic recovery and aggressive underwriting practices.
• Bradesco: Canceled its capital increase to support the acquisition of HSBC Brasil, which is credit negative.
• AXA Bank Hungary: Acquisition by OTP Bank is credit positive, as it is expected to improve profitability.
• German Building Societies: Net interest margin continues to shrink, which is a credit negative.
• Bankia's IPO Ruling: Excludes institutional investors, which is credit positive for the company.
• Armenian and Korean Banks: Decline in remittances and Hyundai Merchant Marine's restructuring are credit negative.
• Singapore Banks: Weakening demand for domestic corporate loans is a credit negative.

Asset Managers

• Waddell & Reed: Struggles with declining asset base and key departures, which is a credit negative.

Sovereigns

• Bermuda: Fiscal consolidation efforts are credit positive.
• European Council Proposal: Supports UK's EU campaign, which is credit positive.
• Serbia: 2015 GDP growth and smaller fiscal deficit are credit positive.
• Ukraine: Economic minister's resignation risks government collapse, which is credit negative.
• Kenya: Targets credit-positive fiscal consolidation.

Sub-sovereigns

• Northwest Territories: Warns of upcoming deficits, which is credit negative.
• Brazil: Approaching limit on federal guarantees to local governments, which is credit negative.
• Russian Regions: Growing debt burden due to persisting deficits, which is credit negative.

US Public Finance

• Vermont School Districts: Increased spending cap and lower overage penalty, which is credit positive.
• Honolulu, Hawaii: Extended tax to support light rail project, which is credit positive.

Rating Changes

• Downgraded: RR Donnelley & Sons, Deutsche Bank México, Deutsche Securities Mexico, Modular Space Holdings, Banco de Credito e Inversiones, Banque SYZ, Financiere SYZ, Unibank.
• Upgraded: Agrobank, Investec Bank, Investec plc.

Research Highlights

• Reports published on a wide range of topics including European speculative-grade corporates, US corporate liquidity, Chinese property developers, global airlines, and various financial instruments and markets.

Conclusion

The credit outlook is mixed, with some developments being credit positive and others credit negative. The analysis covers a variety of sectors and regions, highlighting the importance of market conditions, financial strategies, and regulatory changes in shaping credit profiles.