20160509-穆迪服务-Credit_Outlook_30页_1mb

CreditOutlook Summary

Core Content Overview

This document provides a summary of credit implications of current events, focusing on corporate, infrastructure, banking, insurer, sovereign, and sub-sovereign developments. It highlights how various business decisions and legal actions impact credit ratings and financial stability of the involved entities.

Main Points and Key Information

Corporate Sector

• Quintiles-IMS Merger:

  • A $9 billion all-stock merger creates a pharmaceutical services powerhouse.
  • Credit positive for IMS due to increased scale and diversity, but credit negative for Quintiles due to increased leverage.
  • Pro forma adjusted leverage for the combined company is expected to be around 4.0x debt/EBITDA.
  • The merger is expected to improve cash flow generation through diverse revenue streams.

• Biogen's Spinoff of Hemophilia Business:

  • Credit negative for Biogen due to reduced revenue, earnings, and business diversity.
  • The spinoff would result in a modest increase in debt/EBITDA from 1.2x to 1.3x.
  • Biogen remains heavily dependent on multiple sclerosis treatments, which face limited growth potential.

• Bell Canada's Acquisition of Manitoba Telecom:

  • Credit positive for Bell Canada due to increased scale and EBITDA without significant financial leverage increase.
  • The deal includes a 55% equity and 45% cash structure for a total of CAD3.9 billion.
  • MTS' assets will be integrated into Bell Canada, enhancing synergies and reducing unit costs.

• Brazilian Lawsuit over Dam Disaster:

  • Credit negative for Samarco and its owners BHP Billiton and Vale due to potential $2.2 billion deposit and restrictions on asset sales and dividends.
  • The lawsuit adds uncertainty and financial burden to the companies, especially Samarco, which has limited liquidity.

• Petrobras' Asset Sales:

  • Credit positive for Petrobras as asset sales indicate progress in reducing debt.
  • The company sold two assets for nearly $1.4 billion, part of a $14.4 billion divestment plan.
  • Despite the proceeds, the company still faces significant debt and capital spending needs.

• Sato and Balder's Acquisition in Norway:

  • Credit positive for Sato as it gains access to a new market and diversifies its geographic exposure.
  • The acquisition of Hedmark University College campuses is a strategic move for Balder, enhancing its position in the Nordic property market.

• Crown Resorts' Reduced Stake in Melco Crown Entertainment:

  • Credit positive for Crown Resorts due to improved liquidity and reduced exposure to MCE.
  • The transaction involves the repurchase of 155 million shares for $800 million, reducing Crown's stake to 27.4%.

• Melco Crown Entertainment's Share Buyback:

  • Credit negative for MCE Finance as the buyback reduces its liquidity for working capital and capital expenditure.
  • The buyback is funded by MCE, which will use approximately $600 million from MCE Finance's balance sheet.

• Daiichi Sankyo's Award of Ranbaxy Damages:

  • Credit positive for Daiichi Sankyo as it receives $525 million in damages, improving its financial position.
  • The award is a result of the 2008 acquisition of Ranbaxy and reflects the company's legal victory.

Infrastructure Sector

• Centrica's Equity Issuance:
  • Credit positive for Centrica as the equity issuance strengthens its financial position.
  • The move is expected to support long-term growth and stability.

Banking Sector

• Intesa's Sale of Card Payment Processing Business:

  • Credit positive for Intesa as the sale improves its balance sheet and reduces exposure to non-core activities.

• China's New Guidance on Loan-Beneficiary Rights Transfer:

  • Credit positive for banks due to clearer regulatory framework and potential for better risk management.

• Singapore's Proposed Bank Resolution and Bail-in Regime:

  • Credit positive for senior creditors as the regime is limited in scope and does not significantly impact their position.

Insurer Sector

• German Life Insurance Rate Reduction:
  • Credit positive for the insurer as lowering the maximum guaranteed rate can improve profitability and reduce risk exposure.

Sovereign Sector

• Turkey's Political Turmoil:
  • Credit negative due to impaired reform outlook and increased vulnerability to external shocks.

Sub-sovereign Sector

• Strong Growth in German Länder Tax Revenues:
  • Credit positive for German Länder as increased tax revenues improve their financial standing.

US Public Finance

• Detroit Public Schools' Financial Crisis:

  • Time is running out to resolve the crisis, which could have negative credit implications if not addressed.

• State Housing Finance Agency Exemption from Loan Insurance Rule:

  • Credit positive for the agency as the exemption reduces regulatory burden and improves financial flexibility.

Credit in Depth

• Quintiles-IMS Merger:

  • The merger is expected to improve the combined company's financial profile, but uncertainty remains around the capital structure.
  • The deal is subject to regulatory approvals and could lead to changes in debt classification.

• Biogen's Spinoff:

  • The spinoff is expected to reduce business diversity and increase reliance on a single therapeutic area.
  • The negative outlook for Biogen reflects concerns about future growth and potential debt increases.

• Petrobras' Asset Sales:

  • Asset sales are a key strategy to reduce leverage and meet cash needs.
  • The company's large asset base and government ownership provide some financial cushion.

• Sato and Balder:

  • The acquisition is a strategic move that enhances Sato's market diversification.
  • The transaction is expected to have minimal impact on debt metrics due to its small size.

• Crown Resorts and Melco Crown Entertainment:

  • The reduced stake in MCE is credit positive for Crown, while the share buyback is credit negative for MCE Finance.
  • MCE Finance's liquidity remains adequate despite the buyback.

• Daiichi Sankyo:

  • The award of damages is a significant credit positive, improving financial stability and reducing exposure to past losses.

Summary of Ratings and Outlooks

Conclusion

The document outlines a range of credit implications from mergers, acquisitions, legal actions, and regulatory changes. While some transactions and outcomes are credit positive, others are credit negative, highlighting the importance of financial management, diversification, and regulatory compliance in maintaining credit quality.