20131219-穆迪服务-Credit_Outlook_36页_1mb

Credit Outlook Summary - December 19, 2013

Core Content

This document provides an analysis of credit implications from various current events, focusing on corporate, infrastructure, banking, insurance, sovereign, and sub-sovereign developments. It outlines Moody's credit ratings and assessments for different entities based on their financial strategies and regulatory changes.

Main Points

Corporates

• 3M's Plans to Boost Shareholder Returns Are Credit Negative
  3M plans to increase dividends by 35% and boost share repurchases through 2017, which will lead to a more leveraged capital structure. This is expected to raise its debt/EBITDA leverage to 1.4x–1.7x, potentially pushing its ratings closer to lower-rated peers. Despite this, the company's liquidity remains strong with $4.9 billion in cash and short-term investments.

• Hong Kong Electric's Proposed Spinoff Is Credit Positive for Hutchison Whampoa
  The spinoff of Hong Kong Electric (HEC) is expected to improve the financial position of PAH and CKI by reducing leverage and increasing liquidity. The transaction is likely to proceed with shareholder approval and a minimum market cap of HKD48 billion. The proceeds from the spinoff will support dividend payments, and the structure is expected to improve corporate governance.

• Bumi Plc-Bakrie Separation Is Credit Positive for Berau and Bumi Resources
  The separation is credit positive for Berau Coal Energy (BCE) and Bumi Resources. It will reduce BCE's leverage and improve corporate governance. Bumi Plc plans to use part of the proceeds to refinance BCE's debt, potentially lowering its adjusted debt/EBITDA ratio. Bumi Resources will benefit from a simpler shareholder structure and focus on balance sheet restructuring.

Infrastructure

• Mexico's Energy Reform Is Credit Positive for the Electricity Sector
  The reform ends CFE's monopoly and opens the market to private investment, which is expected to boost electricity generation capacity, efficiency, and reduce costs. It will create opportunities for private companies and improve CFE's leverage by reducing its funding needs. The reform also strengthens the regulator and promotes open access to transmission and distribution grids.

• Norway's Equity Injection into Grid Operator Statnett Is Credit Positive
  Norway's government injected NOK3.25 billion into Statnett, reducing its need for debt financing. The injection supports a major grid upgrade program and increases the company's equity capital. Statnett's financial ratios are expected to remain stable, and the move reflects Norway's commitment to infrastructure and economic growth.

Banks

• Basel Committee's Final Standard on Equity Investments in Funds Is Credit Positive for Banks
  The new standard incorporates fund leverage into capital requirements, improving transparency and risk assessment. It encourages due diligence and may lead to reduced holdings in certain funds with poor risk-adjusted returns. The standard will apply starting in 2017 and is expected to improve capital quality.

• Zions' Charge on Trust Preferred CDOs Is Credit Negative
  Zions will take a significant non-cash charge due to the Volcker Rule, which disallows holding trust preferred CDOs. This charge will reduce its capital position and earnings, but will eventually eliminate a concentration risk linked to commercial real estate lending.

• Norway Sets Countercyclical Capital Buffer for Banks, a Credit Positive
  Norway's Ministry of Finance requires banks to maintain a countercyclical capital buffer of 1% of risk-weighted assets, effective July 2015. This increases capital requirements and encourages capital retention. It may discourage dividend increases and will be implemented gradually for foreign branches.

Insurers

• AIG's Sale of ILFC to AerCap Is Negative for ILFC, Positive for AIG
  The sale is beneficial for AIG but may negatively impact ILFC's credit profile due to reduced ownership and potential loss of strategic control.

• Spain's Pension Reform Will Likely Increase Life Insurers' Sales
  The reform is expected to increase sales for life insurers as they adapt to new regulations and market conditions.

Sovereigns

• Mexico Approves Energy Reform, a Credit Positive
  The reform is a major step toward liberalizing the energy sector, which is expected to benefit the electricity industry and improve CFE's financial position.

Sub-sovereigns

• Mexican State of Sonora's Elimination of Vehicle Tax Is Credit Negative
  The removal of the vehicle tax may lead to reduced government revenue, potentially increasing fiscal stress and negatively impacting credit quality.

Securitization

• Amendments to Italian Law Are Credit Positive for Securitizations and Covered Bonds
  The amendments support the securitization market by improving legal and regulatory frameworks, which is beneficial for issuers and investors.

Key Information

• 3M is shifting to a more leveraged capital structure, which is credit negative.
• Hutchison Whampoa benefits from the spinoff of HEC, which enhances its financial position and corporate governance.
• Bumi Resources and Berau Coal Energy see credit benefits from the separation, which reduces leverage and improves transparency.
• Mexico's Energy Reform is a major credit positive for the electricity sector and CFE.
• Norway's Equity Injection into Statnett is credit positive due to improved capital structure and reduced debt reliance.
• Zions faces a credit negative impact from the OTTI charge, but will eventually reduce concentration risk.
• Norway's Countercyclical Capital Buffer is a credit positive measure that increases capital retention and discourages dividend payouts.
• Alpha Bank benefits from private shareholders increasing their stake, which reduces HFSF's influence and improves strategic flexibility.
• AIG's ILFC sale is credit negative for ILFC but positive for AIG.
• Spain's Pension Reform is expected to boost sales for life insurers.
• Sonora's Vehicle Tax Elimination is credit negative due to reduced revenue.
• Italian Law Amendments are credit positive for securitization and covered bonds.

Conclusion

The document highlights a mix of credit positive and negative developments across various sectors and regions. While some companies and entities face challenges due to increased leverage or regulatory changes, others benefit from improved governance, reduced risk exposure, and enhanced financial structures. The overall outlook is cautiously optimistic, with Moody's anticipating a credit positive 2014.