20170206-穆迪服务-Credit_Implications_of_Current_Events_48页_1mb

Credit Outlook Summary - 6 February 2017

Core Content

The document provides a detailed analysis of credit implications from various current events across different sectors, including corporates, infrastructure, banks, exchanges, sovereigns, sub-sovereigns, US public finance, and securitization. It highlights both credit-positive and credit-negative developments, offering insights into how these events affect the financial health and credit ratings of the involved entities.

Main Points

Corporates

• Entercom's Plan to Merge with CBS Radio: The merger is credit positive for Entercom, with the combined entity projected to have a lower pro-forma leverage (4.1x) and higher revenue ($1.67 billion). However, challenges remain due to CBS Radio's declining performance and tough comparisons with 2016.
• ONEOK Buyout of Subsidiary: The transaction is credit positive for ONEOK (OKE), improving its access to predictable cash flow and reducing cost of capital. It is credit negative for OKS, as its leverage will increase due to debt consolidation.
• Tempur Sealy's Termination of Mattress Firm Supply Pact: This is credit negative for Tempur Sealy, as it will reduce earnings and increase debt/EBITDA. The company is expected to reallocate resources and seek new retail arrangements to offset the loss.
• Teva Pharmaceutical's Copaxone Patent Ruling: The ruling invalidating four out of five patents on Copaxone is credit negative, increasing the risk of generic competition and affecting Teva's ability to meet its debt repayment goals.
• Keysight's Acquisition of IXIA: The acquisition is credit negative for Keysight due to increased leverage, though it is expected to improve technical capabilities and diversify end-market exposure.
• Bouygues' Agreement with Cellnex: This is credit positive for Bouygues, as it allows reinvestment into its telecom network and strengthens its credit profile.
• IHS Netherlands Holdco's Share Transaction with MTN: This is credit positive for IHS Holding, enhancing its capital structure and offering MTN better monetisation prospects and diversification.

Banks

• Brazil's Proposed Covered Bond Regulation: This is credit positive for Brazilian banks, potentially improving their financial stability.
• Credit Mutuel Arkea's Tier 2 Securities Issuance: This is credit positive, as it increases own funds and strengthens the bank's financial position.
• Russian Banks Benefit from Retail Asset Managers' Larger Business Volumes: This is credit positive, indicating improved performance and financial stability.
• Ukraine's Capital Injections: These are credit positive for two state-owned banks, as they will help improve capital adequacy.
• Lebanese Banks' Use of Exceptional Gains: This is credit positive, as it strengthens balance sheets without increasing leverage.
• Egyptian Government-Owned Banks' SME Loan Growth: This is credit negative, as it increases asset risks.
• Sustained Cedi Depreciation: This is credit negative for Ghana's banks, affecting their financial performance.

Exchanges

• Nasdaq's eSpeed Write-down: This is credit positive for marketplace lending ABS, indicating a positive impact on the securitization sector.

Sovereigns

• Mexico's Fiscal Accounts Deteriorate: This is credit negative, due to economic headwinds.
• Ghana's $1.6 Billion Fiscal Arrears: This implies a higher debt burden and is credit negative.

Sub-sovereigns

• UK Universities' EU Undergraduate Applications Decline: This is credit negative, as it affects funding and financial stability.
• German Laender Reaching Balanced Budgets: This is credit positive, showing improved fiscal management.

US Public Finance

• Kansas' Revenue Forecasts Improve: This is credit positive, indicating better financial outlook.
• New Mexico Cuts School Funding: This is credit negative, as it reduces public sector spending and could affect the state's credit profile.

Securitization

• Court Ruling in Lending Club Case: This is credit positive for marketplace lending ABS, suggesting improved legal and financial clarity.

Key Information

• Credit Positive Events:

  • Entercom's merger with CBS Radio
  • Multiemployer Pension Plan Benefit Cut
  • ONEOK's acquisition of OKS
  • Bouygues' agreement with Cellnex
  • IHS Netherlands Holdco's share transaction with MTN
  • MTN increasing its stake in IHS Holding
  • Most German Laender reaching balanced budgets
  • Kansas' improving revenue forecasts
  • Brazil's proposed covered bond regulation
  • Credit Mutuel Arkea's Tier 2 securities issuance
  • Russian banks' increased business volumes
  • Ukraine's capital injections

• Credit Negative Events:

  • Tempur Sealy's termination of Mattress Firm supply pact
  • Teva Pharmaceutical's Copaxone patent ruling
  • Keysight's acquisition of IXIA
  • Steinhoff and Mattress Firm benefit from Tempur Sealy contract termination (but this is a result of the credit negative event)
  • Sustained Cedi depreciation
  • Egyptian Government-Owned Banks' SME loan growth
  • New Mexico cutting school funding
  • Ghana's fiscal arrears
  • UK universities' decline in EU undergraduate applications

Summary of Ratings Actions

• Entercom is on review for upgrade
• OKS is on review for downgrade
• Teva Pharmaceutical is on review for downgrade
• Keysight is on review for downgrade
• IHS Holding is on review for upgrade
• MTN is on review for upgrade

Conclusion

The document outlines a range of credit implications from recent corporate and financial developments, emphasizing that while some actions are credit positive (e.g., mergers, improved fiscal management), others are credit negative (e.g., patent rulings, supply pact terminations, currency depreciation). These insights are crucial for assessing the financial stability and creditworthiness of the entities involved.