20160623-穆迪服务-Credit_Outlook__Credit_Implications_Of_Current_Events_20页_1mb

Credit Outlook Summary

Core Content Overview

This document provides a summary of credit implications from current events across different sectors, including Corporates, Banks, Money Market Funds, and Sovereigns. It outlines the potential impact of regulatory changes, business mergers, and market conditions on credit profiles of various entities.

Main Points and Key Information

Corporates

• US Multiemployer Pension Plan Sponsors:

  • Large premium increases (363%–552%) are credit negative as they would reduce cash flows by $29–$42 billion over the next 20 years.
  • The Pension Benefits Guarantee Corporation (PBGC) reported a significant increase in liabilities, with $54 billion in net liabilities and only $2 billion in assets as of 30 September 2015.
  • The increase would make participation in MEPPs uneconomical, potentially leading to stronger companies withdrawing, which could further weaken the system.
  • Premium increases are necessary but depend on Congressional authorization, which is uncertain.

• Pesquera Exalmar S.A.A.:

  • Benefited from a 1.8 million metric ton increase in anchovy fishing allowance, boosting its annual revenues by about $82 million.
  • This will help reduce its debt/EBITDA ratio from 6.5x to below 6.0x.
  • The company's operating margin is expected to improve to over 15% for full-year 2016.
  • A potential La Niña event poses a risk for 2016–17 due to cooler ocean temperatures.

• Siemens and Gamesa Merger:

  • The credit-positive merger will create the world's largest wind energy company.
  • Synergies of €230 million are expected, mainly from cost savings in R&D, supply chain, logistics, and purchasing.
  • The combined market share in installed capacity will be 14%, surpassing competitors like Vestas and Goldwind.
  • The merger is expected to close in Q1 2017, and the transaction will be consolidated into Siemens' financial statements.

• China Vanke's Acquisition of Qianhai International:

  • The credit-positive acquisition will strengthen China Vanke's market position in Shenzhen.
  • The deal involves RMB45.6 billion, funded by a new equity issuance.
  • Post-acquisition, China Vanke's adjusted net debt/net capitalization ratio will stay below 30%, and revenue/adjusted debt will remain between 175% and 200%.
  • The acquisition is expected to support the company's Baa1 rating.

Banks

• RBC's Acquisition of City National:

  • The credit-positive integration approach is less interventionist, reducing the risk to City National's credit profile.
  • RBC plans to achieve double-digit organic growth at City National through 2020.
  • The bank can fund growth with sweep deposits from RBC's wealth management clients, up to $5 billion by the end of 2016.
  • However, the emphasis on growth could lead to increased risk exposure and reduced profitability if not managed carefully.

• Nordea's Regulatory Changes:

  • Credit positive due to increased capital buffer requirements in Sweden.
  • Nordea's CET1 capital ratio is expected to increase by 40 basis points.
  • The bank's return on equity is over 11%, supporting its ability to meet higher capital requirements.
  • Dividend policy changes allow for greater profit retention and capital buildup.

• Dubai Islamic Bank (DIB) Rights Issue:

  • The credit-positive rights issue of AED3.2 billion increases share capital and liquidity.
  • The tangible common equity to risk-weighted assets ratio is expected to rise from 9.8% to 12.3%.
  • The Tier 1 capital ratio will increase to 18.1%, well above the regulatory minimum.
  • The capital increase will support solvency and improve liquidity, reversing a decline since 2013.

Money Market Funds

• EU's Money Market Proposal:
  • The credit-positive proposal is a compromise between the European Commission and Parliament.
  • It allows certain CNAV MMFs to continue operating in the EU, retaining investor interest.
  • The rules do not include a capital buffer requirement, which is favorable for fund managers.
  • Prime MMFs can now opt for a low-volatility net asset value structure, which is permanent and not subject to a sunset clause.
  • MMF boards are required to consult when net redemptions reach 10% of the fund's assets or weekly assets fall below 30% of the total.

Sovereigns

• EU Extends Sanctions on Russia:
  • This credit negative action could impact Russia's financial stability and access to international markets.

US Public Finance

• Philadelphia City Council's Sugar Tax:
  • The credit positive sugar tax is expected to improve the city's fiscal position.

Recent Articles

• Articles in Last Monday's Credit Outlook:
  • Referenced in the document but not detailed here.

Additional Notes

• The document is issued by Moody's Analytics, and it does not announce a credit rating action.
• For any credit ratings referenced, the most updated information can be found on the issuer/entity page on www.moodys.com.
• The publication also mentions a Weekly Market Outlook as a sister publication.