20160912-穆迪服务-Credit_Outlook_44页_1mb

Credit Outlook Summary

Core Content Overview

This document provides an analysis of credit implications arising from various corporate, infrastructure, banking, insurance, sovereign, and public finance events as of September 12, 2016. It highlights both credit positive and credit negative impacts of these developments on the credit profiles of the respective entities.

Main Corporate Events

Credit Negative

• Hewlett-Packard (HPE): Spinoff of software business is credit negative due to loss of diversification and lack of significant debt reduction, despite a strong cash position.
• Danaher Corporation: Acquisition of Cepheid for $4 billion is credit negative as it involves a high debt multiple and a significant increase in debt/EBITDA.
• General Electric (GE): Acquisition of 3D printing companies is credit negative due to high purchase price and the fact that the new business will not generate meaningful returns for several years.
• Fresenius SE: Acquisition of Quirónsalud is credit negative as it adds substantial net debt and raises leverage ratios, although the acquired business has strong fundamentals.
• Ardagh Group: Return of capital to shareholders is credit negative due to potential liquidity constraints.

Credit Positive

• EOG Resources: Acquisition of Yates Petroleum is credit positive as it enhances exploration and production positions without significantly affecting leverage.
• Liberty Media: Acquisition of Formula One is credit positive as it accelerates digital content distribution and expands the franchise's market presence.
• Schaeffler AG: Refinancing at the holding company level is credit positive due to potential cost savings and improved financial flexibility.
• Knorr-Bremse: Takeover of Haldex is credit positive as it strengthens the company's position in the automotive industry.
• Samsung Electronics: Galaxy Note 7 recall is credit negative due to potential financial and reputational impacts.
• China's Life Insurance Regulations: Tighter regulations are credit positive as they promote stability and sustainability in the sector.
• Altice N.V.: Exchange offer for SFR minority shareholders is credit positive as it improves capital structure and reduces leverage.

Infrastructure and Public Finance

Credit Positive

• Enbridge's Merger with Spectra Energy: Credit positive as it strengthens the company's infrastructure position and operational scale.
• Lafayette Combined Utilities System: Credit positive due to rate hike that supports capital needs for new generation.

Credit Negative

• New Jersey's Tax Reciprocity with Pennsylvania: Ends credit-negative tax reciprocity, improving fiscal conditions.
• Norway's Mortgage Underwriting Standards: Tighter standards are credit positive for banks and covered bonds, but may affect some sectors.

Banking Sector

Credit Negative

• Wells Fargo: Deficiencies in consumer banking sales practices are credit negative.
• Russian Banks: Deposit insurance fee increases are credit negative as they strain liquidity.
• Mexican Construction Companies: Budget cuts are credit negative, impacting employment and consumer purchasing power.

Credit Positive

• Italian Mutual Banks: Implementation of ECB opinion is credit positive, improving regulatory compliance and financial stability.
• Greek Banks: Declines in nonperforming loans and operating expenses are credit positive.
• Jyske Bank: Additional Tier 1 capital issue mitigates share buybacks and improves capital adequacy.

Insurance Sector

Credit Negative

• Property and Casualty Insurers: Hurricane Hermine is expected to depress third-quarter margins.

Credit Positive

• Colombian Auto Insurers: Ability to audit medical claims is credit positive, improving transparency and efficiency.
• China's Life Insurance Regulations: Tighter regulations are credit positive as they enhance sector stability and sustainability.

Sovereigns

Credit Positive

• Albania's EU Membership: Progress toward EU membership is credit positive, signaling economic and political stability.
• Hong Kong Election Results: Likely to slow effective policymaking, which is credit negative.

Key Takeaways

• Credit Negative Events often involve high debt multiples, reduced liquidity, or operational challenges, such as spinoffs, acquisitions, and budget cuts.
• Credit Positive Events typically result from strategic moves that enhance operational efficiency, expand market presence, or improve financial leverage.
• The document emphasizes the importance of financial leverage, free cash flow, and operational stability in assessing credit risk.
• Several companies are expected to stabilize their business portfolios and deleverage over the next 12–18 months, which supports their credit quality.

Summary of Ratings and Outlooks

• HPE: Baa2 stable
• Danaher: A2 stable
• EOG: Baa1 stable
• GE: A1 stable
• PEMEX: Baa3 negative
• Alpha Topco Limited: B3 stable
• FSE: Baa3 stable
• Navistar: B3 stable
• SFR Group: Unrated

Conclusion

The document outlines a range of credit implications based on corporate actions, economic conditions, and regulatory changes. It underscores the importance of strategic decisions, financial discipline, and market dynamics in shaping credit outcomes. While some acquisitions and policy changes are seen as credit negative, others, such as the expansion of market presence and the reduction of leverage, are viewed as credit positive. The overall assessment highlights the need for companies to balance growth with financial stability.