20161117-穆迪服务-CreditOutlook__Credit_Implications_of_Current_Event_20页_1mb

Credit Outlook Summary

Core Content Overview

This document provides an analysis of credit implications stemming from various current events, focusing on corporate, banking, insurance, public finance, and covered bonds sectors. The key themes include the impact of regulatory changes, market conditions, and economic trends on credit profiles and financial stability.

Main Points by Sector

Corporates

• Pesquera Exalmar (B3 negative):

  • Benefited from Peru's increased anchovy fishing allowance, which is expected to boost revenues by $173 million in 2016.
  • Operating margin is projected to rise to 11% in 2016 from 9.2% in 2015.
  • Debt/EBITDA ratio is expected to decrease to around 5.5x from 6.5x in December 2015.
  • The 2015-16 El Niño event reduced anchovy populations, but the 2016-17 climate outlook suggests a more stable environment.

• SABMiller (A3 review for downgrade):

  • Anheuser-Busch InBev (ABI, A3 stable) proposed a debt swap offer, which is credit positive for SABMiller debtholders.
  • The new debt will be rated A3 and will have better protections than SABMiller's current bonds.
  • However, SABMiller's future EBITDA may fall by around 30% due to the sale of core assets.
  • Remaining debt is at risk of being downgraded due to uncertainty in its financial profile.

• Siemens (A1 stable):

  • Acquired Mentor Graphics (MG, unrated) for $4.5 billion, which will increase its leverage beyond quantitative guidance.
  • The acquisition is expected to create a more integrated PLM platform, offering competitive advantages.
  • Debt/EBITDA is projected to rise to 2.6x from 2.3x, but integration costs and synergies are expected to help reduce leverage in 2017.
  • Siemens is not expected to sell off Healthineers in the short term.

Banks

• Lindorff AB (B2 review for upgrade):

  • Merging with Intrum Justitia (unrated) is credit positive, as the combined entity will have lower leverage and significant synergies.
  • Expected to become the largest debt-management company in Europe with a presence in 23 countries.
  • Cost synergies of SEK800 million per year, with full implementation expected in 3-4 years.

• Saudi Arabia's Banks:

  • The decline in the three-month SAIBOR (from 2.39% to 2.19%) is credit positive, indicating easing liquidity pressures.
  • Funding costs for local banks are expected to decrease, and net interest margins remain stable.
  • The government's bond issuance and settlement of delayed payments are expected to improve liquidity and reduce funding pressures.
  • Credit growth may moderate in 2017, and SAIBOR pressures are expected to ease.

Insurers

• Mexico's Surety Insurers:
  • Credit negative due to a prolonged contraction in infrastructure construction expenditures.
  • The construction sector accounts for 80% of surety premiums, and a 5% contraction is expected in 2016.
  • Government spending cuts and budget reductions will further constrain the construction sector and surety business.
  • Larger surety companies like ACE Fianzas Monterrey and Grupo Aserta are better positioned to weather the downturn, while smaller insurers are more vulnerable.

US Public Finance

• Cook County, Illinois (A2 stable):
  • Approved a sweetened-beverage tax of $0.01 per ounce, expected to generate $74.6 million in 2017 and $220 million in 2018.
  • The tax is credit positive, helping to close the budget gap and avoid general fund reserve depletion.
  • General fund revenues are projected to grow by 40% by 2019 compared to 2015 levels.
  • The tax is part of a broader trend in US municipalities, following Berkeley, California and Philadelphia, Pennsylvania.

Covered Bonds

• EBA Proposal for European Covered Bond Framework:
  • The EBA proposed a three-step approach to harmonize covered bond frameworks across the EEA.
  • Includes credit-positive requirements such as bail-in exemptions and liquidity coverage ratio special treatment.
  • The proposals aim to increase market liquidity and reduce refinancing risk for covered bondholders.
  • Would lead to a stronger framework with increased protections for bondholders.
  • Jurisdictions will need to adjust legal frameworks to comply with the recommendations.

Key Information

• Positive Credit Impacts:

  • Increased fishing quotas in Peru benefit Exalmar and other producers.
  • Debt swap offers by ABI improve the credit quality for SABMiller debtholders.
  • Lower SAIBOR in Saudi Arabia reduces funding costs for banks.
  • The sweetened-beverage tax in Cook County Illinois supports its fiscal outlook.

• Negative Credit Impacts:

  • Mexico's construction contraction is a credit negative for surety insurers.
  • Siemens' acquisition of MG increases leverage and poses short-term credit risks.
  • The EBA's proposal requires legal changes in many jurisdictions.

• Uncertainties:

  • SABMiller's future EBITDA is uncertain due to asset disposals and reliance on emerging markets.
  • The impact of potential changes in the US healthcare system on Cook County's health system subsidies is unclear.
  • The success of the Lindorff-Intrum merger depends on execution and integration risks.

Conclusion

The document outlines a range of credit implications across different sectors and regions. While some developments, such as increased fishing quotas and regulatory changes, are credit positive, others like construction downturns and leveraged acquisitions pose risks. The analysis highlights the importance of market conditions, regulatory environments, and company-specific factors in shaping credit profiles.