20141215-穆迪服务-Credit_Outlook_Credit_lmplications_of_Current_Events_50页_1mb

Credit Outlook Summary

Core Content

This document provides an analysis of credit implications related to current events across various sectors and regions, including corporates, banks, insurers, sovereigns, and securitization. It outlines the credit impact of specific corporate actions, regulatory changes, and market conditions.

Main Points by Sector

Corporates

• Abengoa S.A. (B2 stable):

  • Plans to reduce its stake in YieldCo and accelerate asset sales to it.
  • Proceeds from the transactions are expected to reduce gross corporate leverage from 7.6x to 7.3x on a pro forma basis.
  • The company aims for a net corporate leverage target of 4.5x in 2015.
  • The move is credit positive if it reduces debt, but the company may still consolidate YieldCo, affecting liquidity.

• Metsa Board (B1 positive):

  • Considering a €100 million rights issue to fund restructuring and expansion.
  • The funds will be used to finance a new folding boxboard machine and increase linerboard capacity.
  • The plan is credit positive as it improves operational efficiency and EBITDA.
  • The company may also divest its Gohrmühle paper mill, which generates negative EBITDA.

• Dalian Wanda Commercial Properties (DWCP, Baa2 stable):

  • Planning a HKD25.0-HKD29.8 billion IPO to improve liquidity and capital structure.
  • The IPO is expected to reduce the net debt/net capitalization ratio to 38%-42% by end of 2014.
  • EBITDA/interest ratio is projected to rise to 3.0x–3.5x in the next 12–18 months.
  • The IPO will also enhance corporate governance and investor base.

Banks

• Citigroup Inc. (Baa2 stable):

  • Fourth-quarter results were impacted by litigation provisions and restructuring charges.
  • These headwinds are credit negative, affecting earnings and profitability.
  • Despite challenges, the bank's strong capital and liquidity positions support its credit rating.
  • The efficiency ratio is expected to improve from 62% in the first nine months of 2014 to mid-50s in 2015.

• Russian Banks:

  • Postponement of tighter risk limits is credit negative, as it reduces the incentive for banks to improve borrower concentration ratios.
  • The new rules, which were supposed to take effect on 1 January 2015, will now likely take effect on 1 January 2016.
  • The delay is a step back from international regulatory standards and could increase systemic risk.

• Zuercher Kantonalbank (ZKB, Aaa stable):

  • Acquired Swisscanto Holding AG for CHF700–750 million, which is credit positive.
  • The acquisition strengthens ZKB's position in asset management and diversifies earnings.
  • The deal is expected to boost ZKB's AUM to CHF105 billion and improve profitability from 2016 onwards.

• New Zealand Banks:

  • Lower milk prices are credit negative, as they reduce income for farmers and threaten the asset quality of banks exposed to the dairy sector.
  • Dairy loans account for around 69% of agricultural loans for some banks.
  • The decline in milk prices could lead to higher nonperforming loans (NPLs), but farmers are more cautious now, which may prevent a repeat of the 2009 crisis.

Insurers

• US House Passes Collins Amendment:
  • Credit positive for systemically important insurers.
  • The amendment aims to strengthen the insurance sector by improving capital requirements and risk management.

Sovereigns

• Israel:

  • Collapse of the governing coalition is credit negative, as it may lead to political instability and economic uncertainty.

• Côte D'Ivoire:

  • Received further debt relief from France, which is credit positive.
  • The relief helps reduce the country's debt burden and improve its credit profile.

US Public Finance

• Nevada:

  • Budget shortfall erases gains made during the recovery, which is negative for its credit profile.

• Puerto Rico:

  • Legislation imperils bond issuance that would boost the Development Bank's liquidity, which is a concern for credit quality.

Securitization

• Mexican Proposal to Cap Mortgage Balance Adjustment:
  • This is credit negative for RMBS, as it could reduce the attractiveness of mortgage-backed securities and impact cash flows.

Key Information

• Rating Changes:

  • Several entities were downgraded, including Merck, Momentive Specialty Chemicals, and others.
  • Upgrades were given to Whiting Petroleum, Power Sector Assets & Liabilities Management, and several others.

• Research Highlights:

  • Moody's published reports on various sectors including global oilfield services, US consumer durables, and EMEA speculative-grade retailers.
  • The reports cover a wide range of topics, including leverage ratios, interest coverage, and regulatory changes.

• IMF Recommendations for Denmark:

  • Proposed changes to mortgage lending include reducing short-term funding, discouraging variable rates, and limiting interest-only loans.
  • These recommendations are credit positive as they aim to reduce vulnerabilities in the mortgage market.

• Credit Implications:

  • Credit positive actions include equity issuances, restructuring, and regulatory improvements.
  • Credit negative actions include litigation costs, regulatory delays, and declining asset values.

Summary

The document outlines the credit implications of various corporate and regulatory developments. It highlights credit positive actions such as Abengoa's capital structure optimization, Metsa Board's restructuring and expansion plans, and Dalian Wanda Commercial Properties' IPO, which improve liquidity and capital structure. On the other hand, credit negative actions include Citigroup's litigation and restructuring costs, the postponement of tighter regulations in Russia, and the impact of lower milk prices on New Zealand banks. The IMF's recommendations for Denmark are seen as credit positive, aiming to enhance mortgage lending stability. Overall, the document emphasizes the importance of capital structure, liquidity, and regulatory compliance in assessing credit risk.