20150713-穆迪服务-Credit_Outlook_43页_2mb

Credit Outlook Summary

Core Content

The document provides an analysis of credit implications of various current events across different sectors, including Corporates, Infrastructure, Banks, Insurers, Sovereigns, and Sub-sovereigns. It includes rating changes, research highlights, and specific news analysis for each sector.

Main Points

Corporates

• Albertson's Planned IPO Is Credit Positive:

  • Albertson's Companies Inc. is expected to launch an IPO this year, which is credit positive as the company plans to use proceeds to repay debt.
  • The IPO is anticipated to significantly improve post-IPO credit metrics, reducing debt/EBITDA to below 6x for both Albertson's Holdings and New Albertson's.
  • Management's confidence in growth prospects is reflected in the planned IPO, which is expected to enhance profitability and reduce debt.

• Cardtronics' Pending Loss of 7-Eleven Contract Is Credit Negative:

  • Cardtronics is losing its largest customer, 7-Eleven, which accounts for 17.5% of its revenue.
  • This loss could increase debt/EBITDA by 0.5x, negatively affecting credit quality.
  • The impact may be mitigated by potential scaled-down arrangements and reduced capital expenditures.

• UK Budget's Minimum Wage Is Credit Negative, Other Aspects Are Credit Positive for Corporates:

  • The increase in the minimum wage to £9.00 by 2020 is credit negative for labor-intensive sectors like retail, restaurants, and hotels.
  • However, the reduction in corporate tax rate (to 19% in 2017 and 18% in 2020) is credit positive.
  • Healthcare and oil and gas sectors benefit from the budget as well.

• Coty Merger with P&G's Beauty Business Will Diversify JAB's Portfolio, a Credit Positive:

  • Coty's merger with P&G's beauty business is credit positive for JAB Holding Company.
  • The merger will improve Coty's earnings stability and JAB's portfolio diversification.
  • JAB's stake in Coty is expected to decrease, but it will retain control over strategy and dividend policy.

• Singapore Telecom Incumbents Face Increased Competition:

  • A new telecom operator is expected to enter the market, which is credit negative for existing incumbents.
  • The regulator is allocating 60 MHz of spectrum at a lower price to encourage new entrants.
  • Incumbents have more spectrum and better network coverage, making it difficult for new entrants to compete effectively.

Infrastructure

• State Regulators Order Mississippi Power to Refund Kemper Plant Rate Increases, a Credit Negative:

  • Mississippi Power is ordered to refund $335–350 million in rates collected for the Kemper plant, negatively impacting liquidity and financial metrics.
  • The plant's costs have risen significantly to $4.9 billion, with additional costs from peripheral items reaching $6.2 billion.
  • The CFO pre-W/C to debt ratio is expected to fall to 15% or less this year due to the refunds and rate reductions.

• UK's Removal of Exemption from Energy Levy Is Credit Negative for Renewable Generators:

  • The removal of the exemption from the Climate Change Levy (CCL) for renewable generators is credit negative.
  • This affects revenue and profitability, especially for those relying on the exemption.
  • Electricity interconnectors with mainland Europe, which benefited from the exemption, are also negatively impacted.

Banks

• BayernLB Would Benefit from Austria and Bavaria's Settlement over Heta:

  • The settlement is expected to provide financial relief to BayernLB.

• Finland's Higher Capital Requirements for SIFI's Are Credit Positive:

  • Increased capital requirements are credit positive as they may lead to improved financial stability.

• South Africa Proposal to Lower Unsecured Lending Rate Would Be Credit Negative for Lenders:

  • Lowering unsecured lending rates is credit negative for lenders as it reduces their margins.

Insurers

• China Raises Insurers' Investment Limit on Blue-Chip Stocks, a Credit Negative:
  • The increased investment limit on blue-chip stocks is credit negative for insurers, potentially affecting their investment strategies and returns.

Sovereigns

• China Sovereign Credit Quality Will Remain Intact Amid Stock Market Declines:
  • Despite stock market declines, China's sovereign credit quality is expected to remain stable.

Sub-sovereigns

• Canadian Federal Funding for Ontario Institute of Technology's New Research Building Is Credit Positive:

  • The funding supports the institution's growth and is credit positive.

• UK Budget Will Squeeze Housing Association Revenues and Increase Political Uncertainty:

  • The budget is expected to reduce revenues for housing associations and create political uncertainty.

Key Information

• Rating Changes:

  • SquareTwo Financial and Metropolitan Water Reclamation District of Greater Chicago were downgraded.
  • JoAnn Stores Holdings, Sherwin-Williams, Southwest Airlines, Univision Communications, and AmeriCredit subprime auto loan ABS were upgraded.

• Research Highlights:

  • The report includes analysis on global pharmaceuticals, Asian corporate liquidity, EMEA corporate liquidity, and other sectors.

• Credit Implications:

  • The document outlines the credit implications of various policy changes, business decisions, and market developments.
  • It emphasizes the importance of debt leverage, EBITDA margins, and operational synergies in assessing credit quality.

Conclusion

The summary highlights the mixed credit implications of recent events across different sectors. While some developments are credit positive, such as the planned IPO of Albertson's, the merger of Coty with P&G, and the reduction in corporate taxes in the UK, others like the loss of 7-Eleven contract by Cardtronics and the removal of the energy levy exemption in the UK are credit negative. The overall assessment considers both the financial and operational impacts on companies, with a focus on debt reduction, profitability, and market dynamics.