20150824-穆迪服务-CreditOutlook_41页_2mb

CreditOutlook Summary

Core Content

This document provides an analysis of the credit implications of recent corporate and sovereign events, focusing on the financial impact of acquisitions, regulatory changes, and market conditions on credit ratings and risk profiles.

Main Points

Corporates

• Valeant's Acquisition of Sprout: A credit negative event as it delays deleveraging. The acquisition of Sprout Pharmaceuticals for $1 billion plus future profits is expected to increase Valeant's pro forma debt/EBITDA to 6.5x before synergies and 6.0x with synergies. Despite this, Valeant's strong EBITDA growth and the potential success of Addyi, a new drug for female sexual dysfunction, could lead to a rating upgrade if the company achieves its deleveraging goals by 2016.

• Pentair's Acquisition of ERICO: A credit negative event due to the increase in leverage. The $1.8 billion acquisition is expected to raise pro forma debt/EBITDA to over 4x from 3x, and free cash flow/debt to 4%-6% from nearly 8%. The company's weak operating performance and the risk of a downgrade are highlighted, though we expect a limited downgrade if Pentair uses free cash flow to reduce debt.

• NN's Acquisition of Precision Engineered Products: A credit negative event as it increases leverage. The $615 million acquisition is expected to raise pro forma leverage to 5.2x from 4.0x. The transaction brings new markets but also integration risks and a shift in revenue composition.

• Surgery Partners' IPO Plan: A credit positive event as it aims to reduce debt. The proposed IPO of $431 million is expected to lower pro forma debt/EBITDA to 6.0x-6.5x from 8.7x. The IPO could improve the company's rating outlook from negative to stable if debt reduction is successful.

• DISH Network's Denied Discounts: A credit negative event due to increased financial burden. The denial of $3.3 billion in discounts will lead to significant cash outlays, increasing debt leverage. This could pressure DISH DBS's Ba3 rating, depending on how the company funds the additional cost.

• Kirin's Acquisition of Myanmar Brewery: A credit positive event despite a slight increase in leverage. The $560 million acquisition of a 55% stake in Myanmar Brewery is expected to raise debt/EBITDA to 3.4x, but the company's focus on debt reduction and the high profitability of Myanmar Brewery will offset this.

Infrastructure

• Energisa's Acquisition of Celg: A credit negative event as it would increase leverage. The acquisition is expected to raise net debt/EBITDA to 3.4x from 2.9x, with a significant debt increase and limited EBITDA growth. The deal could lead to a reevaluation of Energisa's credit rating.

Banks

• National Penn's Sale to BB&T: A credit positive event as it resolves a credit-negative predicament. The sale allows National Penn to avoid the regulatory and cost pressures associated with crossing the $10 billion asset threshold.

• Brazil's Government Banks: A credit negative event due to below-market lending to the auto industry. Caixa Economica Federal and Banco do Brasil are providing $5 billion and $3.1 billion in loans, respectively, at below-market rates, which could weaken their credit profiles.

• Kazakhstan's Currency Depreciation: A credit negative event for banks due to increased financial risk. The depreciation of the Kazakhstani tenge affects the banks' liquidity and credit quality.

Insurers

• Higher Accident Frequency: A credit negative event for US auto insurers due to increased claims and potential profitability pressures.

• Mexico City's New Transit Regulation: A credit positive event for insurers as it may reduce accident frequency and claims.

Sovereigns

• Ecuador's Reduced Spending: A credit positive event as it indicates fiscal discipline in a difficult economic environment.

• Greek Prime Minister Resigns: A credit positive event as it may lead to a stronger government and more effective economic reforms.

• Kazakhstan's Flexible Currency: A credit positive event as it helps the economy adjust to lower oil prices.

• Israel's Second-Quarter Slump: A credit negative event due to economic headwinds and potential instability in the government majority.

• Sri Lanka's Election Outcome: A credit positive event as it improves the government's ability to implement reforms.

Sub-sovereigns

• Financial Discipline Law for Mexican Sub-sovereigns: A credit positive event as it promotes fiscal responsibility and could lead to improved credit metrics.

Key Information

• Rating Changes: Recent rating actions include downgrades for ConocoPhillips, Samson Investment Company, SandRidge Energy, Voya Holdings, two US RMBS, and three US CMBS. Upgrades were given to Consort Healthcare (Mid Yorkshire) Funding, Bank of Shanghai, Kuwait Insurance Company, 14 US RMBS, and two US CMBS.

• Research Highlights: Moody's published reports on various sectors including US payment systems, global midstream energy, Chinese property developers, and others, indicating a broad range of credit-related analyses.

• Credit Outlook: The document emphasizes the importance of deleveraging, EBITDA growth, and the impact of regulatory decisions on credit profiles.

Summary

The summary highlights the credit implications of various corporate and sovereign events, including acquisitions, regulatory changes, and market conditions. It identifies credit positive and negative factors based on financial performance, leverage, and strategic decisions. The document also includes recent rating actions and research highlights, providing a comprehensive overview of the credit landscape.