20141211-穆迪服务-Corporate_Debt_Slows,_but_the_High_Yield_Bond_Spread_Widens_24页_459kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook highlights the recent trends in corporate debt growth and high yield bond spreads, alongside key economic indicators and market data across the US, Europe, and Asia-Pacific. The report also provides insights into credit ratings activity, CDS spreads, and upcoming economic data releases.

Main Views

• Corporate Debt Growth: Corporate debt growth has slowed significantly over the past few years, peaking at 7.5% in Q3-2012 and declining to 5.5% in Q3-2014. However, the annual increase in corporate debt (6.1%) still outpaced the growth in pretax profits (1.1%).

• High Yield Bond Spread: The high yield bond spread has widened to 525 bp, the widest since December 2012. This is supported by a rise in the average high yield EDF (Expected Default Frequency) metric, which climbed from 2.05% to 3.05% since year-end 2013. Despite the widening, the spread is not considered fundamentally excessive compared to historical levels.

• Credit Quality Outlook: If corporate profits accelerate while debt continues to expand, credit quality may improve. However, the risk of default increases with further leverage, which could negatively impact share prices.

• Sovereign CDS Spreads: Sovereign CDS spreads have widened significantly, especially in Latin America. The cost of insuring $10,000 of sovereign debt has risen for several countries, including Argentina, Brazil, and Russia, though China's CDS spread has remained stable.

• Inflation and Interest Rates: The 10-year Treasury yield has dropped to 2.20%, while the spec grade bond yield has increased to 6.88%. The widening spread between Treasury and speculative grade bonds reflects market concerns about credit risk. The Fed is expected to maintain its rate target for a considerable time, but a stronger dollar and weak wage growth may temper inflationary pressures.

• Economic Indicators: The report forecasts a slowdown in inflation across the eurozone and the UK, with the eurozone's CPI likely at 0.3% and the UK's at 1.1%. The US CPI is also expected to decline slightly, driven by falling gasoline prices.

Key Information

Corporate Debt and Bond Markets

• Investment Grade Debt Issuance: US investment grade bond issuance in 2013 declined by 1.3%, but is expected to rise by 5% in 2014.
• High Yield Debt Issuance: US high yield bond issuance reached a record $431 billion in 2013, but is projected to fall by 1% in 2014 to $426 billion.
• Default Rates: The US HY default rate was 1.9% in October, with an average of 2.2% in 1H/2015.

Credit Spreads and EDF

• Credit Spreads: Investment grade spreads are expected to remain near 132 bp at year-end 2014, while high yield spreads may dip to 500 bp.
• EDF Metric: The high yield EDF metric has risen from 2.05% to 3.05% since year-end 2013, indicating higher default risk. This is the largest yearly jump since 2012.

Sovereign CDS Spreads

• Widening Spreads: CDS spreads have widened for several countries, including Spain, Italy, and Russia. Spain's CDS spread reached 107 bp in November, while Italy's reached 148 bp.
• Latin America: Argentina's CDS spread is the highest, at $2,713, while Brazil's spread is at $191. China's spread remained largely unchanged.

Regional Outlook

United States

• Producer Price Index (PPI): Expected to show little cost pressure in November, with a forecast of -0.1% overall and 0.1% core.
• Consumer Confidence: Likely to rise to a new seven-year high, supporting increased consumer spending.
• Industrial Production: Expected to rebound in November after a slight decline in October.
• Housing Market: Homebuilder confidence is forecast to remain stable at 58, with lower borrowing costs supporting the market.
• FOMC Policy Decision: The Fed is expected to keep the target rate at 0-0.25%, but the meeting may provide clarity on future rate hikes.

Europe

• UK Inflation: Likely to fall further below the 2% target in November, driven by lower oil prices and a stronger pound.
• Eurozone Inflation: CPI is expected to ease to a five-year low of 0.3% in November.
• Bank of England Minutes: Expected to show uncertainty about labor market spare capacity.
• German ZEW Indicator: Improved to 12 in December, but remains below the expansion threshold.
• French Business Survey: Expected to remain unchanged at 99, with weak manufacturing PMI.

Asia-Pacific

• China and Korea: CDS spreads have remained relatively stable, with China at 83 bp and Korea at 52 bp.
• Japan: Sovereign bond yields are very low at 0.40%, despite rising CDS spreads.

Market Data Highlights

• Credit Spreads: Investment grade spreads are near 132 bp, while high yield spreads are at 525 bp.
• CDS Movers: Significant increases in CDS spreads for Spain, Italy, and Russia.
• Bond Yields: The spec grade bond yield has increased to 6.88%, while the 10-year Treasury yield has fallen to 2.20%.

Upcoming Reports

• US Reports: November PPI, University of Michigan Consumer Confidence, FOMC Policy Decision.
• Europe Reports: UK CPI, UK PPI, Eurozone CPI, Spain and Italy trade balances, Germany ZEW and Ifo indices.
• Asia-Pacific Reports: Russia's industrial production and retail sales, Italy's balance of payments.

Outlook

• The report suggests that while corporate debt growth has slowed, credit quality remains under pressure due to rising default risk.
• The Fed is likely to maintain its current rate policy for some time, but future tightening is expected.
• The eurozone and UK face challenges with weak economic growth and inflation, while Russia's economy is more resilient despite oil price declines.