20170116-穆迪服务-Credit_Outlook_36页_1mb

Credit Outlook Summary

Core Content

This document provides an analysis of credit implications of current events across various sectors including Corporates, Infrastructure, Banks, Insurers, Asset Managers, Sovereigns, Sub-sovereigns, US Public Finance, Securitization, and Sustainable Investing. It outlines the credit impacts of recent business activities, regulatory changes, and market conditions, offering insights into the financial health and creditworthiness of different entities.

Main Points and Key Information

Corporates

• WPX Energy: The company's acquisition of 18,100 net acres in the Delaware Basin is credit positive. It increases production and reduces reliance on dry natural gas without increasing leverage or liquidity risk. The acquisition is part of a larger $6 billion portfolio realignment strategy.
• Braskem: The sale of subsidiary quantiQ for BRL550 million is credit positive, improving liquidity. The transaction does not significantly affect cash flows or commercial operations.
• Fiat Chrysler: Allegations of violating the US Clean Air Act are credit negative, possibly leading to fines and legal costs. However, the impact is expected to be less severe than that of Volkswagen.
• Tesco: Continued positive LFL sales growth is credit positive, indicating operational momentum. Despite this, profit margins remain low and leverage is still high.
• Marks & Spencer: Strong Christmas sales growth is credit positive, showing recovery in the clothing and home business and improvement in the food segment. Free cash flow is expected to remain positive in 2017.

Infrastructure

• Atlantica Yield: The agreements with lenders for its solar projects are credit positive, ensuring continued cash flow distributions. These agreements help mitigate risks from Abengoa's financial situation.
• Malaysia Airports Holdings: Robust passenger traffic growth in Malaysia is credit positive, with a total increase of 5.7% in 2016. The growth was supported by strong demand from various international markets.

Banks

• Banco Comercial Portugues (BCP): A €1.33 billion capital increase is credit positive, helping to strengthen the bank's CET1 ratio and repay contingent capital securities. The transaction is supported by a subscription from Chiado, increasing its stake to 30%.

Insurers

• UnitedHealth: The acquisition of SCA is credit positive, enhancing its OptumCare services business.

Asset Managers

• Large Asset Managers: Financial Stability Board recommendations are expected to benefit them, promoting financial stability and regulatory alignment.

Sovereigns

• Iceland: The formation of a governing coalition is credit positive, potentially leading to more stable governance and policy.
• Sri Lanka: The proposal to restore preferred trade status in the EU is credit positive, which could enhance trade and economic conditions.

Sub-sovereigns

• Germany: Strict fiscal rules for Laender are credit positive, reinforcing fiscal discipline.
• Warsaw, Poland: Receiving rail system funding from the European Commission is credit positive, supporting infrastructure development.

US Public Finance

• Texas: The shift in teacher pension funding is positive for the state but negative for many local school districts, potentially leading to financial strain at the local level.

Securitization

• Fiat Chrysler: Emissions issues are credit negative for some US Auto ABS, raising concerns about legal and financial exposure.

Sustainable Investing

• Transition Pathway Initiative: This initiative will aid in analyzing environmental risks, supporting sustainable investing practices.

Summary of Credit Impacts

• Positive Credit Impacts:
  • WPX Energy's acquisition and Braskem's sale of a subsidiary improve liquidity and production prospects.
  • Tesco and Marks & Spencer show operational momentum and sales growth, which are credit positive.
  • Centrica's sale of its wind farm stake contributes to debt reduction.
  • Atlantica Yield's agreements with lenders ensure continued cash flow.
  • Malaysia Airports Holdings' passenger traffic growth is credit positive.
  • BCP's capital increase strengthens its financial position.
  • UnitedHealth's acquisition enhances its business capabilities.
  • Financial Stability Board recommendations are beneficial for asset managers.
  • Iceland's governing coalition and Sri Lanka's trade status proposal are credit positive.
  • Germany's fiscal rules and Warsaw's funding are credit positive.
• Negative Credit Impacts:
  • Allegations against Fiat Chrysler are credit negative due to potential fines and legal costs.
  • FCA's emissions issues could lead to higher costs and reputational damage.
  • US Auto ABS may be affected by FCA's emissions allegations.
  • Tesco's profit margins and leverage remain high despite positive sales.
  • The shift in Texas pension funding is negative for local districts.
  • Abengoa's financial situation poses a risk to Atlantica Yield's operations.

Outlook

• The credit outlook for the coming weeks is positive for several entities, particularly those showing operational improvements and financial stability.
• However, the credit implications of regulatory and legal issues, such as those faced by Fiat Chrysler, remain a concern.
• The document highlights the importance of liquidity management, operational momentum, and regulatory alignment in assessing creditworthiness.