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Credit Outlook Summary

Core Content

This document provides an overview of credit implications from various current events across different sectors, including corporates, infrastructure, banks, sovereigns, and securitization. It includes rating changes, research highlights, and detailed analysis of specific transactions and their credit impacts.

Main Points and Key Information

Corporates

• Pitney Bowes (PBI): Acquired Borderfree Inc. for $395 million, a credit positive move due to the strategic enhancement of its digital commerce unit. The deal may strain credit metrics but offers growth opportunities.
• Airbus: Secured a $5 billion order from Avianca for 100 A320neos, which is a credit positive. The order strengthens Airbus' position in the Latin American market and supports its A2 rating.
• Bombardier: Plans to IPO its Bombardier Transportation unit, a credit positive due to increased strategic alternatives and clarity on valuation. The IPO could reduce Bombardier's leverage.
• Alfa: Increasing its stake in Pacific Rubiales to 50% is credit negative due to heightened exposure to the oil and gas industry and potential leverage increase.
• Interxion: Break-up of the merger with Telegy would be credit negative, as it would weaken its competitive position against the merged Equinix/TelegyGroup.
• Greentown and Sunac: Division of joint venture assets is credit positive for both companies, improving liquidity for Greentown and enhancing Sunac's control.
• Fosun: Acquisition of Ironshore is credit negative for both companies, due to liquidity pressures and increased debt for Fosun, and uncertainty for Ironshore.

Infrastructure

• Sabesp (Brazil): Received a 15.24% tariff increase, a credit positive. This helps cover revenue losses from declining water consumption and rising energy costs. However, the impact on EBITDA is muted due to high inflation and continued economic slowdown.

Banks

• Spanish Banks: Increased holdings of repossessed real estate, a credit negative. This reflects the ongoing weakness in the real estate market and its impact on bank balance sheets. The recovery is not strong enough to reduce the problem loan ratio significantly.

Sovereigns and Sub-sovereigns

• Bahrain: Draft budget projects increasing deficits, which is a negative credit implication.
• Jordan: Successful IMF program review brings further financial aid, a credit positive.
• Korea: Reforms expected to boost foreign direct investment and growth, a credit positive.
• German Länder: Growth in tax revenues is a credit positive, indicating improved financial health at the sub-sovereign level.

US Public Finance

• Maryland Transportation Authority: Toll cuts are credit negative, as they may affect revenue and financial performance.

Securitization

• US Tank Car Safety Rule: Credit negative for railcar securitizations due to increased costs and regulatory compliance requirements.

Rating Changes

• Downgraded: Arch Coal, Walter Energy, Hypo Tirol Bank, Vorarlberger Landes- und Hypothekenbank, First Citizens Bank, and Tobago House of Assembly.
• Upgraded: Hilton Worldwide Finance, Generacion Independencia, Genneia, Energisa Mato Grosso, Energisa Tocantins, Close Brothers, EFG Bank, and Arizona.

Research Highlights

• Reports published on a wide range of topics including China property developers, Macau gaming, Greek corporates, US utilities, US marketplace lending securitizations, and US public finance ratings.

Recent Updates

• Articles from the previous week's Credit Outlook are available for reference.

Summary of Credit Implications

This summary highlights the credit implications of various corporate, infrastructure, banking, and regulatory developments, with a focus on the positive and negative impacts on financial health and credit ratings.