20180507-穆迪服务-Credit_Outlook__Credit_Implications_of_Current_Events_35页_1mb

Credit Outlook Summary

Core Content

The document provides a detailed analysis of credit implications of various corporate and financial events across multiple sectors, including Corporates, Infrastructure, Banks, Exchanges, Asset Managers, Sovereigns, and Securitization. It outlines the credit impacts of mergers, acquisitions, debt repayments, and other financial strategies, highlighting both positive and negative effects on credit profiles.

Main Points

Credit Positive Developments

• Marathon Petroleum's acquisition of Andeavor: The acquisition is credit positive for Andeavor and its MLP, ANDX, as it enhances geographic reach and operating diversification without significantly affecting credit quality. Marathon's strong liquidity and the potential for debt upgrades support this assessment.

• Boeing's acquisition of KLX: This transaction is credit positive for Boeing, as it strengthens its global services segment. The acquisition is valued at 14x EBITDA and is expected to have minimal impact on financial leverage.

• Pitney Bowes' debt repayment and asset sale: The planned repayment of $700 million in debt and sale of its DMT business are credit positive, reducing leverage and improving cash flow. This supports PBI's transition to higher-growth markets.

• B&G Foods' debt prepayments: The company's voluntary debt prepayments have reduced its debt/EBITDA leverage and annual debt-service costs. Continued deleveraging is expected, supported by inventory reduction and EBITDA growth.

• HC2 Holdings' sale of BeneVir and note offering: The sale of BeneVir and the tack-on note offering improve near-term liquidity and extend debt maturities. These actions are credit positive despite ongoing refinancing risks.

• Boyd Gaming's acquisition of Lattner Entertainment: The acquisition is credit positive, providing strategic value and expanding Boyd's asset base without increasing leverage. It also offers a defensive hedge in states where distributed gaming is allowed.

• Alpek's acquisitions in Brazil: The purchase of two petrochemical units enhances Alpek's Latin American presence and offers synergies. While there was a short-term increase in leverage, it is expected to recover quickly.

• UK retailer House of Fraser's CVA and capital raise: The proposed company voluntary arrangement (CVA) and capital raise are credit positive, helping to reduce rent costs and alleviate liquidity challenges. This could support the company's transformation into a more effective multi-channel retailer.

• Rosneft's strategic focus on deleveraging: Rosneft's efforts to reduce leverage are credit positive, reflecting a disciplined approach to financial management.

• Baidu's plan to divest its Financial Service Group: This move is credit positive, as it allows Baidu to focus on core operations and reduce financial complexity.

Credit Negative Developments

• Cott's share buyback: The share buyback is credit negative as it slows the company's deleveraging. However, the strong operating performance and cash flow will mitigate this impact.

• Andrade Gutierrez Engenharia misses notes payment: The failure to repay $345 million in senior unsecured notes is a credit negative. The company is in negotiations for a financing transaction, but failure could result in severe losses to bondholders.

• Argentina's currency pressures: Currency pressures are credit negative for Argentina's sovereign, affecting the financial stability of banks and the broader economy.

• Saudi government deposits decline: The decline in government deposits is a credit negative, though it is offset by high excess liquidity.

• CPMI-IOSCO reports deficiencies in clearing houses: The identified risk management and recovery planning deficiencies at clearing houses are credit negative, indicating potential vulnerabilities in the financial system.

Key Information

• Marathon Petroleum acquires Andeavor for $23 billion, with a focus on geographic and operational diversification. The deal is expected to have minimal impact on credit quality due to Marathon's liquidity.

• Boeing acquires KLX for $4.25 billion, enhancing its global services segment. The transaction is valued at 14x EBITDA and is expected to have a limited effect on financial leverage.

• Pitney Bowes plans to repay $700 million in debt, reducing leverage to below 4.0x. The company is transitioning to higher-growth markets and expects continued asset sales and acquisitions.

• B&G Foods has prepaid $150 million of debt and is on track to reduce leverage further. The company is expected to continue deleveraging, with EBITDA growth supporting this.

• HC2 Holdings benefits from the sale of BeneVir and a note offering, improving liquidity and extending debt maturities. However, refinancing risks remain for its 2019 notes.

• Boyd Gaming acquires Lattner Entertainment for $100 million, expanding its asset base and reducing reliance on Las Vegas. The acquisition is expected to have minimal impact on leverage.

• Alpek acquires two petrochemical units in Brazil, enhancing its Latin American presence. The company's leverage is expected to recover by the end of 2018.

• House of Fraser is seeking a CVA and capital raise to address liquidity challenges. The CVA could help reduce rent costs and improve financial flexibility.

• Rosneft is focusing on deleveraging, which is credit positive.

• Baidu is divesting its Financial Service Group, a credit positive move to simplify its financial structure.

• Andrade Gutierrez Engenharia missed a $345 million debt payment, signaling financial distress. The company is negotiating a financing transaction to avoid further credit downgrades.

• Argentina's currency pressures are a credit negative for the sovereign, affecting banks and the overall economic outlook.

• Saudi government deposits are declining, which is a credit negative, but this is offset by high excess liquidity.

• CPMI-IOSCO identified deficiencies in risk management and recovery planning at clearing houses, a credit negative for the financial system.

Summary

The document outlines a mix of credit positive and negative events across various sectors. Acquisitions, debt repayments, and strategic divestitures are generally viewed as credit positive, as they improve liquidity, reduce leverage, and enhance operational efficiency. However, certain actions like share buybacks and missed debt payments are credit negative, though they may be mitigated by strong operating performance or strategic adjustments. The analysis highlights the importance of financial discipline, liquidity management, and strategic business moves in shaping credit profiles.