2018: Another Good Year for U.S. Insolvencies

The global economy is set for a change of pace this year, according to a new insolvency forecast from credit insurer Atradius. 2018 will be the ninth straight year of insolvency declines at 3%. This is due in part to economic growth and low interest rates, but "downside risks are rising as the period of easy money is coming to an end, especially in...
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U.S. Protectionist Policies Could Hurt Global Trade

There is a potential slump in global trade on the horizon, according to the latest Intelligence Unit from The Economist (EIU). There is a moderate probability (21%-30%) that U.S. protectionism will have a very high impact (2% or more) on the global annual gross domestic product (GDP) in the next two years.A strong global trade growth is expected th...
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Asia-Pacific High-Yield Nonfinancial Companies to See Low Default Rate by End 2018

A low default rate awaits high-yield nonfinancial companies in Asia Pacific by the end of this year, which Moody's Investors Service reported will fall in line with the global trend. Compared to a default rate of more than 4% in 2017, a Feb. 26 Moody's report stated that the rate is expected to drop to just under 2% before the end of 2018, accordin...
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Forecast Cloudy for 2018 U.S. Manufacturing Outlook

Month-over-month results for January's factory output in the U.S. are causing some uncertainty among the nation's economists regarding the manufacturing outlook for 2018.  While the Federal Reserve predicted a 0.3% gain in U.S. manufacturing growth for January over December, a recent Reuters report said overall industrial production actually f...
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Moody’s Predicts Stable Outlook for U.S. Steel Industry

A stable outlook is predicted for the U.S. steel industry in 2018 following last year's demand growth, which Moody's Investors Service described as "stronger than in many years."According to the Institute of Supply Management's Purchasing Managers' Index (PMI), Moody's reported, the average rating in 2017 was about 57.5—readings above 50 indicate e...
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New Bankruptcy Law Coming to Saudi Arabia

A new bankruptcy law in Saudi Arabia will help companies in need of debt restructuring. The legislation was approved earlier this month, according to Reuters. It is not known when the bankruptcy law will become effective, however. This comes just weeks after Egypt passed a new bankruptcy law.Official details of the new plan have not been released, ...
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New Bankruptcy Law Coming to Saudi Arabia

A new bankruptcy law in Saudi Arabia will help companies in need of debt restructuring. The legislation was approved earlier this month, according to Reuters. It is not known when the bankruptcy law will become effective, however. This comes just weeks after Egypt passed a new bankruptcy law.Official details of the new plan have not been released, ...
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Leveraged Finance Issuance Reaches Record High in January

Despite the year-over-year increase in January's leveraged finance issue in Europe, Middle East and Africa (EMEA), Moody's Investors Service predicts the rising stock market volatility will bring numbers back down in February. Leveraged finance issuance was recorded at a record high for the month of January, which Moody's reported was thanks to new...
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Infrastructure Plan Could Be Great for Private Bonds, but Lags in Overall Funding

A recent Fitch Ratings report finds that one highlight of the Trump administration's infrastructure proposal would be that it could expand private activity bond (PAB) usage and speed the approval process, which would be credit positive for infrastructure projects. "However, the proposal's effects on overall infrastructure development will be small ...
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Business Inventories Increased More than Anticipated in December

Economists and the U.S. Department of Commerce were pleasantly surprised by the results for business inventories at the end of last year, which Reuters reported increased "more than expected" between November and December 2017. According to a Reuters report on Feb. 14, business inventories rose nearly half a percent, 0.1% higher than economists ori...
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Crack Down on Shadow Banking in China to Impact Supply of Credit to Real Economy

The impact of stricter regulations in China is impacting its shadow banking sector, including slowing the aggregate growth of entrusted loans, trust loans and undiscounted bankers' acceptances, according to a new Moody's Investors Service report. Financial flows to the nation's social financing will be reduced this year as a result. "What started a...
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Less Volatility Expected for Banking Ratings in 2018

A shift in global bank ratings at the end of last year indicates less volatility in 2018, as Fitch Ratings reports stable outlooks are at their highest mark in recent years. According to a Fitch report on Feb. 9, the share of positive outlooks nearly doubled year-over-year, despite being outweighed by negative outlooks toward the end of 2017. Upgra...
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Increased M&A in European Pharma to Hit Credit Metrics of Large Firms

Europe's six-largest pharmaceutical companies will face increased credit quality risks from mergers and acquisitions this year, while any benefits to operating performance are also likely to take a hit, according to a new report by Moody's Investors Service. These firms include: GlaxoSmithKline, AstraZeneca, Roche Holding, Novartis and Novo Nordisk...
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Improved Earnings Doesn’t Mean Corporate Debt is out of the Woods

Corporate debt levels will remain an issue in 2018, according to S&P Global Ratings analysts, despite corporations seeing relief in their earnings and cash flow, some of which is thanks to the recent U.S. tax bill. In a 2018 study of 13,000 corporate issuers, analysts reported that although corporate earnings have improved and default rates are...
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Cyber Insurance ‘Profitable,’ but Could Be Credit Negative for Insurers

Cyber security studies confirmed a significant increase in data breaches last year and, now, property/casualty (P&C) insurers are scouring for ways to protect their policyholders in the likelihood cyber attacks occur in 2018. But according to Fitch Ratings, cyber insurance could be credit negative for insurers in the demanding market. The Equif...
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Asian Liquidity Stress Indicator Improves Again in January

Moody's Investors Service's Asian Liquidity Stress Indicator (Asian LSI) improved for the third consecutive month to 24.7% in January—its lowest level since July 2015—from 26.2% in December 2017. The Asian LSI measures the percentage of high-yield companies with Moody's weakest speculative-grade liquidity score of SGL-4 as a proportion of high-yiel...
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Companies Could Spend Accumulated Cash Soon, Survey Finds

If all goes well, U.S. businesses may be set to deploy some of their cash piles on capital expenditures, wage increases, dividends and buyback and mergers and acquisitions, according to a recent report from the Association for Financial Professionals (AFP). The organization saw companies accumulating cash and short-term investment holdings at a les...
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Liquidity-Stress Indicator Remains Low, Despite Rising in January

Despite economic growth and healthy credit markets in the U.S., the January 2018 results from Moody's Investors Service's Liquidity-Stress Indicator (LSI) show a potentially weakened corporate liquidity after increasing for the first time in a year. The indicator, which generally falls when corporate liquidity improves and rises when it weakens, re...
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As U.S. Hotel Market Peaks, Loan Transfers to Special Services Increases

After four years of warning signs that pointed to a peaking U.S. hotel market, Fitch Ratings' prediction is coming to fruition as more hotel properties in the country's top metropolitan markets transfer loans to special services in the midst of facing pressures from oversupply. An increasing number of hotel properties transferred to special servici...
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China’s Debt-for-Equity Swap Framework Provides Companies Time, Turnaround Plans Still Needed

China's debt-for-equity swap framework provides near-term liquidity relief to Chinese corporates that need it, offering much-needed time to restore their business and credit profiles. Still, these debt-for-equity swaps need to be combined with well-planned and closely monitored turnaround plans to allow companies to improve cash flow and recapitali...
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