The Big Picture

Key themes shaping global credit markets in 2019

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Growth
Financial Stability
Trade Tensions
Political Risks
Technology & Innovation
ESG Risks
Report Highlight
Cross Sector
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22
August
2019
Global growth slows even as central banks cut rates to offset effect of trade disputes
We expect global growth to slow below trend to 2.7% in 2019 and 2020, about half a percentage point below the level in 2017-18.
Video Highlight
Cross Sector
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20
May
2019
Cross-Sector – Global: Delay in US auto tariffs provides a respite for the global economy, but risks persist
The six-month delay in potential US tariffs on imported autos and parts reduces uncertainty and eases market concerns. However, this de-escalation of trade tensions is likely only temporary.
Video Highlight
Cross Sector
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7
May
2019
Emerging markets continue growth trajectory despite market volatility
Laura Acres, Managing Director for Corporate Finance, explains how the long-term story in emerging markets has been one of consistent growth despite the short-term volatility in these markets.
2
Oct
2019
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Cross Sector
Healthcare – US: Workers’ healthcare costs keep rising, weighing on household consumption
Worker's health insurance premiums continue to outpace wages, which is credit negative for the economy and companies, as they weigh on households finances and impede access to healthcare.
29
Aug
2019
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Banking
Banking System Outlook - Mexico: Negative outlook reflects weakening economic prospects
Prospects for lower GDP growth will lead to higher delinquencies, lower business growth and fiscal constraints that will limit the government's ability to support banks. Economic policy uncertainty could further affect investment decisions.
23
Aug
2019
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Sovereign & Supranational
Sovereigns – Asia Pacific: Weaker trade and investment weigh on GDP growth despite stable private and public consumption
Spillovers from an uncertain operating environment are most apparent in softer capital formation, although some signs of trade and investment diversion are emerging.
21
Aug
2019
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Cross Sector
Self-employment is increasingly supporting US consumer strength
Digital platforms and demand for services are fueling growth in the number of freelancers and independent workers in the US. These workers would likely feel the effects of an economic downturn more acutely than employees at traditional companies.
10
Oct
2019
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Cross Sector
Financial conditions weaken, as market and fundamental signals deteriorate
This report analyzes the latest signals from the Moody’s US Financial Conditions Indicator, a composite of 18 measures of financial and economic activity, grouped into four components.
16
Sep
2019
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Sovereign & Supranational
Faltering structural reform momentum undermines long-term growth prospects in many EU countries
Improvements in the future growth potential of many EU countries depend on stepped-up productivity and investment. These are only likely to materialise if progress is made in structural economic reforms of labour markets, product and service markets.
16
Sep
2019
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Sovereign & Supranational
Mexico’s 2020 budget underestimates extent of support PEMEX may require
Mexico’s proposed new budget assumes relatively optimistic GDP growth and oil production. These assumptions result in the budget overestimating next year's government revenue and underestimating the financial support that PEMEX may require.
12
Sep
2019
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Banking
Continued low interest rate environment will alter behavior of US financial institutions
US interest rates are likely to remain low for some time, which will have a large impact on the financial strategies of US bank and non-bank financial institutions. The low rate environment will encourage more risk-taking and US bank consolidation.
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16
Sep
2019
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Cross Sector
US-China trade dispute and China’s continuing slowdown pose spillover risks to Asia
The escalation of tensions between the US and China will further cloud the trade and economic outlook in Asia, with a predominantly negative effect at the sector level.
28
Aug
2019
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Cross Sector
Trade - US and China: US agricultural and auto sectors will bear the brunt of China's retaliatory tariffs
The new trade restrictions, which mark a further escalation of tensions between the world's two largest economies, will be credit negative for a number of US industries.
26
Aug
2019
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Cross Sector
Trade - US: China stops buying US farm products, adding to struggles in agricultural sectors
China's restrictions are credit negative for large soybean-producing states, as well as for food processors and providers of loans and other financial services to the farm sector.
19
Aug
2019
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Corporates
Two-stage US tariff plan will not eliminate some of the negative effects on US companies
The US administration has postponed a portion of its planned new tariffs on Chinese imports, but they remain a credit negative for US companies and retailers within the affected industries.
19
Sep
2019
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Sovereign & Supranational
Government of Israel: Inconclusive election outcome poses a risk to timely fiscal consolidation
The continuing political uncertainty comes as the central government is very unlikely to achieve its deficit target for 2019.
16
Sep
2019
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Cross Sector
Geopolitical Risks – Saudi Arabia & Aramco: Attacks on oil infrastructure are credit negative; full extent of credit impact still unclear
Output disruption will not leave a long-lasting impact on the government or Saudi Aramco, but highlights elevated and broader-based exposure to geopolitical risk than previously assumed.
12
Sep
2019
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Cross Sector
Credit Conditions – Argentina: Deepening economic malaise will hit government and business sectors
Argentina's nascent stabilization of economic activity has unraveled in the wake of national primary elections in August. The outcome triggered a severe market reaction, a credit negative for the sovereign and for most business sectors.
10
Sep
2019
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Cross Sector
UK Brexit Monitor
UK growth declined in Q2 2019 and the core inflation rate has stabilised in recent months. In a no-deal Brexit scenario, the UK economy could be permanently smaller than with a trade agreement.
9
Oct
2019
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Corporates
Podcast: Transparency of cyber corporate disclosures varies widely across high risk sectors
Brendan Sheehan from the Governance group and Lesley Ritter of the Cyber Risk team discuss the varying levels of transparency in cyber corporate disclosures across high risk sectors
7
Oct
2019
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Cross Sector
GIBs heighten readiness against constant cyber threat
The global investment banks are at high risk of cyberattacks through their multiple businesses and have accordingly enhanced their monitoring and risk-mitigation capabilities.
2
Oct
2019
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US Public Finance
Local government – US: Ransomware attacks highlight importance of IT investment and response planning
Investment in IT infrastructure and personnel, establishing response plans and controls, and cybersecurity insurance will help local governments reduce the impact of cyberattacks.
12
Sep
2019
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US Public Finance
Hospitals & health service providers - US: Cyberattacks pose growing operational and financial risks for hospitals
Cyber threats will continue to grow in sophistication, pushing hospital managements to allocate more resources to protect data and limit system vulnerabilities.
27
Oct
2019
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Sovereign & Supranational
Government of United States: Rising US income inequality presents long-term challenges to fiscal strength and political risk
The unabated rise in income inequality, if left unaddressed, poses long-term fiscal and political challenges to the US' credit profile.
25
Sep
2019
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Corporates
Metals & Mining – Cross Region: Water availability poses risks to the global mining Industry
Miners' use of ground and surface water that local communities rely on has resulted in protests and prompted stricter environmental regulations that will exacerbate the challenge.
19
Sep
2019
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Cross Sector
ESG – Global: Governance considerations are a key determinant of credit quality for all issuers
Governance failures can lead to severe reputational and financial risks, including increased debt financing costs or, at the extreme, complete loss of access to capital markets
11
Sep
2019
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Sovereign & Supranational
Asia Pacific excluding China: Emerging, frontier markets face greatest risk from implicit SOE liabilities
Deconstruction of contingent liability risks for non-financial SOEs allows us to determine overall exposure. How liabilities are managed informs assessment on probability of crystallisation.
2
Oct
2019
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US Public Finance
Local government – US: Ransomware attacks highlight importance of IT investment and response planning
Investment in IT infrastructure and personnel, establishing response plans and controls, and cybersecurity insurance will help local governments reduce the impact of cyberattacks.
12
Sep
2019
/
US Public Finance
Hospitals & health service providers - US: Cyberattacks pose growing operational and financial risks for hospitals
Cyber threats will continue to grow in sophistication, pushing hospital managements to allocate more resources to protect data and limit system vulnerabilities.
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