The Big Picture
2018 Global Credit Themes

The Big Picture presents research on six themes shaping credit in 2018: Growth, Financial Stability, Political & Geopolitical Risk, Technology & Innovation, Climate Change & Sustainability, and Demographics.

Explore our Credit Themes
Growth
Financial
Stability
Political &
Geopolitical Risk
Technology
& Innovation
Climate Change
& Sustainability
Demographics
launch credit themes video
Highlights
Cross-sector
/
17
July
2018
Infographic: Auto sector transformation will drive global multi-sector credit trends
Four technologies are remaking the automotive market: the connectivity of vehicles, alternative fuel vehicles, autonomous driving and ride sharing. In our latest infographic, we highlight the factors and trends playing a key role in the changing landscape of the automotive sector.
Highlights
SOVEREIGN AND SUPRANATIONAL
/
3
July
2018
EU summit highlights deep divisions between member states, a long-term credit negative
Deep divisions among EU member states over immigration and euro area integration illustrate European policymakers' limited willingness and ability to work together on reforms that would bolster the resilience of both the EU and the euro area.
Highlights
Cross-Sector
/
26
June
2018
Video: Risks to global trade are credit negative across sectors, countries
In this video, Moody's Investors Service analysts Madhavi Bokil, Robert Jankowitz, and Bruce Clark outline how the escalation of tensions between the United States and its trading partners is raising the prospect of broader challenges to the global trade regime. They explain how tit-for-tat tariffs would have a cascading effect on numerous industries and could dampen global growth momentum.
Growth
U.S. PUBLIC FINANCE
/
7
August
2018
States - US: China trade dispute adds to agricultural states' economic, demographic concerns

The trade dispute between the United States and China is only the latest development that threatens to slow growth in agriculture-dependent states.

Cross-Sector
/
31
July
2018
Global Trade Monitor: Escalation of global trade tensions becomes the baseline expectation

The trade dispute between the US and China and other countries will be prolonged and have a negative impact on global growth. However, the countries involved will likely stop short of full implementation of the most severe potential measures, including tariffs on all US auto imports or a breakdown of NAFTA.

Corporates
/
30
July
2018
Potential US tariff on auto parts imports credit negative for suppliers

US tariffs on auto parts would be credit negative for the sector with original equipment manufacturers likely to recoup a portion of the cost through contract negotiations

Financial Stability
Sovereign and Supranational
/
31
July
2018
Structural fiscal weaknesses persist in EU despite improving headline budget positions

Nominal fiscal positions across the euro area are improving. However, structural fiscal balances in the EU as a whole are deteriorating, illustrating the challenges national authorities face in ensuring compliance with the common fiscal framework, which is especially important for euro area countries.

SOVEREIGN AND SUPRANATIONAL
/
19
July
2018
Malaysia’s use of domestic sukuk to fund deficit lowers liquidity risk, a credit positive

The government’s efforts to create a local market for Islamic finance instruments are supporting the sovereign's credit quality by adding stability and diversity to its borrowing profile.

CROSS-SECTOR
/
16
July
2018
Moody’s Financial Monitor: Current conditions mask risks that will crystallize when the cycle turns

Global equity prices have rebounded from the turmoil in the spring but show signs of being weighed down by news on trade, while government bond prices have declined from high levels amid expectations of higher interest rates in the US and in other economies. Systemic financial risks have increased, reflecting reduced liquidity in the US.

Political & Geopolitical Risk
Cross-Sector
/
23
July
2018
Outlook for Qatari issuers stabilises, reflecting a broad ability to withstand boycott

The economic impact of the ongoing boycott of Qatar by neighboring Gulf countries and Egypt remains modest. Qatar's credit quality continues to receive support from the large net asset position of the government, high per capita income, large hydrocarbon reserves and low breakeven oil prices.

Structured Finance
/
12
July
2018
China’s retaliatory tariffs are negative for US agricultural equipment-backed ABS

The tariffs on US soybeans, if kept in place for an extended period of time, are likely to erode US farmers’ net income and reduce equipment residual values, credit negatives for US asset-backed securities backed by loans or leases secured by agricultural equipment. However, several mitigants should limit the effect on the ABS, and cumulative net loss rates in the securitizations will likely remain within our expectations.

Technology & Innovation
FINANCIAL INSTITUTIONS
/
8
August
2018
Data-sharing partnerships between technology-enabled firms and big US banks would be credit negative for regional banks

Data-sharing partnerships between big technology-enabled firms and large US banks would increase competition for customer relationships for midsize and smaller US regional banks.

FINANCIAL INSTITUTIONS
/
6
August
2018
US Asset Managers: Active equity fund outflows pick up, leave asset managers vulnerable to downturn

Based on recent fund flow data, outflows of dollars invested in US active equity mutual funds have accelerated and are at their highest rate year-to-date.

FINANCIAL INSTITUTIONS
/
5
August
2018
Treasury’s fintech proposals support innovation, increased competition and modernized regulation

Innovation will be credit positive for banks if implemented prudently with adequate safeguards and testing. Increased competition is also positive, but a threat to banks unable to keep up. A new OCC fintech charter is credit negative for incumbent banks but positive for fintechs awarded a charter.

Climate Change & Sustainability
INFRASTRUCTURE AND PROJECT FINANCE
/
31
August
2018
Europe's electricity markets: In Europe, higher carbon price would benefit generators

Despite continued reductions in power sector emissions, the slow pace of decarbonisation in other sectors could drive carbon markets tightening

FINANCIAL INSTITUTIONS
/
2
August
2018
California Carr fire losses up to $1.5 billion portending destructive wildfire season

We estimate insured losses are up to $1.5 billion and will likely increase as the fire continues to burn, which likely portends heavy wildfire losses for the remainder of 2018.

Cross-Sector
/
31
July
2018
Green bond issuance rebounds in Q2 but full-year growth likely to moderate

Global green bond issuance rebounded in Q2 2018 to $44.9 billion from $31.9 billion in Q1. While we expect green bond issuance to pick up in the second half of 2018, we have trimmed our full-year expectations to $175-200 billion, down from our January forecast of $250 billion.

INFRASTRUCTURE AND PROJECT FINANCE
/
31
July
2018
Europe's electricity markets: In Britain, the carbon price has done its job

Britain will continue to reduce CO2 emissions rapidly and power prices are likely to fall.

Demographics
Cross-Sector
/
26
July
2018
Beyond demographics, cutting costs will be key to affordability of European healthcare

European sovereigns will face increasing fiscal challenges to meet the publicly funded share of healthcare spending as their populations age. As a result, moderating per capita costs will be key to maintaining access to efficient and affordable care.

U.S. Public Finance
/
19
July
2018
Rural America confronts growing economic and demographic challenges

Slow-to-recover labor markets, shrinking populations accelerated by urban migration and an aging workforce pose financial hurdles that most rural local governments will increasingly confront. Prudent fiscal management and financial flexibility will be critical in maintaining credit quality.

Sovereign
/
16
July
2018
Growing population is positive for City of Moscow, challenging for surrounding region

Population growth has boosted the City of Moscow’s personal tax receipts. However, the Oblast of Moscow, where most of the workers have settled, will face welfare spending pressures, limiting the Oblast’s ability to spend more on infrastructure.

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