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
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.
Highlights
CROSS-SECTOR
/
30
May
2018
Global economic outlook remains strong, but downside rises to the surface
Global growth will be robust in 2018 but will likely moderate by the end of 2018 and in 2019 as several advanced economies reach full employment and as borrowing costs rise and credit conditions tighten.
Growth
US Public Finance
/
16
July
2018
Most US states adopt timely fiscal 2019 budgets amid strong revenue growth

Growth in US state tax revenue was robust in fiscal 2018 and positioned many states to carry an operating surplus into fiscal 2019, which for all but four states began on July 1. Likely aided by the strong revenue performance, nearly all states began fiscal 2019 with an adopted budget in place.

SOVEREIGN AND SUPRANATIONAL
/
3
July
2018
Closer trade and investment ties with China present challenges and opportunities for African sovereigns

A shift to consumption-led growth in China will have mixed credit implications for African sovereigns. Trade volumes for oil and ferrous metal exporters will likely flatten, while rising Chinese incomes will likely benefit non-ferrous metal exporters and tourist destinations.

Cross-sector
/
25
June
2018
Chinese investment benefits Latin American borrowers but heightens certain credit risks

Over the last decade Chinese investment in Latin America has particularly benefited countries, banks, utilities and companies with limited access to funding. However, higher debt burdens, and weaker trade balances are potential risks for any borrowers dependent on highly discretionary lending.

Financial Stability
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.

Cross-Sector
/
26
June
2018
End of quantitative easing and rising interest rates will be manageable for most euro area issuers

The gradual unwinding of the European Central Bank’s stimulus will likely lead to tighter financing conditions and an increase in borrowing costs at a modest pace, which most debt issuers in the euro area will be able to withstand.

Political & Geopolitical Risk
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.

Cross-sector
/
2
July
2018
Financial volatility, oil sector risks in Mexico will likely increase following election

The precise direction of the policies of incoming president Andres Manuel Lopez Obrador will not be clear until after his 1 December inauguration. In the meantime, financial markets in Mexico could become unusually volatile, with negative consequences for the exchange rate and market yields.

CROSS-SECTOR
/
29
June
2018
Delayed EU-UK agreement on Brexit terms highlights downside risks

The continued deadlock in the negotiations between the European Union and the UK suggests that the current significant uncertainties around Brexit will persist for longer than anticipated, and highlights the downside risks associated with a “no deal” Brexit.

Technology & Innovation
Cross-sector
/
16
July
2018
Evolution of the auto sector will have varying credit implications

Four technologies are remaking the automotive market: the connectivity of vehicles, alternative fuel vehicles, autonomous driving and ride sharing. This transformation is comparable in scope to the dawn of the automotive age a century ago and will have ramifications for industries well beyond auto manufacturing.

FINANCIAL INSTITUTIONS
/
28
June
2018
Decoding impact of genetic testing: riskier for life insurers than health insurers

Genetic testing is already improving health outcomes with great potential going forward. However, the results of genetic testing are not always available to insurers, which could put life insurers that write new long-term policies at an information disadvantage relative to their policyholders.

Cross-Sector
/
25
June
2018
Restrictions on technology transfer to China would moderately disrupt certain US industries

US export restrictions and investment controls aimed at curbing technology transfer, intellectual property infringement and the effects of the Made in China 2025 initiative would lead to disruptions in specific US industries, particularly those with extensive involvement in China.

Climate Change & Sustainability
Corporates
/
18
July
2018
Energy-intensive cement makers face rising pressure to lower carbon emissions

Efforts to decarbonize the global economy are likely to bring greater scrutiny to the cement sector at a time when demand for cement is likely to continue to rise significantly as the world's population grows and continues to industrialize and urbanize.

SOVEREIGN AND SUPRANATIONAL
/
9
July
2018
Sovereign green bond market on course for critical mass, but challenges remain

An increasing number of sovereigns are turning to green bonds as a means to raise capital for climate mitigation and adaptation activities. We expect this trend to accelerate.

SOVEREIGN AND SUPRANATIONAL
/
3
July
2018
Carbon transition will be manageable for most oil-exporting sovereigns, but credit negative for some

For some oil-exporting sovereigns, the shift towards lower reliance on oil-related products – carbon transition – over the coming decades will considerably lower fiscal strength in the absence of additional revenue from other sources, undermining creditworthiness.

SOVEREIGN AND SUPRANATIONAL
/
27
June
2018
Environmental, social and governance (ESG) risks influence sovereign ratings in multiple ways

Governance risks are directly incorporated into our analysis of a sovereign’s institutional strength, while environmental and social risks may influence our assessment of economic, institutional and, to a lesser extent, fiscal strength.

Demographics
U.S. Public Finance
/
12
July
2018
Continued influx of millennials into US housing market benefits single-family programs

Millennials are showing signs of entering the US housing market in significant numbers. State housing finance agencies' single-family programs will continue to benefit from this trend, although they face obstacles in expanding into the digital mortgage space, which millennial homebuyers favor.

U.S. PUBLIC FINANCE
/
10
July
2018
Rapidly evolving environment presents credit risks and opportunities to universities

Over the next decade, the global higher education sector will face new challenges, as well as encounter opportunities to grow and improve efficiency. As the pace of change continues to accelerate, driven by factors such as demographics and technology, the ability of universities to innovate and adapt will be a key determinant of future credit quality.

SOVEREIGN AND SUPRANATIONAL
/
9
July
2018
Divergence in CIS working-age population trends will shape regional sovereign credit profiles

Belarus and Ukraine are most vulnerable to the negative economic impact of shifting demographics, while the Kyrgyz Republic is most exposed to the credit-negative fiscal implications arising from this trend.

Upcoming events
SEE ALL EVENTS »
AMERICAS
+1.212.553.1653

EMEA
+44.20.7772.5454

ASIA PACIFIC
+852.3551.3077

JAPAN
+81.3.5408.4100