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.
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.
1
Aug
2019
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Cross Sector
Brazil: Central bank resumes rate cuts, benefitting borrowers across sectors
The decline in the Selic reference rate will help further stimulate capital market activity and benefit interest-rate sensitive sectors such as utilities and infrastructure.
31
Jul
2019
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Cross Sector
Cross-Sector – US: Student loan debt forgiveness would stimulate US economy, but private lenders may lose future income
A one-time student loan forgiveness policy would provide a near-term fiscal stimulus to the economy and support the retail sector. It would be negative for private student loan lenders.
30
Jul
2019
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Sovereign & Supranational
Sovereigns – Europe: Downside risks to potential growth in 2020s limit upside in region's credit profiles
Low and uncertain economic growth increases the vulnerability of the region’s sovereigns to shocks and together with other factors constrains the credit profiles of the region's sovereigns.
9
Aug
2019
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Sovereign & Supranational
Portugal’s Baa3 rating outlook changed to positive on improved fiscal and banking sector prospects
The government’s debt burden is declining at a faster pace than we previously anticipated, supported by falling interest costs and the containment of expenditures. At the same time, the banking system is becoming more robust.
7
Aug
2019
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Cross Sector
CLOs – US: Risks from lower-rated companies with concentrated business links raise stakes for CLOs in a downturn
CLOs with high shares of such companies rated B3 or lower in their portfolio are at greater risk of abrupt credit deterioration than other CLOs.
26
Jul
2019
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Sovereign & Supranational
Government of Thailand – Baa1 positive: Update following rating affirmation, outlook change to positive
Our credit view for Thailand reflects the sovereign's very strong public and external finances, as well as lingering political risk and demographics and labour skills challenges.
12
Jul
2019
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Sovereign & Supranational
Argentina’s rating outlook changed to negative on policy uncertainty
Our credit view of Argentina reflects its large and relatively wealthy economy against rising policy uncertainty and the risk it poses for increased financing pressures and eroding buffers.
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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.
9
Aug
2019
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Sovereign & Supranational
Governments of China and the US: US labelling of China as a currency manipulator is likely to escalate trade tensions, a credit negative
On 5 August 2019, the US designated China a currency manipulator. The move is likely to lead to a hardening in the trade dispute between the countries, and slower expansion in both economies, a credit negative for the sovereigns.
2
Aug
2019
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Cross Sector
New US tariffs will weigh on global economy and be negative for US tech, manufacturing and retail sectors
Trade tensions are escalating amid already decelerating growth in the US, euro area and China, with the uncertainty likely to weaken business investment and trade flows.
2
Aug
2019
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Corporates
Retail — US: Larger retailers best positioned to weather new tariffs
We believe that many potentially affected retailers, especially the larger names, have taken steps in recent years to diversify their supply chains, thus reducing reliance on China.
16
Aug
2019
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Sovereign & Supranational
Government of Hong Kong: Ongoing protests point to weaker growth; rating assumes continuity in key institutional arrangements
Recurring and long-lasting protests that disrupt economic activity but allow the broad functioning of the government fall within our political risk scores and Hong Kong’s credit profile.
14
Aug
2019
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Sovereign & Supranational
Argentina’s post-election currency volatility highlights vulnerability to rising policy uncertainty
The majority vote for Alberto Fernandez in Argentina’s recent primary elections resulted in a 15% depreciation of the Argentine peso, weakening the country’s economic prospects for the remainder of 2019.
6
Aug
2019
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Sovereign & Supranational
Governments of India & Pakistan: Sustained escalation in Kashmir tensions would weigh on economies, hampering fiscal consolidation, a credit negative
While not our baseline, an escalation of military conflict in Kashmir would weaken growth and hurt fiscal consolidation efforts in India and Pakistan.
23
Jul
2019
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Cross Sector
United Kingdom: Risk of credit negative no-deal Brexit has increased
The election of Boris Johnson as the UK’s new prime minister has increased the risk of a “no-deal Brexit. Our view remains that a no-deal Brexit would have significantly negative credit effects for the UK sovereign and related issuers.
13
Aug
2019
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Corporates
3D printing has potential to transform production in certain industries, but widescale use likely years away
Greater adoption of 3D printing technology will likely usher in major changes over time for certain industries, with implications for companies' profitability and market shares.
1
Aug
2019
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Corporates
Global: Deepfake disinformation campaigns pose reputational risks to businesses
Advances in artificial intelligence will likely result in more pernicious disinformation campaigns targeting businesses and financial markets, with potential negative credit effects.
31
Jul
2019
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Banking
Capital One Financial Corporation: Breached customer data reveals a weakness in Capital One’s cyber defenses
Capital One's data breach is credit negative and will have an adverse effect on the company’s reputation.
29
Jul
2019
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Corporates
Medical products and devices – US: Innovation improves patient outcomes, but brings cyber risk and tech interlopers
Minimally invasive procedures can shorten hospital stays, while data monitoring and data analytics can predict adverse events. But cyber risk is increasing and tech giants are moving in.
7
Aug
2019
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Corporates
Newest proposals to reduce US drug prices raise industry's social and financial risk
US lawmakers and regulators continue to take aim at prescription drug prices, adding new fuel to a key social risk overhanging the sector. Their most recent proposals, if adopted, would increase financial risk by pressuring prices.
7
Aug
2019
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Insurance
California homeowners insurers cut wildfire risk
After a second consecutive year of large wildfire losses in 2018, P&C insurers are responding by boosting their pricing, and re-underwriting policies, and reconsidering wildfire models.
25
Jul
2019
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Cross Sector
Podcast: An introduction to Moody’s corporate governance assessment framework
In this podcast, Simone Andrews and Brendan Sheehan of the ESG team discuss Moody’s analytical framework for assessing corporate governance risk for publicly traded non-financial companies.​
23
Jul
2019
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Infrastructure & Project Finance
Regulated networks and unregulated utilities — Australia: Issuers will manage the transition to lower carbon and decentralized power generation
We expect renewable energy investment in Australia — including distributed energy generation and storage — to continue, as will customer demand for the ability to export that distributed energy through smart networks.
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