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Argentina court extends Barrick Gold's Veladero mine suspension

Broadband Only Homes Skyrocket In 2018 Validating Top MSOs Connectivity Pivot

Street Talk Episode 40 - Digital Banks Take a Page Out of 'Mad Men'

Power Forecast Briefing: As retirements accelerate, can renewable energy fill the gap?

2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

Argentina court extends Barrick Gold's Veladero mine suspension


Argentina court extends suspension of Barrick Gold's Veladero mine

Based on the report submitted by mining police in Argentina's San Juan province, Judge Pablo Oritja ruled that Barrick Gold Corp.'s Veladero mine would remain suspended, as the the repairs were insufficient to reopen the mine, Reuters reported. The court extended the temporary suspension until the company completes additional work at the mine. Operations were suspended at Veladero on Sept. 15 following a cyanide leak.

OZ Minerals may miss gold production guidance due to power outage

OZ Minerals Ltd. may miss its gold production guidance of 125,000 ounces and 135,000 ounces in 2016 at its Prominent Hill mine due to the power outage in South Australia. Copper production is expected to remain within the guidance of 115,000 ounces to 125,000 tonnes.

Anglo closes US$1.5B sale of Brazilian niobium, phosphates assets to China Molybdenum

Anglo American Plc completed the sale of its niobium and phosphates businesses in Brazil for a total of US$1.7 billion in cash to China Molybdenum Co. Ltd. The consideration comprises a previously agreed upon US$1.5 billion in cash for the sale of Anglo's assets and an additional US$187 million of working capital and other adjustments.


* According to a BHP Billiton Group spokesperson, operations at the company's Olympic Dam remain suspended with no timeline yet confirmed for production to be restarted, Bloomberg News reported. Meanwhile, Arrium Ltd. could face costs of as much as A$40 million following South Australia's statewide power outage caused by storms, which forced suspensions across several operations in the state. Arrium's Whyalla steelworks and the mining of iron ore to feed the mill have been halted since the power failure on Sept. 28.


* Global nickel prices are expected to jump 25% to about US$6 per pound by the end of next year following the recent bans on miners in the Philippines, Bloomberg News reported, citing USB Group AG.

* Vast Resources PLC has started full-scale commercial zinc production at its Manaila polymetallic mine in Romania, adding a second commodity and revenue stream for the company in addition to copper. The company is targeting production of 150 tonnes per month of zinc from this month onward.

* Horizonte Minerals Plc's new pre-feasibility study at its Araguaia nickel project in northern Brazil estimated a posttax net present value, discounted at 8%, of US$581 million and a posttax internal rate of return of 26.4%, at a nickel price of US$14,000 per tonne. Production is estimated at about 14,500 tonnes per year with a 28-year life of mine.

* New World Resources Plc shareholder State Street Nominees Ltd. requested that the company's directors call a general meeting for shareholders to vote on placing New World into liquidation and to appoint liquidators.

* The Public Prosecutor's Office of Peru closed the investigation into the disappearance and death of three workers of Rio Blanco Copper SA, a subsidiary partially owned by China's Zijin Mining Group Co. Ltd. The workers went missing in July 2015 while doing exploration work in Piura region, in northern Peru, and no explanation as to the cause of their deaths was found, daily Correo reported.

* Glencore Plc is reviewing the allegations by U.S. authorities of the decade-long involvement of its key business partner, Israeli billionaire Dan Gertler, in bribing government officials in the Democratic Republic of the Congo. Gertler's Fleurette Properties Ltd. holds a 31% interest in the Mutanda copper-cobalt mine in the DRC, while Glencore owns the majority 69% interest in the project.

* Codelco submitted a US$55 million plan to environmental regulators aimed at keeping the Salvador copper mine in Chile operating through 2021.

* Rescue operations are ongoing to recover three workers trapped inside the Dudder lead-zinc mine in Lasbela, in Pakistan's Balochistan province, with the rescuers managing to reach 600 meters into the mine to create ventilation, Dawn reported. A lift carrying five workers — four Chinese engineers and one Pakistani electrician — fell 1 kilometer inside the mine Sept. 24. Two Chinese engineers have managed to escape, but, according to Chief Inspector Mines in Balochistan Iftikhar Ahmed, there was a slim chance that the three remaining men have survived.


* White Rivers Exploration Pty Ltd. is considering another gold partnership in South Africa. "We are talking to a number of other large South African producers," Executive Chairman Neil Warburton told SNL Metals & Mining.

* Brixton Metals Corp. has struck a deal with Agnico Eagle Mines Ltd. to acquire its landholding of additional property adjoining the former’s Langis silver project in Ontario.

* Wesizwe Platinum Ltd. decided to reduce the scope of engineering and construction works for the Bakubung platinum project in South Africa’s North West province due to commercial imperatives.

* For its first-ever ratings action for the company, Moody's assigned a corporate family rating of Ba1 and a probability of default rating of Ba1-PD to Polyus Gold International Ltd., the holding company of Russian PJSC Polyus Gold. The outlook on the ratings is negative.


* Kommersant and Vedomosti reported that Sual Partners, owned by Viktor Vekselberg and his partners, intends to close a deal by the end of October to buy 17.02% of United Co. RUSAL Plc, owned by Mikhail Prokhorov's Onexim, according to Vekselberg's interview with Bloomberg. If Sual Partners completes the transaction, it will own 32.8% of the aluminum company.

* RUSAL's board approved a payment of interim dividends for the first half in the amount of about 1.65 U.S. cents per common share, Kommersant reported. The payment of dividends is subject to approval by the creditor banks.

* New evidence suggests that, not only did Sundance Resources Ltd. bribe the family of the president of the Republic of Congo, but it also bribed the country's mines and geology minister. Fairfax Media obtained leaked documents showing that Sundance gave millions of dollars worth of shares to a company, Cominvest, which was founded and directed by the brother of Republic of Congo mining minister Pierre Oba.

* RBC Daily reported that the auction for the right to develop Sukhoi Log, with 28% of the gold reserves of Russia, could take place at the end of the year. Only companies with state participation of not less than 25% will be allowed to take part in the auction.

* Vedomosti reported that MMK will not sell its Turkish subsidiary, MMK Metalurji Sanayi Ticaret ve Liman Isletmeciligi AS. The main owner of MMK, Viktor Rashnikov, believes it can be profitable.

* In an effort to streamline its corporate governance, POSCO Engineering & Construction Co. is seeking to lay off about 600 workers under a voluntary retirement scheme, which accounts for more than half of its 1,000-man workforce, The Korea Times reported. The company will start accepting resignations from Oct. 4, according to company insiders.

* Fushun Special Steel, which is 35.22% owned by state-run, unlisted steelmaker Dongbei Special Steel Group Co Ltd., said a court is reviewing an application from creditors for a bankruptcy restructuring of its parent as part of its business revival plan, Reuters reported.

* Thousands of protesters in Vietnam gathered at a steel plant run by a Formosa Plastics Group unit, demanding the exit of the company from the country, more compensation and better environmental cleanup, Reuters reported. In April, toxins released from the company's US$10.6 billion steel plant caused massive fish deaths along a 200-kilometer stretch of coastline.

* S&P Global Ratings downgraded the corporate credit rating on Compass Minerals International Inc. to BB from BB+, with a stable outlook. The firm also assigned a BB+ issue-level rating and 2 recovery rating to the company's new US$450 million term loan due 2021.

* Fitch Ratings has maintained the rating watch evolving on the Tata Steel Ltd.'s long-term issuer default rating, which is at BB, and long-term issuer default rating of Tata Steel UK Holdings Ltd., which is at B.

* Exxaro Resources Ltd. completed the divestment of its iron ore assets in the Republic of Congo, transferring the ownership of the Mayoko iron ore project to SAPRO SA.


* Saint Jean Carbon Inc. entered into an agreement to acquire a large block comprising 27 mineral claims that cover 1,458 hectares in Quebec's James Bay region. The new claims are contiguous to the company's Whabouchi lithium project and increase its lithium holding to 109 claims in the area.

* Lobbyists from Russia met with Chilean government officials to discuss collaboration on lithium projects, Reuters reported.


* Colombia’s bid to end more than five decades of armed conflict with the Revolutionary Armed Forces of Colombia, known as FARC, has failed, with Colombians voting against a peace deal. The voting was expected to end in favor of ending the conflict, but 50.25% of votes were cast against the agreement.

* Regina Lopez, the Philippines' Environment and Natural Resources secretary, said some of the 20 mines facing suspension orders on the back of environmental violations may not have to halt operations if they manage to fix the issues, Reuters reported. Lopez was cited as saying that the mines will be given time to address the problems.

S&P Global Ratings and SNL Metals and Mining, an offering of S&P Global Market Intelligence, are both owned by S&P Global Inc.

The Daily Dose is updated as of 7 a.m. London time, and scans news sources published in Chinese, English, Indonesian, Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Some external links may require a subscription.

Technology, Media & Telecom
Broadband Only Homes Skyrocket In 2018 Validating Top MSOs Connectivity Pivot


The segment stood at an estimated 23.6 million as of Dec. 31, 2018, accounting for 24% of all wireline high-speed data homes.

The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Mar. 20 2019 — The U.S. broadband-only home segment logged its largest net adds on record in 2018, validating Comcast Corp.'s and Charter Communications Inc.'s moves to make broadband, or connectivity, the keystone of their cable communication businesses.

The size and momentum of the segment also put in perspective the recent high-profile online-video video announcements by the top two cable operators as well as AT&T Inc.'s WarnerMedia shake-up and plans to go toe-to-toe with Netflix in the subscription video-on-demand arena in the next 12 months.

We estimate that wireline broadband households not subscribing to traditional multichannel, or broadband-only homes, rose by nearly 4.3 million in 2018, topping the gains from the previous year by roughly 22%. Overall, the segment stood at an estimated 23.6 million as of Dec. 31, 2018, accounting for 24% of all wireline high-speed data homes.

For perspective, broadband-only homes stood at an estimated 11.3 million a mere four years ago, accounting for 13% of residential cable and telco broadband subscribers.

The once all-powerful, must-have live linear TV model, which individuals and families essentially treated as a utility upon moving into a new residence, increasingly is viewed as too expensive and unwieldy in the era of affordable, nimble internet-based video alternatives. This has resulted in a sizable drop in penetration of occupied households.

As a result, continued legacy cord cutting is baked in and broadband-only homes are expected to continue to rise at a fast clip, with the segment's momentum in the next few years compounded by Comcast's, Charter's and AT&T's ambitious moves into online-video territory.

Note: we revised historical broadband-only home estimates as part of our fourth-quarter 2018, following restatements of historical telco broadband subscriber figures and residential traditional multichannel subscriber adjustments.

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Q4'18 multichannel video losses propel full-year drop to edge of 4 million

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Q4'18 multiproduct analysis sheds more light on video's fall from grace

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Listen: Street Talk Episode 40 - Digital Banks Take a Page Out of 'Mad Men'

Mar. 20 2019 — Some fintech companies are making hay with digital platforms that tout their differences with banks, even though they are often offering virtually the same products. In the episode, we discuss with colleagues Rachel Stone and Kiah Haslett the deposit strategies employed by the likes of Chime, Aspiration and other incumbent players such as Ally Financial, Discover and Capital One. Those efforts conjure up memories of a Don Draper pitch in Mad Men and likely will enjoy continued success.

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Watch: Power Forecast Briefing: As retirements accelerate, can renewable energy fill the gap?

Mar. 19 2019 — Steve Piper shares the outlook for U.S. power markets, discussing capacity retirements and whether continued development of wind and solar power plants may mitigate the generation shortfall.

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Credit Analysis
2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

Mar. 15 2019 — On November 20, 2018, a joint event hosted by S&P Global Market Intelligence and S&P Global Ratings took place in London, focusing on credit risk and 2019 perspectives.

Pascal Hartwig, Credit Product Specialist, and I provided a review of the latest trends observed across non-financial corporate firms through the lens of S&P Global Market Intelligence’s statistical models.1 In particular, Pascal focused on the outputs produced by a statistical model that uses market information to estimate credit risk of public companies; if you want to know more, you can visit here.

I focused on an analysis of how different Brexit scenarios may impact the credit risk of European Union (EU) private companies that are included on S&P Capital IQ platform.

Before, this, I looked at the evolution of their credit risk profile from 2013 to 2017, as shown in Figure 1. Scores were generated via Credit Analytics’ PD Model Fundamentals Private, a statistical model that uses company financials and other socio-economic factors to estimate the PD of private companies globally. Credit scores are mapped to PD values, which are based on/derived from S&P Global Ratings Observed Default Rates.

Figure 1: EU private company scores generated by PD Model Fundamentals Private, between 2013 and 2017.

Source: S&P Global Market Intelligence.2 As of October 2018.

For any given year, the distribution of credit scores of EU private companies is concentrated below the ‘a’ level, due to the large number of small revenue and unrated firms on the S&P Capital IQ platform. An overall improvement of the risk profile is visible, with the score distribution moving leftwards between 2013 and 2017. A similar picture is visible when comparing companies by country or industry sector,3 confirming that there were no clear signs of a turning point in the credit cycle of private companies in any EU country or industry sector. However, this view is backward looking and does not take into account the potential effects of an imminent and major political and economic event in the (short) history of the EU: Brexit.

To this purpose, S&P Global Market Intelligence has developed a statistical model: the Credit Analytics Macro-scenario model enables users to study how potential future macroeconomic scenarios may affect the evolution of the credit risk profile of EU private companies. This model was developed by looking at the historical evolution of S&P Global Ratings’ rated companies under different macroeconomic conditions, and can be applied to smaller companies after the PD is mapped to a S&P Global Market Intelligence credit score.

“Soft Brexit” (Figure 2): This scenario is based on the baseline forecast made by economists at S&P Global Ratings and is characterized by a gentle slow-down of economic growth, a progressive monetary policy tightening, and low yet volatile stock-market growth.4

Figure 2: “Soft Brexit” macro scenario.5

Source: S&P Global Ratings Economists. As of October 2018.

Applying the Macro-scenario model, we analyze the evolution of the credit risk profile of EU companies over a three-year period from 2018 to 2020, by industry sector and by country:

  • Sector Analysis (Figure 3):
    • The median credit risk score within specific industry sectors (Aerospace & Defense, Pharmaceuticals, Telecoms, Utilities, and Real Estate) shows a good degree of resilience, rising by less than half a notch by 2020 and remaining comfortably below the ‘b+’ threshold.
    • The median credit score of the Retail and Consumer Products sectors, however, is severely impacted, breaching the high risk threshold (here defined at the ‘b-’ level).
    • The remaining industry sectors show various dynamics, but essentially remain within the intermediate risk band (here defined between the ‘b+’ and the ‘b-’ level).

Figure 3: “Soft Brexit” impact on the median credit risk level of EU private companies, by industry.

Source: S&P Global Market Intelligence. As of October 2018.

  • Country Analysis (Figure 4):
    • Although the median credit risk score may not change significantly in certain countries, the associated default rates need to be adjusted for the impact of the credit cycle.6 The “spider-web plot” shows the median PD values for private companies within EU countries, adjusted for the credit cycle. Here we include only countries with a minimum number of private companies within the Credit Analytics pre-scored database, to ensure a robust statistical analysis.
    • Countries are ordered by increasing level of median PD, moving clock-wise from Netherlands to Greece.
    • Under a soft Brexit scenario, the PD of UK private companies increases between 2018 and 2020, but still remains below the yellow threshold (corresponding to a ‘b+’ level).
    • Interestingly, Italian private companies suffer more than their Spanish peers, albeit starting from a slightly lower PD level in 2017.

Figure 4: “Soft Brexit” impact on the median credit risk level of EU private companies, by country.

Source: S&P Global Market Intelligence. As of October 2018.

“Hard Brexit” (Figure 5): This scenario is extracted from the 2018 Stress-Testing exercise of the European Banking Authority (EBA) and the Bank of England.7 Under this scenario, both the EU and UK may go into a recession similar to the 2008 global crisis. Arguably, this may seem a harsh scenario for the whole of the EU, but a recent report by the Bank of England warned that a disorderly Brexit may trigger a UK crisis worse than 2008.8

Figure 5: “Hard Brexit” macro scenario.9

Sources:”2018 EU-wide stress test – methodological note” (European Banking Authority, November 2017) and “Stress Testing the UK Banking system: 2018 guidance for participating banks and building societies“ (Bank of England, March 2018).

Also in this case, we apply the Macro-scenario model to analyze the evolution of the credit risk profile of EU companies over the same three-year period, by industry sector and by country:

  • Sector Analysis (Figure 6):
    • Despite all industry sectors being severely impacted, the Pharmaceuticals and Utilities sectors remain below the ‘b+’ level (yellow threshold).
    • Conversely, the Airlines and Energy sectors join Retail and Consumer Products in the “danger zone” above the ‘b-’ level (red threshold).
    • The remaining industry sectors will either move into or remain within the intermediate risk band (here defined between the ‘b+’ and the ‘b-’ level).

Figure 6: “Hard Brexit” impact on the median credit risk level of EU private companies, by industry.

Source: S&P Global Market Intelligence. As of October 2018.

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  • Country Analysis (Figure 7):
    • Under a hard Brexit scenario, the PD of UK private companies increases between 2017 and 2020, entering the intermediate risk band and suffering even more than its Irish peers.
    • Notably, by 2020 the French private sector may suffer more than the Italian private sector, reaching the attention threshold (here shown as a red circle, and corresponding to a ‘b-’ level).
    • While it is hard to do an exact like-for-like comparison, it is worth noting that our conclusions are broadly aligned with the findings from the 48 banks participating in the 2018 stress-testing exercise, as recently published by the EBA:10 the major share of 2018-2020 new credit risk losses in the stressed scenario will concentrate among counterparties in the UK, Italy, France, Spain, and Germany (leaving aside the usual suspects, such as Greece, Portugal, etc.).

Figure 7: “Hard Brexit” impact on the median credit risk level of EU private companies, by country.

Source: S&P Global Market Intelligence. As of October 2018.

In conclusion: In Europe, the private companies’ credit risk landscape does not yet signal a distinct turning point, however Brexit may act as a pivot point and a catalyst for a credit cycle inversion, with an intensity that will be dependent on the Brexit type of landing (i.e., soft versus hard).

1 S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence.
2 Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit scores from the credit ratings issued by S&P Global Ratings.
3 Not shown here.
4 Measured via Gross Domestic Product (GDP) Growth, Long-term / Short-term (L/S) European Central Bank Interest Rate Spread, and FTSE100 or STOXX50 stock market growth, respectively.
5 Macroeconomic forecast for 2018-2020 (end of year) by economists at S&P Global Ratings; the baseline case assumes the UK and the EU will reach a Brexit deal (e.g. a “soft Brexit”).
6 When the credit cycle deteriorates (improves), default rates are expected to increase (decrease).
7 Source: “2018 EU-wide stress test – methodological note” (EBA, November 2017) and “Stress Testing the UK Banking system: 2018 guidance for participating banks and building societies”. (Bank of England, March 2018).
8 Source: “EU withdrawal scenarios and monetary and financial stability – A response to the House of Commons Treasury Committee”. (Bank of England, November 2018).
9 As a hard Brexit scenario, we adopt the stressed scenario included in the 2018 stress testing exercise and defined by the EBA and the Bank of England.
10 See, for example, Figure 18 in “2018 EU-Wide Stress Test Result” (EBA November 2018), found at:

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2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Market-Driven View

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