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Economic Research

U.S. Election: Promises, Policy, And The Potential Effects On The Economy And Corporate Credit

Published October 19, 2020

As the historically unusual election season in the U.S. nears its Nov. 3 climax--with the race thrown even further into uncharted waters with President Donald Trump's contraction of COVID-19--S&P Global Ratings has analyzed the platform of the president's Republican party and that of presidential nominee Joe Biden and the Democratic party.

With 35 of 100 Senate seats (23 Republican, 12 Democratic) and all 435 seats in the House of Representatives at stake, we remain impartial to the politics and rhetoric of the race. Instead, we focus on the stated policies of the two camps, as well as what, if implemented, they would mean for the broader economy and for the credit quality of borrowers, including nonfinancial corporates, banks, and states and municipalities.

Economic Forecasts: Third Quarter 2020

While the threat from COVID-19 persists, many key economies fared better than expected in the third quarter as households stepped up spending in the U.S. and Europe, and the Chinese government ramped up infrastructure investment. The majority of advanced economies surprised on the upside, while developments in emerging markets were mixed.

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BioNTech/Pfizer’s announcement of 90% efficacy in phase 3 trials of its new vaccine offered hope that an end might be in sight to the COVID-19 crisis.

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The Health Care Credit Beat:

U.S. Election Issue--Industry Reform Will Likely Remain Gradual, Though Wildcards Abound

Published October 29, 2020

Low- to medium-risk for major health care policy changes and limited to no ratings impact in the near term.

We have not incorporated any major legislative changes into our projections.

Pharmaceutical companies face the greatest level of risk, though a blue sweep would further elevate that risk.

A Republican win would entail elevated risk for providers.

Health insurers face the least risk, though they would see greater risk following a blue sweep given the uncertainty around the details of the Democrats' plans.


In the midst of a global health crisis and economic downturn, the 2020 U.S. presidential election comes at an unprecedented time of volatility.

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Retail Trends In August Illustrated Consumers' Resilience And Shifts In Spending

Published September, 2020

President Trump and former-Vice President Joe Biden's energy policies vastly differ in their main tenets and will have different implications for the upstream and midstream oil and gas sectors.

Regardless of the presidential election outcome, the upstream and midstream sectors still face headwinds that are making for a difficult operating environment.

We believe renewables—especially solar--stand to gain significantly under a Biden administration. The $2 trillion plan highlights the extension of renewable tax credits as a key agenda item.

In public finance, we expect a limited impact from the outcome of the presidential election in the short-term, although states with a comparatively large share of mining activities could face new headwinds should standing policies materially shift away from extraction and production.

Overall, states and utilities have been less reliant on federal energy funding and have been responding to state-driven environmental regulations, which in some cases is stricter than those coming from Washington, D.C.

U.S. Corporate Tax Policy Post-Election Won’t Likely Affect Ratings, Regardless Of Election Results

The plan espoused by Democratic presidential candidate Joe Biden to raise the statutory tax rate for U.S. corporations would likely raise the effective rate for most companies we rate, absent tax-planning offsets.

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How Diverging Energy Policies In The U.S. Presidential Election May Affect Credit Quality

President Trump and former-Vice President Joe Biden's energy policies vastly differ in their main tenets and will have different implications for the upstream and midstream oil and gas sectors.

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The credit downturn caused by COVID-19 has been abrupt and severe, with a tremendous variance of impact across different corporate sectors. As markets begin to reopen, we will continue to share our views on the economic and credit implications.

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Credit FAQ:

How A Big Election Win For The Democrats Could Affect U.S. Telecom And Cable Companies

Published October 27, 2020

In the upcoming U.S. election, some are speculating that Democrats might be able to both win the presidency and take control of the Senate--a so-called blue sweep. Such a scenario could provide a rare opportunity for Democratic policies to become enacted. We believe the biggest risk is the potential for price regulation of cable providers, while the potential for increased funding for broadband provides some opportunities for operators to benefit. Below we answer some specific questions about how a blue sweep could affect the sector.

Regulators Lean In To U.S. Big Tech Firms

The seemingly unstoppable expansion of Apple Inc., Alphabet Inc., Amazon.com Inc., and Facebook Inc. in the smartphone ecosystem, digital advertising, e-commerce, and social media could decelerate as the tech giants face scrutiny from the U.S. Congress, Department of Justice (DoJ), and Federal Trade Commission (FTC)--and that's naming only the domestic regulators.

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At S&P Global Ratings we are continuously assessing the economic and credit impact of the COVID-19 pandemic around the world. Subscribe to our Coronavirus Bulletin today and we will ensure you have all our latest research and forecasts as they are published.

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Regulated Utilities

U.S. Regulated Utilities' Credit Metrics Could Strengthen Under Proposed Biden Tax Plan

Published October 29, 2020

The espoused tax plan of U.S. Democratic presidential candidate Joe Biden would likely improve the U.S. regulated utility industry's financial measures if implemented. The key element of the tax plan that could potentially benefit the utility industry over our outlook period (over the next two years) is the proposal to increase the corporate tax rate to 28% from 21%. While details of Biden's tax plan are currently limited, we expect that under the promoted proposals the utility industry's funds from operations (FFO) to debt would improve by about 100 basis points. Because the Biden tax plan would likely result in higher customer bills, reception by utility regulators is a key risk that utilities must effectively manage. Though most U.S. corporations financially benefited from the Tax Cuts and Jobs Act of 2017 (TCJA), which enhanced cash flow by lowering the corporate tax rate to 21% from 35%, many U.S. regulated utilities saw their credit measures weaken. This is because utilities fully recover their income tax expense from customers, and the reduced tax rate led to a decline in FFO. A further reduction in the industry's FFO reflected increased cash taxes paid, as utilities lost the ability to accelerate the deductibility of capital expenditures beyond typical modified accelerated cost recovery system (MACRS) depreciation. Collectively, these changes to the tax code weakened the utility industry's FFO to debt by about 200 basis points (bps).

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