More good vaccine news and hopes for a smooth U.S. political transition buoyed markets. We see a September 2021 trailing spec-grade default rate of 9% in the U.S., 8% in Europe.Read the Weekly Digest
Our periodic roundup of key takeaways from our articles brings together all of S&P Global Ratings’ coronavirus-related research—including our regularly updated list of rating actions we have taken globally on corporations, sovereigns, and project finance.
Published November 1, 2020
Our economic modeling suggests fiscal stimulus is more powerful when demand is depressed and interest rates are negative--the current state of the European economy.
We find that fiscal stimulus in the eurozone could boost growth between 1.6 and 2 times the amount spent after four years, that is, for every €100 spent, economies would generate up to €200.
Our study also shows that proposed green, infrastructure, and digitalization spending by the four largest EU economies may not be enough just to close the wide investment gap accumulated before the COVID-19 crisis.
Economic Research: Real Time Economic Data Tracker: An Odd Juncture
The U.S. economy is yet again at a precipice. On one hand, COVID-19 cases have surged, risking fourth-quarter growth that bleeds into an early leading portion of the first quarter next year. On the other hand, at the same time, there have been encouraging announcements on the vaccine front since our last publication of this series, with couple of major vaccine makers--Pfizer/BioNTech and Moderna--announcing 90%-95% effectiveness of their trials so far, which raises hope of a vaccine in distribution sooner than expected. There is an upside risk to growth in the first half of next year, which may see some activity pulled forward from what was anticipated in the second half of the year.
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COVID-19 Heat Map:
We are updating our COVID-19 sector recovery expectations. While there is a tremendous variance of recovery prospects across different corporate sectors, we continue to believe it will take until well into 2022 or, in some cases, 2023 and beyond for many sectors to recover credit metrics.
Low interest rates and the long road to recovery puts financial policy as a key factor and variable that could further shape and delay the recovery timeline.
While most sectors remain in line with our initial view, there are a couple of bright spots (homebuilders, building materials, and consumer staples, for example) that, in some cases, we expect to recover sooner than our initial expectations, while the auto industry is showing some signs of stabilization.
Travel-related segments, especially related to air travel, continue to be under pressure and may not recover until 2023 and beyond as a result of restrictions, reluctant consumers, and heavy debt burdens.
Global Banking: Recovery Will Stretch To 2023 And Beyond
COVID-19 and the oil price shock of 2020 are taking a heavy toll on global banks. S&P Global Ratings has taken 335 negative rating actions globally since the outbreak began, and we anticipate it will be difficult for the financial strength ratings on financial institutions to return to pre-crisis levels. We don't expect the world's largest banking sectors, including more than half of G20's, to recover to pre-COVID-19 levels until 2023, or beyond.
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The ESG Pulse:
Published November 19, 2020
Sustainable Finance Addresses Social Justice As COVID-19 Raises The Stakes
Early in the pandemic, the coronavirus was seen as the "great leveler," hitting rich and poor alike. Instead, it's become apparent that COVID-19 is the "great divider," aggravating the many structural inequities between richer and poorer nations and people--leading to demands for social justice.
Energy In Transition
Global power generators have faced mounting uncertainty - the transition toward renewable energy sources, weakening load growth, and declining fuel prices. We explore the ‘Energy Transition’ and its credit implications.