(Editor's Note: This article has been updated from the previous edition. It now contains key takeaways from recent articles on Russian banks and U.S. timeshare loan payments.)
- As the U.S. battles the COVID-19 outbreak, S&P Global Ratings has affirmed the 'AA+' long-term and 'A-1+' short-term sovereign credit ratings on the country. The ratings reflect the country's diversified and resilient economy, monetary policy flexibility, and status as issuer of the world's leading reserve currency.
- The outlook remains stable, reflecting our view that unprecedented fiscal and monetary stimulus will limit the current economic downturn. The stable outlook also reflects our expectation that negative and positive rating factors will be balanced over the next two years.
- We expect an economic recovery next year and continued GDP growth afterward. A larger and prolonged deterioration in public finances could pressure the ratings. On the other hand, we could raise the ratings if we see signs of more effective and proactive policymaking beyond the policy response to the current recession.
The rate of spread and timing of the peak of the coronavirus outbreak are still highly uncertain. As the situation evolves, we will update our assumptions and estimates accordingly. As we expand our analysis of how the outbreak will affect economic conditions and credit, we will periodically update this article, which is an edited compilation of key takeaways from our series (see table 1).
Webcast Series And Weekly Digest
S&P Global Ratings is launching a series of weekly webcasts--Coronavirus Insights: Friday Credit Focus. Every Friday, we will provide the market with updates on our view of how the current unprecedented circumstances are affecting credit risk and ratings across asset classes. To register for the upcoming webcasts, please click the link: https://www.spglobal.com/ratings/en/events/webcasts/index
We are also publishing a COVID-19 Weekly Digest, which spotlights key developments, economic and credit market updates, and asset class trends on a weekly basis. See the latest published April 1 here.
In response to investors' growing interest in the coronavirus and its credit effects on companies, S&P Global Ratings is publishing a regularly updated list of rating actions we have taken globally on corporations, sovereigns, as well as project finance. These are public ratings where we mention the coronavirus as one factor or in combination with others. The latest edition is: "COVID-19: Coronavirus-Related Public Rating Actions On Corporations And Sovereigns To Date," published April 1.
In structured finance, S&P Global Ratings has placed the ratings on 77 classes from 32 aircraft and aircraft engine ABS transactions on CreditWatch with negative implications, due to the unprecedented collapse in travel caused by global restrictions and social distancing enacted to combat the spread of the coronavirus (see "77 Ratings On 32 Aircraft And Aircraft Engine ABS Deals Placed On Watch Negative Over Reduced Travel Due To Coronavirus," published March 19). In addition, ratings on nine classes from three whole business securitizations have been placed on CreditWatch with negative implications (see "Nine Ratings on Three Whole Business Securitizations Placed On Watch Negative Due To Stress From COVID-19," published March 24).
For specific consideration of CLOs, see "U.S. CLO Exposure To Negative Corporate Rating Actions (As Of March 29, 2020)," published March 31, and "COVID-19: Coronavirus-Related Public Rating Actions On Nonfinancial Corporations And Affected European CLOs," published April 3.
Moreover, all of S&P Global Ratings' sector outlooks in U.S. public finance are now negative (see "All U.S. Public Finance Sector Outlooks Are Now Negative," published April 1). S&P Global Ratings also revised to negative the outlooks on nearly all long-term debt ratings in the U.S. transportation infrastructure sector, and all U.S. higher education privatized student housing projects in the wake of COVID-19 and the uncertainties surrounding the ultimate economic fallout (see "Ratings Outlooks On U.S. Transportation Infrastructure Issuers Revised To Negative Due To COVID-19 Pandemic," published March 26, and "U.S. Higher Education Privatized Student Housing Projects Outlook Revised To Negative On Potential COVID-19 Impact," published March 25).
"Credit FAQ: The Ratings Process And The COVID-19 Pandemic," published April 2, addresses some questions about the pandemic's effect on S&P Global Ratings and how our credit analysis and surveillance are proceeding during this time.
The number of COVID-19 confirmed cases has now surpassed one million worldwide, with the death toll exceeding 55,000. The virus appears to be more contagious than Severe Acute Respiratory Syndrome (SARS) in 2003, although less lethal (see chart 1). Daily growth rates of COVID-19 confirmed cases outside of China have increased significantly (see chart 2). Around 21% of the confirmed cases have recovered.
Key Takeaways From Our Relevant Published Reports
1. Credit Conditions Asia-Pacific: As Bad As 1997, March 29, 2020
Terry E Chan, CFA, Melbourne, (61) 3-9631-2174, email@example.com
- Overall. Despite the slow return to normalcy in mainland China, the sharp rise in COVID-19 cases in the rest of the Asia-Pacific is translating to an environment at least as challenging as the 1997-1998 Asian Financial Crisis for borrowers.
- Risks. Top risks include COVID-19 containment failing, risk-aversion affecting financing, commodity price volatility increasing, and U.S.-China dispute reigniting.
- Credit. While lower official interest rates and government stimulus actions provide some relief, the slump in demand is likely to lead to declining credit quality and rising defaults, particularly among nonfinancial corporates with weaker credit profiles.
2. Credit Conditions Emerging Markets: Covid-19 Magnifies Risks, March 31, 2020
Jose M Perez-Gorozpe, Mexico City, (52) 55-5081-4442, firstname.lastname@example.org
- Overall. Emerging markets (EMs) are facing severe stress resulting from three simultaneous shocks, as the COVID-19 pandemic spreads globally. All key emerging economies that we cover will fall into recession or see sharply lower growth in 2020.
- Risks. Downside risks are significant. A prolonged outbreak will depress economic activity and stress health systems. Extended shock to investor sentiment could result in heightened refinancing risk, especially for low rated issuers.
- Credit. Global recession is heightening risk aversion, resulting in significant capital outflows from EMs, pressuring currencies and widening spreads. The sudden and substantial shock to global economy has impacted several sectors in EM economies, pressuring credit ratings.
3. Credit Conditions Europe: Europe Goes Into Lockdown, April 1, 2020
Paul Watters, CFA, London, (44) 20-7176-3542, email@example.com
- Overall: Containment measures to restrict the spread of the coronavirus have forced the authorities to place the European economy on life support. We expect the second quarter to see the nadir, but the duration of the outbreak and the credit implications are highly uncertain and nonlinear.
- Risks: Top risks include a worsening pandemic despite all efforts, scarcity of financing for indebted corporate borrowers, the re-emergence of global trade tensions including between the EU and U.K., and asymmetric fiscal costs from the pandemic placing renewed pressure on the EU's cohesion.
- Credit: Aggressive measures to ensure that credit remains accessible to business and that employees can remain on the payroll are supporting liquidity and provide some protection to the supply side of the economy. But the demand shock will weaken credit quality, particularly for corporates in consumer discretionary-facing sectors and those with already stretched balance sheets.
4. Global Credit Conditions: Triple Trouble: Virus, Oil, Volatility, April 1, 2020
Alexandra Dimitrijevic, London, +44-20-7176-3128, firstname.lastname@example.org
- As the sudden economic stop related to the coronavirus pandemic puts intense credit pressure on borrowers worldwide, credit conditions across regions are as gloomy as they've been since at least the financial crisis more than a decade ago.
- Our Credit Conditions Committees' top risks include coronavirus-containment measures failing, financial and commodities market volatility worsening, and the demand drop-off persists and supply disruption escalates.
- This comes as oil markets head into a period of severe supply-demand imbalance. Demand for oil and oil products is already weak and will almost certainly decline materially in the second quarter.
5. Credit FAQ: Assessing The Coronavirus-Related Damage To The Global Economy And Credit Quality, March 24, 2020
Alexandra Dimitrijevic, London, +44-20-7176-3128, email@example.com
- With the sudden economic stop caused by coronavirus-containment measures placing intense credit pressures on borrowers worldwide, S&P Global Ratings has already taken more than 330 ratings actions on corporate borrowers at least partially as a result of the outbreak's effects.
- These pressures will lead to increased defaults. However, the magnitude will vary by industry, geography, and rating level. Companies rated 'B' and below have higher vulnerability to adverse business, financial, and economic conditions. At 'CCC' (or even 'B') a crisis such as this one could be existential, even if a borrower had adequate liquidity entering into the downturn.
- Among sovereign borrowers, developed economies usually have capacity to exercise larger and more effective stimulus, given their wealth and access to funding. Emerging markets have less room for policies to cushion the economic hit; in some extreme cases, their access to funding is limited. Still, it's safe to say that whenever this crisis is over, most countries will have weaker balance sheets than before.
6. Credit Conditions North America: Unprecedented Uncertainty Slams Credit, March 31, 2020
David C Tesher, New York, (1) 212-438-2618, firstname.lastname@example.org
- Overall. The U.S. and Canadian economies have plunged into what will likely be historically severe recessions, with evaporating liquidity plaguing both corporate borrowers and the real economy. With the COVID-19 pandemic continuing to spread, predicting an end to this period of unprecedented uncertainty is fraught with variables.
- Risks. With coronavirus-containment measures hammering the U.S. labor market—almost 3.3 million Americans filed jobless claims in one week, by far a record—the concomitant demand shock threatens to prolong the economic slump and stifle an expected second-half recovery.
- Credit. Historically low interest rates and massive government stimulus are helping to bolster financial markets, but slumping cash flows and tight financing conditions are pressuring the credit quality of issuers across our rating practices; S&P Global Ratings has taken roughly 350 ratings actions on borrowers in North America at least partially due to the coronavirus outbreak's effects.
7. COVID-19 Will Batter Global Auto Sales And Credit Quality, March 23, 2020
Vittoria Ferraris, Milan, (39) 02-72111-207, email@example.com
- We are further lowering our forecasts for global light vehicle sales as the coronavirus pandemic escalates and global growth heads sharply lower.
- We now project global sales will decline by almost 15% in 2020 to less than 80 million units.
- We expect global automakers and suppliers will face intense credit pressures, which will test their liquidity management and the headroom in their credit metrics.
8. Aircraft Lessors, Hit By Coronavirus Fallout, Should Fare Better Than Their Airline Customers, March 25, 2020
Philip A Baggaley, CFA, New York, (1) 212-438-7683, firstname.lastname@example.org
- The aircraft-leasing sector should fare better than airlines in this coronavirus-related economic downturn, but will still face pressure on their revenues and cash flow.
- Lessors will need to repossess some aircraft and re-lease them at lower rates in a weak market.
- Based on past experience, many lessors have mitigated potential risks by having diverse customer bases, collecting security deposits, and matching the terms of their leases and the debt funding them.
- Nevertheless, we expect to revise many outlooks to negative or put the ratings on CreditWatch, with some downgrades possible.
9. Coronavirus' Global Spread Poses More Serious Challenges For Airlines, March 12, 2020
Philip A Baggaley, CFA, New York, (1) 212-438-7683, email@example.com
- Current industry conditions in the global airlines sector have weakened substantially as the coronavirus pandemic poses serious challenges to the industry and threatens operators' credit quality.
- The ultimate impact of the coronavirus outbreak on our global airline ratings will depend on the duration and severity of the crisis, and the type and severity of measures airlines and governments take to mitigate it. These decisions will be partly informed by global, national, and local health authorities' advice on travel to highly affected areas.
- We see significant downside potential to International Air Transport Assn.'s 19% global "extensive spread" revenue loss projection given the recent, rapid spread of the virus in the U.S. and President Trump's announced 30-day ban on travel to the U.S. from most of Europe.
- Over the next several weeks we will conduct reviews on global airline companies to reflect our updated views on the industry and this highly uncertain and fast-moving situation.
10. COVID-19, Risks Of Global Recession Spike Business Services' Downgrade Tilt, March 19, 2020
Tatiana Kleiman, New York, (1) 212-438-4872, firstname.lastname@example.org
- COVID-19 will be a material headwind for the business services sector given our expectations that the drastic efforts to contain the coronavirus leads to a global economic recession in 2020.
- Given the uncertainties in the trajectory and development of the spread of COVID-19, the increasing risk of a prolonged recession, and the weak average credit quality of our sector ratings portfolio, we now expect a spike in downgrades and defaults over the next six months.
- Over the next 30 days, downgrades will likely reflect issuers with high end-market exposure to travel, hospitality, leisure, and oil and gas, or that have short-term refinancing or liquidity needs. Thereafter, we expect downgrades to become more broad-based, but concentrated within segments identified as having a high cyclical demand exposure to the business cycle.
11. China's Oil Majors Can Withstand Crude Price Slump…For Now, March 18, 2020
Danny Huang, Hong Kong, (852) 2532-8078, email@example.com
- S&P Global Ratings has not changed its ratings on China's three oil majors CNPC, Sinopec, and CNOOC despite a halving in the price of oil in the year to date.
- However the price drop is hitting the ratings buffer of all the firms, and we see particular sensitivity if oil stays below US$40/barrel.
- A prolonged slump in the price of crude may prompt a review of the ratings of China's oil majors.
12. S&P Global Ratings Cuts WTI And Brent Crude Oil Price Assumptions Amid Continued Near-Term Pressure, March 19, 2020
Simon Redmond, London, (44) 20-7176-3683, firstname.lastname@example.org
- S&P Global Ratings lowered its West Texas Intermediate (WTI) and Brent crude oil price assumptions for 2020 by $10 a barrel. Oil price assumptions are unchanged for 2021 and 2022. In addition, we affirmed the Henry Hub and AECO Canadian natural gas price assumptions.
- Over the next several weeks, we will continue to conduct reviews on investment-grade and speculative-grade E&P and oilfield services companies.
- Oil markets are heading into a period of a severe supply-demand imbalance in second-quarter 2020. The acute oversupply threatens to test the limits of crude and product storage as soon as May, according to S&P Global Platts Analytics.
13. Metal Price Assumptions: Oil Prices And The Coronavirus Dulls Demand For Most Metals, March 16, 2020
Donald Marleau, CFA, Toronto, (1) 416-507-2526, email@example.com
- We're lowering some of our price assumptions by only 5%-10% despite shocking headlines for supply-chain disruptions and lower oil prices.
- We expect several rating actions within the next two weeks because of these lower assumptions, but mostly for deep high-yield issuers that could breach our leverage thresholds with 2021 maturities on the horizon.
- Our previous assumptions for several metals were already below breakeven cash costs for numerous marginal assets, which should limit additional significant price drops but bodes ill for demand.
- Copper and steel inventories rose after the Lunar New Year as the coronavirus led to an industrial slowdown in China, and demand-pull for intermediate metals products globally has stalled as the outbreak has spread.
14. The Health Of Branded European Consumer Goods Companies Isn’t Immune To The New Coronavirus, Feb. 3, 2020
Rocco A Semerano, London, +44 20 7176 3650, firstname.lastname@example.org
- Chinese customers, both in their home country and during their overseas travels, are the largest customer segment for the personal luxury industry, accounting for about 35% of global industry.
- We estimate that European rated luxury goods companies have some headroom under existing ratings to withstand a moderate hit to their earnings that will depend on how quickly the virus can be contained.
- We note that China and travel retail also represents a profitable growth driver for the other product categories, such as alcoholic beverages and beauty care.
15. If Coronavirus Is Not Contained, Disruption For Toy Companies Could Extend Into The Second Quarter, Feb. 27, 2020
Emile J Courtney, CFA, New York, (1) 212-438-7824, email@example.com
- Transportation restrictions and fear of travel complicate workers' return to factories.
- We anticipate negative effects on revenue and EBITDA in the seasonally weak first quarter.
- Revenue effects are modest under our base case, unless the virus is not brought under control and there is a wider and harsher global economic impact that hurts consumer spending.
16. Coronavirus Is Not The Only Headline For Corporate Australia, March 10, 2020
Richard Timbs, Sydney, (61) 2-9255-9824, firstname.lastname@example.org
- The coronavirus will weigh heavily on Australia's economy, and this will feed through to demand and pricing for goods and services in Australia.
- We anticipate travel- and tourism-exposed sectors will bear the brunt of the initial impact. A lower Australian dollar will provide some cushion to the Australian economy, but there will be winners and losers among Australian corporates.
- Several Australian companies have already highlighted the potential fallout from coronavirus on their businesses, including Virgin Australia Holdings Ltd., Crown Resorts Ltd., BlueScope Steel Ltd., as well as discretionary retailers and their landlords such as Vicinity Centres and Scentre Group Ltd.
17. How Are China's Industrial Producers And Construction Firms Holding Up Under The COVID-19 Outbreak, March 8, 2020
Claire Yuan, Hong Kong, (852) 2533-3542, Claire.Yuan@spglobal.com
- Auto sales: We expect China's auto sales to decline by 5% from last year. The fallout from the virus outbreak hit auto consumption hardest in February. We anticipate auto demand will gradually pick up from the second quarter onwards as pent-up demand gradually releases. Favorable government policies may also support auto sales.
- Auto OEMs: They generally expect production to normalize gradually from March and April onwards, and that they can improve utilization rates to compensate for stoppages in the first quarter.
- Capital goods companies: Generally, the first quarter will be tough on revenue and margins. However, we anticipate wind-power equipment makers will see significant volume growth in 2020, due to rush installation ahead of subsidy cuts. Late-cycle construction machinery should continue to see decent demand and benefit from ongoing infrastructure construction.
- Engineering and construction companies: The construction industry in China faces a large but temporary blow. The sector companies we rate should be able to absorb the first-quarter disruptions and largely make up for lost time in subsequent quarters.
18. Coronavirus Outbreak A Test For China Corporates' Cash Flow And Liquidity, Feb. 12, 2020
Chang Li, Beijing, + 86 10 6569 2705, email@example.com
- Outbreak of the novel coronavirus in China could put more pressure on the already weakening liquidity of Chinese corporates, especially small businesses.
- Corporates with high operating leverage, concentrated short- term maturities, and poor liquidity management will be hit harder.
- Information technology, consumer, and retail and leisure have more liquidity issues, and may have to face stretched liquidity during this period.
19. How Is COVID-19-Related Market Volatility Affecting Investment Holding Companies?, March 12, 2020
Marta Bevilacqua, Milan, + (39) 0272111298, firstname.lastname@example.org
- Investment holding companies (IHCs) are sensitive to market valuations and have not been immune to recent equity market declines. The vast majority of rated IHCs in Europe, the Middle East, and Africa (EMEA), however, have ample rating headroom, given several years of improving asset values, which resulted in a structural improvement of their balance sheets.
- Companies with the lowest leverage are better placed to withstand turbulent market conditions.
20. Coronavirus Jeopardizes Creditworthiness At Certain Major Japanese Companies, Feb. 12, 2020
Roko Izawa, Tokyo, (81) 3-4550-8674, email@example.com
- A number of Japanese companies face the prospect of damage to their operating performance in the first half of 2020 following the coronavirus outbreak in China.
- Auto and retail companies that have considerable exposure to the country for production and sales will likely be impacted, as will transportation and leisure companies that are seeing a significant decrease in Chinese tourists.
- Disrupted transportation and distribution networks across the region could hold up supply chains, which we believe will negatively affect the electronics sector, too.
21. COVID-19 Piles Risk Onto Korea's Strained Corporates, March 12, 2020
JunHong Park, Hong Kong, (852) 2533-3538, firstname.lastname@example.org
- Korea's trade-dependent companies are emblematic of the strain COVID-19 is putting on global ratings.
- S&P Global Ratings has a negative outlook on almost one-quarter of the Korean companies we rate.
- Korean firms belonging to the refining and chemical, steel, airline, retail, auto, and technology sectors are all highly exposed.
22. Latin American 2020 Corporate Credit Outlook: COVID-19 Testing Latin America's Defenses, March 23, 2020
Diego H Ocampo, Buenos Aires, (54) 114-891-2116, email@example.com
- We expect stagnation for Latin America or even mild contractions for its largest economies.
- Airlines, oil and gas, metals and mining, forest products, leisure, lodging and gaming in the first line of contagion. Some key commodities produced in the region are hit hard by the global shock, and we believe the recovery would be gradual.
- Consumer products, retail, home appliances, shopping malls, car rentals, and auto parts are under pressure due to the demand crunch and supply chain disruptions. Companies in these sectors are, in our opinion, in a second line of contagion. Those that rely on imported raw materials may also experience profitability erosion as domestic currencies weaken.
- The weakening credit quality of sovereigns is pressuring corporate ratings. This is especially the case in Argentina and Mexico. The former needs to restructure its sovereign debt that currently appears as a titanic venture, while the latter will suffer from plummeting oil prices and fiscal imbalances.
- Debt maturities in the second half of 2020 start to look less manageable if the market freeze prolongs.
23. COVID-19 Exacerbates Africa's Social And Macroeconomic Vulnerabilities, March 18, 2020
Mohamed Damak, Dubai, (971) 4-372-7153, firstname.lastname@example.org
- COVID-19 transmission in Africa might accelerate given the continent's relatively poor public health systems.
- The immediate economic impact will come primarily from reduced commodities exports, remittances, tourism, and more restricted access to the global capital markets or portfolio investors.
- Uncertainty regarding the duration and the severity of the COVID-19 pandemic will keep risks high.
24. Asia-Pacific Credits Wobble As COVID-19 Goes Global, March 9, 2020
Vera Chaplin, Melbourne, (61) 3-9631-2058, email@example.com
- COVID-19 could knock US$211 billion from Asia-Pacific incomes and slow GDP growth to 4.0% in 2020.
- Our new baseline for China GDP growth in 2020 is 4.8% with a downside scenario of 2.8%. Australia, Hong Kong, Japan, Korea, Singapore, and Thailand will enter or flirt with recession.
- Risks remain on the downside and are non-linear for Asia's emerging markets that face healthcare constraints and tighter financial conditions.
25. Emerging Markets: Empty Streets And Rising Risks, March 30, 2020
Jose M Perez-Gorozpe, Mexico City, (52) 55-5081-4442, firstname.lastname@example.org
- Emerging markets (EMs) are facing severe stress resulting from three simultaneous shocks, as COVID-19 pandemic spreads globally. All key emerging economies that we cover will fall into recession or see sharply lower growth in 2020.
- We believe stress could become more significant in the coming weeks given that most EMs are only beginning to show an escalation of COVID-19 cases. As the epidemic accelerates, measures to contain the spread of the virus will compound the hit to economic activity from external shocks.
- The strength of eventual recovery will crucially depend on policy measures to cushion the blow and limit economic dislocation. Policy space differs across EMs.
- Downside risks are significant. Prolonged outbreak will depress activity and stress health systems. Extended shock to investor sentiment could result in heightened refinancing risk, especially for low rated issuers.
26. Prolonged COVID-19 Disruption Could Expose The GCC's Weaker Borrowers, March 11, 2020
Mohamed Damak, Dubai, (971) 4-372-7153, email@example.com
- COVID-19 will weigh on the economies of the Gulf Cooperation Council region as weakening global demand drags down oil prices and hampers important industries such as tourism and real estate.
- As global financing conditions deteriorate, funding costs for more-leveraged borrowers are rising and investor appetite for less-creditworthy issuers could fade.
- The high level of uncertainty regarding the duration and eventual severity of the crisis will increase downside risks.
Default, Transition, And Recovery
27. Recession Likely Will Spur The European Speculative-Grade Default Rate To Rise Toward 8%, March 31, 2020
Nick W Kraemer, FRM, New York, (1) 212-438-1698, firstname.lastname@example.org
- We expect the European trailing-12-month speculative-grade corporate default rate to rise to 8% within the next 12 months, from 2.2% in December 2019, as a global recession is now here amid the coronavirus pandemic.
- Financial market turmoil in response to the pandemic has led to a month with almost no bond or loan issuance, at a time when some sectors' earnings are under severe strain due to widespread lockdowns and supply side disruption.
- In our pessimistic scenario, a protracted period of fighting to contain the virus would lead to a longer and deeper recession, potentially pushing the default rate up to about 11%.
- The oil and gas sector is likely to be particularly hard hit during this time as Brent prices have fallen below $30 a barrel amid expanding supply following the standoff between Saudi Arabia and Russia. A quick resolution between the two parties is not expected.
28. The Global Recession Is Likely To Push The U.S. Default Rate To 10%, March 19, 2020
Nick W Kraemer, FRM, New York, (1) 212-438-1698, email@example.com
- We expect the U.S. trailing-12-month speculative-grade corporate default rate to rise to 10% within the next 12 months, from 3.1% in December 2019, as a global recession is now here amid the coronavirus pandemic.
- Financial market turmoil in response to the pandemic is pressuring funding conditions while earnings for some sectors are expected to plummet under the strain of supply disruptions and tanking demand.
- In our pessimistic scenario, a protracted period of fighting to contain the virus and reduced effectiveness of stimulus measures could lead to a longer recession, pushing the default rate to about 13%.
- The oil and gas sector is likely to be particularly hard hit during this time--oil prices have fallen below $30 per barrel amid expanding supply following the standoff between Saudi Arabia and Russia. A quick resolution between the two parties is not expected.
29. Asia-Pacific Economic Forecasts: The Cost Of Coronavirus Is Now US$620 Billion, March 22, 2020
Shaun Roache, Singapore, (65) 6597-6137, firstname.lastname@example.org
- S&P Global Ratings has updated its estimates of the total and permanent income loss for Asia-Pacific from COVID-19: approximately US$620 billion. This loss will be distributed across sovereign, bank, corporate, and household balance sheets.
- Our revised forecasts are consistent with the views in "Asia-Pacific Recession Guaranteed," and the global commentary "Global Recession Is Here And Now," both published on Ratings Direct on March 17, 2020. All forecasts remain subject to much higher-than-normal uncertainty.
- We have revised our real GDP, inflation, policy rate, and unemployment rate forecasts. We now expect China's GDP growth rate to slow to 2.9% in 2020. Economies will contract in Hong Kong, Singapore, South Korea, and a newly deflationary Japan. The region's average growth rate will be 2.7%.
30. Oil Price Plunge And COVID-19 Deal A Double Blow To Canada's Economy This Year, March 27, 2020
Satyam Panday, New York + 1 (212) 438 6009, email@example.com
- A sudden-stop recession is all but certain for Canada. The unrelenting sequence of hits to the already weak economy from plummeting oil prices, rail blockades, COVID-19, and global recession has ensured that Canada will see two quarters of well below-trend growth rate, which will materially increase the unemployment rate.
- We forecast a 2% real GDP contraction in Canada in 2020. If containment is effective, which is what we assume in our baseline, we expect stronger 3.4% growth in 2021.
- Forecast uncertainty is unusually high given the unprecedented circumstances. The Bank of Canada (BoC) and the federal government will do whatever it takes to cushion the blow, but still the balance of risk to our growth forecast remains on the downside.
31. COVID-19: The Steepening Cost To The Eurozone And U.K. Economies, March 26, 2020
Sylvain Broyer, Frankfurt, (49) 69-33-999-156, firstname.lastname@example.org
- The eurozone and U.K. are facing recessions. We now expect GDP to fall around 2% this year due to economic fallout from the coronavirus pandemic, which represents a €420 billion loss in real GDP in 2020, compared with our forecast from November 2019. We expect a gradual rebound of at least 3% in 2021.
- Central banks and governments have deployed a flurry of unprecedentedly large fiscal and monetary policy packages to help workers and companies bridge the gap to recovery. To prevent a credit crunch, central banks have injected liquidity and cut rates to lower banks' refinancing costs and have implemented large asset purchase programs.
- Swift and bold policy responses taken now are key to avoiding permanent losses to GDP later.
- Risks are still to the downside, as the pandemic might last longer and be more widespread than we currently envisage. For example, we estimate a lockdown of four months could lower eurozone GDP by up to 10% this year.
32. The Escalating Coronavirus Shock Is Pushing 2020 Global Growth Toward Zero, March 30, 2020
Paul F Gruenwald, New York, (1) 212-438-1710, email@example.com
- In response to the ongoing extraordinary impact of the coronavirus pandemic on economic activity and financial markets, we have marked down global growth to just 0.4% this year, with a rebound to 4.9% in 2021. The decline in activity will be very steep.
- The policy challenges are enormous. Central banks and governments have moved quickly, pulling out all of the stops to keep the financial system functioning as orderly as possible, protect the most vulnerable and highly affected groups, and bridge to an eventual recovery.
- The risks to our baseline forecast remain firmly on the downside since the translation from health outcomes to economic variables remains highly uncertain.
33. For Latin America, The Path To Economic Recovery From COVID-19 Remains Uncertain, March 31, 2020
Elijah Oliveros-Rosen, New York, (1) 212-438-2228, firstname.lastname@example.org
- The COVID-19 outbreak, and its associated economic and financial implications, will push Latin America into a recession in 2020, recording its weakest growth since the Global Financial Crisis (GFC). We forecast Latin America's GDP to contract 1.3% in 2020, and then, bounce back to 2.7% growth in 2021.
- While we believe that the depth of the recession could be on par, or potentially worse, for some Latin American economies than during the GFC, we expect the length of the recession will be much shorter: two quarters versus six quarters during the GFC.
- Risks are firmly to the downside as inadequate or delayed policy implementation could lengthen the health crisis and postpone the economic recovery we had expected across the region.
- We see a higher risk of a prolonged crisis in Mexico due to the slow public health response to the pandemic combined with pre-outbreak weak investment dynamics.
34. It's Game Over For The Record U.S. Run; The Timing Of A Restart Remains Uncertain, March 27, 2020
Beth Ann Bovino, New York, (1) 212-438-1652, email@example.com
- Amid the coronavirus pandemic, the longest economic expansion in U.S. history has abruptly ended: In our baseline, we forecast GDP will drop by 1.3% in 2020, down from our pre-virus December forecast of a 1.9% gain.
- Our baseline recession will likely be on par with the economic losses seen during the Great Recession, but over a much shorter time frame. In our deep recession scenario, the possible economic damage would far exceed that of the Great Recession.
- The government's tentative economic relief package and the Fed's own stimulus measures will likely help conditions, but not enough to fully offset the drag on second-quarter economic activity.
35. Australian Banks Resilient To COVID-19 Crisis, March 31, 2020
Sharad Jain, Melbourne, (61) 3-9631-2077, firstname.lastname@example.org
- Australian major banks should be able to absorb a material rise in credit losses due to the COVID-19 outbreak within their earnings despite lower interest and fee income.
- Our sensitivity analysis suggests that mutual ADIs have lower buffers to withstand more severe scenarios.
- Our ratings on most banks in Australia have headroom for a modest increase in economic risks facing the banks in the country. A more severe and longer lasting downturn beyond our base case would likely result in several downgrades.
- Monetary and policy support from the central bank and government has significantly eased bank funding and liquidity concerns and provided additional borrower and business support, in our view.
36. China Banks And Coronavirus: Forbearance Today, Diminished Standards Tomorrow, Feb. 19, 2020
Ming Tan, CFA, Hong Kong, + 852 2532 8074, email@example.com
- We estimate Chinese 2020 GDP growth of 5.0% and gross nonperforming loans (NPLs) to peak at 6.0% in our baseline.
- Forbearance may keep reported Chinese bank NPLs at around 2% of gross loans, but the peak questionable loan ratio may almost double in the aftermath of the coronavirus outbreak, in the worst-case scenario.
- We expect China will loosen NPL recognition standards to help affected businesses and communities, and that it may take years to digest the forbearance.
37. European Banks' First-Quarter Results: Many COVID-19 Questions, Few Conclusive Answers, April 1, 2020
Osman Sattar, FCA, London (44) 20-7176-7198, firstname.lastname@example.org
- While European banks' first-quarter results might be important indicators of the impact of the economic "stop" across much of Europe, we expect management disclosures and comments to be more revealing than the results themselves.
- The COVID-19 pandemic will result in most European banks applying forbearance measures across their loan books, as well as raising questions about the future shape of loan provisioning under IFRS 9--a standard that has not yet seen a full economic downturn.
- We don't currently see forbearance measures as an indication of a sharp rise in future credit losses, but losses will inevitably rise through 2020 and banks' transparency in reporting will be important to investor confidence.
- We expect the effect on bank liquidity and capital ratios to be uneven. Having eased buffer requirements, regulators are comfortable seeing ratios start to decline, but for a decade investors have seen ever-increasing ratios and so will want a refreshed view from bank management on how they could develop through 2020.
- Many market movements that will affect 2020 results may not be visible in first-quarter disclosures, such as further margin pressure from low base rates and likely widening in pension fund deficits.
38. Coronavirus Spells More Trouble For Hong Kong Banks, Feb. 3, 2020
Shinoy Varghese, Hong Kong (852) 2533-3573; email@example.com
- The new coronavirus outbreak will add to the challenges that Hong Kong banks already face amid social unrest, U.S.-China trade tensions, and China's economic slowdown.
- Travel and tourism, hospitality, entertainment, trade, and retail sectors will likely be the hardest hit, dragging on credit demand and quality. Some sectors are already under severe strain because of the social unrest in Hong Kong.
- Some bank ratings could come under pressure if credit costs rise sharply or loan quality deteriorates more severely than the industry average, or capitalization significantly weakens.
39. COVID-19 Hits Indonesia Banks On Multiple Fronts, March 26, 2020
Ivan Tan, Singapore, (65) 6239-6335, firstname.lastname@example.org
- S&P Global Ratings expects Indonesia banks to take a hit from the COVID-19 pandemic. Although the banks are unlikely to be directly affected by currency depreciation, their loans to companies with significant foreign currency borrowing are vulnerable.
- Indonesia, being a major commodity producer and exporter, is susceptible to volatility in commodity prices, which in turn affects banks.
- Indonesia's central bank has initiated a series of rate cuts to bolster the economy. S&P Global Ratings believes further rate cuts are possible.
- We forecast a 1.5 percentage point increase in weak loans (nonperforming loans plus special mention loans) to 9.3%, and credit cost to rise to 285 basis points in 2020 from our prior forecast of 185 basis points.
40. The Coronavirus Pandemic Is Set To Test The Resiliency Of Italy's Banks, March 13, 2020
Regina Argenio, Milan, (39) 02-72111-208, email@example.com
- While most Italian banks started 2020 with their strongest balance sheets of the past decade, they are preparing different plans to cope with the deteriorating environment.
- The longer and deeper the economic contraction, the more this could impair the banks' asset quality, increase credit losses, and reduce business and revenue generation. Ultimately this represents a significant tail risk for Italian banks.
- We also note some mitigating factors that could support their credit profiles in the expected downturn. Most Italian banks have tightened their underwriting standards in recent years, improving their loan and client diversification, as well as reducing exposures to riskier customers.
41. Three Big Risks For Kazakh Banks: Oil Prices, Foreign Exchange Rates, And The Coronavirus, April 2, 2020
Irina Velieva, Moscow, (7) 495-783-40-71, firstname.lastname@example.org
- Much lower oil prices, consequently high currency volatility, and the coronavirus pandemic will add risks for Kazakh banks, challenging their resiliency and hampering further growth prospects.
- Key risk transmission channels will be via decreasing borrowers' payment capacity and banks' high level of dollarization.
- The asset quality review carried out by National Bank of Kazakhstan shed light on additional provisioning needs for legacy loans, yet the new risks will likely lead to an increase in problem assets this year.
- Loan book growth is yet uncertain, and profitability is likely to drop dramatically in 2020.
- The ratings on most Kazakh banks remain low in an international context, with a 'B' median rating, reflecting still high credit risks. We expect greater rating divergence, depending on how banks respond to the current worsening of operating conditions.
42. Korean Banks Will Likely Weather Headwinds Arising From Coronavirus, Feb. 5, 2020
Daehyun Kim, CFA, Hong Kong, (852) 2533-3508, email@example.com
- An economic downturn stemming from the coronavirus outbreak will likely weigh on Korean banks' asset quality and profitability in the coming few quarters.
- Nevertheless, S&P Global Ratings believes the Korean banks have adequate capital buffers and prudent risk management to weather the outbreak without any downgrades.
- We expect industries such as shipbuilding, shipping, and steel could be particularly pressured, as the sectors continue to face stiff competition amid global overcapacity.
43. Latin American Banks Will Cope With Coronavirus Fallout But At The Expense Of Asset Quality, March 24, 2020
Cynthia Cohen Freue, Buenos Aires, +54 (11) 4891-2161, firstname.lastname@example.org
- Foreign capital flight from emerging markets and a deterioration in asset quality will drag down the Latin American banks' operations.
- Government-owned banks will play a key role by stepping up financing to the most vulnerable economic sectors, but the trend will vary from one country to another in the region.
- The banks' funding structures, which mainly consist of customer deposits, will partly help compensate for a restricted access to capital markets.
- Lenders' high liquidity positions will also help.
- Recently established business continuity plans and cybersecurity measures will be tested amid economic and financial strains.
44. NPLs To Rise For Malaysian Banks As Political Uncertainty Adds To COVID-19 Blow, March 4, 2020
Rujun Duan, Singapore, (65) 6216-1152,email@example.com
- The global outbreak of COVID-19 and renewed domestic political uncertainty add obstacles for Malaysian banks, which are already grappling with the effects of a slowing economy and dampened investor and consumer sentiments over the past year.
- We are revising down our credit growth forecast for these banks to 1%-3% in 2020, from the previous 3%-5%. We now expect NPLs to reach 1.7%-1.8% of outstanding loans this year, versus 1.5% as of Dec. 31, 2019.
- In our view, the government's recently announced credit relief measures could buy some time for the sectors most disrupted by the coronavirus outbreak.
45. New Zealand Banks Buckle Down For Lockdown, March 30, 2020
Lisa Barrett, Melbourne, (61) 3-9631-2081, firstname.lastname@example.org
- We do not expect New Zealand's lockdown to weigh heavily on bank ratings, given the significant support measures helping to smooth the economic shocks.
- The major New Zealand banks are likely, in our view, to receive timely financial support from their Australian parents, if needed.
- Credit losses will escalate, but we think New Zealand banks should absorb increased losses without significant risks to their credit quality.
46. COVID-19 Means Another Year Of Single-Digit Loan Growth For Philippine Banks, March 8, 2020
Nikita Anand, Singapore, (65) 6216-1050, email@example.com
- Philippine banks could see another year of slow loan growth and uptick in nonperforming loans (NPL) as COVID-19 risk looms over economic growth and financial markets. We believe banks will be resilient to these external pressures supported by strong fundamentals.
- The Philippines is less exposed to tourism compared with neighbors, such as Thailand and Singapore. However, the expected slowdown in global growth, including in China, could be a blow to trade and private-sector investments in the Philippines.
47. Recession And Market Volatility Will Test The Resilience Of Russian Banks, April 2, 2020
Sergey Voronenko, Moscow, (7) 495-783-40-03, firstname.lastname@example.org
- The drop in oil prices and the coronavirus pandemic will throw the Russian economy into a recession this year, with GDP declining 0.8% according to our forecast, which will weigh heavily on the credit quality of Russian banks.
- We anticipate a spike in nonperforming loans of up to 15% by end-2020, from about 8% at end-2019, and a reduction in profitability by at least one-half.
- However, banks' accumulated capital and liquidity cushions, potential extraordinary government support, and regulatory relaxation should help them, particularly large and systemic banks, weather the stress for now, though the situation may change quickly.
48. Singapore Banks Can Draw On Buffers As Coronavirus Spreads, Feb. 2, 2020
Ivan Tan, Singapore, (65) 6239-6335, email@example.com
- Given that Chinese visitors account for about one-fifth of total visitors to Singapore, the virus outbreak will likely hurt visitor numbers and drag on the hospitality, tourism, and airline sectors in Singapore.
- We estimate that the transport and general commercial sectors respectively account for about 4% and 10% of Singapore's domestic loans. This is a meaningful exposure.
- In our view, the impact to banks in the short term will be manageable given their healthy profit levels and financial strength. Extraordinary government support is likely in the case of major banking system stress.
49. Coronavirus Impact: Taiwan's Financial Sectors Can Stave Off The Threat For Now, Feb. 7, 2020
YuHan Lan, Taipei, (8862) 8722-5810, firstname.lastname@example.org
- Taiwan's economic growth will undoubtedly feel the knock-on effect of the new coronavirus outbreak, given the economy's close ties with and reliance on China's economy.
- Taiwan banks have good capital buffers to cushion against the potential longer term economic impact of the current outbreak. This should help protect against deteriorating asset quality or a downturn in average property price.
- However, life insurers' capitalization is vulnerable to market shocks, given insurers' high investment leverage.
50. Coronavirus Will Test The Resilience Of Thai Banks, Feb. 5, 2020
Deepali V Seth Chhabria, Mumbai, (91) 22-3342-4186, email@example.com
- The Coronavirus outbreak will have a greater impact on Thai banks than on any other banking system in Southeast Asia, given the country's high credit risk and high linkages with China for tourism and trade.
- The outbreak would exacerbate an economic slowdown already underway which could impact banks, given high household leverage, aggressive underwriting standards, and weakness in the small and midsize enterprise sector.
- The drag on the tourism sector could be acute since the contribution of tourism exports to GDP is high at about 11% and China accounted for about 28% of total visitors in 2018.
51. Stress Scenarios Show How U.S. Bank Ratings Could Change Amid Pandemic-Induced Financial Uncertainty, March 24, 2020
Stuart Plesser, New York, (1) 212-438-6870, firstname.lastname@example.org
- While the duration of the COVID-19 downturn remains uncertain, we conducted a stress test to gauge the potential impact of pandemic-related financial uncertainty on the net income and capital positions of U.S. banks.
- In our stylized adverse stress scenario, most ratings would be unaffected, but we could take some actions, such as outlook revisions, on banks with exposure to energy or other stressed commercial or consumer sectors.
- In our severely adverse stress scenario, stress would spread meaningfully beyond the sectors currently most affected, leading to a larger number of bank rating actions.
52. Most U.S. Banks, Helped By Fed Actions, Are Well Positioned To Meet Corporate Borrowers' Demand For Cash, March 24, 2020
Brendan Browne, CFA, New York, (1) 212-438-7399, email@example.com
- Corporate borrowers appear to be increasingly drawing on their bank credit and liquidity facilities to add to liquidity amid the coronavirus pandemic. The actions that Fed announced this week, including additional programs to facilitate credit for businesses and consumers, should further support bank liquidity. However, draws could be larger than in the past crises and could test certain banks' liquidity if they are especially high.
- Banks enter the current period with far stronger liquidity and capital than they had in the lead-up to the 2008-2008 financial crisis.
- We believe that any pressure on capital from draws on commercial facilities should be manageable.
53. The Fed's Crisis Actions Will Further Bolster Liquidity For U.S. Banks, But Earnings And Asset Quality Are Set To Worsen Substantially, March 18, 2020
Brendan Browne, CFA, New York, (1) 212-438-7399, firstname.lastname@example.org
- The Fed's return to quantitative easing, zero interest rates, and commercial paper funding and primary dealer credit facilities should bolster market and bank liquidity, lowering the probability banks will face liquidity strains resulting from the coronavirus crisis and bolstering their ability and willingness to meet client demands for funding.
- We think the actions of several banks to halt stock repurchases and to borrow from the Fed discount window to remove its stigma will also support the already good capital and liquidity in the banking system.
- Still, the crisis and ultra-low interest rates promise to lead to substantially lower earnings and significantly worse asset quality, particularly in industries more affected by the virus outbreak.
- We will be closely monitoring banks for signs of credit deterioration, especially those with significant exposure to industries most affected by the pandemic that may also have less-robust liquidity or capital than peers.
Gaming, Leisure, And Lodging
54. Asia-Pacific Gaming Takes Severe Knock From COVID-19, March 26, 2020
Sandy Lim, CFA, Hong Kong, (852) 2533-3578, email@example.com
- Visits to casinos in Asia-Pacific are likely to drop 60%-80% in the first half of 2020 due to the COVID-19 outbreak.
- Balance sheets will deteriorate for all operators this year, and some companies may breach our downgrade triggers.
- Revenue is likely to decline until the fourth quarter, at least, with the mass market the heaviest hit segment.
55. COVID-19 Will Cause A Significant Decline In Global RevPAR, Cash Flow, For Rated Lodging Companies, March 11, 2020
Emile J Courtney, CFA, New York, (1) 212-438-7824, firstname.lastname@example.org
- RevPAR in the U.S., Europe, and Asia will decline for as long as leisure and business travel is postponed or cancelled due to fear of COVID-19.
- Most rated lodging companies have substantial flexibility in leverage measures compared to downgrade thresholds, and in cash flow generation, and can reduce spending on shareholder returns and other investments.
- We plan to conduct a review of lodging ratings as frequently as needed and update the marketplace on the ratings impact of the virus on the sector until it is contained.
Healthcare And Pharmaceuticals
56. Pharma Industry Only Moderately Affected While Helping Mitigate COVID-19 Pandemic Impact, March 16, 2020
David A Kaplan, CFA, New York, (1) 212-438-5649, email@example.com
- We expect some pharma companies to benefit and others to face moderate headwinds, but we don't expect many rating actions as a result of COVID-19. We expect drugmakers whose products are effective against COVID-19 to benefit financially. We also expect greater investment in pandemic prevention to help the industry in coming years.
- There are also several potential near-term weakness, including moderate risk from disruptions to the global supply chain for active pharmaceutical ingredients (API). We believe generic-drug companies have greater sensitivity to this risk.
- We see travel constraints, quarantine-initiatives, and shortages of supplies to potentially cause delays or disruption in R&D, clinical trials, product launches, and manufacturing.
57. U.S. Health Care Braces Itself As COVID-19 Storm Makes Landfall, March 18, 2020
Arthur C Wong, Toronto, (1) 416-507-2561, firstname.lastname@example.org
- Thus far, we anticipate very limited rating actions for the health care universe. However, the situation is changing quickly and the longer and more widespread the outbreak, the higher the potential for more negative ratings actions.
- Hospitals and insurers are the most exposed to risk and will largely be dependent on severity, duration, and regional locations of the outbreak. Increased inpatient and outpatient volume for COVID-19 cases could have ripple effects to operations for hospitals and, ultimately, impact margins for hospitals and insurers.
- Pharmaceuticals, medical devices, and life sciences businesses have varying degrees of credit exposure with more neutral to negative risks.
Infrastructure – Midstream
58. Supply And Demand Shocks Are Throwing The U.S. Midstream Industry Off Balance, March 24, 2020
Michael V Grande, New York, (1) 212-438-2242, email@example.com
- The combination of the COVID-19 pandemic and the oil price war is hurting the U.S. midstream industry.
- Some of the corrective measures companies took during the last downturn might not be as effective this time.
- We believe companies with investment-grade ratings are better positioned to navigate the challenging environment.
- We've already taken rating actions on some companies in the sector, and we expect more.
Infrastructure - Project Finance
59. Infrastructure Projects Dependent On Discretionary Spending Could Face Negative Cash Flows Amid COVID-19 Outbreak, March 9, 2020
Trevor J D'Olier-Lees, New York, (1) 212-438-7985, firstname.lastname@example.org
- Credits in the high-risk bucket depend on consumer discretionary spending. We foresee potential negative cash flow effects on these credits as consumers choose to not travel, attend events, etc.
- Another area of concern is under-construction projects that might be delayed due to supply-chain disruptions.
- At this time, we anticipate that the PPP volume-based road and operational availability projects (roads, hospitals, etc.), together with the contracted power and midstream projects we rate, will not be materially affected under this new COVID-19 scenario.
60. Coronavirus Outbreak Unlikely To Affect International Demand For U.K. Student Housing Projects, Feb. 12, 2020
Giulia Rusconi, London, + 44 20 7176 1203, Giulia.Rusconi@spglobal.com
- International recruitments by U.K. universities could be hit by a decrease in purchasing power of China and other economies affected by Covid-19.
- Under the scenario that outbreak travel restrictions will remain in place perhaps until the middle of the second quarter, we would not expect disruptions to international students' move-in date for the 2020/2021 academic year.
- If the spread of the virus does not recede by the summer of 2020, foreign students in the U.K. may extend leases, which could increase occupancy and rental revenue for some of the projects that we rate.
61. U.K. Hospital PFI Projects Expected To Be Resilient Against Spread Of Coronavirus, Jan. 30, 2020
Joest F Bunse, CFA, London, + 44 20 7176 3430, email@example.com
- Footfall in accident and emergency (A&E) departments could increase over the coming weeks, depending on the extent to which the coronavirus spreads in the U.K. The infection would require hospitals to isolate affected patients.
- We publicly rate the debt issued by 19 projects party to long-term arrangements with the NHS to construct, maintain, and finance hospitals. Almost all of these private finance initiative (PFI) funded hospitals have A&E departments.
- Despite the potential increase in footfall and the number of patients in isolation, we do not currently expect the consequences for these projects to include an impact on creditworthiness.
Infrastructure - Transportation
62. How Can China's Highway Operators Survive The Toll Moratorium?, March 16, 2020
Gloria Lu, CFA, FRM, Hong Kong, (852) 2533-3596, firstname.lastname@example.org
- The new coronavirus outbreak caused a traffic slump and also led to an unprecedented moratorium on toll fees for vehicles on all roads. S&P Global Ratings believes this drastic policy will lead to major revenue losses in the sector.
- We estimate the toll road sector as a whole may lose Chinese renminbi (RMB) 270 billion (US$38 billion) or more in 2020. Toll-road companies that operate along commercial lines are more vulnerable to rating downgrades.
- We anticipate a strong traffic recovery following the stabilization of the virus outbreak in China, a resumption in economic activities, and the stimulus effect of free highway travel. We also expect the government to unveil measures to address short-term liquidity stress and introduce long-term compensation for the sector.
63. The Coronavirus Pandemic Could Reduce Global Air Passengers By Up To 30% In 2020, March 17, 2020
Julyana Yokota, Sao Paulo + 55 11 3039 9731, email@example.com
- The rapid spread of the new coronavirus across the globe has caused an unprecedented plunge in air traffic demand in recent weeks.
- Controlling the coronavirus, as well as reestablishing passenger confidence, may be more challenging than similar efforts for previous viruses, and recovery is likely to take longer, given the lockdown measures many states recommend (in contrast with other virus events).
- Hence, our current base case for global air passengers in 2020 assumes a decline of 20%-30% from 2019, with full recovery achieved only in 2022-2023. We recognize, however, that the situation is highly uncertain and fast-moving.
- Over the coming weeks, we will conduct reviews of our airport ratings to reflect our updated views, with airport ratings likely to come under pressure.
64. Chinese Insurers’ Earnings Will Erode Amid Coronavirus Outbreak, Feb. 4, 2020
WenWen Chen, Hong Kong (852) 2533-3559; firstname.lastname@example.org
- Life insurers' efforts to enhance tied agency distribution may come to a standstill and new business activity will contract in the first half of 2020.
- We anticipate an accelerated revolution of traditional insurance distribution, fueled by technology advancements as insurers seek to distribute policies remotely.
- The coronavirus outbreak will strain China's property and casualty sector with thinning profitability, and possibly limit auto sales in early 2020, affecting the already dim growth prospects for motor insurance.
65. COVID-19 Will Test Insurers’ Resilience, March 25, 2020
Dennis P Sugrue, London, (44) 20-7176-7056, email@example.com
- The capital strength typical of the insurance sector will help stave off widespread downgrades across the global industry as it faces the COVID-19 pandemic.
- That said, the situation will exacerbate existing weaknesses and we anticipate some targeted downgrades or outlook changes over the coming weeks as we actively review and stress our insurance ratings.
- Life insurers are more at risk, particularly those with relatively thin capital buffers and significant exposure to financial market volatility through their asset portfolios or product offerings.
- We are retaining our stable outlooks on the life insurance sectors in North America and EMEA, but revising the outlook for the APAC life insurance sector to negative.
- Regulatory solvency ratio volatility could increase deferral risk for hybrids. Issuers' capital management and mitigation actions, as well as possible supervisory interventions, will continue to be key to our rating analysis of hybrids.
66. EMEA And U.S.-Based Re/Insurers Likely To Take COVID-19 In Stride, Feb. 24, 2020
Johannes Bender, Frankfurt, (49) 69-33-999-196, firstname.lastname@example.org
- The new coronavirus outbreak has had little impact on the U.S. and EMEA insurance industry, and we expect the overall impact to be manageable.
- Capital markets in China and Asia are more likely to feel the negative effects of the COVID-19 virus than those elsewhere.
- Given China's importance in a just-in-time world, contingent business interruption claims could arise anywhere in the world.
67. GCC Insurers' Earnings Are Under Threat From COVID-19 And Low Oil Prices, March 31, 2020
Emir Mujkic, Dubai, (971) 4-372-7179, email@example.com
- Most rated insurers in the Gulf Cooperation Council (GCC) have capital buffers strong enough to absorb COVID-19-related claims and capital market volatility.
- But the significant fall in equity markets, widening bond spreads, and ongoing decline in real estate prices will damage their earnings and capital. The expected slowdown in premium income and collections from businesses could put further stress on liquidity management and asset quality over the coming months.
- This could lead to some negative rating actions in 2020, particularly on insurers that have thin capital buffers and material exposure to equities, real estate, and/or speculative-grade bonds.
68. Hong Kong Life Insurers Could Face First Contraction In Decades, April 1, 2020
Judy Chen, Hong Kong, (852) 2532-8059, Judy.Chen@spglobal.com
- Hong Kong's life insurers face a slump in new-business volumes in 2020 despite the regulator's recent measures to cushion an industry plunge. The sector's growth prospects are dented by ongoing travel restrictions, intensifying economic recession, and rising unemployment rates.
- We expect total premiums in the Hong Kong life insurance market to slide 5%-10% year over year in 2020. This assumes new-business activity drops over 30% and the renewal rate is stable. We estimate a roughly 70% decline in new business related to mainland Chinese visitors amid tighter border controls.
- Larger players with established digital platforms will likely be better positioned than smaller peers to benefit from the regulator's relaxed temporary measures.
69. Mexican Insurers' Solid Capital And Liquidity Help Counteract Impact From COVID-19 Outbreak, March 24, 2020
Rodrigo Cuevas Covarrubias, Mexico City, Rodrigo.Cuevas@spglobal.com
- Currently, we expect the COVID-19 outbreak to have a limited impact on Mexican insurers' stand-alone credit profiles.
- Most insurers in the country have strong capitalization levels and use reinsurance, which should help them mitigate a potential rise in claims.
- However, the economic effects of the pandemic will likely pressure insurers' margins.
70. Assessing The Top Risks COVID-19 Poses To North American Life Insurers, March 26, 2020
Tracy Dolin, New York, (1) 212-438-1325, firstname.lastname@example.org
- Risks for North American life insurers are escalating amid the COVID-19 pandemic--in particular, asset risk, equity market volatility, near-zero interest rates, and heightened mortality risk.
- We are maintaining our stable sector outlook for North American life insurers, although the pandemic could negatively affect a few outliers that are more prone to these risks or that were already facing ratings pressure prior to the coronavirus.
- Robust capital and liquidity should help absorb elevated credit risk from corporate sectors, particularly from those most vulnerable to social distancing measures and the energy sector due to its own crisis.
71. Robust Capitalization Makes The COVID-19 Fallout Manageable For North American Property/Casualty Insurers And Reinsurers, March 25, 2020
Tracy Dolin, New York, (1) 212-438-1325, email@example.com
- We view current financial market turmoil and the ensuing recession as a greater pitfall for North American property/casualty (P/C) insurers and reinsurers than underwriting exposure to pandemic risk, although impact stress tests reflect ample capital buffers at these companies through 2020.
- We do not envision significant rating activity. However, the pandemic could hurt a few outliers and those insurers already facing ratings pressure prior to the arrival of the coronavirus.
- We believe P/C insurers' underwriting exposure to the fallout from the COVID-19 outbreak is a small portion of the industry's business mix and should only modestly weaken earnings.
- We are maintaining our stable outlook on the North American P/C insurance and reinsurance sectors.
72. Asset Risk Still A Thorn In The Side For Taiwan Life Insurers, March 20, 2020
Patty Wang, Taipei, (8862) 8722-5823, firstname.lastname@example.org
- Asset risk remains high for Taiwan's life insurers and susceptible to market volatility.
- Greater stability in capital markets helped life insurers partly recover their capitalization in 2019 after a dip in 2018; however, average capitalization remains slightly weaker than levels I n 2017.
- The sector's capital and earnings will likely fluctuate over the coming year, given insurers' sensitivity to macro changes and volatile investment returns.
- Slower asset growth and more stringent capital policies could help offset some of the challenges facing life insurers in 2020.
73. Despite The COVID-19 Pandemic, The Outlook For The U.S. Health Insurance Sector Remains Stable, March 26, 2020
Deep Banerjee, Centennial, (1) 212-438-5646, email@example.com
- We are maintaining our stable outlook on the U.S. health insurance sector.
- We expect health insurers' profitability to be lower than initially expected for 2020, but we think capital and diversification will limit negative rating actions on the industry.
- Extremely strong capitalization for the private insurers will offset the impact of an market decline on their equity portfolios, as well a morbidity stress on their claim trends.
- Geographic and product diversification, along with noninsurance fee-based business will likely mitigate the impact of the pandemic on publicly traded insurers.
- We assume virus-containment measures will be successful, but if these fail and the spread doesn't peak by June-August 2020, we will revisit our outlook.
74. Morbidity Stress Test: How A Hypothetical Pandemic Could Affect U.S. Health Insurers, March 12, 2020
Deep Banerjee, Centennial, (1) 212-438-5646, firstname.lastname@example.org
- We conducted a stress test for a hypothetical pandemic to gauge the potential impact on U.S. health insurers.
- Our results indicate that insurers' medical loss ratio would rise to 88%-89% in our moderate morbidity scenario and to 95%-97% in our severe scenario (compared with a current average medical loss ratio of about 85%).
- In the severe scenario, the added medical costs would result in reported losses for the year and the need to use capital buffers to pay the increased claims.
75. Amid Coronavirus Outbreak, S&P Global Ratings Looks At How A Hypothetical Pandemic Could Affect U.S. Life Insurers, Feb. 14, 2020
Deep Banerjee, Centennial, (1) 212-438-5646, email@example.com
- We conducted a hypothetical mortality stress test to estimate the potential impact of a pandemic event on the U.S. life insurance sector.
- The hypothetical extreme mortality scenario (based on the 1918 Spanish flu) resulted in $52 billion of excess net mortality claims (aftertax), which is about 12% of the aggregate U.S. life insurance industry capital.
- The hypothetical moderate mortality scenario (based on the 1957 Asian flu) resulted in $7 billion of additional excess net mortality claims (aftertax), which represents about 2% of outstanding industry capital.
Media And Telecom
76. COVID-19 Increases Pressure On Global Media & Entertainment Ratings, March 26, 2020
Naveen Sarma, New York, (1) 212-438-7833, firstname.lastname@example.org
- We've already taken more than 25 ratings actions on those sectors that are most exposed to the fallout from the coronavirus pandemic, and companies that we've identified as being the most vulnerable. This includes event organizers, live-events companies, travel-related companies, and movie exhibitors.
- We've also focused on those companies vulnerable to economic downturns, because of high leverage or weak business models, as well as those with immediate financing needs such as those with weaker liquidity, tight covenants, or near-term maturities.
- We believe the broadest threat to the media sector is a pullback in advertising spending. We will likely take more negative ratings actions because we expect to see evidence of weakness in the advertising sector.
77. As COVID-19 Cases Surge, Pockets Of Risk Emerge For Certain U.S. Telecom And Cable Providers, March 17, 2020
Allyn Arden, CFA, New York, (1) 212-438-7832, email@example.com
- U.S. telecom and cable providers can withstand the effects of a surge in COVID-19 cases and a sinking stock market with limited impact to credit quality near-term.
- Longer-term credit implications will depend on the severity and duration of COVID-19 outbreaks and their impact on the U.S. economy.
- A handful of issuers' operations have direct exposure to the virus, some of which have cushion at current ratings while others are in the 'CCC' rating category already.
78. Coronavirus Will Dent Australia's Higher Education Revenues, Feb. 5, 2020
Martin J Foo, Melbourne, + 61 3 9631 2016, Martin.Foo@spglobal.com
- Travel restrictions enacted in response to the coronavirus outbreak will depress the revenues and margins of Australia's universities.
- International students make up nearly a third of all university enrolments and are a lucrative income stream.
- The universities we rate can absorb the impact but finances will be strained if travel restrictions are extended for many months.
79. Pandemic Upends Finances Of China's Weak Local Governments, March 27, 2020
Susan Chu, Hong Kong, (852) 2912-3055, firstname.lastname@example.org
- China's local and regional governments (LRGs) are among the country's highest volume debt issuers, with about US$720 billion in expected issuance in 2020.
- Our revised base case accounts for the economic contraction in China at the start of the year, hitting the budgets of local governments. We assume LRGs' collective deficit to reach 15%-20% of total revenues in 2020, as compared with a 14% ratio (our estimate) in 2019. During the slowdown, the weak LRGs may struggle to generate sufficient revenues to sustain spending.
- Chinese authorities are rolling out relief measures for the sectors and groups most affected by the COVID-19 outbreak. However, we do not expect LRGs will be drafted into the job of providing big fiscal stimulus.
80. Swedish Government To Mitigate Impact From Coronavirus On Local And Regional Governments, March 11, 2020
Johanna Melinder, Stockholm, + 46 84 40 5926, email@example.com
- The announcement made by the Swedish government will mitigate short-term financial pressure on local and regional governments due to coronavirus, but these measures are unlikely to address long-term structural budgetary issues.
- We don't see any immediate pressure on the LRGs' funding and liquidity despite volatility in the capital markets.
81. COVID-19: A Closer Look At How It Affects 10 Major U.S. Cities, April 2, 2020
Blake E Yocom, Chicago, (1) 312-233-7056, firstname.lastname@example.org
- COVID-19 will have a significant effect on major U.S. cities, increasing expenditures and reducing revenues.
- The projected hit to U.S. economic growth from the ensuing recession will exacerbate the situation, presenting even more challenges for cities as they struggle to maintain structural balance, especially for those reliant on economically sensitive revenues.
- While we expect the federal relief package to aid state and local governments in the near term, the timing and support remains unknown, placing more pressure on liquidity levels.
82. The COVID-19 Outbreak Weakens U.S. State And Local Government Credit Conditions, April 2, 2020
Oscar Padilla, Farmers Branch, (1) 214-871-1405, email@example.com
- Most U.S. states entered 2020 on a comparatively stable footing, benefiting from a decade-long national economic expansion.
- Ratings on issuers with narrower payment streams are more susceptible to immediate pressures than a state or local government's general credit quality.
- State and local governments with concentrated economic activities are more likely to see revenue declines.
83. All U.S. Public Finance Sector Outlooks Are Now Negative, April 1, 2020
Robin L Prunty, New York, (1) 212-438-2081, firstname.lastname@example.org
- Following mobility restrictions and closure of large segments of the economy due to COVID-19 and the swift onset of recession, all of S&P Global Ratings' sector outlooks in U.S. public finance are now negative. At the start of 2020 all sector outlooks were stable with the exception of higher education, ports, and mass transit.
- We do not expect that these sector outlook revisions will lead to immediate issue-specific negative rating actions. However, given the confluence of events from COVID-19 and the ensuing recession, we believe that rapid expenditure increases and precipitous revenue declines will generate more negative than positive rating actions across U.S. public finance for the remainder of 2020.
84. New Virus, Unprecedented Risks For China's Developers, March 2, 2020
Christopher Yip, Hong Kong (852) 2533-3593; email@example.com
- China residential property sales will likely fall by 5%-10% in 2020, assuming coronavirus cases peak in March and gradual recovery starts.
- In our stress tests, most developers should survive the liquidity strain, although nearly a quarter to a third of ratings or outlooks could face downward pressure from rising leverage.
- Swing factors include sales recovery, policy supports, and developers' individual performance and financial control.
85. COVID-19 Will Likely Ruin European Retail Property Companies' Efforts To Contain Competition From E-Commerce, April 1, 2020
Marie-Aude Vialle, Paris, (33) 6-1566-9056, firstname.lastname@example.org
- The European retail property owners rated by S&P Global Ratings reported growth in rental income and sales by tenant retailers in 2019, despite a testing retail market due to progressive e-commerce penetration and changing consumer habits.
- However, the coronavirus pandemic now presents a major threat to retail property owners, as temporary closures of shopping centers and social isolation requirements will inevitably dent their tenants' revenues.
- We have therefore revised our base-case assumptions for the retail real estate sector, although the full-year impact on rents and valuations remains uncertain and will greatly depend on the duration of the pandemic.
- We believe that our ratings on European retail property owners could withstand one-to-two months without rent, but are unlikely to withstand a double-digit decline in valuations.
- As a result, we have recently taken negative rating actions on nine European real estate companies exposed to the retail property sector.
- All European pure retail property owners now have negative outlooks, reflecting the potential downside risk for the sector as a whole.
86. COVID-19: Implications For European Real Estate Investment, As Tenants Begin To Suspend Rent Payments, March 26, 2020
Franck Delage, Paris, (33) 1-4420-6778, email@example.com
- Measures to contain COVID-19 are eroding the credit quality of real estate investment companies in Europe as tenants start to skip rental payments.
- Social-distancing measures and authorizations to skip rental payments for corporates in difficulty will likely weigh on landlords' revenue in 2020, depending on the duration of the outbreak.
- The retail and hotels property segments should suffer the most in the short term, while the effects on other real estate segments will likely take more time.
- Deteriorating financing conditions could affect real estate companies, which heavily rely on capital markets.
87. Past Gains Help Hong Kong Property Companies Face Another Round Of Disruption, March 29, 2020
Edward Chan, CFA, Hong Kong, + 852 2533 3539, firstname.lastname@example.org
- S&P Global Ratings believes Hong Kong's residential property transactions will remain sluggish throughout the first half of the year, after dropping 27% year on year during January and February. Secondary home prices have been relatively resilient despite the global health emergency.
- Hong Kong's residential property market is supported by structural undersupply and low interest rates. Last October's relaxation on the level of cash down payments for housing loans also underpins the sector.
- The COVID-19 pandemic will bring a second year of extreme dislocation to the Hong Kong economy after the civil unrest in the second half of 2019. We think prices could fall by 10%-20% by end-2020 from the June 2019 peak.
- The Hong Kong developers we rate have ample cash on hand to cover short-term debt maturities and expenses amid lackluster sales activity in the first half. This is despite their varying exposures to the heavily battered hospitality and retail sectors.
88. REITrends: COVID-19 Could Threaten Rating Stability For North American REITs, March 17, 2020
Ana Lai, CFA, New York, (1) 212-438-6895, email@example.com
- Under a recession scenario, we expect our negative rating bias to grow in the next few quarters. While only 8% of ratings have negative outlooks, negative rating pressure could build where consumer spending, wage, and job growth weaken significantly leading to weaker demand fundamentals for real estate.
- We expect rating downside on North American REITs to be mitigated by key credit strengths underpinning the sector, including cash flow stability, tenant diversity, and better balance sheets relative to the last recession.
- We will continue to monitor the impact of COVID-19 on the real estate sector, particularly performance in the retail, health care, and industrial subsectors, which we believe could be more directly affected in the near term.
- Our REIT coverage does not include the lodging sector and note that our Leisure team expects COVID-19 to have a significant impact on cash flow in 2020.
- The indirect impact from sharply slower economic growth and financial market volatility could be felt across all property types as the effects of social distancing, travel restrictions, and lower oil prices will take time to deteriorate the financial health of tenants.
- In additional to retail and health care, we expect ratings for more cyclical sectors such as office to also face credit quality pressure, as an economic downturn could exacerbate tenant distress and limit the REITs' ability to complete asset sales.
- Given external funding natures of REITs, capital markets volatility could hamper REITs' access to equity and debt markets, limiting their ability to fund external growth. Most rated REITs face limited refinancing risk given proactive refinancing of debt maturities in recent years.
Retail And Restaurants
89. Coronavirus Dramatically Increases Risk For Already Stressed Retail And Restaurant Sectors, March 19, 2020
Sarah E Wyeth, New York, (1) 212-438-5658, firstname.lastname@example.org
- Credit risks to the global retail sector have increased dramatically as the effort to contain COVID-19 results in store closures, changes to shopping habits, and heightened risk of a broad based macroeconomic decline.
- The degree of any impact on our ratings will depend on the duration of shutdowns and trajectory of a future rebound.
- We expect sales to decline substantially in the short term and think travel retail, casual dining, mall-based retail, and discretionary spending are at particular risk.
- We expect to take rating actions across the spectrum with the majority concentrated in the above retail segments and at the lower end.
90. The European Central Bank Rises To The Challenge As Eurozone Sovereign Borrowing Soars In Response To COVID-19, March 19, 2020
Frank Gill, Madrid, (34) 91-788-7213, email@example.com
- We believe that the Pandemic Emergency Purchase Program reflects the ECB's clear willingness to contribute to the containment of the economic and financial fallout from the COVID-19 crisis.
- In the context of the sharp increase in the governments' borrowing needs, we believe that the planned expansion of the ECB's balance sheet is appropriately oriented towards absorbing the sovereigns' additional borrowing needs at relatively low borrowing costs, alleviating the potential funding concerns of the individual sovereign issuers.
91. Eurozone Sovereign Creditworthiness Unaffected For Now From Coronavirus-Related Effects On Growth, March 10, 2020
Frank Gill, Madrid, (34) 91-788-7213, firstname.lastname@example.org
- Europe's macroeconomic outlook for 2020 is highly uncertain and worsening. We expect the ECB, eurozone sovereigns, and the Eurogroup to take or continue to take actions to counteract the drag on growth.
- We continue to see eurozone sovereigns as benefiting from strong and well-financed public health systems, transparent governance frameworks, and all the advantages of being able to borrow in euro. Depending upon the duration of the shock, member states are likely to consider a more proactive joint response.
92. Stress Scenario: The Sovereigns Most Vulnerable To A COVID-19-Related Slowdown In Tourism, March 17, 2020
Samuel Tilleray, London, + 442071768255, email@example.com
- COVID-19 will take a major toll on the world's largest tourism exporters.
- We have run 122 of our rated sovereigns through three scenarios--"limited", "extensive", and "extreme"--under which tourism receipts decline by 11%, 19%, and 27% as per similar stresses modelled by the International Air Transport Assn. (IATA).
- Despite the uncertainty, under our baseline expectation that this is a one-year shock, most sovereign ratings would be resilient to a temporary slide in tourism flows.
- Our scenario analysis suggests "Sun, Sea, and Sand"-focused island economies in the Caribbean and elsewhere would be the most heavily exposed to a uniform slowdown in global tourist footfall.
- The second heaviest-affected region globally would be the Balkans, where even under the lower stress scenario, falling tourism arrivals would shave 1.9-2.2 percentage points (ppts) off headline GDP growth (excluding second-round effects).
- Even larger more diversified exporters of tourism, such as Portugal, Turkey, Spain, and Australia could see negative GDP contributions to tourism of between 0.9-2.5 ppts from full-year GDP growth under the extreme shock scenario, which is less unrealistic than a few weeks ago in light of national quarantines and travel bans.
93. Credit FAQ: Coronavirus And Its Possible Impact On Global Sovereign Ratings, Feb. 13, 2020
KimEng Tan, Singapore, (65) 6239-6350, firstname.lastname@example.org
- The virus outbreak has immediate negative implications for China's economic growth and fiscal performance. Our China sovereign credit standing may be threatened if the government eagerly props up growth with heavy stimulus measures. This could lead to a negative rating action.
- The main risk for the Europe, Middle East, and Africa region is if the temporarily decelerating growth in China hits demand for and prices of goods and services that the region exports to China.
- We do not envisage changes in our sovereign ratings in Latin America and the Caribbean due to the impact of the virus. We also assume the impact on the U.S. economy will be minimal and largely concentrated in first quarter 2020.
94. How Will COVID-19 Affect Australian Structured Finance?, March 25, 2020
Erin Kitson, Melbourne, (61) 3-9631-2166, email@example.com
- Liquidity stress and an increased proportion of borrowers unable to make scheduled loan repayments will affect the cash flows to Australian RMBS transactions.
- Policymakers have announced stimulus measures to dampen increasing financial hardship. Australian banks have announced support measures for households and small business customers affected by the coronavirus, including temporary relief from home-loan repayments. These measures should help stabilize underlying borrower creditworthiness for RMBS transactions, but could disrupt cash flows in the short term.
95. How Will COVID-19 Affect Australian And New Zealand ABS Transactions, April 1, 2020
Elizabeth A Steenson, Melbourne, (61) 3-9631-2162, firstname.lastname@example.org
- Liquidity stress, an increased proportion of borrowers unable to make scheduled loan repayments, and a higher default rate will affect the cash flows to many Australian and New Zealand ABS transactions.
- We expect the performance of auto, auto/equipment, and credit card/sales finance collateral pools to be more affected than agricultural equipment-backed pools.
- Although employment disruptions caused by the COVID-19 pandemic will put stress on consumers' ability to pay their loan obligations, ABS have numerous structural protections that we believe will protect transactions from near-term liquidity-related note defaults.
96. What Do The First Performance Reports Reveal About COVID-19's Effects On China Auto ABS And RMBS?, March 26, 2020
Andrea Lin, Hong Kong (852) 2532-8072; email@example.com
- In terms of the country's still-nascent securitized assets market, the first round of data shows volatility has increased, though not dramatically. However, risks remain tilted to the downside.
- Some policy measures should alleviate borrowers' financial stress, at least temporarily. However, forbearance on timely loan payments has the potential to stall cash flows to securitized portfolios. While delinquencies for both auto ABS and RMBS are up only slightly from a low base, we anticipate the impact could nonetheless be lagged.
97. A Deeper Dive Into The Potential Credit Effects Of COVID-19 On European CMBS, April 2, 2020
Edward C Twort, London, (44) 20-7176-3992, firstname.lastname@example.org
- Structural features are coming to the fore in light of COVID-19's effects on credit performance: Liquidity facilities, reserve fund notes (RFNs), and similar liquidity features; Class X diversion trigger events; Servicing, operating advisors, and tail periods.
- When a European CMBS class of notes experiences an interest shortfall, we look to assess whether we believe the interest shortfalls to be permanent or temporary, with repayment occurring on subsequent payment dates.
- The property insurance contracts typically protect the borrowers against loss of rent and business interruption, generally for up to 24 months, but our current understanding is that the lockdowns in many countries and the social distancing guidelines do not qualify as business interruption.
98. How Credit Distress Due To COVID-19 Could Affect European CLO Ratings, April 2, 2020
Rebecca Mun, London, (44) 20-7176-3613, email@example.com
- Applying a variety of hypothetical stress scenarios to a typical European CLO transaction shows that the rating changes, if any, would generally be greater further down the capital structure.
- Under 10 scenarios of varying severity, the 'AAA' tranche rating appears resilient and the 'BBB' rated tranche remains investment-grade in most cases.
- However, in the most severe scenarios--where all of the underlying obligors are downgraded or 10% of them default--CLO ratings throughout the capital structure could fall by one to three notches.
- This analysis may be broadly representative of how our European CLO ratings could move in certain downturn scenarios, but in reality the ratings migration would differ between transactions, depending on structure, portfolio, and manager.
99. European ABS And RMBS: Assessing The Credit Effects Of COVID-19, March 30, 2020
Alastair Bigley, London, 44 (0) 207 176 3245, Alastair.Bigley@spglobal.com
- Although the spread of COVID-19 has sharply slowed the European economy, ABS and RMBS transactions in the region are well placed to deal with a spike in delinquencies through a combination of external and internal liquidity. However, timeframes for enforcement and liquidation of security are likely to lengthen.
- We expect transactions with already weak asset performance to exhibit higher sensitivity to underemployment and unemployment, and to show a greater rise in delinquencies.
- The short weighted-average life of ABS transactions and speedy deleveraging will support credit performance in the sector.
- There is an increased risk that originators will not exercise call options, especially for non-banks.
100. European Corporate Securitizations: Assessing The Credit Effects Of COVID-19, March 26, 2020
Greg M Koniowka, London, (44) 20-7176-1209, firstname.lastname@example.org
- In the U.K., a mandatory closure of all public houses (pubs), restaurants, cafes, and other non-essential businesses came into effect on March 22, 2020, with three-week-long restrictions put in place starting the evening of March 23.
- We have identified three European corporate securitization transactions that, in our view, will be directly affected. The ability of the borrowers to withstand the pending liquidity stress will come down to their current level of headroom over their financial covenants and readily available sources of liquidity.
- As we develop better clarity on the expected size and duration of reductions in transactions' securitized net cash flows, we will evaluate whether adjustments to our base-case and downside projections are appropriate.
101. European CLOs: Assessing The Credit Effects Of COVID-19, March 25, 2020
Emanuele Tamburrano, London, (44) 20-7176-3825, email@example.com
- The European CLO market, like most other sectors, is not completely resistant to the effects of the COVID-19 pandemic, which we expect to continue for several months.
- In the short term, we do not expect rated European CLO transactions to experience significant downgrades. Key transaction indicators such as the level of 'CCC' category rated assets, the proportion of defaulted assets, and overcollateralization cushions, suggest transactions are protected from a degree of deterioration in portfolio credit quality.
- However, an extended period of stress may put downward pressure on our CLO ratings, initially affecting speculative-grade tranches.
102. European CMBS: Assessing The Credit Effects Of COVID-19, March 24, 2020
Oliver Thomas, London, + 44 20 7176 8589, Oliver.Thomas@spglobal.com
- Despite growing disruption to economies and financial markets across Europe, most European CMBS transactions should be well equipped to deal with liquidity stress over a short-term period.
- We may revise our assumptions if we believe the impact of the coronavirus outbreak were to result in long-term structural changes in the commercial real estate market. So far, we believe there is not enough evidence to do this.
- Although the impact is likely to be greater on some sectors, overall we do not yet envisage a significant wave of CMBS downgrades.
103. Will Mortgage Payment Suspensions Related To COVID-19 Affect European RMBS?, March 13, 2020
Andrew H South, London, (44) 20-7176-3712, firstname.lastname@example.org
- The Italian authorities may allow some mortgage borrowers to suspend their debt repayments while the COVID-19 health emergency continues. Other European lenders and governments are also mulling similar forbearance measures for households and small and mid-size corporates.
- For now, we do not expect a material negative impact on rated European RMBS transactions, which typically have structural features that cover for cash flow disruption.
- Extended periods of reduced cash collections could change our assessment on specific transactions, depending on the structural features they contain to bridge such periods.
104. Global Covered Bonds: Assessing The Credit Effects Of COVID-19, March 25, 2020
Casper R Andersen, Frankfurt, (44) 20-7176-6757,email@example.com
- It's unlikely that a deterioration in short-term liquidity caused solely by mortgage forbearance initiatives would lead to the downgrade of covered bond programs, given their dual-recourse nature.
- Any potential changes to sovereign or issuer credit ratings as a result of the COVID-19 pandemic would be more likely to trigger changes in our covered bond ratings.
- However, most covered bond programs that we rate have a stable outlook and can withstand some degree of issuer or sovereign downgrades without affecting the program rating.
105. Insurance-Backed Securitizations Likely To Show Near-Term Resilience To COVID-19, March 24, 2020
Deborah L Newman, New York, (1) 212-438-4451, firstname.lastname@example.org
- S&P Global Ratings expects insurers and global reinsurers based in Europe, the Middle East, and Africa (EMEA) and the U.S. to hold firm, without suffering earnings and capital shocks, though this could change with the rapidly evolving global conditions surrounding the COVID-19 outbreak.
- Our ratings on insurance premium finance and structured settlement securitizations depend on the credit of the underlying insurance carriers.
- Based on the results of our two-scenario sensitivity analysis, we believe insurance-backed securitizations generally have sufficient enhancement to withstand a one-notch credit rating deterioration, but the ratings would be vulnerable if each of the top 10 underlying insurance carriers were to be downgraded three notches or more.
106. COVID-19 Credit Update: Latin America Structured Finance Is In Lockdown, March 27, 2020
Jose Coballasi, Mexico City, (52) 55-5081-4414, email@example.com
- Because Latin America has less of a social safety net than many more developed areas, measures to reduce the spread of COVID-19 will likely hit individuals and small businesses especially hard.
- We expect new structured finance issuance to virtually halt while the pandemic persists.
- When assessing the effects on existing transactions, we're monitoring the liquidity, with special attention on payment reserves, expected debt service (including expenses) during the next three to six months, deferability clauses, and defaults.
107. Assessing The Credit Effects Of COVID-19 On U.S. And Canadian Credit Card ABS, March 25, 2020
Sanjay Narine, CFA, Toronto, + 1 (416) 507 2548, firstname.lastname@example.org
- The likelihood of obligors not satisfying their credit card payment obligations will depend on their income curtailment. In the short-term, we expect delinquencies to be elevated, which could result in increased charge-offs (losses) depending on the duration of the dislocation from COVID-19. In our view, credit card issuers' forbearance considerations, employers' assistance, and government efforts to provide financial assistance and other stimulus measures will lessen the burden faced by many obligors and, as a result, reduce delinquencies and losses.
- Our expectation is that as consumers' behaviors change, there will be a shift in their spending patterns.
- Our understanding is that sponsors will assess possible obligors' request for forbearance on a case-by-case basis and may offer temporary payment relief to those experiencing difficulty making payments as a result of the COVID-19 situation.
108. COVID-19 Containment Measures Put U.S. Timeshare Loan Payments To The Test, April 2, 2020
Deborah L Newman, New York (1) 212-438-4451, email@example.com
- U.S. timeshare securitizations will likely see a short-term spike in delinquencies due to the impact of the COVID-19 containment measures. However, we believe the securitizations generally have sufficient liquidity to support senior fees and interest payments.
- Over the longer term, credit could also be negatively affected if unemployment rates continue to rise, bankruptcy filings continue to increase, consumers continue to limit travel, and timeshare borrowers' payment priorities shift to pay down nondiscretionary debt first.
- We are increasing our base-case assumption for defaults and testing additional sensitivity scenarios to incorporate the uncertain and weakened U.S. economic outlook.
109. The Potential Effects Of COVID-19 On U.S. Auto Loan ABS, March 26, 2020
Amy S Martin, New York, (1) 212-438-2538, firstname.lastname@example.org
- Although employment disruptions caused by the COVID-19 pandemic will put stress on consumers' ability to pay their auto obligations, auto loan ABS have numerous structural protections that we believe will protect transactions from near-term liquidity-related bond defaults. Higher credit losses could impair ratings over the longer term, however.
- In our view, the transactions that are at greatest risk of downgrade and default are subprime auto loan ABS with noninvestment-grade classes.
- In light of the weakened economic outlook, we are increasing our base-case level of cumulative net losses and modifying certain cash flow assumptions, and will run additional sensitivity scenarios as we deem appropriate.
110. U.S. Lodging-Backed CMBS Bracing For The Impact Of COVID-19, March 23, 2020
Natalka H Chevance, New York, (1) 212-438-1236, email@example.com
- As the coronavirus (COVID-19) continues to spread across the country, the U.S. lodging industry has been affected, experiencing a rapid, systemic shock over the past few weeks. The unprecedented COVID-19 containment efforts have essentially brought lodging demand to a halt.
- With the prospect of a recession on the horizon, we expect the impact to the lodging sector to be exacerbated as hotel revenues exhibit nearly a 1:1 inverse correlation with unemployment rates and demand is highly correlated with the performance of the economy.
111. Assessing The Credit Effects Of COVID-19 On U.S. RMBS, March 20, 2020
Tom Schopflocher, New York (1) 212-438-6722; firstname.lastname@example.org
- We stratified the U.S. residential mortgage-backed securities (RMBS) market by its dominant subsectors to determine how each could be impacted by the economic disruption caused by COVID-19.
- The current and expected credit impact of COVID-19 on U.S. RMBS resembles to some extent that of recent natural disasters in parts of the U.S., but, given the widespread precautionary measures put in place across most of the country, the impact thus far has a geographic footprint well beyond localized natural disasters.
- Government involvement and the declaration of a National Emergency, as well as corresponding legislative efforts to provide more aid, will reduce the burden faced by many borrowers.
112. U.S. Whole Business Securitizations Under Stress From COVID-19, March 17, 2020
Jesse R Sable, CFA, New York, (1) 212-438-6719, email@example.com
- While difficult to measure at this early stage, the negative impact on whole business securitizations (WBS) from the coronavirus outbreak in the U.S. will almost certainly be substantial, particularly for the restaurant sector.
- Restaurant issuers reliant on dine-in sales are likely to experience the greatest impact, though increased off-premise sales, including delivery and take-away, may soften the blow. Primary risk factors shared with other WBS sectors are the financial resilience of operators and geographic diversification.
- S&P Global Ratings has assessed the permanent cash flow reduction that each rated WBS transaction can tolerate before impairing timely interest or ultimate principal payments. Although most transactions have a substantial excess cash flow cushion, negative rating actions are possible if liquidity concerns emerge, debt service coverage weakens, or business risk profiles are revised downward.
113. Coronavirus Will Put U.S. CLO Diversity And Managers To The Test, March 13, 2020
Daniel Hu, FRM, New York, (1) 212-438-2206, firstname.lastname@example.org
- Some companies with loans held in U.S. broadly syndicated collateralized loan obligations (BSL CLOs) have experienced negative rating actions largely due to coronavirus-related concerns.
- Because U.S. BSL CLOs are relatively diversified across multiple speculative-grade issuers and sectors, their exposure to coronavirus-driven corporate rating actions has been modest to date.
- We expect corporate ratings activity on issuers affected by the coronavirus to continue, and perhaps even accelerate, as the situation continues to evolve.
- U.S. BSL CLOs have some room to absorb additional downgrades. As of early March 2020, the average transaction has 4.8% exposure to corporate issuers rated 'CCC+' and below and 3.8% of cushion in their junior overcollateralization tests. But, if the pace of negative corporate rating actions increases, we see downgrade risk for some CLO subordinate tranche ratings and, potentially, some 'BBB' tranche ratings.
114. Global IT Spending Set To Slide As Coronavirus Hits Hardware Sales, March 19, 2020
Andrew Chang, San Francisco, (1) 415-371-5043, email@example.com
- We believe the spread of the coronavirus will hurt enterprise and consumer IT spending across the globe with particularly bleak ramifications for the hardware and semiconductor segments. However, we expect some of the deferred spending to return gradually in the latter half of this year through heavy government stimulus in the U.S., China, and elsewhere.
- We now expect global IT spending to decline 3% year over year compared to our previous forecast of 2%-3% growth with a particular hit to smartphones (to negative 9% from 1% to nearly 2%) and PCs (to negative 9% from negative 3% to nearly 4%). We believe reduced hardware spending will lower semiconductor industry revenues by 6% in 2020 compared to our previous forecast for 3% growth.
- We expect significant negative ratings actions throughout the year as the impact of the revenue deferral, or revenue destruction in some cases, begins to emerge. We are paying particular attention to liquidity among speculative-grade issuers given the market dislocation and we expect small hardware and highly leveraged software issuers with weak cash flow to bear the brunt of the fallout.
115. Coronavirus Outbreak Will Test Resilience Of China's Utilities And Environmental Service Operators, Feb. 10, 2020
Apple Li, CPA, Hong Kong, (852) 2533-3512, firstname.lastname@example.org
- The novel coronavirus outbreak has limited impact on the financial strength of the rated companies in the power utilities and environmental sectors in China owing to their relative resilience to an economic downturn.
- A temporary slowdown on construction work for pipeline projects might rein in capital expenditure for 2020 but the work will likely pick up after the outbreak eases.
- Overall demand for electricity and gas will largely be in line with China's economic growth while profitability will continue to recover given softening fuel costs.
116. EMEA Utilities Should Withstand COVID-19 Better Than Most Sectors, March 24, 2020
Pierre Georges, Paris, (33) 1-4420-6735, email@example.com
- European utilities are more resilient to the effects of COVID-19 than most other sectors given the essential service they provide, the regulated or long-term contracted nature of a portion of their activities, and their relatively better access to capital markets.
- We currently expect only a limited number of rating downgrades in the sector. Yet, the pandemic and recent oil price collapse have triggered a wider economic shock and uncertainties over the timing of a recovery, thereby increasing earnings risks for utilities with large exposure to merchant power activities.
- We expect power demand to decline by 5%-7% this year on 2019 and power prices to be down 20% in 2021 from our previous assumptions. This will affect earnings on generation and supply activities, while regulated networks are better protected. Lower investments in 2020, and eventually some flexibility on dividends may ease pressure on credit metrics.
- More generally, we see weaker macroeconomic fundamentals affecting ratings on utilities, owing to political and commercial pressure to support weaker customers and suppliers, increased sovereign risk, and in certain cases refinancing challenges.
- We also see increased risks that pension and asset-retirement obligation deficits will widen, which could weaken the credit health of some companies.
117. COVID-19: The Outlook For North American Regulated Utilities Turns Negative, April 2, 2020
Gabe Grosberg, New York (1) 212-438-6043, firstname.lastname@example.org
- We are revising our assessment of the North America regulated utility industry to negative from stable.
- We expect that the utility industry will remain a high-credit-quality investment-grade industry.
- We expect that the industry's median rating, which is 'A-', could weaken to the 'BBB+' level.
- Prior to the coronavirus outbreak in North America about 25% of the utilities had a negative outlook or ratings that were on CreditWatch with negative implications.
- Additionally, many utilities with a stable outlook have minimal financial cushion at the current rating level.
- We expect COVID-19 will weaken the industry's 2020 funds from operations (FFO) to debt by about 100 basis points.
|Coronavirus Impact Article Series|
|Sector||Region/Country||No.||Article title||Publication date|
|Credit conditions||Asia-Pacific||1||Credit Conditions Asia-Pacific: As Bad As 1997||March 30, 2020|
|Credit conditions||Emerging Markets||2||Credit Conditions Emerging Markets: Covid-19 Magnifies Risks||March 31, 2020|
|Credit conditions||Europe||3||Credit Conditions Europe: Europe Goes Into Lockdown||April 1, 2020|
|Credit conditions||Global||4||Global Credit Conditions: Triple Trouble: Virus, Oil, Volatility||April 1, 2020|
|Credit conditions||Global||5||Assessing The Coronavirus-Related Damage To The Global Economy And Credit Quality||March 24, 2020|
|Credit conditions||North America||6||Credit Conditions North America: Unprecedented Uncertainty Slams Credit||March 31, 2020|
|Autos||Global||7||COVID-19 Will Batter Global Auto Sales And Credit Quality||March 23, 2020|
|Aviation||Global||8||Aircraft Lessors, Hit By Coronavirus Fallout, Should Fare Better Than Their Airline Customers||March 25, 2020|
|Aviation||Global||9||Coronavirus' Global Spread Poses More Serious Challenges For Airlines||March 12, 2020|
|Business services||U.S.||10||COVID-19, Risks Of Global Recession Spike Business Services' Downgrade Tilt||March 19, 2020|
|Commodities||China||11||China's Oil Majors Can Withstand Crude Price Slump…For Now||March 18, 2020|
|Commodities||Global||12||S&P Global Ratings Cuts WTI And Brent Crude Oil Price Assumptions Amid Continued Near-Term Pressure||March 19, 2020|
|Commodities||Global||13||Metal Price Assumptions: Oil Prices And The Coronavirus Dulls Demand For Most Metals||March 16, 2020|
|Consumer goods||Europe||14||The Health Of Branded European Consumer Goods Companies Isn't Immune To The New Coronavirus||Feb. 3, 2020|
|Consumer goods||U.S.||15||If Coronavirus Is Not Contained, Disruption For Toy Companies Could Extend Into The Second Quarter||Feb. 27, 2020|
|Corporates||Australia||16||Coronavirus Is Not The Only Headline For Corporate Australia||March 10, 2020|
|Corporates||China||17||How Are China's Industrial Producers And Construction Firms Holding Up Under The COVID-19 Outbreak||March 8, 2020|
|Corporates||China||18||Coronavirus Outbreak A Test For China Corporates' Cash Flow And Liquidity||Feb. 12, 2020|
|Corporates||Europe||19||How Is COVID-19-Related Market Volatility Affecting Investment Holding Companies?||March 13, 2020|
|Corporates||Japan||20||Coronavirus Jeopardizes Creditworthiness At Certain Major Japanese Companies||Feb. 12, 2020|
|Corporates||Korea||21||COVID-19 Piles Risk Onto Korea's Strained Corporates||March 12, 2020|
|Corporates||Latin America||22||Latin American 2020 Corporate Credit Outlook: COVID-19 Testing Latin America's Defenses||March 23, 2020|
|Cross-sector||Africa||23||COVID-19 Exacerbates Africa's Social And Macroeconomic Vulnerabilities||March 18, 2020|
|Cross-sector||Asia-Pacific||24||Asia-Pacific Credits Wobble As COVID-19 Goes Global||March 9, 2020|
|Cross-sector||Emerging Markets||25||Emerging Markets: Empty Streets And Rising Risks||March 27, 2020|
|Cross-sector||Gulf||26||Prolonged COVID-19 Disruption Could Expose The GCC's Weaker Borrowers||March 11, 2020|
|Default, transition, and recovery||Europe||27||Recession Likely Will Spur The European Speculative-Grade Default Rate To Rise Toward 8%||March 31, 2020|
|Default, transition, and recovery||U.S.||28||The Global Recession Is Likely To Push The U.S. Default Rate To 10%||March 19, 2020|
|Economics||Asia-Pacific||29||Asia-Pacific Economic Forecasts: The Cost Of Coronavirus Is Now US$620 Billion||March 22, 2020|
|Economics||Canada||30||Oil Price Plunge And COVID-19 Deal A Double Blow To Canada's Economy This Year||March 27, 2020|
|Economics||Europe||31||COVID-19: The Steepening Cost To The Eurozone And U.K. Economies||March 26, 2020|
|Economics||Global||32||The Escalating Coronavirus Shock Is Pushing 2020 Global Growth Toward Zero||March 30, 2020|
|Economics||Latin America||33||For Latin America, The Path To Economic Recovery From COVID-19 Remains Uncertain||March 31, 2020|
|Economics||U.S.||34||It's Game Over For The Record U.S. Run; The Timing Of A Restart Remains Uncertain||March 27, 2020|
|Financial institutions||Australia||35||Australian Banks Resilient To COVID-19 Crisis||March 31, 2020|
|Financial institutions||China||36||China Banks And Coronavirus: Forbearance Today, Diminished Standards Tomorrow||Feb. 19, 2020|
|Financial institutions||Europe||37||European Banks' First-Quarter Results: Many COVID-19 Questions, Few Conclusive Answers||April 1, 2020|
|Financial institutions||Hong Kong||38||Coronavirus Spells More Trouble For Hong Kong Banks||Feb. 3, 2020|
|Financial institutions||Indonesia||39||COVID-19 Hits Indonesia Banks On Multiple Fronts||March 26, 2020|
|Financial institutions||Italy||40||The Coronavirus Pandemic Is Set To Test The Resiliency Of Italy's Banks||March 13, 2020|
|Financial institutions||Kazakhstan||41||Three Big Risks For Kazakh Banks: Oil Prices, Foreign Exchange Rates, And The Coronavirus||April 2, 2020|
|Financial institutions||Korea||42||Korean Banks Will Likely Weather Headwinds Arising From Coronavirus||Feb. 5, 2020|
|Financial institutions||Latin America||43||Latin American Banks Will Cope With Coronavirus Fallout But At The Expense Of Asset Quality||March 24, 2020|
|Financial institutions||Malaysia||44||NPLs To Rise For Malaysian Banks As Political Uncertainty Adds To COVID-19 Blow||March 4, 2020|
|Financial institutions||New Zealand||45||New Zealand Banks Buckle Down For Lockdown||March 30, 2020|
|Financial institutions||Philippines||46||COVID-19 Means Another Year Of Single-Digit Loan Growth For Philippine Banks||March 8, 2020|
|Financial institutions||Russia||47||Recession And Market Volatility Will Test The Resilience Of Russian Banks||April 2, 2020|
|Financial institutions||Singapore||48||Singapore Banks Can Draw On Buffers As Coronavirus Spreads||Feb. 2, 2020|
|Financial institutions||Taiwan||49||Coronavirus Impact: Taiwan's Financial Sectors Can Stave Off The Threat For Now||Feb. 7, 2020|
|Financial institutions||Thailand||50||Coronavirus Will Test The Resilience Of Thai Banks||Feb. 5, 2020|
|Financial institutions||U.S.||51||Stress Scenarios Show How U.S. Bank Ratings Could Change Amid Pandemic-Induced Financial Uncertainty||March 24, 2020|
|Financial institutions||U.S.||52||Most U.S. Banks, Helped By Fed Actions, Are Well Positioned To Meet Corporate Borrowers' Demand For Cash||March 24, 2020|
|Financial institutions||U.S.||53||The Fed's Crisis Actions Will Further Bolster Liquidity For U.S. Banks, But Earnings And Asset Quality Are Set To Worsen Substantially||March 18, 2020|
|Gaming, leisure, and lodging||Asia-Pacific||54||Asia-Pacific Gaming Takes Severe Knock From COVID-19||March 26, 2020|
|Gaming, leisure, and lodging||Global||55||COVID-19 Will Cause A Significant Decline In Global RevPAR, Cash Flow, For Rated Lodging Companies||March 11, 2020|
|Healthcare and pharmaceuticals||Global||56||Pharma Industry Only Moderately Affected While Helping Mitigate COVID-19 Pandemic Impact||March 16, 2020|
|Healthcare and pharmaceuticals||U.S.||57||U.S. Health Care Braces Itself As COVID-19 Storm Makes Landfall||March 18, 2020|
|Infrastructure - midstream||U.S.||58||Supply And Demand Shocks Are Throwing The U.S. Midstream Industry Off Balance||March 24, 2020|
|Infrastructure - project finance||North America||59||Infrastructure Projects Dependent On Discretionary Spending Could Face Negative Cash Flows Amid COVID-19 Outbreak||March 9, 2020|
|Infrastructure - project finance||U.K.||60||Coronavirus Outbreak Unlikely To Affect International Demand For U.K. Student Housing Projects||Feb. 12, 2020|
|Infrastructure - project finance||U.K.||61||U.K. Hospital PFI Projects Expected To Be Resilient Against Spread Of Coronavirus||Jan. 30, 2020|
|Infrastructure - transportation||China||62||How Can China's Highway Operators Survive The Toll Moratorium?||March 16, 2020|
|Infrastructure - transportation||Global||63||The Coronavirus Pandemic Could Reduce Global Air Passengers By Up To 30% In 2020||March 17, 2020|
|Insurance||China||64||Chinese Insurers' Earnings Will Erode Amid Coronavirus Outbreak||Feb. 4, 2020|
|Insurance||Global||65||COVID-19 Will Test Insurers’ Resilience||March 25, 2020|
|Insurance||Global||66||EMEA And U.S.-Based Re/Insurers Likely To Take COVID-19 In Stride||Feb. 24, 2020|
|Insurance||Gulf||67||GCC Insurers' Earnings Are Under Threat From COVID-19 And Low Oil Prices||March 31, 2020|
|Insurance||Hong Kong||68||Hong Kong Life Insurers Could Face First Contraction In Decades||April 1, 2020|
|Insurance||Mexico||69||Mexican Insurers' Solid Capital And Liquidity Help Counteract Impact From COVID-19 Outbreak||March 24, 2020|
|Insurance||North America||70||Assessing The Top Risks COVID-19 Poses To North American Life Insurers||March 26, 2020|
|Insurance||North America||71||Robust Capitalization Makes The COVID-19 Fallout Manageable For North American Property/Casualty Insurers And Reinsurers||March 25, 2020|
|Insurance||Taiwan||72||Asset Risk Still A Thorn In The Side For Taiwan Life Insurers||March 20, 2020|
|Insurance||U.S.||73||Despite The COVID-19 Pandemic, The Outlook For The U.S. Health Insurance Sector Remains Stable||March 26, 2020|
|Insurance||U.S.||74||Morbidity Stress Test: How A Hypothetical Pandemic Could Affect U.S. Health Insurers||March 12, 2020|
|Insurance||U.S.||75||Amid Coronavirus Outbreak, S&P Global Ratings Looks At How A Hypothetical Pandemic Could Affect U.S. Life Insurers||Feb. 14, 2020|
|Media and telecom||Global||76||COVID-19 Increases Pressure On Global Media & Entertainment Ratings||March 26, 2020|
|Media and telecom||U.S.||77||As COVID-19 Cases Surge, Pockets Of Risk Emerge For Certain U.S. Telecom And Cable Providers||March 17, 2020|
|Public finance||Australia||78||Coronavirus Will Dent Australia's Higher Education Revenues||Feb. 5, 2020|
|Public finance||China||79||Pandemic Upends Finances Of China's Weak Local Governments||March 27, 2020|
|Public finance||Sweden||80||Swedish Government To Mitigate Impact From Coronavirus On Local And Regional Governments||March 11, 2020|
|Public finance||U.S.||81||COVID-19: A Closer Look At How It Affects 10 Major U.S. Cities||April 2, 2020|
|Public finance||U.S.||82||The COVID-19 Outbreak Weakens U.S. State And Local Government Credit Conditions||April 2, 2020|
|Public finance||U.S.||83||All U.S. Public Finance Sector Outlooks Are Now Negative||April 1, 2020|
|Real estate||China||84||New Virus, Unprecedented Risks For China's Developers||March 2, 2020|
|Real estate||Europe||85||COVID-19 Will Likely Ruin European Retail Property Companies' Efforts To Contain Competition From E-Commerce||April 1, 2020|
|Real estate||Europe||86||COVID-19: Implications For European Real Estate Investment, As Tenants Begin To Suspend Rent Payments||March 26, 2020|
|Real estate||Hong Kong||87||Past Gains Help Hong Kong Property Companies Face Another Round Of Disruption||March 29, 2020|
|REITs||North America||88||REITrends: COVID-19 Could Threaten Rating Stability For North American REITs||March 17, 2020|
|Retail and restaurants||Global||89||Coronavirus Dramatically Increases Risk For Already Stressed Retail And Restaurant Sectors||March 20, 2020|
|Sovereigns||Europe||90||The European Central Bank Rises To The Challenge As Eurozone Sovereign Borrowing Soars In Response To COVID-19||March 19, 2020|
|Sovereigns||Europe||91||Eurozone Sovereign Creditworthiness Unaffected For Now From Coronavirus-Related Effects On Growth||March 10, 2020|
|Sovereigns||Global||92||Stress Scenario: The Sovereigns Most Vulnerable To A COVID-19-Related Slowdown In Tourism||March 17, 2020|
|Sovereigns||Global||93||Credit FAQ: Coronavirus And Its Possible Impact On Global Sovereign Ratings||Feb. 13, 2020|
|Structured finance||Australia||94||How Will COVID-19 Affect Australian Structured Finance?||March 25, 2020|
|Structured finance||Australia, New Zealand||95||How Will COVID-19 Affect Australian And New Zealand ABS Transactions||April 1, 2020|
|Structured finance||China||96||What Do The First Performance Reports Reveal About COVID-19's Effects On China Auto ABS And RMBS?||March 26, 2020|
|Structured finance||Europe||97||A Deeper Dive Into The Potential Credit Effects Of COVID-19 On European CMBS||April 2, 2020|
|Structured finance||Europe||98||How Credit Distress Due To COVID-19 Could Affect European CLO Ratings||April 2, 2020|
|Structured finance||Europe||99||European ABS And RMBS: Assessing The Credit Effects Of COVID-19||March 30, 2020|
|Structured finance||Europe||100||European Corporate Securitizations: Assessing The Credit Effects Of COVID-19||March 26, 2020|
|Structured finance||Europe||101||European CLOs: Assessing The Credit Effects Of COVID-19||March 25, 2020|
|Structured finance||Europe||102||European CMBS: Assessing The Credit Effects Of COVID-19||March 24, 2020|
|Structured finance||Europe||103||Will Mortgage Payment Suspensions Related To COVID-19 Affect European RMBS?||March 13, 2020|
|Structured finance||Global||104||Global Covered Bonds: Assessing The Credit Effects Of COVID-19||March 25, 2020|
|Structured finance||Global||105||Insurance-Backed Securitizations Likely To Show Near-Term Resilience To COVID-19||March 24, 2020|
|Structured finance||Latin America||106||COVID-19 Credit Update: Latin America Structured Finance Is In Lockdown||March 27, 2020|
|Structured finance||North America||107||Assessing The Credit Effects Of COVID-19 On U.S. And Canadian Credit Card ABS||March 25, 2020|
|Structured finance||U.S.||108||COVID-19 Containment Measures Put U.S. Timeshare Loan Payments To The Test||April 2, 2020|
|Structured finance||U.S.||109||The Potential Effects Of COVID-19 On U.S. Auto Loan ABS||March 26, 2020|
|Structured finance||U.S.||110||U.S. Lodging-Backed CMBS Bracing For The Impact Of COVID-19||March 23, 2020|
|Structured finance||U.S.||111||Assessing The Credit Effects Of COVID-19 On U.S. RMBS||March 20, 2020|
|Structured finance||U.S.||112||U.S. Whole Business Securitizations Under Stress From COVID-19||March 17, 2020|
|Structured finance||U.S.||113||Coronavirus Will Put U.S. CLO Diversity And Managers To The Test||March 13, 2020|
|Technology||Global||114||Global IT Spending Set To Side As Coronavirus Hits Hardware Sales||March 19, 2020|
|Utilities||China||115||Coronavirus Outbreak Will Test Resilience Of China's Utilities And Environmental Service Operators||Feb. 10, 2020|
|Utilities||Europe||116||EMEA Utilities Should Withstand COVID-19 Better Than Most Sectors||March 24, 2020|
|Utilities||North America||117||COVID-19: The Outlook For North American Regulated Utilities Turns Negative||April 2, 2020|
This report does not constitute a rating action.
|Primary Credit Analyst:||David C Tesher, New York (1) 212-438-2618;|
|Secondary Contacts:||Terry E Chan, CFA, Melbourne (61) 3-9631-2174;|
|Jose M Perez-Gorozpe, Mexico City (52) 55-5081-4442;|
|Paul Watters, CFA, London (44) 20-7176-3542;|
|Contributors:||Joe M Maguire, New York (1) 212-438-7507;|
|Yucheng Zheng, New York + 1 (212) 438 4436;|
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