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COVID-19 Impact: Key Takeaways From Our Articles

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COVID-19 Impact: Key Takeaways From Our Articles

(Editor's Note: This article has been updated from the previous edition. It now contains key takeaways from recent articles on the economies of China, Europe, and the U.S., emerging markets, the global food processing industry, Korean corporates, potential downgrades, global corporate defaults, U.S. corporate downgrades, the corporate and infrastructure sectors in Latin America, financial institutions in Asia-Pacific, the U.S. media industry, Canadian grocers, the European retail and restaurant sector, and global structured finance.)

To date, S&P Global Ratings has published more than 710 articles that analyze the effects of COVID-19 on economic conditions and credit. We also periodically update this article, which contains an edited compilation of key takeaways from our most up-to-date series organized by sector, region/country, and publication date (see table 1).

S&P Global Ratings acknowledges a high degree of uncertainty about the evolution of the coronavirus pandemic. The current consensus among health experts is that COVID-19 will remain a threat until a vaccine or effective treatment becomes widely available, which could be around mid-2021. We are using this assumption in assessing the economic and credit implications associated with the pandemic (see our research here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.

Webcast Series And Weekly Digest

S&P Global Ratings has launched a series of webcasts--Coronavirus Insights: Friday Credit Focus. Every other Friday, we 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 here.

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 Oct. 14 here.

Our recent Industry Top Trends series of 39 short reports lays out what's in store for each sector in North America and in Europe, as COVID-induced changes--and secular shifts that predate the pandemic--play out. View the full series here.

Rating Actions

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 it has taken globally on corporations and sovereigns. These are public ratings where we cite COVID-19, oil prices, or both as a factor. The latest edition is: "COVID-19: Coronavirus- And Oil Price-Related Public Rating Actions On Corporations, Sovereigns, And Project Finance To Date," published Oct. 20.

Structured finance ratings are also affected due to the COVID-19 crisis, see "COVID-19 Activity In Global Structured Finance As Of Sept. 18, 2020," published Sept. 24. Moreover, "COVID-19 Activity In U.S. Public Finance," published Oct. 16, summarizes the sector's rating actions and publications to date.

"Credit FAQ: The Ratings Process And The COVID-19 Pandemic," published April 2 and "Top 10 Investor Questions On Our Ratings Process," published June 4 address some questions about the pandemic's effect on S&P Global Ratings and how our credit analysis and surveillance are proceeding during this time. "Q&A: Government Support, Forbearance, And Corporate Liquidity Analysis In A Time Of Stress," published April 9, provides a summary of certain elements of our criteria and rating definitions relevant to understanding how we may assess government support, forbearance, and corporate liquidity in a time of credit stress.

COVID-19 Infections

The number of COVID-19 confirmed cases has surpassed 40.8 million worldwide, with the death toll exceeding 1,126,000 (see charts 1 and 2). South America has become an epicenter of the pandemic, and cases continue to rise in emerging markets such as Brazil, Russia, and India. Elsewhere, the situation remains complicated as countries transition to recovery. For example, some European countries recently experienced increasing infections that have driven them back to more restrictions. In the U.S., too, new coronavirus cases are rising again. Globally, around 68% of the confirmed cases have recovered.

Chart 1

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Chart 2

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Key Takeaways From Our Relevant Published Reports

Credit Conditions

1. Credit Conditions Asia-Pacific: Recovery Roads Diverge, Sept. 29, 2020

Christopher Yip, Hong Kong, +852-2533-3593, christopher.yip@spglobal.com

  • Overall. The road to recovery is hardly smooth or even. China continues to be a relative bright spot while many other emerging markets struggle to contain COVID-19. Economic fallout has bottomed but the rebound is showing a big disparity among countries as well as sectors, potentially leading to widening variation in credit trends.
  • Risks. These include mounting debt with suppressed revenue, disruption from lingering containment measures, spillovers from the U.S.-China strategic confrontation, and uneven access to U.S. dollar funding.
  • Credit. Negative rating actions have tapered for the region in the past quarter with no defaults by rated issuers. However, the net negative outlook bias worsened to nearly onefifth of ratings. Consequently, the likelihood of downgrades and defaults persists.

2. Credit Conditions Emerging Markets: Fragile And Uneven Recovery, Virus Resurgence Looms, Sept. 29, 2020

Jose M Perez-Gorozpe, Mexico City, (52) 55-5081-4442, jose.perez-gorozpe@spglobal.com

  • Overall: Credit conditions in emerging markets (EMs) continue showing a gradual improvement stemming from supportive financing conditions, the gradual economic recovery, and the likelihood that a COVID-19 vaccine will be available soon.
  • Risks: A key developing risk is the phase out of credit forbearance and fiscal stimulus. As these measures are lifted, some of the pandemic's consequences will surface, which could especially stress banks given a potentially rapid deterioration of asset quality, absent additional measures. People are learning to live with the virus, as weariness with health and safety restrictions rises. The latter raises questions about a potential resurgence in cases over the coming months. Furthermore, winter is coming in the Northern Hemisphere and COVID-19 will coincide with the influenza season potentially setting a setback in beating the pandemic. In our view, this will further pressure health systems and government budgets. Lockdown renewals or additional social-distancing measures could undermine expected recovery. In our view, the risk of policy missteps remains.
  • Credit: Negative rating actions have plateaued, but lower rating levels and negative outlooks reflect higher leverage and vulnerability to further shocks. A slower economic recovery or failure to deliver a vaccine within an expected time frame could lead to further downgrades..

3. Credit Conditions Europe: Ill-Prepared For Winter, Sept. 29, 2020

Paul Watters, CFA, London, (44) 20-7176-3542, paul.watters@spglobal.com

  • Overall: Supported by wide-ranging policy measures, Europe has bounced back well from the COVID-19 lockdown coma in the spring. The question now is how stringent containment measures will need to be to suppress the second wave that is breaking across the Continent as winter approaches – and at what cost.
  • Risks: Key risks remain a resurgence in the virus as winter approaches without a vaccine, the ongoing threat to solvency for companies with weak credit fundamentals, increasing global trade tensions, extended uncertainty inhibiting consumer demand, as well as increasing doubts about whether a U.K.-EU trade deal can be concluded before year-end.
  • Credit: The shock of the pandemic on productive capacity is enormous but temporary. If, on the contrary, the fallout on human and economic capital is permanent, private-sector bankruptcies will become more pervasive, impairing asset quality in the banking sector and draining the resources of the state.

4. Global Credit Conditions: The K-Shaped Recovery, Oct. 6, 2020

Alexandra Dimitrijevic, London, (44) 20-7176-3128, alexandra.dimitrijevic@spglobal.com

  • Credit trends are on diverging paths. Macroeconomic and credit trends point to a widening gap in credit risks across regions and industries in the year to come.
  • Downgrades have slowed but negative outlooks are at unprecedented highs. This is the case for both nonfinancial corporates (37%) and banks (30%) globally, indicating more rating actions ahead. Since the pandemic started, weaker credits (rated 'B' and below) have represented over half of the downgrades, while 90% of defaults were from companies rated in the 'CCC' category. We forecast the speculative-grade corporate default rate to double by June 2021 to 12.5% in the U.S. from the current 6.2%, and to 8.5% in Europe from 3.8%.
  • Credit metrics are increasingly diverging between industries. Some sectors have been barely touched by the pandemic, such as tech, consumer staples, homebuilders, and retail essentials. For others, including airlines, hotels, and auto to name a few, the credit damage will go well
  • into 2023. Banks can absorb the shock generally, but recovery will be slow and uneven.
  • Financing conditions remain supportive. Corporate bond issuance has reached a record $4.5 trillion for the year to date, 29% higher than this time last year. But fears of renewed market volatility have pushed many corporates to frontload bond issuance ahead of the U.S. elections.
  • We also see signs of a return of the aggressive financial policies we often saw before the pandemic, such as the use of debt to finance dividend payments.
  • Economic recovery will take time. Despite better-than-expected bounces in the U.S, the eurozone, and China, healing the global economy will take time, and some emerging markets will suffer sizeable permanent income losses.
  • Global risks. Risks to our base case include extended COVID-19 containment measures and transition to post-COVID policies, corporate solvency risk, new highs in government debt, struggling emerging markets, economic nationalism and geopolitical tensions, as well as mounting ESG risks..

5. Credit Conditions North America: Potholes On The Road To Recovery, Sept. 29, 2020

David C Tesher, New York, (1) 212-438-2618, david.tesher@spglobal.com

  • Overall: While credit conditions are largely favorable for many borrowers, pockets of risk are rising—particularly for U.S. state and local governments, whose tumbling revenues are adding to budget pressures. Risks around commercial real estate, too, are growing.
  • Risks: The threat of financial-market volatility has heightened as the U.S. election draws near—especially if the presidency is in dispute, as in 2000. Moreover, if Republicans and Democrats continue to split power in Washington, the chance for another round of sweeping fiscal stimulus may disappear.
  • Credit: Yields on Treasuries and on private-sector debt have all fallen or remain low. Issuance is robust across the credit spectrum, with even the combined leveraged loan and speculative-grade bond offerings to date exceeding the same period last year..
Autos

6. Global Auto Sales Forecasts: Hopes Pinned On China, Sept. 17, 2020

Vittoria Ferraris, Milan, (39) 02-72111-207, vittoria.ferraris@spglobal.com

  • We now forecast global auto sales will decline by about 20% this year and that two years from now sales will still be 6% below 2019 volumes.
  • We continue to believe that the Chinese market has the potential to resume moderate long-term growth, and project it will be the only region to recover to 2019 volumes by the end of 2022.
  • In Europe and North America, sales showed signs of stabilizing in July and August but we don't expect these markets to fully recover their steep declines within the next two years.
Aviation

7. From Bad To Worse: Global Air Traffic To Drop 60%-70% In 2020, Aug. 12, 2020

Rachel J Gerrish, CA, London, (44) 20-7176-6680, rachel.gerrish@spglobal.com

  • We now expect global air passenger traffic to drop by 60%-70% in 2020 compared with 2019, a steeper decline than we estimated previously. We also expect a more gradual recovery to pre-COVID-19 traffic levels by 2024.
  • We do not believe that this revision will have a widespread rating impact across the global portfolio of airlines we rate. However, as we continue to review our rated airlines, it may affect some individual companies.
  • The more negative air traffic outlook increases pressure on all airlines' credit quality. Cost reductions, fleet right-sizing, and liquidity preservation will be critical measures to partly counterbalance the depressed demand for air travel.
Capital Goods

8. China's Cyclical Capital Goods Makers Brace For Downcycle, Oct. 11, 2020

Chloe Wang, Hong Kong, + 852-25333548, chloe.wang@spglobal.com

  • Replacement demand and healthy downstream activity have generated 50%-plus sales growth since March for key types of Chinese construction machinery and heavy-duty trucks.
  • We anticipate the cycle to turn in 2021, with construction machinery and heavy-duty truck sales reversing from record levels.
  • Some capital goods firms are well positioned for the upcoming downcycle due to balance-sheet strengthening undertaken in recent years.
Chemicals

9. Specialty, Commodity Chemicals Recovery Stuck Behind Autos In Slow Lane, Sept. 30, 2020

Edward J Hudson, New York, + 1 (212) 438 2764, edward.hudson@spglobal.com

  • Chemical companies with significant automotive exposure face headwinds, as S&P Global Ratings revised its 2020 global light vehicle sales forecast to a 20% decline year over year, with recovery to 2019 sales not expected until 2023. Companies that make adhesives, resins, and coatings, such as The Dow Chemical Co. and Momentive Performance Materials Inc., were affected in the second quarter as many automakers halted production in April and May.
  • Companies that serve the oil additives and oil refining industries, such as NewMarket Corp. and LyondellBasell Industries N.V., face challenges in those segments as fuel demand fell on significantly reduced travel due to the COVID-19 pandemic.
  • The pandemic has slowed the timeline for electric vehicle market penetration, affecting lithium producers such as Albermarle Corp.
  • Rating activity in the U.S. chemicals sector has been extremely negative. Companies with significant exposure to the automotive market are the hardest hit.
  • Barring a second wave of COVID-19, which could spur further economic contraction and slower recovery, automotive production should continue to ramp up in the second half and into 2021 to make up for declining inventory and pent-up demand. This should boost demand for chemicals companies that serve auto-related end markets.
Commodities - Metal And Mining

10. S&P Global Ratings Lifts Price Assumptions For Most Metals, Sept. 24, 2020

Elad Jelasko, CPA, London (44) 20-7176-7013, elad.jelasko@spglobal.com

  • We are raising our assumptions for commodity prices for the rest of 2020 and 2021, amid a better-than-expected recovery of the global economy to date, especially in China.
  • We believe that China's $500 billion stimulus package will continue to drive the country's demand for commodities in the short term, supporting our revised assumptions and even higher prices.
  • A second wave of lockdowns and the elections in the U.S. will result in some uncertainty, causing higher–than-normal volatility in commodity prices.
  • In our view, despite the improved outlook for prices, mining companies are unlikely to increase their recently reduced capex programs, leading to some capacity constraints over the medium and long term.
Commodities - Oil And Gas

11. S&P Global Ratings Revises Oil And Natural Gas Price Assumptions, Sept. 16, 2020

Thomas A Watters, New York (1) 212-438-7818, thomas.watters@spglobal.com

  • We raised our price assumptions for Brent and West Texas Intermediate crude oil, as well our Henry Hub and AECO natural gas prices for the remainder of 2020.
  • We raised our natural gas price assumptions for 2021.
  • We lowered our oil price assumptions for 2022.
  • We set long-term oil and natural gas price assumptions for 2023.
  • The new increased price assumptions do not necessarily warrant wholesale upgrades, though we may revise outlooks to stable from negative on producers, particularly those that have a higher balance of natural gas production.
Consumer Goods

12. COVID-19 Is A Wake-Up Call For The Food Processing Industry, Oct.20, 2020

Anna Overton, London, (44) 20-7176-3642, anna.overton@spglobal.com

  • We believe the pandemic's impact on food industry workers will permanently change how companies approach workforce safety, particularly at meat facilities, where coronavirus infection rates have been high.
  • With consumers, regulators, and other stakeholders demanding change, food companies will need to invest, not only to adjust to new operating and safety standards but also to ensure continued global food supply.
  • The social impact of COVID-19 already informs our opinion of food processing companies' creditworthiness; we believe the sustainability of their business models hinges on the ability to price in social factors while remaining competitive in the long term.

13. COVID-19 Battered Global Consumer Discretionary Sectors But Lifted Staples; Recovery Varies By Subsector, Aug. 4, 2020

Diane M Shand, New York, (1) 212-438-7860, diane.shand@spglobal.com

  • Global consumer products companies invested heavily in digital capabilities and their supply chains ahead of the COVID-19 pandemic and should meet the acceleration of demand from the online and offline channels.
  • Discretionary subsectors face material declines in sales and profits because of social distancing mandates and the recession. It will likely take credit metrics 2-3 years to recover to 2019 levels.
  • The demand increase related to COVID-19 is a modest credit positive for staples. This subsector will use innovation and value propositions to retain some recent share gains.
  • Since year-end 2019, we have downgraded approximately a quarter of the sector; 46% of the issuers either have negative outlooks or are on CreditWatch with negative implications.
  • We continue to believe most rating actions will be at the low end of the rating spectrum given many of these issuers entered the pandemic with significant debt burdens, faltering operating performance, and have issued more debt to cover operating losses and/or shore up liquidity.
Corporates

14. Carmakers Are A Step Behind In Industrial China's COVID Comeback, July 16, 2020

Claire Yuan, Hong Kong, (852) 2533-3542, Claire.Yuan@spglobal.com

  • China's engineering and construction firms and capital goods makers are recovering smartly, largely thanks to heavy spending on infrastructure.
  • Sales of key types of construction machinery and heavy-duty trucks grew 60%, year-on-year, in the second quarter.
  • China's recent auto sales have significantly beat our expectations but the outlook is murky given soft consumer demand.

15. From Crisis To Crisis: A Lookback At Actual Recoveries And Recovery Ratings From The Great Recession To The Pandemic, Oct. 8, 2020

Kenny K Tang, New York, (1) 212-438-3338, kenny.tang@spglobal.com

  • Our recovery ratings continue to provide a good gauge of expected recovery levels and a rank order of the debt class priority of claims position and actual recoveries. Average recoveries continue to reflect a rank order within the recovery range associated with each recovery rating.
  • In the past two and a half years, average first-lien debt recoveries have trended downward to 71%, compared to the current 12.5-year average of 79%. Debt recoveries were low in the retail (eight companies) and consumer (five companies) sectors, which averaged 56%-58%, but higher in the oil and gas sector (14 companies), which averaged 94%.
  • Debt cushion matters because first-lien debt recovery is the highest--at an average of 90%--when there is junior debt in the debt structure, or debt cushion of 60%-70%.

16. European Corporate Recoveries Over 2003-2019: The Calm Before The COVID-19 Storm, Aug. 5, 2020

David W Gillmor, London, (44) 20-7176-3673, david.gillmor@spglobal.com

  • There were few defaults or restructurings of European corporate debt instruments in 2019, meaning minimal changes to the mean and median recovery rates for 2003-2019 versus 2003-2018.
  • The mean recovery on first-lien debt has dropped a little, to 72.7% in 2003-2019 from 73.4% in 2003-2018 and 74.7% in 2003-2017, with the number of defaults on first-lien bonds gradually increasing, but no new defaults on second-lien or mezzanine debt.
  • At 67.2%, the average first-lien recovery in the U.K. remains lower than the overall average of 72.7%, consistent with the weakening economic environment in the U.K.
  • The retail and restaurant and media and entertainment sectors have lower average recoveries and are the ones to watch in future.

17. COVID-19 Heat Map: Updated Sector Views Show Diverging Recoveries, Sept. 29, 2020

Jeanne L Shoesmith, CFA, Chicago, (1) 312-233-7026, jeanne.shoesmith@spglobal.com

  • We are updating our COVID-19 sector recovery expectations. While there is a tremendous variance of recovery prospects across different corporate sectors, we continue to believe it will take until well into 2022 or, in some cases, 2023 and beyond for many sectors to recover credit metrics.
  • Low interest rates and the long road to recovery puts financial policy as a key factor and variable that could further shape and delay the recovery timeline.
  • While most sectors remain in line with our initial view, there are a couple of bright spots (homebuilders, building materials, and consumer staples, for example) that, in some cases, we expect to recover sooner than our initial expectations, while the auto industry is showing some signs of stabilization.
  • Travel-related segments, especially related to air travel, continue to be under pressure and may not recover until 2023 and beyond as a result of restrictions, reluctant consumers, and heavy debt burdens.

18. Twin Shocks Of Low Oil And COVID-19 Mean Double Trouble For GCC Corporates, July 21, 2020

Timucin Engin, Dubai, (971) 4-372-7152, timucin.engin@spglobal.com

  • Operating conditions have substantially weakened for corporate and infrastructure issuers in the GCC countries since February 2020 on the back of sharp oil price declines and negative effects related to COVID-19 containment measures.
  • We are generally seeing a weaker macroeconomic picture, negative employment trends and consumer spending, and a softer 2020 across the board, with a focus on preservation rather than growth.
  • Since mid-March 2020, we have taken negative rating actions on about 45% of our Middle East corporate and infrastructure portfolio, particularly in the real estate and oil field services sectors.
  • Aviation, tourism, real estate, hospitality, nonstaples retail, and oil and gas are the most exposed sectors, while telecommunications, utilities, and food retailers are relatively protected from deteriorating conditions.
  • Corporates will take at least a few quarters to recover, so a key focus will be on cost optimization, managing liquidity, and cash flow preservation, with new investments expected to take a back seat for most sectors.

19. COVID-19 Casts Cloud Over Rated Irish Corporates’ Performance Gains, Sept. 17, 2020

Amy O Martin, Dublin, + 353 (0)1 568 0606, amy.martin1@spglobal.com

  • Stable and improving margin and leverage trends exhibited by most Irish-incorporated corporates in 2019 will be eroded in 2020 due to increased pressure on operating performance as the impact of the pandemic unfolds.
  • Negative rating outlooks and CreditWatch placements have risen sharply by 33% to 39% to date in 2020, primarily because of the impact of COVID-19. However, downgrades have been limited and largely weighted toward more vulnerable sectors such as the transport-related industry.
  • We expect average revenue to decline about 10% in 2020, fueling weaker credit metrics, and we expect that the recovery may be slow and protracted for many issuers.
  • Mergers, acquisitions, and shareholder-friendly actions are likely to decline in the near term as some issuers postpone share buybacks, dividends, and business development to preserve and prioritize liquidity to support medium-term growth.

20. Korea's COVID Comeback Holds Lessons For The World, Oct. 15, 2020

JunHong Park, Hong Kong, (852) 2533-3538, junhong.park@spglobal.com

  • COVID-19 hit Korean firms hard, with about one-third of the corporate ratings in the country on negative outlook.
  • Early and decisive fiscal, monetary, and health policies have ensured that Korea is recovering quickly from the pandemic.
  • The country's technology firms are already faring well, but old-economy, industrial entities will need to wait for the global economy to rebound before returning to full health.

21. Taiwan Top 50 Corporates: Credit Profiles Extend Their Downward Trend Amid COVID-19, Sept. 7, 2020

Raymond Hsu, CFA, Taipei, (8862) 8722-5827, raymond.hsu@spglobal.com

  • Credit strength among Taiwan's top 50 corporates will continue to weaken well into 2021, largely due to the prolonged negative impact of COVID-19.
  • Falling demand will weaken capital structures as cash flow and profits shrink while capital expenditure (capex) remains high.
  • The fallout from COVID-19 will hit non-tech credit profiles hardest. We don't expect average cash flow and profitability to rebound to 2018 highs until 2022 at the earliest.
  • Stand-alone credit profiles (SACPs) in the transportation sector will likely weaken further in 2020-2021, given the potential lengthy time fame for the global economic recovery to gain traction.
  • Strong demand from rising investment in homeworking, homeschooling, and new technologies such as 5G provide some uplift for credit profiles in the tech sector. This has led to a slight divergence in credit outlooks between tech and non-tech sectors.
  • The profitability of display panel and branded IT companies remains under intense pressure due to oversupply as well as weak technology and brand names amid growing international competition.
  • For the first time in three years we made no upward adjustments to SACPs over the previous 12 months. Meanwhile, global trade tension and COVID-19 fallout resulted in seven downward adjustments over the same period, compared with six in 2018-2019.
  • Largely prudent debt appetites and shareholder returns should provide significant leverage headroom for most credit profiles to absorb a prolonged downturn.
Credit Trends And Market Liquidity

22. Credit And Economic Deterioration Signals A Rising European Speculative-Grade Default Rate Despite Market Optimism, Aug. 18, 2020

Nick W Kraemer, FRM, New York, (1) 212-438-1698, nick.kraemer@spglobal.com

  • We expect the European trailing-12-month speculative-grade corporate default rate to rise to 8.5% by June 2021 from 3.35% in June 2020. To reach this baseline forecast, 62 speculative-grade companies would need to default.
  • In our optimistic scenario, we expect the default rate to rise to 3.5% by June 2021 (26 defaults), and, in our pessimistic scenario, we expect the default rate to expand to 11.5% (84 defaults).
  • Although the economy and financial market backdrop have improved somewhat, risks prevail so long as the world is still waiting for a COVID-19 vaccine, leading once again to a wide range of possible outcomes.
  • Expansive monetary and fiscal support could lessen defaults over the near term, but, with basic revenues flagging, the proportion of 'CCC'/'C' issuers has risen sharply, raising default risk. When combined with continued support, this could lead to a drawn-out period of a higher-than-average default rate, rather than typical cyclical behavior.

23. Downgrade Potential Eases But Remains Above Pre-Pandemic Levels, Oct. 20, 2020

Sarah Limbach, Paris, + 33 14 420 6708, Sarah.Limbach@spglobal.com

  • Potential bond downgrades dropped to 1,349 in August from their peak of 1,365 a month earlier--the first drop since April 2019. Nevertheless, they remain more than twice the January count of 642--before the global COVID-19 outbreak.
  • Moreover, 1,202 financial, nonfinancial, and sovereign issuers had negative outlooks and 147 were on CreditWatch negative (as of Aug. 31, 2020). This is a ratio of 8 to 1, versus 4 to 1 in May, pointing to significantly lower risk of credit deterioration in the near term.
  • Of the 42 new potential downgrades in August, 28 were affected by the coronavirus pandemic-induced economic downturn.
  • Media and entertainment (including lodging) remains the hardest-hit sector, with 170 potential downgrades.

24. Distressed Exchanges Boost Corporate Defaults In The Second Half Of 2020, Oct. 16, 2020

Nicole Serino, New York, (1) (212) 438 1396, nicole.serino@spglobal.com

  • The global corporate default tally has reached 189 so far in 2020, after five companies defaulted since our last report.
  • Distressed exchanges lead the corporate default tally in the second half of 2020 so far, with 23, followed by missed interest and principal payments and bankruptcy with 18 and 15 defaults, respectively.
  • At this point in 2009, 2016, and 2019, there had been 234, 135, and 90 defaults, respectively.
  • By region, the U.S. leads the global default tally with 124, followed by Europe with 31 and emerging markets with 25.

25. The Travel And Entertainment Business Faces Elevated Default Risk Despite Easing Market Pressures, Oct. 12, 2020

Sudeep K Kesh, New York, (1) 212-438-7982, sudeep.kesh@spglobal.com

  • The number of global weakest links (issuers rated 'B-' or lower by S&P Global Ratings with negative outlooks or ratings on CreditWatch with negative implications) decreased to 572 as of August 31st from 589 since our last report.
  • The weakest link tally is still elevated and nearly double its precrisis levels, though it does reflect some broad improvement among issuers most at risk for default over the past three months.
  • The negative bias through Aug. 31, 2020, across regions remains higher than in January 2020, signaling future downgrades.
  • The media and entertainment (including hotels, and gaming and leisure) (103 issuers), consumer products (71 issuers), and oil and gas (46 issuers) sectors lead weakest links globally. Together they account for 38% of the global weakest links.

26. 'BBB' Pulse: Potential Fallen Angels Remain Stable In August, With Five Outlook Revisions To Stable And Just One Downgrade, Sept. 28, 2020

Vincent R Conti, Singapore + 65 6216 1188, vincent.conti@spglobal.com

  • Credit trends in the 'BBB' rating category continue to stabilize as supportive capital market conditions provide some relief to the rapid rise in fallen angels in the spring. There was a single addition to fallen angels in August, the lowest since April. The share of potential fallen angels on CreditWatch negative also fell further to 11%, suggesting less immediate downgrade risk than a few months earlier.
  • Further, for the first time since the COVID-19 crisis began, there were more removals from potential fallen angels on the back of revisions to stable outlooks than due to downgrades to speculative-grade.
  • In the secondary markets, spreads for the current crop of potential fallen angels have tightened in nearly all sectors as central bank support provided much needed stability to capital markets more generally, supporting investor confidence, especially for issuers of higher credit quality.
  • Moreover, most of the current crop of fallen angels have so far demonstrated ratings stability after a downgrade (as opposed to continued downgrades), commensurate with historical norms despite the exceptional circumstances faced today.

27. Global Financing Conditions: Bond Issuance Is Expected To Finish 2020 Up 6% After A Strong Second Quarter, July 27, 2020

Nick W Kraemer, FRM, New York, (1) 212-438-1698, nick.kraemer@spglobal.com

  • Despite the COVID-19-driven global recession deepening in the second quarter, global bond issuance soared to an all-time high, led by U.S. corporations.
  • The economic recovery slated to begin in the third quarter of 2020 will likely be a long, slow process. Some central banks and governments have expanded their initial support, but it is unclear when more normal functioning of economic and financial relationships will resume.
  • Based on these factors, we believe global bond issuance will increase by 6% in 2020.
  • While issuance volumes so far in 2020 rose at a faster pace in both Greater China and Latin America than at the same point in 2019, recent evidence points to investors being more selective, which may ultimately curb issuance growth in the second half of this year.

28. Global Refinancing--Rated Corporate Debt Due Through 2025 Nears $12 Trillion, July 27, 2020

Evan M Gunter, New York, (1) 212-438-6412, evan.gunter@spglobal.com

  • Nearly $11.9 trillion in corporate debt rated by S&P Global Ratings is scheduled to mature globally through 2025.
  • Annual maturities rise to a peak of $2.28 trillion in 2023, and debt maturities now peak one year later than they did at the beginning of 2020.
  • $3.1 trillion (or 26%) of the debt maturing through 2025 is speculative-grade, and, while this debt carries more refinancing risk than investment-grade, companies have more time to refinance as these maturities do not peak until 2025.
  • With record new volume of issuance in the first half of 2020, the level of rated corporate debt instruments outstanding globally (including those maturing after 2025) rose by 3.8% in the first half of 2020 to nearly $21.4 trillion.

29. The Potential Fallen Angels Tally Holds Steady At A Record High Of 126, July 21, 2020

Sarah Limbach, Paris, + 33 14 420 6708, Sarah.Limbach@spglobal.com

  • Four issuers lost their investment-grade status in June, bringing this year's fallen angel tally to 34, with a fairly broad distribution across sectors.
  • Potential fallen angels stayed at a record high of 126 and show nascent signs that stabilization may continue: 20 are on CreditWatch negative, down from 24 in May, signifying less immediate downgrade pressure.
  • The gap between potential fallen angels and potential rising stars is at an all-time high, with eight potential rising stars (and just two rising stars) in the year to date.

30. Market Liquidity In A Crisis: Five Key Lessons From COVID-19, July 16, 2020

Patrick Drury Byrne, Dublin, (00353) 1 568 0605, patrick.drurybyrne@spglobal.com

  • It takes a swift, massive, and global response by central banks to contain a worldwide liquidity crisis.
  • Market data and investor risk tolerance are fast indicators of impending gloom.
  • Investment-grade issuance bounces back from a liquidity crisis much faster than speculative grade--and 'BB' returns before 'B'.
  • In the aftermath of a crisis, the stronger may get stronger, while weaker may get weaker.
  • Credit market liquidity will remain fragile while the COVID-19 health threat lingers.

31. Historically Low Ratings In The Run-Up To 2020 Increase Vulnerability To The COVID-19 Crisis, May 28, 2020

Sudeep K Kesh, New York, (1) 212-438-7982, sudeep.kesh@spglobal.com

  • We entered the global recession with a median credit rating for corporate and sovereign entities globally significantly weaker than at the onset of the global financial crisis ('BBB' versus 'BB+').
  • Speculative-grade bond issuance more than doubled in the past decade, as low interest rates fueled demand for speculative-grade corporate debt.
  • The median rating for new nonfinancial corporate issuers globally is 'B'; it fell to this historical low at the end of 2017, declining from 'BB-' in 2008.
  • Speculative-grade borrowers are now almost twice more likely to be downgraded than their higher-rated peers with double the proportion of Negative Outlooks and Negative CreditWatch Placements.
  • As of May 20, 70% of rated entities negatively affected by COVID-19 and a sharp drop in oil prices have been in the speculative-grade category, and almost half in the 'B' category and below, a rating level that indicates greater vulnerability to changes in economic and business cycles.

32. Risky Credits: The Number Of 'CCC' Category Ratings Stabilizes, Sept. 21, 2020

Nicole Serino, New York, + 1 (212) 438 1396, nicole.serino@spglobal.com

  • The number of 'CCC' category ratings on U.S. and Canadian companies steadied in August as both the pace of companies entering the rating category and defaults slowed.
  • U.S. 'B' and 'CCC' composite spreads continued to tighten in July, by 7% and 2% to 618 and 1,094, respectively, as investors' risk tolerance increased for 'B-' rated debt.
  • Through August, 11 companies rated in the 'CCC' and 'CC' rating categories defaulted, and five have defaulted so far in September (as of Sept. 9).
  • During the first half of 2020, we downgraded or placed on CreditWatch negative about one-third of the issuers whose loans are held in U.S. broadly syndicated loan collateralized loan obligations.

33. U.S. Corporate Downgrades Fell To Pre-Pandemic Levels In The Third Quarter, Oct. 14, 2020

Evan M Gunter, New York, (1) 212-438-6412, evan.gunter@spglobal.com

  • The number of U.S. corporate downgrades fell by 74% in the third quarter to 107, its lowest level since fourth-quarter 2018.
  • The U.S. corporate upgrade tally rose to 43 in the quarter, matching third-quarter 2019's total, as economic growth rebounded.
  • Downgrade risk as measured by negative bias (the percentage of issuer credit ratings with negative outlooks or on CreditWatch with negative implications) for U.S. speculative-grade companies fell by 5 percentage points to 47%.
  • Weakness persists at the lowest rating levels as we expect the recovery for many sectors to last into 2023: Companies rated 'B-' and lower accounted for 53% of downgrades in the quarter, and companies rated 'CCC+' and below have a negative bias of 89%.

34. One-Third Of U.S. Distressed Issuers Have Faced Downgrades Or Default Since March, Oct. 8, 2020

Nicole Serino, New York, + 1 (212) 438 1396, nicole.serino@spglobal.com

  • The U.S. distress ratio fell to 9.5% as of Sept. 17 from 12.7% as of June 19, with the highest number of distressed credits in oil and gas (64) and media and entertainment (28).
  • The oil and gas distress ratio leads by sector at 30%, with $26.3 billion in distressed debt outstanding--25.1% of the total distressed debt.
  • About 31% of the distressed issuers as of March 15 have since defaulted or been downgraded, most from sectors vulnerable to the economic impact of COVID-19, namely oil and gas, media and entertainment (including lodging), and retail and restaurants.

35. How ETFs Contributed To Liquidity And Price Discovery In The Recent Market Dislocation, July 8, 2020

Evan M Gunter, New York, (1) 212-438-6412, evan.gunter@spglobal.com

  • Secondary trading in credit markets has changed meaningfully in the last 10 years, including the retreat of traditional providers of liquidity, such as broker-dealers, and the rise of exchange-traded funds (ETFs).
  • ETFs are playing an increasing role in providing secondary market liquidity, which was on display during the recent volatility.
  • As both primary and secondary bond markets faced illiquidity, record ETF volumes helped to support liquidity and, importantly, provide price discovery.

36. The Gap Between Market Expectations And Credit-Based Indications Of U.S. Defaults Is Growing, Aug. 27, 2020

Nick W Kraemer, FRM, New York, (1) 212-438-1698, nick.kraemer@spglobal.com

  • We expect the U.S. trailing-12-month speculative-grade corporate default rate to rise to 12.5% by June 2021 from 5.4% in June 2020. To reach this baseline forecast, 229 speculative-grade companies would need to default.
  • In our optimistic scenario, we expect the default rate to fall to 4% by June 2021 (74 defaults), and in our pessimistic scenario, we expect the default rate to expand to 15.5% (284 defaults).
  • This historically wide range of possibilities reflects the growing divergence between market expectations of future defaults and those implied by credit and economic fundamentals during the COVID-19 pandemic and resulting stimulus measures.
  • By some measures, markets may be overly optimistic, and our downside scenario again anticipates a historically high default rate as liquidity concerns give way to basic solvency ones.
  • Further monetary or fiscal policy support could lessen defaults over the near term, but growing debt burdens amid falling revenue could lead to a protracted period of higher defaults, rather than typical cyclical behavior.
Cross-Sector

37. Sector Roundup Asia-Pacific: Net Negative Bias Hits One-In-Five, Oct. 6, 2020

Terry E Chan, CFA, Melbourne, + 61-3-9631-2174, terry.chan@spglobal.com

  • Overall: Our net negative outlook bias has worsened, emphasizing the potential significant number of downgrades still to come.
  • Assumptions and risks: While a general recovery is now underway, we project it will take one to three years for most sectors to normalize.
  • What to look for: Recurring waves of COVID-19 infections, which could lead to the re-imposition of government restrictions on travel and people movement. An uneven trajectory of business and consumer demand could weigh on credit conditions.

38. China Debt After COVID-19: Flattening The Other Curve, June 4, 2020

Terry E Chan, CFA, Melbourne, (61) 3-9631-2174, terry.chan@spglobal.com

  • Total credit in China will rise about 14% in 2020, year on year, as the country uses debt to stimulate the economy.
  • Beijing has given China's local governments US$530 billion in quota to issue special purpose bonds to fund infrastructure.
  • We expect that the authorities will try to bring credit growth back in line with economic growth next year, circumstances permitting.

39. Emerging Markets Monthly Highlights: Recovery Losing Momentum, Volatility Looms, Oct. 15, 2020

Jose M Perez-Gorozpe, Mexico City, (52) 55-5081-4442, jose.perez-gorozpe@spglobal.com

  • Recovery is underway, but losing steam. High-frequency data, such as business surveys and mobility indicators, suggest the recovery's momentum has slowed in September in several emerging markets (EMs). If the current resurgence in coronavirus cases in EMs and developed markets (DM) intensifies as the winter approaches in the northern hemisphere, it can potentially disrupt the economic recovery. Furthermore, the expected phase-out of stimulus in several EMs could also slow the recovery.
  • The upcoming U.S. election could generate volatility. The stakes are high with two very different potential outcomes in November, with implications on key issues that impact investor appetite towards EM assets. One of these is the future of U.S.-China relations under the next U.S. president, and more generally the U.S. position towards globalization, from which many EMs have benefited. Furthermore, the uncertainty over a potentially disputed electoral outcome, with a plausible scenario in which the result is disputed and unknown for a prolonged period of time, could increase volatility in financial markets, lowering appetite for riskier EM assets.
  • Corporations are highly vulnerable to a slower and longer economic recovery. The response to the crisis by corporations has included higher debt, lower capex, and layoffs. Some of the weakest corporations restructured their debt. This means that in the event of a slower-than-expected economic recovery, many corporations will have less room to implement cost-cutting measures, as well as issuing more debt without a significant increase in cost. Our rating's negative bias remains historically high across key EMs, which reflects vulnerability to weaker conditions.

40. European Corporate Credit Outlook Mid-Year 2020: Living In A Different World, July 30, 2020

Gareth Williams, London, +44-20-7176-7226, gareth.williams@spglobal.com

  • COVID-induced recession. Some aspects of this recession are following normal tropes, others less so. Cost pressures, accelerated disruption, winning-and-losing product mixes, and renewed country differences are all part of the risk overlay COVID-19 has added to credit risk.
  • Debt hangover. Swift fiscal, monetary, and loan support have all served to soften the blow and keep financial markets functioning. This has enabled companies to top-up cash balances to help endure the downturn. But the pace of cash burn remains critical, especially if the crisis persists. Solvency concerns will then become more acute. Weaker cash flows and higher debts, on top of already-high debt levels, may well lead to a persistent debt hangover.
  • Limits to support. The winding down of support and stimulus schemes will present a significant challenge in the months ahead and fragile confidence could unravel.

41. The Pandemic's Impact On Latin America's Corporate And Infrastructure Sectors, Oct. 20, 2020

Luis Manuel Martinez, Mexico City (52) 55-5081-4462, luis.martinez@spglobal.com

  • The reopening of economies in each country is uneven, while we continue to see high levels of new cases of COVID-19 across Latin America.
  • The region's rated infrastructures entities have been hit hard since the outbreak of the pandemic in Latin America in February. We took more than 100 negative ratings actions due to combination of sovereign rating actions and weaker financial performance, particularly in the transportation sector given the mobility restrictions.
  • Turmoil is not new for the region's infrastructure operators. Many of them have taken actions to preserve liquidity by cutting fixed and variable costs, streamlining capital expenditures, and suspending dividends.
  • Downgrades occurred mostly in the infrastructure, transportation, utilities, and oil and gas sectors, while protein companies have been resilient.
  • Corporate defaults escalated between May and June, but have plateaued since then.

42. Sub-Saharan Africa: Emerging From COVID-19?, Aug. 18, 2020

Ravi Bhatia, +44 20 7176 7113, ravi.Bhatia@spglobal.com

Sovereign Balance Sheets Take A Hit -

  • The majority of our rating actions in SSA has been negative due to the impact of COVID-19.
  • We expect real GDP growth to contract an average 1% in the Sub-Saharan countries we rate due to the COVID-19 pandemic.
  • Prospects for an economic recovery will be mixed, depending on the health of the economy prior to the pandemic, the fiscal and monetary policy responses, and global growth and trade.
  • On the fiscal side, we expect revenues to drop and spending to spike in almost all rated sovereigns, leading to rising fiscal imbalances for the next few years and a material increase in debt in most cases.
  • Balance of payments positions have weakened, triggering some urgent external financing needs amid falling sources of foreign income and capital outflows from offshore investors.

Bank Earnings Are To Weaken –

  • Central banks across Africa have proactively supported banks operating in the region by swiftly cutting interest rates and injecting liquidity.
  • Loan growth will remain subdued as banks will face higher nonperforming loans because of recessionary conditions. Regulatory forbearance could delay recognition of NPLs and will lead inevitably to higher credit losses.
  • While central banks are supporting local currency liquidity, U.S. dollar liquidity will continue to be tight in Nigeria where foreign currency loans average about half of rated banks' total loans.
  • We have taken negative rating actions on banks in South Africa, Nigeria, and Kenya because of COVID-19 impacts on their economies. We downgraded South African banks to 'BB-' to reflect the sharp economic contraction in 2020 and related higher impairments charges. We downgraded Nigerian banks to 'B-' in March because of the dual shock of the slump in oil prices and COVID-19- related setbacks for economic growth prospects. Lastly, we assigned a negative outlook to a bank in Kenya, reflecting the same rating action on the sovereign. Despite higher credit losses, we expect this crisis to be an earnings, rather than a capital, event for most systems.
  • We generally do not rate financial institutions in these countries above the foreign currency sovereign ratings due to the direct and indirect effects that sovereign distress would have on banks' operations.

43. U.S. Corporate Credit Midyear Outlook 2020: Pitfalls And Possibilities, July 16, 2020

David Tesher, New York, +1-212-438-2618, david.tesher@spglobal.com

  • A "new normal" will undoubtedly evolve as global economies ease lockdowns. Many U.S. corporates will likely grapple with weaker revenue, earnings, and credit metrics for several years compared to pre-pandemic levels.
  • Corporate borrowers will likely suffer from a debt hangover, having built up leverage in order to cope with COVID-19's disruption to customer demand and economic activity.
  • Government monetary and fiscal policy actions have enabled record debt issuance. However, the stimulus will inevitably be pulled back, potentially triggering a credit crunch.
Economics

44. Asia-Pacific's Recovery: The Hard Work Begins, Sept. 24, 2020

Shaun Roache, Singapore, (65) 6597-6137, shaun.roache@spglobal.com

  • The worst is behind us but it's now time to do the hard yards. As relief measures taper and the credit impulse wanes, the true economic costs of COVID-19 will emerge.
  • We expect Asia-Pacific to shrink by -2% in 2020 and rebound by about 7% next year leaving the region almost 5% below the pre-COVID trend by end 2021.
  • China's recovery continues but is not yet self-sustaining. India's path to a new normal will be blighted by permanent economic damage. Japan's post-Abenomics future will hinge on household confidence.
  • China's potentially harder turn toward self-reliance, in response to geopolitical tensions, would move the economy closer to our downside medium-term growth scenario.

45. Despite A Bounce In the Summer, Canada's Economic Recovery Is Far From Complete, Sept. 28, 2020

Satyam Panday, New York, + 1 (212) 438 6009, satyam.panday@spglobal.com

  • Strict social distancing measures shaved off 18.2 percentage points from Canadian real GDP in March and April combined.
  • Nearly five months into the recovery as lockdown restrictions eased in Canada, economic activity has surprised to the upside. However, the level of activity remains one-third below normal, and the recovery has been uneven.
  • We do not foresee the Canadian economy getting back to its pre-pandemic level before the first quarter of 2022, with a 5.6% contraction in 2020.

46. China's Careful Stimulus Dims Outlook For 2021, Oct. 19, 2020

Shaun Roache, Singapore, (65) 6597-6137, shaun.roache@spglobal.com

  • China's economy is on track for growth of about 2% in 2020 as consumer spending recovers from the COVID-19 income shock.
  • Questions linger regarding growth momentum heading into 2021 as financial conditions tighten and the exchange rate appreciates.
  • The cautious approach to stimulus is helpful for the sustainability of medium-term growth but it may disappoint expectations for next year.

47. Emerging Markets: A Tenuous And Varied Recovery Path, Sept. 29, 2020

Tatiana Lysenko, Paris, (33) 1-4420-6748, tatiana.lysenko@spglobal.com

  • Emerging market (EM) economies are recovering from a deep decline in activity. We forecast average GDP in EMs, excluding China, to decline 6.4% in 2020 and grow 6.2% in 2021.
  • The recovery is advancing at different speeds across EMs, shaped by pandemic-related developments, but also other factors such as the pace of the rebound in major trading partners and the effectiveness of policy support.
  • We have revised our 2020 GDP growth forecast upwards in Brazil, China, Russia, Poland, and Turkey, and downwards in most other EMs. We sharply lowered our GDP forecast for India to a contraction of 9% from 5%.
  • Risks to the outlook for EMs are still skewed to the downside and mostly relate to pandemic and policy developments. Geopolitical risks have risen particularly in EMEA. Earlier-than-expected deployment of a vaccine is a modest upside risk to our projections.

48. Pandemic Won’t Derail European Housing Price Rises, Oct. 20, 2020

Marion Amiot, London, 44(0)2071760128, marion.amiot@spglobal.com

  • Housing prices in most European markets are likely to rise further in 2020 despite the COVID-19 lockdowns and the unprecedented fall in economic activity.
  • We expect prices to rise most in The Netherlands (6.1% year on year), Germany (4.6%), and Sweden (3%), while only Ireland, Spain, and Portugal could see small price declines.
  • We forecast a more pronounced slowdown in housing prices in 2021 as government support through the pandemic is phased out and labor market developments become less supportive of household income.

49. European Economic Snapshots: A Second COVID-19 Wave Is Dampening The Recovery, Oct. 14, 2020

Sylvain Broyer, Frankfurt, (49) 69-33-999-156, sylvain.broyer@spglobal.com

  • Europe's economy has rebounded faster than expected after the lifting of lockdowns.
  • However, new restrictions in some countries following a rise in COVID-19 cases are likely to weigh on the recovery.
  • Fiscal and monetary policy support have been key to the quick upswing in activity, since companies and households have accumulated cash buffers.
  • Supportive ECB policy and the EU Next Generation Fund should enable a more sustainable broad-based recovery from mid-2021, which is also when a vaccine might become available.

50. Keynes And Schumpeter Are What The European Economy Needs Right Now, Oct. 12, 2020

Sylvain Broyer, Frankfurt, (49) 69-33-999-156, sylvain.broyer@spglobal.com

  • Keynesian and Schumpeterian dynamics are kicking in to help the European economy in its tricky transition out of the COVID-19 crisis.
  • The fiscal space that Europe has finally found represents the Keynesian element of expected demand, incentivizing economic agents to convert their excess savings into consumption and investment decisions.
  • The strong increase in business starts, like those we are seeing in France and Germany, is the Schumpeterian process of value creation following the economic shock.

51. The Eurozone Is Healing From COVID-19, Sept. 24, 2020

Sylvain Broyer, Frankfurt, (49) 69-33-999-156, sylvain.broyer@spglobal.com

  • The eurozone economy has recovered faster than expected from the first wave of COVID-19. We now forecast GDP will fall only by 7.4% this year and rebound by 6.1% next year. We are also lowering slightly our expectations for unemployment, which we forecast will peak at 9.1% in 2021.
  • Yet, the eurozone is now entering a tricky transition period from gradual withdrawal of government support toward implementing the EU's economic reform program. Liquidity, households' behavior, and demand will be crucial in enabling the European economy to weather this transition, and much could go wrong along the way.
  • As low inflationary pressures will persist, we don't expect the European Central Bank to tighten monetary policy any time soon, either in terms of interest rates or balance sheets.

52. A Double-Digit Rebound Has Begun, But It’s No Time To Celebrate, Oct. 6, 2020

Paul F Gruenwald, New York, (1) 212-438-1710, paul.gruenwald@spglobal.com

  • While the threat from COVID-19 persists, many key economies fared better than expected in the third quarter as households stepped up spending in the U.S. and Europe, and the Chinese government ramped up infrastructure investment. The majority of advanced economies surprised on the upside, while developments in emerging markets were mixed.
  • But the good news only goes so far: The big bounce is largely mechanical and the next leg of the recovery will be more difficult. Indeed, momentum is already beginning to fade. Challenges are mostly fiscal include protecting those hardest hit, keeping viable firms afloat, and facilitating necessary structural changes.
  • Our global GDP forecast for full-year 2020 remains broadly unchanged, with a contraction of around 4%. Upward revisions for the U.S., Eurozone, and China were offset by downward revisions to India (for the second quarter in a row) and the U.K.
  • The balance of risks remains on the downside, reflecting insufficient support for the nexus of small- and medium-enterprises and the labor market, premature fiscal tightening, and increasing economic damage to EMs. Progress toward a vaccine provides a modest upside.

53. India's Economy Likely To Tank 9% Due To COVID, Sept. 14, 2020

Shaun Roache, Singapore, (65) 6597-6137, shaun.roache@spglobal.com

  • Rising COVID-19 cases in India will keep private spending and investment lower for longer. We now expect the country's economy to contract by 9% in the current fiscal year, which ends March 31, 2021. Our previous forecast put the economic hit from COVID at -5%.
  • While India eased lockdowns in June, we believe the pandemic will continue to restrain economic activity. New cases per day in India averaged nearly 90,000 in the week ending Sept.11, according to data from the World Health Organization.
  • The potential for further support monetary support is curbed by India's inflation worries.

54. Latin America's Pre-COVID-19 Growth Challenges Won't Go Away Post-Pandemic, Sept. 24, 2020

Elijah Oliveros-Rosen, New York, (1) 212-438-2228, elijah.oliveros@spglobal.com

  • Our macroeconomic narrative for Latin America has not changed materially since last quarter. The recovery from the worst of the pandemic is underway across the major economies in the region, and our GDP forecast adjustments this round mostly reflect unexpected performance in the second quarter.
  • The Brazilian economy performed better than we anticipated. Argentina, Colombia, Mexico, and Peru fared worse than we expected. Chile's was broadly in line with what we envisioned. Our new forecasts account for this, and we now see the region contracting a touch more this year, but also a bit faster next year (down 8.5% for 2020 and up 4.5% in 2021).
  • Most major Latin American economies will not return to prepandemic levels of GDP until 2022, and some beyond, and the permanent income losses will average about 6% of GDP--among the highest in emerging markets due to severe damage to labor and investment dynamics.
  • We expect the post-COVID-19 Latin American countries to face the same structural economic challenges as before the pandemic, especially regarding weak investment and low productivity. This means the region will likely converge to its traditionally low GDP growth rates as it reaches its post-pandemic "new normal."

55. The Second Wave And Brexit Will Test The U.K. Recovery, Oct. 1, 2020

Boris S Glass, London, (44) 20-7176-8420, boris.glass@spglobal.com

  • We have lowered our forecast for the U.K. economy and now expect a contraction of 9.7% for 2020 as a whole, before growth rebounds to 7.9% in 2021, but still leaving the economy short of pre-pandemic levels at least until 2024.
  • The return of consumer spending means the U.K. recovery was off to a promising start. We think the economy could grow 15% in the third quarter alone.
  • However, fresh restrictions to keep the emerging second-wave of COVID-19 infections in check, together with the abrupt switch to a bare-bones trade agreement with the EU in 2021, will curb the recovery's momentum.
  • While new, recently announced government support will minimize damage from the second wave, it will not give much of a boost to growth.

56. U.S. Biweekly Economic Roundup: U.S. Consumer Spending Continues To Outperform Expectations, Oct. 16, 2020

Beth Ann Bovino, New York, (1) 212-438-1652, bethann.bovino@spglobal.com

  • Retail sales continued to surprise on the upside in September despite it being the second month since the $600/week unemployment-booster support was replaced with half-as-generous wage payments coming from the Disaster Relief Fund.
  • Higher-than-expected retails sales have led to low inventories, which should bolster manufacturing and imports in the coming months.
  • Used car and truck prices have been surging as consumers avoid public transportation and take advantage of low interest rates. But offsetting weaker rents meant core-CPI inflation held steady at 1.7% (year over year).

57. The U.S. Economy Reboots, With Obstacles Ahead, Sept. 24, 2020

Beth Ann Bovino, New York, (1) 212-438-1652, bethann.bovino@spglobal.com

  • The U.S. economy has taken a few promising steps toward recovery, with consumer spending largely resilient through the summer and the unemployment rate declining a bit more than we had forecast (though still in recession territory). We expect a 29.5% bounce in third-quarter U.S. GDP, though that will only partly offset the massive losses in the first half of the year.
  • While the drop in the unemployment rate to 8.4% in August from its post-1947 record high of 14.75% (in April) was a relief, that was likely the easier half of the jobs market recovery. We don't expect the unemployment rate to reach its pre-crisis level until mid-2024.
  • For full-year 2020, real GDP is likely to contract by 4% (was a 5% drop in our June forecast) and then grow a modest 3.9% in 2021 (was 5.2% in June).
  • As this sluggish recovery unfolds, three big risks remain: no coronavirus vaccine yet available as the country heads into flu season, a lack of new fiscal stimulus, and trade tensions with China on the rise.
Energy Transition

58. China's Energy Transition Stalls Post-COVID, Sept. 21, 2020

Shaun Roache, Singapore, (65) 6597-6137, shaun.roache@spglobal.com

  • China's transition to a low energy intensity economy fueled increasingly by renewables will stall in 2020 and 2021 as policy stimulus ripples through the economy.
  • Investment in renewables continues but signs of a turn back to coal are emerging, a tendency that could strengthen as post-pandemic geopolitics push energy security up the policy agenda.
  • We will only learn whether China is executing an energy U-turn after the next five-year plan for 2021-2025 is published in the first quarter next year.

59. Does COVID-19 Bend The Emissions Curve To 2 Degrees?, Sept. 24, 2020

Karl Nietvelt, Paris, (33) 1-4420-6751, karl.nietvelt@spglobal.com

  • COVID-19 has altered three fundamentals drivers of emissions: macroeconomics, behaviors, and policy, that combined will lower energy sector CO2 emissions by 27.5 gigatons over 2020-2050.
  • However, this is only a minor step in the direction needed to meet the 2 degree target, which would require more than 10 times that reduction over the period.
  • The emissions reduction achieved in 2020 nevertheless is equivalent to the decline required by 2027 in a 2 degree scenario, illustrating that sizable emissions reductions are possible.

60. A Pivotal Moment For Climate Policies And Energy Companies, Sept. 24, 2020

Karl Nietvelt, Paris, (33) 1-4420-6751, karl.nietvelt@spglobal.com

  • The COVID-19 pandemic has drawn increased attention to climate policy and economic resilience.
  • More than 10 times the emission reductions resulting from COVID-19 will be needed to meet the 2 degrees target through 2050.
  • COVID-19 has reduced long-term world oil demand by 2.5 million barrels per day.
  • Lower global energy demand threatens gas more than other fuel sources over the next 10-20 years.
  • We believe the global growth outlook for renewables generally remains intact, but not all lights are green.

61. The Effect Of COVID-19 Economic Recovery Policies, Sept. 24, 2020

Marion Amiot, London, + 44 20 7176 0128, marion.amiot@spglobal.com

  • The European, U.S., and Chinese economies all reacted to the COVID-19 economic crisis with large monetary stimulus, but not all recovery policies will accelerate the energy transition.
  • The EU recovery fund, agreed in July, dedicated €225 billion to the energy transition, to be invested in the next three years.
  • The U.S. federal government has not provided any new support for green initiatives in stimulus measures to date beyond current tax incentives. The November election outcome will be pivotal for future climate change policies.
  • In China, warning signs abound that the energy transition has stalled as policy stimulus ripples through the economy even as a new commitment is made to achieve carbon neutrality by 2060.

62. COVID-19 Could Make 2020 Crucial For Renewables, Sept. 24, 2020

Pierre Georges, Paris, (33) 1-4420-6735, pierre.georges@spglobal.com

  • COVID-19 has drawn increased attention to climate policy in Europe and is playing a role in the U.S. elections.
  • We believe the global growth outlook for renewables generally remains intact, even if stimulus plans will likely prioritize employment and direct support measures to the economy over green growth--especially in China and emerging markets.
  • Key risks for the sector are reductions in direct subsidies and tax credits as observed in China, Europe, and the U.S.; permitting; and a cloudier outlook for long-term prices.
  • On the other hand, continued strong investor appetite and declining costs are allowing renewables to compete increasingly at grid-parity prices, but with lower returns and rising market risks.
  • As a result, larger renewables players, with strong balance sheets and vertical integration to mitigate merchant risks, may be better positioned and could move to consolidate the industry.

63. COVID-19 Undermines The Role Of Gas As A Bridge Fuel, Sept. 24, 2020

Elena Anankina, CFA, Moscow, (7) 495-783-4130, elena.anankina@spglobal.com

  • Lower global energy demand due to the COVID-19 pandemic threatens the future of gas more than other fuels over the next 20 years. Gas will be to some extent squeezed out by lingering coal supply and growing renewables.
  • Still, we do not expect gas demand to peak over the next 10-20 years globally, owing to industrial demand rather than power generation. China, India, and the Middle East will account for 61% of growth over the next decade.
  • Gas demand growth has probably peaked in the U.S. power generation sector, as utilities' strategies shift to renewables and retail integration.
  • Smaller U.S. independent gas producers face the greatest credit impact, as the pandemic exacerbates preexisting pressure on their profitability, credit metrics, liquidity, and refinancing ability.
  • In Europe, the Green Deal is unlikely to support gas in the long term, even if gas remains an important part of the energy mix owing to the phase-out of coal and nuclear power. Uncertainty about the future role of gas is beginning to weigh on gas utilities' regulatory returns.
  • Large gas producers in Europe are focusing increasingly on decarbonization and green energy, or diversifying into growing markets in Asia.

64. COVID-19 And Peak Oil Demand, Sept. 24, 2020

Thomas A Watters, New York, (1) 212-438-7818, thomas.watters@spglobal.com

  • COVID-19's impact on the global economy and consumer behaviors has reduced long-term world oil demand by 2.5 million barrels per day, according to S&P Global Platts Analytics.
  • However, some adjustments to the demand outlook were positive as weaker oil prices make electric vehicles less competitive, reduce the drive for efficiency, and stimulate underlying oil consumption.
  • The weaker oil demand therefore is not meaningful enough to substantively bring forward the timing of the peak in oil demand that S&P Global Platts Analytics projects for the late 2030s. For oil demand to peak by 2025, drastic changes would need to occur to business and consumer behavior, including near full adoption of working from home, reshoring of supply chains, and widespread electrification of road transportation.
  • Together with added COVID-19 concerns regarding ESG risks, weaker forecasts for oil demand are forcing oil companies to reassess investments and policies.
  • The oil majors, which have the size and financial power to do so, might decide to develop renewables that would offer them options for adapting to changing energy scenarios, build different power assets, or gradually consolidate.
Environmental, Social, And Governance

65. The EU Recovery Plan Could Create Its Own Green Safe Asset, July 15, 2020

Marion Amiot, London, + 44 20 7176 0128, marion.amiot@spglobal.com

  • The EU could become the main liquidity provider for a green safe asset with long duration by financing 30% (€225 billion) of its proposed €750 billion recovery fund through green bond issuance.
  • EU green bond issuance on such a large scale would help respond to a fast-growing ESG investor base and increase the size of the global green bond market by around 89% compared with total issuance in 2019.
  • A larger pool of green assets would also help policymakers and central banks toward their aim to "green" the financial system. Currently, the green bond market represents only 3.7% of total global bond issuance, making it difficult to ask market participants to build green portfolios.

66. The ESG Pulse: Better Climate Data Could Provide Foundation For Understanding Physical Risks, Oct. 8, 2020

Karl Nietvelt, Paris, (33) 1-4420-6751, karl.nietvelt@spglobal.com

  • Total environmental, social, and governance (ESG)-related rating actions reached 1,945 during April-August (of which 666 were downgrades).
  • Of the 296 downgrades in July-August, 199 related to CreditWatch resolutions on U.S. commercial mortgage-backed securities (CMBS) transactions. These structured finance rating actions reflected our revised valuations and credit views on the underlying assets (malls and hotels). Downgrades were primarily for speculative-grade classes.
  • In percentage terms, sovereign and international public finance ratings remain the most directly affected by COVID-19, at 24% and 14% respectively.
  • Overall, U.S. public finance saw only 4% of ratings affected by ESG factors over the last five months, but in higher education and public transport it's closer to one-third.
  • Rating actions on corporates and infrastructure affected 15% of the rated universe. Actions remain heavily concentrated in sectors such as air travel, restaurants, retail, hotels, and leisure and are likely to remain negatively oriented as pandemic-related pressures persist.

67. A Pandemic-Driven Surge In Social Bond Issuance Shows The Sustainable Debt Market Is Evolving, June 22, 2020

Lori Shapiro, New York, + 1 (212) 438 0424, lori.shapiro@spglobal.com

  • We expect social bonds to emerge as the fastest-growing segment of the sustainable debt market in 2020. This stands in sharp contrast to the rest of the global fixed income market, for which we expect issuance volumes to decline this year.
  • We believe recent growth in social bond issuance indicates that the COVID-19 pandemic has not turned issuers' or investors' attention away from sustainable finance, but rather interest seems to be growing.
  • Corporations and financial institutions will become more active in the social bond market as the pandemic accelerates private issuers' interest in social considerations.
  • While significant steps have been made to standardize social bond disclosure and reporting, we believe issues persist and improvements have been slow to proliferate.
Financial Institutions

68. Central Banks In Africa Are Guiding Banks Through COVID-19’s Economic Fallout, July 22, 2020

Samira Mensah, Johannesburg (27) 11-214-4869, samira.mensah@spglobal.com

  • Rising economic imbalances, higher credit losses, and funding and liquidity gaps are, in our view, at the crux of African banks' challenges stemming from COVID-19 and the plunge in oil prices.
  • Central banks across Africa have proactively supported banks operating in the region by swiftly cutting interest rates and injecting liquidity.
  • Meanwhile, the economic crisis is an opportunity for banks to leverage their digital capabilities to optimize operational costs.
  • Operational risks, including cyber risks, will rise since persisting COVID-19-related disruptions will test the scalability of security protocols and work-from-home arrangements.

69. Asia-Pacific Financial Institutions Monitor 4Q2020: Downside Risks Dominate, Oct. 18, 2020

Ryoji Gavin J Gunning, Melbourne, (61) 3-9631-2092, gavin.gunning@spglobal.com

  • Downside risks will dominate Asia-Pacific banking for the remainder of 2020. Recoveries to pre-COVID-19 levels will likely be slow and uncertain, as in other regions.
  • We have already negatively revised the economic or industry trends underpinning the financial strength of many banking jurisdictions globally; and we expect this negative trend will persist. We have taken 337 negative rating actions on financial institutions globally to Oct. 13, 2020, since the onset of the pandemic.
  • Our outlooks for about one in five financial institutions in Asia-Pacific are currently negative. We believe this negative theme will likely stay in play for the rest of 2020.

70. Top 60 Asia-Pacific Banks: COVID-19 Drives Downside Risks As Credit Losses Jump And Earnings Fall, July 14, 2020

Sharad Jain, Melbourne, (61) 3-9631-2077, sharad.jain@spglobal

  • Asia-Pacific's economic recovery will stretch to 2023, weakening banks' asset quality and taking a big chunk out of bank earnings in several countries in the next two years.
  • We expect most banks in the region to be able to absorb the hits from COVID-19 but we may downgrade some lenders, particularly if economies deteriorate more severely than we now assume.
  • The extent of defaults from borrowers, and banks' credit losses, will become clearer when fiscal support from governments unwinds and banks end their loan repayment moratoriums.

71. Australian Banks Poised For A Slow And Long Recovery, Oct 7, 2020

Sharad Jain, Melbourne, (61) 3-9631-2077, sharad.jain@spglobal.com

  • Australia's banks will likely struggle to regain pre-COVID earnings metrics even as credit losses recede.
  • High headline loan deferrals don't necessarily portend massive credit losses. Our forecast that annual credit losses will peak at about 85 bps of gross loans is unchanged.
  • A downgrade on the Australian sovereign remains the main risk to our ratings on the major Australian banks and Macquarie Bank. We do not foresee an imminent risk to our ratings on the remaining Australian banks.

72. Canadian Banks Mid-Year Outlook 2020: Navigating Through The Pandemic Cautiously, Aug. 14, 2020

Lidia Parfeniuk, Toronto, +1-416-507-2517, lidia.parfeniuk@spglobal.com

  • Outlook for Canadian banks underscores the expected pressure on profitability and credit quality in the near term, balanced by the banks' historical balance-sheet strength and stability at the start of the COVID-19 pandemic.
  • We expect net incomes to decline by 30%-50% in 2020, reflecting compressed net interest margins, headwinds for some fee income sources, and sharply higher provisions for loan losses. We do not expect profitability to return to pre-pandemic levels before the end of 2021.
  • Asset quality metrics will likely deteriorate as higher loan losses emerge, particularly from the banks' exposures to high-risk sectors related to the pandemic. Canadian banks' exposure to such high-risk sectors (including media, entertainment, leisure, tourism, hospitality, retail, restaurants, oil and gas, retail commercial real estate, and transportation) is manageable at 5%-10% of total loans.

73. Chilean Banks' Asset Quality Hasn't Slumped Yet Due To COVID-19--Helped By Government Measures, Aug. 13, 2020

Ivana L Recalde, Buenos Aires, (54) 114-891-2127;ivana.recalde@spglobal.com

  • Chilean banks' second quarter figures don't yet indicate significant deterioration in asset quality, mainly due to the impact of actions taken by the government, central bank, and the regulator.
  • The financial system's results declined 25% in the first half of year and we believe profitability will dip, but this will be somewhat mitigated by measures taken by banks and local authorities to contain volatility.
  • The system's liquidity position remains solid, and funding has been strengthened by Central Bank measures.

74. China's $420 Billion Small-Loan Push Puts Policy Before Profit, Sept. 14, 2020

Robert Xu, Hong Kong, (852) 2532-8093, Robert.Xu@spglobal.com

  • We see China's efforts to boost lending to micro and small enterprises as a tactical tradeoff between stabilizing employment and maintaining social stability, and bank profitability.
  • Chinese lenders may extend the equivalent of US$420 billion in new loans--about 17% of all new commercial lending in the country--to micro and small enterprises in 2020.
  • Financial technology firms and some Chinese banks are developing real-time data gathering and behavioral pattern detection tools, to get a better understanding of MSEs' credit risk.

75. COVID-19 Puts The Brakes On Capital Strengthening For The 50 Largest European Banks, Oct. 14, 2020

Mathieu Plait, Paris, (33) 1-4420-7364, mathieu.plait@spglobal.com

  • RAC ratios for the top 50 European Banks continued to increase in 2019 to 10.4% on average, up 50 basis points (bps).
  • Years of capital increase are likely to come to an abrupt stop in 2020 as economies and banks are facing the impact of the COVID-19 pandemic.
  • We expect our RAC ratio to decrease in the next two years by about 30 bps cumulatively--a moderate amount that largely doesn't affect our view of capital strength--but downside risks to our projections remain.
  • From a capital adequacy standpoint, European banks are better equipped to fight this economic shock than the one in 2008, thanks to 10 years of accumulated capital buffers.

76. Banking Horizons Europe 2020: COVID-19 As A Catalyst For Change, Oct. 13, 2020

Osman Sattar, FCA, London, (44) 20-7176-7198, osman.sattar@spglobal.com

  • Surveying the horizon for European banks, participants at S&P Global's European banking conference said that COVID-19 represents a catalyst for transformation of the sector.
  • The pandemic is spurring banks to take bolder steps to address their weak profitability, accelerating the imperative to become more efficient, digitize, consolidate, and integrate ESG risks and opportunities.
  • Looking down the road, asset quality is bound to weaken, but exactly when and by how much is unclear. Much depends on whether the expected recovery in European economies from next year remains on track, or is significantly delayed due to, for example, a severe second wave of the pandemic.
  • S&P Global Ratings expects the creditworthiness of European banks to diverge further in the coming year, reflecting country-specific drivers as well as idiosyncratic factors for individual banks.

77. Managing Through The Crisis, Europe’s Banks Look To The Future, Sept. 28, 2020

Giles Edwards, London, (44) 20-7176-7014, giles.edwards@spglobal.com

  • After a slew of European bank rating actions in the spring, we have taken very few since, leaving around 45% of ratings on larger European banks with negative outlooks.
  • Banks' second-quarter results confirmed many of our assumptions, but took us only slightly further forward in understanding the full implications for each bank.
  • Asset quality remains central to future bank profitability and capitalization. However, comparability of loan book quality and provisioning metrics is poor, and is unlikely to become fully clear until late 2020 at the earliest.
  • A laser focus on crisis risk management is not enough if banks will not only survive the pandemic, but thrive thereafter. Investment is indispensable, and consolidation seems inevitable.
  • In time, we expect divergent patterns to emerge, whether between national banking systems or between domestic peers. We therefore continue to look for a differentiated view among rated European banks, focused on both their short- and long-term health, and will take rating actions accordingly.

78. European Bank Asset Quality: Half-Year Results Tell Only Half The Story, Sept. 28, 2020

Osman Sattar, FCA, London, (44) 20-7176-7198, osman.sattar@spglobal.com

  • European banks' half-year results haven't revealed many new insights into asset quality, in part due to the cushioning effect of ongoing fiscal support to economies and banks' forbearance measures.
  • As these factors wind down, underlying loan quality and the adequacy of banks' provisioning strategies will become clearer, likely once full-year 2020 results are published early next year.
  • That said, banks discretion in estimating expected credit losses under IFRS 9, lack of comparable bank disclosures, and the condensed nature of half-year reporting make it difficult to ascertain reasons for the wide disparity in provisioning.
  • Some banks' asset quality may prove to be much weaker than peers', hurting the credit profiles of those with marginal capital positions or other material areas of weakness, such as sustainability of the business model.

79. European Investment Banks Face A Continued Fight To Remain Competitive, Sept. 28, 2020

Richard Barnes, London, (44) 20-7176-7227, richard.barnes@spglobal.com

  • A surge in trading volumes enabled most European investment banks to increase capital market revenues in the first half of 2020, but not all benefited.
  • European firms have steadily lost market share to their bigger U.S. rivals, in a trend we think will continue because scale is an important competitive advantage.
  • If European firms struggle to meet earnings targets in the next two to three years, they may downsize further or possibly consider structural changes such as partnerships and mergers.

80. The Resolution Story For Europe's Banks: More Flexibility For Now, More Resilience Eventually, Sept. 28, 2020

Giles Edwards, London, (44) 20-7176-7014, giles.edwards@spglobal.com

  • The widespread regulatory easing and forbearance in the face of the systemic COVID-19 stress has amplified existing market uncertainties about some European authorities' willingness to avoid bail-outs if a major bank fails.
  • The EU resolution framework, in its construction and application, remains complex, and the predictability of regulatory decisions generally remains poor.
  • Still, while Europe still has plenty to do to achieve resolvable banks, we do not see this intent as having been fundamentally diluted.
  • While pandemic-linked risks abound, European banks' ramp-up of subordinated bail-in buffers will continue to support ratings, as long as the resolution strategy is likely to avoid default on all senior preferred liabilities.

81. Embedding Environmental Factors In Strategy And Risk Management: For Banks, A Long Journey Just Begun, Sept. 28, 2020

Francesca Sacchi, Milan, (39) 02-72111-272, francesca.sacchi@spglobal.com

  • The financial sector is increasingly aware of the close correlation between environmental risks and financial risks. Addressing environmental risks is now a top priority for numerous bank CEOs.
  • For most banks, however, the incorporation of environmental risk in strategic underwriting and risk management is still in its infancy.
  • We therefore view positively regulatory authorities' efforts to encourage banks to embed climate-related and environmental risks and opportunities into business strategies and risk management.
  • The quality of environmental disclosure is weak across the industry, but it is set to improve rapidly. We are increasingly incorporating environmental considerations and data into our credit rating analysis.

82. The European Sovereign-Bank Nexus Deepens By €200 Billion, Sept. 21, 2020

Cihan Duran, CFA, Frankfurt, (49) 69-33-999-177, cihan.duran@spglobal.com

  • Since the start of the pandemic, European banks have been not only lending heavily to the real economy but also have been channeling part of their excess liquidity from the ECB and other central banks to purchase home sovereign bonds--almost €210 billion since February 2020.
  • While banks might continue to buy sovereign debt for the time being, we think the purchases are a temporary response to the excess liquidity in the market, meant to keep liquid security buffers high given the uncertain economic outlook. This will not constrain lending capacity to the private sector, in our view.
  • The large increase of sovereign bond holdings still requires attention from regulators, because a downward revaluation of the securities would translate into lower profits and growing risks for banks.
  • Previous regulatory discussions and proposals to undo the sovereign-bank nexus haven't succeeded so far and a solution is not on the horizon.
  • A further tightening of the sovereign-bank nexus could also set back the initiative to create a pan-European deposit insurance system, a much needed step in the development of the European Banking Union.

83. Global Banking: Recovery Will Stretch To 2023 And Beyond, Sept. 23, 2020

Gavin J Gunning, Melbourne, (61) 3-9631-2092, gavin.gunning@spglobal.com

  • Recovery of banking jurisdictions to pre-COVID-19 levels will be slow, uncertain, and highly variable across sectors and geographies.
  • Many prominent banking systems may not recover until 2023 including the U.S., U.K., France, Germany, Spain, Italy, Japan, Australia, Brazil, Indonesia, and Russia.
  • China, Canada, Singapore, Hong Kong, South Korea, and Saudi Arabia are among the banking systems likely to recover first--by the end of 2022.
  • India, Mexico, and South Africa are among the banking systems that will be slower to recover to 2019 levels--likely beyond 2023.

84. The $2 Trillion Question: What’s On The Horizon For Bank Credit Losses, July 9, 2020

Osman Sattar, FCA, London, (44) 20-7176-7198, osman.sattar@spglobal.com

  • For banks across the globe, we forecast credit losses of about $2.1 trillion for 2020 and 2021 spurred by the pandemic, with $1.3 trillion this year--more than double the 2019 level.
  • We expect preprovision earnings over the period will be able to absorb these increases, though further upticks would weigh on banks' ratings; inevitably, some banks will incur net operating losses.
  • While around 60% of the forecast credit losses will arise in Asia-Pacific, the highest relative increases--more than double on average compared with 2019--will occur in North America and Western Europe.
  • The duration and severity of the global downturn and the strength of the recovery will shape bank asset quality, and key drivers and differentiators will be effective fiscal support from governments to their economies, as well as banks' forbearance measures and financial reporting transparency.

85. Global Banks Outlook: Midyear 2020: Temporary Shock, Profound Implications, July 9, 2020

Emmanuel F Volland, Paris, (33) 1-4420-6696, emmanuel.volland@spglobal.com

  • Credit conditions deteriorated abruptly due to the COVID-19 pandemic and the oil shock. Global growth is expected to rebound sharply in the second half of the year.
  • Downside risks remain elevated and include a second wave of infections and the reimposition of government restrictions on people movement and travel.
  • The outlook bias on bank ratings has turned markedly negative since April 2020. But strengthened balance sheets, massive support from authorities to retail and corporate markets, and our base case of a sustained economic recovery will limit bank downgrades this year.
  • The resilience of economies and the continued effectiveness of government support programs will be major determinants of future rating actions.
  • Central banks' responses are positive for funding but pressure banks' interest margins. COVID-19 will likely accelerate bank digitalization, trigger another round of restructuring, and push consolidation.
  • The pandemic is likely to heighten populism and political risk in several countries. Additional risks stem from U.S.-China trade tensions, the upcoming U.S. presidential election, and a potential no-deal Brexit.

86. Global Banking Country-By-Country Outlook: Midyear 2020: More Or Less Resilient To COVID-19 Shocks, July 9, 2020

Emmanuel F Volland, Paris, (33) 1-4420-6696, emmanuel.volland@spglobal.com

  • Operating conditions for banks deteriorated abruptly in 2020 due to the COVID-19 pandemic and subsequent oil shock. Although we expect global growth to rebound sharply in the second half of 2020, downside risks remain elevated and include a second wave of infections.
  • The outlook bias on bank ratings has turned markedly negative since April 2020.
  • Bank downgrades will be limited this year, however, thanks to their strengthened balance sheets, massive support from authorities to household and corporate markets, additional flexibility offered by regulators, and the sustained economic recovery.
  • Central bank responses are positive for funding but pressure banks' interest margins. COVID-19 will likely accelerate bank digitalization, trigger another round of restructuring, and push consolidation.
  • The pandemic could heighten populism and political risk in several countries. Additional risks stem from U.S.-China trade tensions, the upcoming U.S. presidential election, and a potential "no-deal" Brexit.

87. COVID And Indian Banks: One Step Forward, Two Steps Back, June 30, 2020

Deepali V Seth Chhabria, Mumbai, (91) 22-3342-4186, deepali.seth@spglobal.com

  • S&P Global Ratings believes large capital increases across India's financial institutions support the system's stability during these rocky times. .
  • We project nonperforming loans to shoot up to 13%-14% of total loans in the fiscal year ending March 31, 2021, from an estimated 8.5% in the previous fiscal year.
  • We anticipate credit costs will rise to about 3.7% of average loans in fiscal 2021. This cost should drop to 2% in fiscal 2022, but this would still be above the 15-year average of 1.5%.

88. COVID-19 A Further Blow To Japan’s Regional Banks, July 1, 2020

Satoru Matsumoto, Tokyo, (81) 3-4550-8673, satoru.matsumoto@spglobal.com

  • Financial results of Japanese regional banks we rate have remained weak amid continued narrowing net interest margins.
  • We expect even greater pressure on their profitability as COVID-19 drives up credit costs--with the added risk of weak asset quality and a further fall in their capital ratios.
  • We will consider downgrading the banks or otherwise lowering our credit assessments if their revenue bases weaken or their risks become more likely to rise.

89. Korea's Major Commercial Banks Resilient In Face Of COVID-19, July 29, 2020

Emily Yi, Hong Kong, (852) 2532-8091, emily.yi@spglobal.com

  • Strengthened risk management at Korea's major commercial banks should help them navigate economic headwinds triggered by the COVID-19 pandemic. The banks can absorb some rise in credit losses without undermining their capital positions.
  • We expect profitability to gradually improve from 2021, led by a reduction in credit losses.
  • A pick-up in global demand and the government's comprehensive fiscal stimulus and market stabilization measures will likely support the economic recovery.

90. Scope Of Policy Responses To COVID-19 Varies Among Latin America's Central Banks, June 3, 2020

Maria M Cangueiro, Buenos Aires, 54 11 4891 2149, maria.cangueiro@spglobal.com

  • As the COVID-19 outbreak spreads throughout Latin America, expectations of a widespread economic recession in the region have been materializing. In this sense, the regional banking regulators have responded with measures to support financial systems, allowing credit to continue flowing to households and corporations.
  • The financial relief programs are similar to those in other parts of the world, such as credit facilities for financial institutions; loan moratoriums; looser loan classification and provisioning, and capital requirements; and government and special trust guarantees on loans to small- to medium-size enterprises.
  • However, the effectiveness, timeliness, and scope of these measures has varied from country to country. Chile, Peru, and Brazil implemented the more comprehensive set of measures while Mexico has been slower. Colombia and Argentina's responses have fallen in the middle.

91. Russian Banks: Asset Quality's Worst Is Yet To Come, Sept. 7, 2020

Sergey Voronenko, Moscow, (7) 495-783-40-03, sergey.voronenko@spglobal.com

  • The first-half results of Russia's 14 largest banks largely confirm our previously published base-case forecasts, suggesting that nonperforming loans and credit costs are rising.
  • We believe that first-half provisioning charges do not show the complete extent of the deterioration in asset quality, and we will see a further increase in provisioning in 2020 and possibly in 2021.
  • Uncertainty about how the COVID-19 pandemic will affect the recovery of the Russian and global economies increases the risks to our base-case macroeconomic forecasts and therefore our assumptions for the banking system.

92. Spanish Banks: COVID-19 Changes Everything, July 24, 2020

Elena Iparraguirre, Madrid, (34) 91-389-6963, elena.iparraguirre@spglobal.com

  • We expect the Spanish economy will only recover to pre-COVID-19 crisis levels in 2022, while a second wave of contagion or policy mistakes could lead to more severe contraction this year or a softer longer rebound.
  • The outlook bias on Spanish banks has turned negative.
  • We now expect credit costs will increase to 80-100 bps of average loans in 2020--more than double our previous estimate of 35 bps--and remain at similar levels in 2021.
  • We forecast NPAs will peak at around 9.5% in 2021, and we expect some longer delays in divesting the stock of legacy problematic assets from the previous downturn.
  • Banks face tougher profitability challenges, with bottom-line results likely to halve this year, reinforcing the rationale for consolidation, particularly among midsize players.
  • Capitalization should hold up well for most banks, but some have limited buffers to absorb a more negative shock than we currently forecast.
  • Banks will make ample use of ECB funding facilities, and will continue building bail-in-able cushions, but at a likely slower pace.

93. Sterling Money Market Funds Are Living Up To Their Name, July 2, 2020

Andrew Paranthoiene, London (44) 20-7176-8416, andrew.paranthoiene@spglobal.com

  • S&P Global Ratings 'AAAm' rated sterling money market funds surged 22% in the year to May amid recent market volatility, and we expect these inflows to continue, considering the resilience and adaptability of these funds to ever-changing market conditions.
  • They have also performed exceptionally well, in line with our key credit metrics--such as net asset value and portfolio credit quality--and as good as or better than during previous market stress.
  • In our view, the funds are more than capable of meeting sudden investor redemptions during times of uncertainty, according to our analysis of past market dislocations.
Gaming, Leisure, And Lodging

94. How Macau Gaming's Recovery May Unfold, May 21, 2020

Sandy Lim, CFA, Hong Kong, (852) 2533-3578, sandy.lim@spglobal.com

  • We forecast Macau's gross gaming revenue (GGR) could drop by 40%-50% in 2020. GGR declines will likely accelerate in the second quarter of 2020, from a 60% drop in the first quarter.
  • A combination of quarantine restrictions, visa limitations, travel fears, economic challenges, and reduced gaming capacity will likely weigh on Macau's GGR recovery, especially in 2020.
  • Operators have more than 12 months of liquidity, including cash and revolving credit lines, to cover monthly fixed expenses (our estimate), assuming zero revenue.
  • All of our rated Macau gaming operators are on CreditWatch with negative implications. This reflects our expectation they will experience significantly less revenue and cash flow this year that could cause us to lower ratings over the next 12 months or so.

95. Strengthening Trends Underpin A Better Outlook For The U.S. Gaming Industry, July 24, 2020

Jawad Hussain, Chicago, + 1 (312) 233 7045, jawad.hussain@spglobal.com

  • There have been ongoing positive trends in the U.S. Gaming Industry leading S&P Global Ratings to have a more favorable view of the industry's business prospects, particularly for Activision Blizzard Inc. and Electronic Arts Inc. (EA).
  • Some of the trends we highlight in the FAQ include the evolution to a game-as-a-service model; live services, or in-game purchases, which we believe smooths out revenue and increases monetization opportunities; and the growth of large game franchises that resemble a strong brand rather than a stand-alone game.
  • Other positive developments in the sector include companies procuring limited developer talent, particularly for larger franchises with greater financial resources, as well as the increasingly social aspect of gaming, which creates positive network effects.

96. U.S. Lodging, Leisure, And Gaming Sectors Face Rocky Road To Recovery, June 30, 2020

Michael P Altberg, New York, (1) 212-438-3950, michael.altberg@spglobal.com

  • Since mid-March, the U.S. lodging, leisure, and gaming sectors have been facing unprecedented declines in revenue and cash flow due to bans and restrictions on travel and consumer activity related to the coronavirus pandemic.
  • We've downgraded more than two-thirds of the sector and 36% of issuers remain on CreditWatch with negative implications, reflecting ongoing stress factors depending on the extent of recovery beginning in the second half of the year.
  • Both investment- and speculative-grade issuers have been able to access the debt markets, albeit at high rates, to provide liquidity runways in the event of prolonged shutdowns. Still, 4% of the sector has defaulted and additional defaults and restructurings are inevitable.
  • While recovery has begun in various states and regions, for many subsectors we believe it could take two to three years for credit metrics to return to 2019 levels due to long-lasting disruption to business fundamentals.
Healthcare And Pharmaceuticals

97. Medical Devices And Life Sciences: Improving Vitals, Ratings Remain In Guarded Condition, Sept. 10, 2020

Alice Kedem, Boston, (1) 617-530-8315, Alice.Kedem@spglobal.com

  • While we normally think of medical devices as among the most stable of health care subsectors, there was a disproportionate negative impact to medical device companies from the March halt in elective procedures across the globe. Some 17 of 47 (36%) of S&P Global Ratings' negative rating actions associated with the pandemic in the health care industry were related to medical technology and life-sciences.
  • We expect, after a rapid rebound in June and July, recovery will continue at a more gradual pace, reflecting concerns regarding the spike in COVID-19 cases in select regions and reluctance among some patients to visit medical facilities. We forecast operating performance expected before the pandemic to be achieved in mid- to late 2021.
  • We think elective procedures (i.e., diagnostic screenings, knee replacements, ophthalmic surgeries) face greater risk of near-term volatility if reported deaths and hospitalizations trends trigger a second wave of restrictive actions. However, that should not have the same impact as in April and May.

98. COVID-19 May Accelerate Disruption In The Global Vaccine Market, Aug. 3, 2020

Patrick Bell, New York, (1) 212-438-2082, patrick.bell@spglobal.com

  • Following decades of consolidation, the global vaccine market offers stable and healthy revenue growth, significant barriers to entry, and good profitability, broadly comparable with the broader pharmaceutical industry.
  • The market has unique characteristics and risks that provide the four big pharma companies (Merck, Pfizer, GSK, and Sanofi) an extra dimension of business diversification from the broader pharma industry's dynamics.
  • The market benefits from substantial involvement from government and humanitarian organizations, and is protected from generic competition and potential U.S. drug-price reform.
  • There has been renewed attention to the market in recent years, amplified with an investment surge as part of the race to develop a COVID-19 vaccine.
  • Although a COVID-19 could enhance revenues by tens of billions of dollars over the next few years, that is also accelerating technological innovations and may support the ambitions of potential market entrants, leading to more intense competition and margin pressure. Alternatively it may lead to leverage-harming M&A as leading market participants seek to maintain their leadership position.

99. What Does Pharma’s Quest For A COVID-19 Vaccine Mean For Its Credit Quality And ESG Profile?, July 8, 2020

Tulip Lim, New York, (1) 212-438-4061, tulip.lim@spglobal.com

  • We believe the market for a COVID-19 vaccine will involve multiple players, rather than a winner-takes-all scenario, given the high level of pent-up demand and differing profiles across potential vaccine offerings and patient groups.
  • The pharmaceutical companies we rate that are seeking to commercialize a vaccine will likely set reasonable pricing on a vaccine and therefore, the associated profits will be limited.
  • We believe the reputational benefits to the industry will result in a more balanced debate about U.S. drug price reform, reducing the risk that legislative changes will severely curtail industry profitability.

100. The Health Care Credit Beat: A Rapid Bounce Back In Demand Accelerates The U.S. Industry’s Recovery Timelines, Sept. 16, 2020

Arthur C Wong, Toronto, (1) 416-507-2561, arthur.wong@spglobal.com

  • The U.S. health care industry's drop in demand at the beginning of the pandemic has bottomed out and a recovery is well underway. As such, we've shortened our expected recovery timelines for several subsectors and we believe all subsectors should recover by year-end 2021.
  • Even though some regions are still experiencing spikes in COVID-19 cases, due to time and experience, providers are better equipped to deal with the deluge. We don't expect a return to the lows of the earlier stages of pandemic in late March/early April.
  • While almost all subsectors suffered losses as a result of the pandemic's fallout, a few subsectors such as life science, diagnostics, and laboratory testing benefitted on a net basis and we expect this trend to continue over the next year.
  • We don't expect a full recovery in demand until a COVID-19 vaccine or effective treatment is widely available. However, assuming a stabilization of demand rates at current levels, we don't expect further major downgrades.

101. U.S. Not-For-Profit Acute Health Care Mid-Year Sector View: Recovery Continues, Likely Uneven For The Rest Of The Year, Aug. 13, 2020

Suzie R Desai, Chicago, (1) 312-233-7046, suzie.desai@spglobal.com

  • Ongoing, but slow recovery for hospitals and health care systems as COVID-19 surges may continue into fall.
  • Revenues and expenses will likely be under longer-term pressure while reserves may tread in place, at best, or possibly decline.
  • The credit quality gap may widen and the stronger credits will likely be better positioned when COVID-19 subsides.
  • COVID-19 will exacerbate existing pressures on the industry, and could further accelerate the pace of change.
Infrastructure

102. China's Infrastructure Push Plucks E&C Firms From COVID Lows, Sept. 29, 2020

Yolanda Tan, Hong Kong, (852) 2912-3006, Yolanda.Tan@spglobal.com

  • Engineering and construction (E&C) companies should remain the most resilient of all China's industrial sub-sectors this year and next. The entities are direct beneficiaries of the government's accelerated infrastructure spending, undertaken to lift the nation from the first-quarter economic downturn.
  • We expect healthy revenue growth for the sector in China, and that most rated names will maintain a stable credit profile over the next one to two years.
  • The gradual resumption of existing projects, accelerated project approvals, and favorable funding conditions have all supported this recovery.
  • In our base case, the rated E&C names will achieve 8%-10% revenue growth in 2020, on average.
Infrastructure - Transportation

103. Australia and New Zealand Airports: Uncertain Recovery Keeps Downward Bias High, July 28, 2020

Richard Langberg, APAC, + 852-2533-3516, richard.langberg@spglobal.com

  • Airports' traffic recovery to hinge on domestic policies and travel, with international traffic key for earnings quality. Sector outlook is negative.
  • Cash flow squeeze, albeit with sufficient liquidity, over the next 12 months.
  • Slow and prolonged recovery given second wave of infections, government actions, consumer behavior, and weak economic outlook.
  • Robust control in operating (opex) and capital expenditure (capex) to continue into calendar 2021, and potentially 2022. Debt covenant waivers for a few airports due to uncertainty.

104. COVID-19 Recovery: European Airports Face More Woes Ahead, July 27, 2020

Tania Tsoneva, CFA, Dublin, +353 1 568 0611, tania.tsoneva@spglobal.com

  • European airports face a steep and protracted recovery in air passenger traffic from the fallout of the COVID-19 pandemic. The shape, timing, and pace of recovery is still uncertain.
  • Credit ratios have deteriorated sharply despite a €10 billion reduction in investments over 2020-2023 and dividend cancellation.
  • Accelerated investment in innovative technologies to deal with COVID-19 could lead to permanent cost savings.
  • Recovery estimates vary by airport, with domestic and leisure travel more favorable and hubs traffic to revive quicker in the medium term, while business travel will lag behind.

105. Infrastructure: Global Toll Roads' Steep Climb Out Of COVID, June 19, 2020

Richard Timbs, Sydney, (61) 2-9255-9824, richard.timbs@spglobal.com

  • Government imposed community lockdowns have seen traffic levels drop 40%-85%, depending on the nature of the road and the extent of the containment measures.
  • While global traffic levels should recover quickly as lockdown measures are loosened, it may take 12 months for traffic to recover to pre-COVID levels on some toll roads, and much longer on others.
  • Credit quality in the sector could see further weakening absent management action to ease liquidity strains over the next 18 months.

106. Airports Face A Long Haul To Recovery, May 28, 2020

Julyana Yokota, Sao Paulo, + 55 11 3039 9731, julyana.yokota@spglobal.com

  • Airports across the world face a long, slow climb to recovery from the fall in traffic and revenues due to the COVID-19 pandemic lockdowns and travel restrictions.
  • We now estimate global air passenger numbers will drop by about 50%-55% in 2020 compared with 2019, a far steeper decline than we anticipated in March. We expect passenger numbers will stay below pre-pandemic levels through 2023.
  • Since March 2020, we have lowered the ratings on 11 airports and assigned negative outlooks or negative CreditWatch placements to a total of 128 issuers and transactions. We believe additional rating downside is possible over the next few months.
  • Notwithstanding the long-term infrastructure significance of airports, we expect their financial strength and flexibility will be eroded over the foreseeable future by the magnitude and duration of the current airport sector shutdown, an anemic recovery, capacity restructuring, and heightened counterparty risks of airlines.

107. This Time Is Different: An Anemic And Uncertain Passenger Recovery Will Challenge U.S. Airports' Credit Quality, Aug. 7, 2020

Kurt E Forsgren, Boston, (1) 617-530-8308, kurt.forsgren@spglobal.com

  • The ongoing COVID-19 pandemic and global recession continue to severely depress enplaned passenger levels at U.S. airports, which we expect will erode key credit metrics relative to historical levels for an extended period.
  • We believe the sector is venturing into uncharted territory with likely anemic system passenger growth; a smaller and weakened airline industry; and airport operators exposed to credit risk from a business model untested in the current severely stressed operating environment.
  • Given the generally strong financial flexibility across the airport sector pre-COVID-19, we believe liquidity, including federal aid, along with debt restructurings to improve cash-flow debt service coverage (DSC), can provide interim credit support at the investment-grade level. However, this is not a substitute for sustainable, self-supporting financial operations commensurate with higher credit ratings.
  • Given the highly uncertain industry conditions and challenges, we see downgrades of one or more notches across the airport sector as likely.
Infrastructure - Utilities

108. Despite COVID-19 Disruption, European Utilities Are Set For Growth, June 25, 2020

Pierre Georges, Paris, (33) 1-4420-6735, pierre.georges@spglobal.com

  • European utilities are showing solid credit resilience in the COVID-19 crisis: we have downgraded only 3% of our rated portfolio since March, while in total 21% have a negative outlook or CreditWatch negative.
  • Regulated networks and long-term contracted renewables, which represent a growing proportion of utilities' core businesses, continue to offer solid growth prospects.
  • We anticipate ongoing strong new investment by utilities over the next two to three years, while past investments will yield additional cash flows over 2021-2023 as projects are commissioned.
  • We also expect the European Green Deal, signed in December 2019 by the European Commission, will be a key enabler of the European economic recovery, supporting investments in the energy sector. However, we believe support will be spread over the next decade rather than provide short-term help.
  • Downside risks for the sector beyond our base case are rising bad debt and a weak power price recovery.

109. Power Markets Outlook And Credit Implications In The Age Of COVID-19, July 9, 2020

Massimo Schiavo, Paris, + 33 14 420 6718, Massimo.Schiavo@spglobal.com

  • Global: Solar PV and wind capacity took hits but should find greater support in a post-COVID-19 world. Renewables capacity should grow more strongly in Europe and the U.S. than in China, India, and Latin America.
  • Western Europe: Annual demand is set to fall about 20% this year, and prices are set to rise 19% starting next year through 2023, following a dip of about 20% this year. Through 2025, renewables capacity is set to rise 53%, with lignite, coal, and nuclear standing to lose 17%.
  • The U.S.: Power demand dropped 5% in the year to mid-April but has since rebounded, according to raw load data, with generation by coal hardest hit. Out to 2025, we see declines in fossil fuel generation due to lower loads, declining renewables costs, and state policy targets.
  • Credit quality: Declines in loads--power volumes--weaken credit quality by reducing EBITDA, a key credit metric. Our outlook for the U.S. utility industry is now therefore negative. In EMEA in contrast, ratings on utilities remain largely unaffected.

110. Energy Transition: The Outlook For Power Markets In The Age Of COVID-19, June 25, 2020

Trevor J D'Olier-Lees, New York, (1) 212-438-7985, trevor.dolier-lees@spglobal.com

  • The credit risk for U.S. independent power producers is somewhat mitigated by their operational diversity and countercyclical retail power operations, which provide a hedge against weakness in wholesale power markets.
  • And while the disruption is worse in Europe because of lower demand and low power prices, the financial impact on our rated European power generators has generally been manageable so far this year.
  • This is largely because of price hedges. The impact will be greater over 2021-2022, as the hedges are lower and the forward prices weaker than we anticipated last year. Although we expect the effects of these factors to be temporary, the credit risk for projects fully exposed to wholesale power prices has increased.

111. COVID-19 And The Resulting Recession Are Having A Limited Impact On U.S. Municipal Utility Credit Quality So Far, July 8, 2020

Jeffrey M Panger, New York, (1) 212-438-2076, jeff.panger@spglobal.com

  • Although there is evidence of residential customers and businesses having difficulty in meeting financial obligations, we have yet to see these challenges flow through to electric, water, wastewater, and stormwater utility cash flows.
  • The economic stress could constrain ratemaking flexibility, particularly if the recession extends and deepens.
  • In the face of these challenges, S&P Global Ratings will monitor whether utilities possess sufficient resources and tools to mitigate cash flow exposure.
Insurance

112. COVID-19 Highlights Global Insurance Protection Gap On Climate Change, Sept. 28, 2020

Olivier J Karusisi, Paris, (33) 1-4420-7530, olivier.karusisi@spglobal.com

  • The pandemic has highlighted the need for governments to improve their economies' resilience to big financial shocks, like those associated with natural catastrophes and epidemic diseases. Government-backed insurance solutions, supported by the (re)insurance industry, could protect government budgets, mitigating the potential for economic instability.
  • The insurance sector, especially reinsurers, has a wealth of data and experience in assessing evolving risks such as climate change. This could enable governments, companies, and individuals to make better decisions.
  • For reinsurers, helping to close the protection gap--the difference between insured and total losses--may provide diversification of risk exposure and help to attract, educate, and develop new insurance markets that can provide growth potential. Ultimately, it could reinforce reinsurers' relevance for potential new clients.

113. Down But Not Out: Insurers' Capital Buffers Are Proving Resilient In The Face Of COVID-19, Sept. 22, 2020

Dennis P Sugrue, London, (44) 20-7176-7056, dennis.sugrue@spglobal.com

  • We estimate that, while financial market stresses related to COVID-19 could have wiped out up to 85% of the global insurance industry's capital buffer at the beginning of 2020, a cushion remains to support most ratings.
  • Asset stresses represented 4%-7% of starting total adjusted capital on average, with equity stress the single most significant; however, a combination of credit default and migration was at least as severe as equity in most regions.
  • That estimate does not account for the rebound in the financial markets in recent months, so we believe there should be some buffer to absorb a possible second market dip. Insurance losses are expected to be contained within the industry's earnings.
  • Capital sensitivity is an important factor in our ratings, especially during rapidly evolving events such as the pandemic, but we remain focused on the long-term implications for our ratings on insurers.

114. Black Swan Or Not, COVID-19 Is Disrupting Global Reinsurers' Profitability, Sept. 8, 2020

Taoufik Gharib, New York, (1) 212-438-7253, taoufik.gharib@spglobal.com

  • Once again, the global reinsurance sector won't earn its cost of capital in 2020, just as it has struggled to do so in the past three years. Hence, our sector outlook remains negative.
  • The top 20 global reinsurers reported about $12 billion in COVID-19 losses year-to-date. We now forecast that this cohort will generate a combined ratio of 103%-108% in 2020 and 97%-101% in 2021, and a return on equity (ROE) of 0%-3% and 5%-8%, respectively.
  • Sector capitalization remains robust with no material capital destruction so far, benefiting from capital raises in 2020 and market recovery from March lows.
  • Property and casualty (P/C) reinsurance pricing has been hardening during the past 18 months in reaction to natural catastrophe and pandemic losses, as well as alternative capital and retrocession capacity constraints. We expect the reinsurance pricing positive momentum will carry into 2021.
  • Life reinsurers are facing higher mortality losses caused by the pandemic, but the impact is manageable.

115. Global Reinsurers Face Threat If COVID-19 Losses Are Followed By A Major Catastrophe, Sept. 8, 2020

Charles-Marie Delpuech, London, (44) 20-7176-7967, charles-marie.delpuech@spglobal.com

  • If 2020 sees insured catastrophe losses of $60 billion-$70 billion--an average level--at least eight of the Top 20 reinsurers could suffer a capital event.
  • The investment impact of COVID-19, combined with pandemic-linked losses, have eroded the Top 20 global reinsurers' combined catastrophe budget and earnings buffer for a severe catastrophe event in 2020 to about $14 billion, from about $32 billion.
  • We expect those reinsurers less affected by COVID-19, which can afford to deploy capital, are likely to take a more offensive stand at the next renewals, while others take a more defensive tack.

116. Cyber Risk In A New Era: Insurers Can Be Part Of The Solution, Sept. 2, 2020

Manuel Adam, Frankfurt, (49) 69-33-999-199, manuel.adam@spglobal.com

  • The COVID-19 pandemic is forcing almost all organizations to speed up their digital transformation priorities.
  • This rapid transformation will inevitably increase systemic vulnerabilities to cyberattacks, leading us to expect the next decade to be the most important period of growth for the cyber insurance market.
  • Currently, commercial and private cyber insurance premiums total about $5 billion, and we expect this to increase 20%-30% per year on average in the near future.
  • As the market gains critical mass, providers should continue to build out their platforms and product offerings and focus on robust underwriting skills.
  • Insurers will have to offer more relevant products for the market to succeed, and carefully evaluate and monitor exposures, in particular related to potential accumulation risks, to maintain credit strength if they accept cyber insurance risks on a larger scale.

117. COVID-19 And Oil Price Shock Further Darken Outlook For Latin American Insurers, Aug. 27, 2020

Alfredo E Calvo, Mexico City, (52) 55-5081-4436, alfredo.calvo@spglobal.com

  • The 2020 recession in Latin America and its likely weak recovery will pressure the regional insurers' operating conditions. We expect a contraction in gross written premiums (GWP) in 2020 and moderate growth in 2021.
  • We expect net profits to reach the 2019 levels only in 2022.
  • However, the insurers' overall adequate underwriting, conservative investment policies, and sound capital and liquidity offer a cushion against the tough conditions.
  • COVID-19 and the shock in oil prices exacerbated pre-existing economic weaknesses. Therefore, we have taken negative rating actions on 40% of the insurers we rate in Latin America.
  • The average financial strength rating (FSR) on Latin American insurers is 'BBB' with a negative bias, given that 75% of these ratings have a negative outlook, reflecting sovereign risk. This reflects that more than 90% of FSRs are at--or above--the level of credit ratings on the respective sovereigns.

118. Dutch Insurers' Strong Capital Pads Economic Pressure From COVID-19, Sept. 30, 2020

Mark D Nicholson, London, (44) 20-7176-7991, mark.nicholson@spglobal.com

  • Dutch life insurers' performance will suffer from COVID-19-related financial market losses in 2020, but we expect moderate recovery in 2021-2022.
  • While Dutch property and casualty (P&C) insurers' underwriting performance benefited from limited economic activity and social interaction in first-half 2020, we expect this will be offset by higher disability claims and lower investment income for the year.
  • Technical results in the health insurance sector will be dampened by increased reimbursements to doctors and hospitals as well as lower investment income.
  • Despite challenging conditions, our ratings on Dutch insurers continue to be supported by strong capitalization, although we have lowered our forecast capital buffers for 2020.

119. Risks For New Zealand's Insurers Stable As COVID-19 Recovery Supports Sector, Aug. 3, 2020

Kelvin J Bannan, Melbourne, (61) 2-9255-9895, kelvin.bannan@spglobal.com

  • The industry and country risks faced by New Zealand insurers have remained stable over 2020, with the sector mostly unscathed from the effects of the COVID-19 pandemic.
  • We continue to view New Zealand's property/casualty (P/C) and health insurance sectors as having intermediate risk, which is the third-lowest risk on a scale of six. We also continue to view the life insurance sector as having low risk, the second-lowest risk on our scale.
  • We expect the largest impact from COVID-19 for New Zealand insurers to be through investment market losses, with asset value declines. We also expect lower investment income due to the low interest rate environment continuing to affect insurers' earnings, more recently illustrated in the first quarter of 2020.

120. A Look At U.S. Life Insurers' $4.5 Trillion Investment Portfolios Amid COVID-19, Sept. 16, 2020

Deep Banerjee, Centennial, (1) 212-438-5646, shiladitya.banerjee@spglobal.com

  • U.S. life insurers' investment portfolio has so far been resilient to the pandemic and the economic recession. But the recession isn't over yet.
  • We expect investment risk to outweigh insurance risk for U.S. life insurers during this COVID-19-related economic recession.
  • The differences in insurers' investment strategies will continue to be tested as the recession continues.
  • At an industry level, we expect the strong level of capitalization to offset the impact of moderate investment losses, but we may take individual rating actions based on our view of changes to capitalization and potential investment losses on individual portfolios.

121. What To Expect When U.S. Insurers Report Second-Quarter Results Amid COVID-19 Pandemic, July 21, 2020

Deep Banerjee, Centennial, (1) 212-438-5646, shiladitya.banerjee@spglobal.com

  • U.S. life, property/casualty (P/C), and health insurers will see a greater impact from the pandemic on their second-quarter earnings.
  • Our sector outlooks on all U.S. Life, P/C, and health insurance sectors remain stable.
  • We don't expect the second quarter results to lead us to revise our outlooks.
Leveraged Finance

122. European Leveraged Finance And Recovery Second-Quarter 2020 Update: Finding Equilibrium, July 20, 2020

Marta Stojanova, London, + 44 20 7176 0476, marta.stojanova@spglobal.com

  • Credit quality deteriorated significantly, with first lien debt rated 'B-' or below increasing €56 billion (28% of the total) compared with the previous quarter.
  • Expected first-lien debt recoveries softened slightly to below 58% as average S&P Global Ratings-adjusted leverage increased 1.1x to 9.0x.
  • The negative outlook bias doubled to almost half of all speculative-grade issuers, mostly at the lower end of the spectrum.
  • Additional debt to address lack of liquidity risks, using super-senior debt or J Crewe-style "asset appropriation" maneuvers, could trigger lower recovery prospects, particularly for highly leveraged issuers in hard-hit sectors.
  • Deteriorating credit quality, along with the risk of lower recovery prospects due to rising leverage and collateral leakage, increases the pressure on collateralized loan obligation minimum recovery tests.

123. Monitoring Middle Market Entities Amid COVID-19, Aug. 6, 2020

Ramki Muthukrishnan, New York, (1) 212-438-1384, ramki.muthukrishnan@spglobal.com

  • Loans within middle market CLO collateral pools often come from unrated obligors, so we perform a credit estimate (CE), or a point-in-time confidential indication of the likely credit rating, to assess credit quality.
  • A CE score of 'b-' is the most representative of these companies' credit quality. Even before the COVID-19 pandemic, about 75% of the middle market entities had a CE score of 'b-', while over 85% of entities in the CE universe had a score of 'b-' and below.
  • Based on our review of about 100 specified amendments and of select entities from sectors affected by the pandemic, the five sectors with the most CE downgrades made up about 47% of the total.
Media And Telecom

124. Reassessing The Pace Of Recovery For U.S. Media, Oct. 20, 2020

Naveen Sarma, New York, (1) 212-438-7833, naveen.sarma@spglobal.com

  • S&P Global Ratings economists expect U.S. GDP to contract 4% in 2020 (revised from the original forecast decline of 5%), then increase modestly 3.9% in 2021 (from growth of 5.2%) due to the COVID-19 pandemic.
  • Our 2020 advertising forecast is for a decline of 9.4% (revised from a decline of 12.4%) and growth of 10.3% in 2021 (previously 14.2%).
  • Our expected recovery path for most media subsectors is largely unchanged from June, but theme parks and movie exhibitors will take longer to recover to pre-COVID-19 metrics.
  • Companies with less tolerance to handle these changes (rated 'B' and lower) could face additional rating actions. The rate of decline of linear television will accelerate, speeding up the importance of streaming services.

125. Down To Three, U.S. Wireless Industry Enters A Period Of Uncertainty With A New T-Mobile And 5G Investments, Sept. 14, 2020

Allyn Arden, CFA, New York, (1) 212-438-7832, allyn.arden@spglobal.com

  • Despite the pandemic and economic recession, we expect the U.S. wireless industry will hold up reasonably well relative to other corporate sectors.
  • With industry consolidation, we believe competitive intensity should be relatively steady over the next couple of years as T-Mobile embarks on its integration of Sprint. However, there is still a lot of uncertainty. Assuming a successful integration, T-Mobile has an abundance of spectrum, and has the marketing prowess to aggressively take share. At the same time, new competition from cable and DISH could constrain top line and margin improvement.
  • We believe there are few industry growth opportunities in the near-term. Longer-term, the Internet of Things (IoT) and enterprise applications could drive a new wave of revenue growth as 5G wireless technology becomes more prevalent.
Public Finance

126. Shock And Ore: Surging Debt To Test Australian States, Sept. 29, 2020

Martin J Foo, Melbourne, + 61 3 9631 2016, martin.foo@spglobal.com

  • Australian state government debt is escalating, eroding headroom in our 'AAA' and 'AA+' ratings. Outstanding bonds on issue have surged past one-third of a trillion Australian dollars.
  • The COVID-19 recession is driving budget deficits wider, as tax revenues plummet and emergency fiscal support flows. But borrowing costs will remain manageable with interest rates expected to stay low for an extended period.
  • The Reserve Bank of Australia has stepped in with a bond purchase program to safeguard orderly markets, helping support states' liquidity.

127. Checks And Imbalances: Delayed Australian State Government Budgets Will Embrace More COVID-19 Stimulus, Sept. 7, 2020

Martin J Foo, Melbourne, + 61 3 9631 2016, martin.foo@spglobal.com

  • Transparency is impeded by Australia's state governments postponing their annual budgets from Q2 2020 to Q4 or later.
  • Tens of billions of dollars in health and economic support measures will contribute to large cash deficits. Additional stimulus is likely.
  • The forward infrastructure pipeline is already large. Delivering more capital spending could intensify the downward pressure on state credit metrics.

128. COVID-19: Fiscal Response Will Lift Local And Regional Government Borrowing To Record High, June 9, 2020

Felix Ejgel, London, (44) 20-7176-6780, felix.ejgel@spglobal.com

  • Revenues will decrease and borrowing needs will increase for local and regional governments (LRGs) substantially above our previous February forecasts because of recession triggered by the coronavirus pandemic.
  • We expect subnational borrowings to swell in 2020 and simmer down a bit in 2021. Over these two years, annual borrowings will increase 10% on average, well over our previous 6% forecast, and reach about US$2.1 trillion.
  • Consequently, we also expect a substantial increase in bond issuance, especially in China and developed markets, with the exception of the U.S. We anticipate global issuance to reach US$1.7 trillion on average in 2020-2021.
  • With rising borrowing and subdued economic activity, LRGs will face an increase in their debt burdens. By the end of 2021, Canada will increase its subnational debt to about 55% of GDP, followed by Spain, Japan, and China with about 25%-30%.

129. Extra Funding In Sweden's 2021 Budget Will Support LRGs, Sept. 24, 2020

Linus Bladlund, Stockholm, + 46-8-440-5356, linus.bladlund@spglobal.com

  • Extra central government support in Sweden's 2021 budget bill will mitigate budgetary pressure on local and regional governments (LRGs), and address both the impact of COVID-19 and some structural issues.
  • A new committee to support underperforming LRGs and to promote long-term financial stability indicates the government's recognition of structural challenges.
  • That said, we continue to assess the trend for Swedish LRG's institutional framework as weakening due to unresolved demographic issues.

130. University Challenge: Will International Students Keep A Distance From English Universities?, Oct. 8, 2020

Christopher Mathews, London, + 44 20 7176 7115, christopher.mathews@spglobal.com

  • We believe that the COVID-19 pandemic could prevent a large number of overseas students from enrolling in English universities in the academic year 2020/2021.
  • Universities have increasingly turned to overseas students to fill the shortfall caused by falling government grants, and a drop in numbers will therefore strain their finances.
  • We expect to see institutions pausing big projects and cutting costs, with some likely to increase borrowing to retain solid liquidity positions.
  • Higher-ranking universities, which can compete on their brand names, are likely to fare better.

131. U.S. State Casino Gaming Tax Revenues Start Long Road To Recovery Following Spring Closures, Oct. 7, 2020

Timothy W Little, New York, + 1 (212) 438 7999, timothy.little@spglobal.com

  • States relying on in-person casino gaming activity collected nearly no related taxes from April through June.
  • Nevada, the state most reliant on gaming activity, saw some gains in June and July as casinos began to reopen, but faces headwinds from a disrupted travel industry and canceled conventions.
  • In the Northeast, casino tax collections varied widely from March to August with New Jersey's revenue decline only 23% compared to 78% for New York State, due to New York's casinos being closed for nearly the entire period.
  • Future sports betting revenue growth remains uncertain as events are canceled or scaled back, but some states may look to it as new source of incremental revenue.

132. How COVID-19 And The Recession Could Affect Credit Quality For U.S. K-14 Schools, Sept. 3, 2020

Jane H Ridley, Centennial, (1) 303-721-4487, jane.ridley@spglobal.com

  • U.S. schools are transforming their operations to respond to a situation that may last no longer than a year. While this is daunting enough, for many there is the added pressure of possible funding cuts stemming from tighter state budgets.
  • Much of the funding for public education comes from state revenues, so any kind of state budget pressure presents a possibility for per-pupil revenue cuts. In this COVID-19-induced recession, states have seen lower revenues, particularly from sales and other user taxes.
  • While there are many factors that will influence credit quality over the next year, there are several that we view as having the most potential to bring on deterioration: State revenue pressure due to the recession; Increased operating costs (the CARES Act didn't cover everything); Federal stimulus, which is essential but still not certain; Limits on the ability to adjust budgets and reserves; Fluctuating enrollment; and uneven health recovery across the country.

133. Checkup On Not-For-Profit Health Care SBPA-Backed VRDOs In The COVID-19 Era, Aug. 24, 2020

John C Mante, Chicago, (1) 312-233-7058, john.mante@spglobal.com

  • The U.S. public finance health care sector currently accounts for about $7 billion or 10% of the $69.8 billion VRDOs backed by SBPAs that we rate.
  • Our sector outlooks for all public finance sectors are now negative, and, as of July 31, we had negative rating outlooks on 26% of the stand-alone not-for-profit health care providers and 17% of the not-for-profit health care systems we rate.
  • Not-for-profit health care providers in the 'AA' rating category continue to have access to the SBPA market, though pricing has increased somewhat and tenors have shortened.
  • Although unlikely, remarketing failures and draws on SBPA providers could increase if bondholders elect to tender their bonds due to impact of the pandemic and investors' concerns about obligors' overall credit quality and the potential loss of put options if SBPAs terminate without notice.

134. Sudden-Stop Recession Pressures U.S. States' Funding For Pension And Other Retirement Liabilities, Aug. 3, 2020

Timothy W Little, New York, + 1 (212) 438 7999, timothy.little@spglobal.com

  • States continued to make progress on improving pension funding discipline, but the recession increases the potential they may reverse these gains to ease budgetary pressures.
  • Low interest rates and equity market volatility may result in riskier asset allocations for plans to meet targeted rates of return.
  • States have started to reduce headcount for budgetary relief, but declining payrolls will negatively affect contributions, as fewer active employees contribute to plan assets.
  • Widening budget gaps this year may result in reducing contributions, extending amortizations, and other actions likely to slow the pace of pre-funding retirement liabilities.
  • OPEB plans continued to be substantially underfunded as most states chose to direct limited surplus revenues to other priorities.

135. U.S. Local Government Mid-Year Sector View: Unprecedented And Unpredictable, July 29, 2020

Jane H Ridley, Centennial, (1) 303-721-4487, jane.ridley@spglobal.com

  • Disruptions caused by COVID-19 and the related recession came on quickly, but will create fiscal strain for local governments for some time to come. In light of this, we expect revenue shortfalls and imbalanced budgets will lead to credit pressure through 2020 and beyond, and in many instances long after much of the rest of the economy has normalized.
  • Falling revenues from sales and other user taxes will pressure ratings, particularly for issuers with limited revenue and/or expenditure flexibility.
  • Uncertainty regarding the amount of federal stimulus that may be forthcoming only adds to issuers' short-term planning pressures.
  • We expect many issuers will use reserves to bridge gaps in revenue shortfalls. In our view, that would not necessarily exert downward pressure on ratings; we expect downgrades will be more likely for issuers who do not address issues that jeopardize structural balance over the next two to three years, and beyond.

136. U.S. States Mid-Year Sector View: States Will Continue To Be Tested In Unprecedented Ways, July 13, 2020

Carol H Spain, Chicago, (1) 312-233-7095, carol.spain@spglobal.com

  • Mid-Year Sector View: Negative
  • Our expectation for U.S. state rating stability in the second half of 2020 remains negative. We believe that in the wake of the COVID-19 induced recession, a propensity for revenue volatility, weaker rainy day reserves, and elevated fixed costs are leading factors that predict state budgetary distress. We expect all states will experience some additional credit stress and a prolonged period of depressed revenues. States with outsized concentration in highly affected industries such as tourism, energy, and manufacturing will likely experience deeper revenue declines and slower recoveries.
  • Additional federal aid is possible and would support credit stability, but the timing is uncertain and any lost-revenue replacement component will likely not cover all projected gaps. Compounding the extraordinary nature of the sudden-stop recession, higher fixed costs compared with previous downturns may test credit quality in unprecedented ways..
Real Estate

137. European Office Real Estate Companies: After A Resilient First Half, Upcoming Lease Maturities Should Test The Market, Sept. 18, 2020

Franck Delage, Paris, (33) 1-4420-6778, franck.delage@spglobal.com

  • The hit to European property companies from temporary office closures and rent concessions due to fallout from COVID-19 has been moderate so far.
  • The office real estate companies we rate posted first-half results in line with our 2020 forecast, with maximum declines in rent and valuations of 2.9% and 2.5% for their office assets.
  • Centrally located assets, especially in Germany, have proven the most resilient so far, and the vast majority of tenants have finally paid their rent.
  • Although rated landlords have built a sufficient cushion into their credit metrics, we believe they may face difficulty in addressing their next lease maturities because of softening office demand in most markets.

138. European Retail Property Companies' First-Half Results Highlight Looming Risks, Sept. 3, 2020

Marie-Aude Vialle, Paris, (33) 6-1566-9056, marie-aude.vialle@spglobal.com

  • As we anticipated, European retail property companies suffered from the economic fallout of COVID-19 in the first half of this year, showing a 4%-20% drop in like-for-like net rental income and a 2%-5% decline in property values.
  • Credit ratios are broadly in line with our projections, but the varying extent of lockdowns and government support by country, alongside companies' asset mix, strategies, and accounting approaches, led to the wide range of income declines.
  • A full recovery is unlikely before 2022 because, until the pandemic is fully contained and economies start to recover, further retail tenant bankruptcies, rental income losses, and valuation declines are possible.

139. COVID-19 Accelerates Structural Shifts In Global Office Real Estate And REITs, June 9, 2020

Ana Lai, CFA, New York, (1) 212-438-6895, ana.lai@spglobal.com

  • The global recession, sparked by record job losses in the wake of the coronavirus pandemic, will hurt demand for office real estate, with occupancy and rental rates to come under pressure.
  • Rent collection for office properties has remained high but we expect landlords to share some of the pain as tenants' capacity to pay rent is impaired.
  • Office REITs entered this recession in relatively good shape, with low vacancy rates and steady rent growth, and long-term leases and staggered lease maturity schedules should help mitigate the impact of the recession.
  • We expect COVID-19 to accelerate the adoption of remote working and lead to a gradual reduction in the office footprint. The sustainability of co-working concepts could also add pressure to the office sector, particularly in gateway markets.
  • We expect negative ratings bias to grow over the next year, although downgrade risks are mitigated by adequate cushion under credit metrics, relatively good balance sheets, and solid liquidity.
REITs

140. COVID-19 Pressured Second-Quarter Earnings And Credit Metrics For North American REITs, Sept. 2, 2020

Ana Lai, CFA, New York, (1) 212-438-6895, ana.lai@spglobal.com

  • REITs faced significant earnings pressure in second-quarter 2020 due to the impact of COVID-19 and the recession. This was largely in line with our expectations for a very challenging quarter and weakening credit metrics.
  • Retail and senior housing assets experienced steeper operating pressure than other property types given the direct impact of the pandemic on their utilization. Office and multifamily assets were also pressured, particularly in gateway markets, as the de-urbanization trend intensifies due to remote working practices.
  • We expect a multiyear recovery in the REIT sector with credit metrics returning to pre-pandemic levels by 2022, but the recovery could be uneven and downside risk remains significant. In this downturn, tenant credit quality and asset quality are key factors in gauging recovery prospects.
  • Of REIT ratings, 18% have negative outlooks, and we expect more downgrades over the next 12 months as we assess the impact of changing consumer behavior and the prospects for economic recovery on credit ratings.
  • After a long and extended expansion cycle that benefited asset values and operating performance, the real estate sector now faces much uncertainty in its operating landscape over the next year. We expect pressure on cash flow to weigh on credit metrics and affect asset valuations due to weaker growth prospects. However, REITs entered this recession with lower debt leverage and more unencumbered assets than the last, which provides some cushion to ratings downside.
  • REITs, like other investment-grade sectors, have maintained good access to the debt markets, bolstering liquidity. REITs have focused on preserving liquidity and mitigating the impact of lower earnings on key credit metrics through dividend cuts and curtailing both capital expenditures and acquisitions.

141. Retail REITs Will Contend With Retail Distress Until At Least 2021, July 21, 2020

Samantha L Stevens, New York + 1 (212) 438 1888, samantha.stevens@spglobal.com

  • Retail REITs have been one of the most impacted subsectors of real estate since the pandemic began, as mandated store closures, physical distancing requirements, and tenant bankruptcies have disrupted a traditionally stable cash flow stream.
  • Our already negative rating bias could grow in the coming quarters if retail stress from the pandemic and the recession exceeds our current expectations and hinders recovery prospects.
  • In our opinion, the key to determining the ratings impact of COVID-19 on our retail focused REITs--the majority of which are investment grade--lies with the industry's recovery prospects, which are currently still unclear given how little is known about the virus, containment measures, and its longer term impact on consumer shopping habits.
  • In the meantime, we expect significant cash flow volatility for retail-focused REITs in the second and third quarters of 2020 from rent deferrals, increased bad debt expense, and retail bankruptcies, especially as differing accounting methods and management discretion could obfuscate cash rents.
  • We expect a bumpy road to recovery for retail REITs as rent deferrals, risk of write-offs, and the accelerated pace of store closings will impact recovery prospects for retail landlords. As a result, we think credit metrics may not return to pre-pandemic levels until 2022.

142. Residential REITs: Why Renters Are Flocking To Suburban Markets, Oct. 7, 2020

Michael H Souers, New York (1) 212-438-2508, michael.souers@spglobal.com

  • Effects from the coronavirus pandemic, including increased remote working and employee mobility, and deteriorating fiscal health at both the state and city levels, threaten to reshape where renters decide to live.
  • Densely populated urban gateway cities such as New York, San Francisco, Boston, and Los Angeles are most at risk, in our opinion, while suburban areas and Sun Belt markets could benefit.
  • We believe residential REITs will face modest operating pressure over the next year, with NOI declines in the low- to mid-single-digit range and some deterioration in credit metrics due to lower rents and occupancy pressure.
  • We also expect rating stability as our rated residential REITs, in general, boast strong balance sheets and sufficient liquidity to manage through headwinds created by this recession.

143. Rent Pressure And Development Delays Heighten Risks For U.S. Office REITs, July 2, 2020

Fernanda Hernandez, New York, (1) 212-438-1347, fernanda.hernandez@spglobal.com

  • Our rating bias on office REITs is negative given the cyclicality of office properties and the fact that some issuers' balance sheets were already stretched prior to the pandemic. As of the date of this report, our outlook on 36% of office REITs we cover is negative.
  • We expect modest occupancy declines, significant pressure on rents, and delayed deleveraging targets across our rated office REITs universe for the next 12 months.
  • Post-pandemic trends, including remote working and potentially reversing office space density, do not have an immediate impact on our credit ratings in the sector.
  • All office REITs we rate maintain solid liquidity with ample availability under large revolving credit facilities and no significant maturities over the next 12 months.
Retail And Restaurants

144. Canadian Grocers: Are They Ready For The Next Stage Of E-Commerce?, Oct. 15, 2020

Aniki Saha-Yannopoulos, CFA, PhD, Toronto, (1) 416-507-2579, aniki.saha-yannopoulos@spglobal.com

  • The COVID-19 pandemic has disrupted consumer habits, including an increased adoption of e-commerce.
  • Companies with a strong a digital presence and omnichannel capabilities are ahead of the game.
  • Canadian food retailers have established a competitive advantage, creating a strong presence and banner diversity.
  • Existing e-commerce platforms, their integration with physical stores combined with ongoing investments, and knowledge gained from earlier shutdowns in the pandemic should help set some Canadian retailers to win market share.
  • The success of e-commerce alone, however, is unlikely to shift the relative competitive profiles of these rated Canadian food retailers in the near term.

145. EMEA Retail And Restaurants: Industry Overview, Credit Trends, And Outlook, Oct. 16, 2020

Raam Ratnam, CFA, CPA, London, (44) 20-7176-7462, raam.ratnam@spglobal.com

  • COVID-19 has transformed the retail sector, with an accelerated transition to e-commerce and "omnichannel" platforms becoming increasingly indispensable to support the bricks and mortar stores.
  • Apparel retailers and the travel retail channel have suffered the most, while grocers, DIY, and home improvement retailers have seen a significant increase in their top line.
  • Retail sales have picked up pace in the third quarter, with online sales rising sharply. Higher logistics and transportation costs will dilute profitability, with retailers incentivizing click and collect to encourage footfall.
  • The restaurants and pubs sector will remain under pressure for the foreseeable future, with government support and measures offering some short-term relief.
  • With around two-thirds of the portfolio affected, the pace of negative actions slowed in the second half of the year. Over half of the issuers we rate in the sector have a negative outlook or are on CreditWatch with negative implications.
  • Ratings have transitioned toward the lower end of the spectrum, with a higher number of defaults. Solvency remains a growing risk for 10% to 15% of speculative-grade retail and restaurants, with unsustainable capital structures, particularly once official support programs taper off.

146. COVID-19 Will Shape The Future Of Retail, May 27, 2020

Raam Ratnam, CFA, CPA, London, (44) 20-7176-7462, raam.ratnam@spglobal.com

  • As countries look to ease the restrictions and open their economies, beleaguered retailers have to rapidly adapt to doing business in the COVID-19 world.
  • We foresee far-reaching and lasting effects on the business models of most retailers and restaurants--these will transcend the selling process; relationships with customers; and changes to assortment, supply chains, store bases, and store configuration.
  • Credit quality will to a large extent depend on how these companies adapt, evolve, and reposition themselves in a dramatically changed environment.
  • The biggest challenge will be to invest and fund this transformation while dealing not only with the pandemic, but the accelerated digital disruption most of the sector has endured in recent years.

147. As The North American Retail And Restaurant Sector Braces For Another Wave Of Downward Rating Actions, A Few Subsectors See Signs Of Hope, July 16, 2020

Sarah E Wyeth, New York, (1) 212-438-5658, sarah.wyeth@spglobal.com

  • The COVID-19 pandemic and unprecedented economic shutdown to contain it forced "non-essential" retailers and dine-in restaurants to temporarily close their doors. Consumers dramatically pulled back spending, limiting it to groceries and basics.
  • From early March through mid-June, we took nearly 100 negative rating actions directly related to the impact of the pandemic across a universe of about 130 rated entities.
  • With around one quarter of our ratings in the 'CCC' category, the 2020 speculative-grade default rate will easily double relative to the rate in recent years, which at 10% epitomized the secular stress the sector endured for years.
  • Green shoots are sprouting in pockets of retail but they could be crushed by a second wave of COVID-19 and the additional economic damage another shutdown would inflict.

148. The Worst Could Be Over For U.S. Retail With Slower Pace Of Negative Rating Actions; Malls And Restaurants Remain At Risk, Sept. 25, 2020

Sarah E Wyeth, New York, (1) 212-438-5658, sarah.wyeth@spglobal.com

  • The pace of negative rating actions has slowed but about two-thirds of the issuers we rate still have a negative outlook or are on CreditWatch with negative implications.
  • While we believe the worst is over for some subsectors, mall-based retail remains at the most risk, while some specialty retailers appear to be improving.

149. Retail Trends In August Illustrated Consumers' Resilience And Shifts In Spending, Sept. 22, 2020

Sarah E Wyeth, New York, (1) 212-438-5658, sarah.wyeth@spglobal.com

  • We are tracking trends in the retail sector in August, the first month without a government stimulus and its impact on spending.
  • Consumers reallocated their spending to areas such as home décor, exercise equipment, and craft materials.
  • Personal savings has also increased, but third-quarter spending trends remain at risk.
Sovereigns

150. Asia-Pacific Sovereign Rating Trends Midyear 2020, July 31, 2020

KimEng Tan, Singapore, (65) 6239-6350, kimeng.tan@spglobal.com

  • We expect most Asia-Pacific sovereign credit ratings to remain unchanged in the next one to two years despite the increased COVID-19-related credit risks.
  • Negative rating actions dominated Asia-Pacific sovereigns in the first seven months of this year.
  • How COVID-19 evolves remains the key credit concern in the next year or so.

151. The Key Sovereign Rating Considerations For Brazil Amid COVID-19, Sept. 18, 2020

Livia Honsel, Mexico City, + 52 55 5081 2876, livia.honsel@spglobal.com

  • Brazil has been one of the sovereigns worst affected by the COVID-19 pandemic globally, although the pace of new cases has slowed recently.
  • We expect the economic recession and government support measures to lead to a record fiscal deficit and a significant surge in government debt in 2020.
  • While the pandemic has increased uncertainty regarding the reform agenda, we continue to see a broad commitment from policymakers to fiscal consolidation and economic reforms, even though political pressure has increased to extend the fiscal stimulus into next year.

152. Dubai's Already High Debt Burden Set To Worsen Amid A Deep Pandemic-Related Macroeconomic Shock, Sept. 30, 2020

Samuel Tilleray, London, + 442071768255, samuel.tilleray@spglobal.com

  • While it does not rate Dubai, S&P Global Ratings expects Dubai's economy will contract sharply by around 11% in 2020, owing in part to its concentration in travel and tourism, two of the industries most affected by COVID-19.
  • Low oil prices have had broad effects on Gulf Cooperation Council (GCC) economies, of which Dubai is one, but hydrocarbons directly contribute only about 1% to Dubai's total GDP. The indirect effect of weaker demand from Dubai's neighbors will dampen Dubai's trade, tourism, and real estate markets.
  • We expect Dubai's gross general government debt to increase sharply to about 77% of GDP (AED290 billion) in 2020, compared with 61% of GDP in 2019.

153. EM Central Banks Risk Reputations With Bond-Buying Programs, Sept. 14, 2020

Andrew Wood, Singapore, + 65 6239 6315, andrew.wood@spglobal.com

  • Some emerging market central banks are following their peers in advanced economies in purchasing sizable amounts of government debt this year.
  • The central banks of India and the Philippines have bought US$24 billion of government bonds this year, with little pushback from investors. Bank Indonesia also started primary market purchases in April, and introduced a comprehensive debt-burden sharing agreement with the government in July.
  • But if these institutions push their purchases too far, price stability and other risks could arise, with implications for sovereign ratings.

154. European Developed Sovereign Rating Trends Midyear 2020, July 31, 2020

Marko Mrsnik, Madrid, (34) 91-389-6953, marko.mrsnik@spglobal.com

  • Amid the economic fallout from the COVID-19 pandemic and governments' policy responses, we project that government debt will increase by almost 20% of GDP on average for the larger developed sovereigns in Europe.
  • However, we think that governments' willingness and ability to service their debt on time and in full depends more on their monetary flexibility and economic resilience than on their government debt-to-GDP ratios.
  • Most of the 30 developed sovereigns we rate in Europe have stable outlooks, with only one positive outlook (Estonia) and two negative outlooks (Italy and Slovakia).
  • Following the economic shock in the first half of 2020, the developed sovereigns' future creditworthiness will depend on the pace of economic recovery, which in turn depends on the evolution of the pandemic.

155. What The EU Recovery Fund Breakthrough Could Mean For Eurozone Sovereign Ratings, July 22, 2020

Frank Gill, Madrid, (34) 91-788-7213, frank.gill@spglobal.com

  • EU leaders have signed off on the Recovery Fund following extensive negotiations, complicated by the need to agree on the €1.07 trillion European Union budget for 2021-2027.
  • S&P Global Ratings believes that, despite its temporary, crisis-specific nature, the Fund lends itself to becoming a permanent part of the EU architecture, a position supported by the European Parliament, not least because it would guard against unfair competition in the form of extraordinary fiscal support at the national level.
  • In our view, the prerequisite that Fund recipients implement a national recovery plan, and show progress on executing it, shows recognition that only via a sustained post-pandemic economic expansion can the euro area shift public debt ratios back onto a downward path; we project that, by the end of 2020, the median level of general government debt to GDP in the euro area will increase by 14 percentage points of GDP compared with the end of last year.

156. Global Sovereign Rating Trends Midyear 2020: Outlook Bias Turns Negative As Governments Pile On Debt To Face COVID-19, July 30, 2020

Roberto H Sifon-arevalo, New York, (1) 212-438-7358, roberto.sifon-arevalo@spglobal.com

  • In response to the substantial drop in economic activity--as a result of measures put in place to slow the spread of coronavirus--governments globally have embarked on massive fiscal and monetary stimulus, which has resulted in a large accumulation of sovereign debt and expansion of central banks' balance sheets.
  • While we expect the economic recovery will start in first-quarter 2021, the debt load on government balance sheets will remain high for several years to come.
  • Since March 10, 2020, we have reviewed 117 sovereign ratings, or 87% of the total sovereigns we rate. We have affirmed ratings on almost 60% of the sovereigns we have reviewed, downgraded 18%, and revised outlooks to negative on 15%.
  • Over the next six months, the global outlook balance for sovereign ratings is stable with a negative bias, with the number of expected downgrades surpassing expected upgrades by 24.

157. How Multilateral Lending Institutions Are Responding To The COVID-19 Pandemic, June 9, 2020

Alexis Smith-juvelis, New York, 1 (212) 438 0639, alexis.smith-juvelis@spglobal.com

  • Many multilateral lending institutions (MLIs) have announced large relief packages to support their members through the health and economic effects of the global COVID-19 pandemic.
  • These packages, however, mostly reflect a repurposing of the pre-COVID-19 lending portfolio rather than an expansion of its size. In contrast, MLIs generally responded with more pronounced increases in capital commitments during previous crises.
  • We believe MLIs are constrained in their ability to deploy significantly greater financing, given the need to balance their disbursements with financial and risk considerations in order to avoid pressure on their capital base and credit ratings.
  • Moreover, shareholders' appetite for additional capital increases could wane, as sovereign fiscal resources become increasingly limited. We expect MLIs to continue to leverage additional instruments that can mobilize resources without committing their own balance sheets.
  • While the G-20 has considered a debt moratorium to the poorest sovereigns as a mechanism of support amid the current severe economic and health challenges, we don't expect MLIs to join the moratorium. Rather, we expect MLIs to continue to provide grant and other concessional funding to these sovereigns.

158. Can Multilateral Lenders' Capital Bases Hold Up Against COVID-19?, June 9, 2020

Alexander Ekbom, Stockholm, (46) 8-440-5911, alexander.ekbom@spglobal.com

  • Our stress tests of multilateral lending institutions (MLIs), factoring in the COVID-19 pandemic, indicate a few large capital shortfalls, largely due to planned growth.
  • We believe MLIs will continue to enjoy preferred creditor treatment (PCT) although sovereign downgrades could erode their capital positions; we expect an increase in provisions but mainly to cover private-sector exposure.
  • If MLIs grant a debt moratorium to the poorest sovereigns as agreed among G-20 bilateral creditors, their PCT status might weaken and ultimately weigh on our ratings, unless most of the associated losses are compensated.
  • We anticipate limited additional loan growth over the next few years despite pandemic-related aid packages to member sovereigns, since MLIs are likely to reallocate previous commitments and shift project priorities.

159. IMF Lending And Sovereign Ratings, May 28, 2020

Roberto H Sifon-arevalo, New York, (1) 212-438-7358, roberto.sifon-arevalo@spglobal.com

  • We base our rating analysis and decisions solely on the overall economic, financial, and political conditions in a country. A sovereign's decision to obtain or accept financing facilities from the IMF or any other official creditor does not in and of itself trigger a rating action--either positive or negative.
  • The nature of the credit facility is not a driver for rating actions. However, the differences between the various facilities are important for our analysis of a sovereign. Different IMF lending facilities are targeted at different needs. Hence, sovereigns in different segments of our credit rating scale are likely to seek different types of IMF support.

160. GCC Government Funding Needs Increase Sharply On Low Oil Prices And COVID-19, July 20, 2020

Trevor Cullinan, Dubai, (971) 4-372-7113, trevor.cullinan@spglobal.com

  • We estimate that GCC sovereigns' central government deficits will reach about $490 billion cumulatively between 2020 and 2023. About 55% of this deficit relates to Saudi Arabia, the GCC's largest economy, followed by Kuwait with 17% and Abu Dhabi with 11%.
  • Since the sharp fall in oil prices, many GCC sovereigns have posted sizable central government deficits. These increased funding needs prompted total GCC government debt issuance in local and foreign currency of over $90 billion in 2016 and 2017, and we expect a new record high of about $100 billion in 2020. We then expect total annual debt issuance to trend down toward $70 billion by 2023, largely driven by our expectation of a narrowing of Saudi Arabia's fiscal deficits over the period.
  • In first-quarter 2020, due to the spread of COVID-19, emerging markets experienced significant capital outflows and there was limited activity on international capital markets. In the second quarter, however, GCC sovereigns contributed significantly to the resurgence in emerging market sovereign issuance, with about $35 billion in eurobonds.

161. India's COVID-19 Recovery Will Be Key To The Sovereign Ratings, June 11, 2020

Andrew Wood, Singapore, 65 6239 6315, andrew.wood@spglobal.com

  • The effects of the COVID-19 pandemic will reverberate for the Indian economy over the next few years.
  • A drop in economic growth this year could stymie reform momentum.
  • If the Modi administration handles the crisis successfully, the event may boost its political support, giving it room to introduce painful, but necessary, measures.
Structured Finance

162. Australian Structured Finance Mostly Resilient In Face Of Protracted Recovery, Oct. 13, 2020

Erin Kitson, Melbourne, (61) 3-9631-2166, erin.kitson@spglobal.com

  • Australia's path to economic recovery will be protracted and risks remain.
  • We expect most structured finance asset classes and ratings to be resilient, given strong levels of credit support, but risks are on the downside.
  • Structural shifts that may accelerate post-COVID and alter debt serviceability trends include the use of technology in credit decision making, the increasing contractualization of work, and household indebtedness in an era of very low interest rates.

163. How The European CLO Market Has Developed Over 180 Days Of COVID-19, Sept. 2, 2020

Shane Ryan, London, + 44 20 7176 3461, shane.ryan@spglobal.com

  • Following six months of heightened rating actions on nonfinancial corporates spurred by the economic fallout from the pandemic, data for European collateralized loan obligations (CLOs) show the market continues to evolve.
  • New CLOs have priced during this period, but at a slower pace and at lower levels compared from those in 2019.
  • The focus is on monitoring the performance of loans underlying existing transactions, as well as challenges that existed before and persisted during COVID-19, including high leverage ratios, EBITDA add-backs, and covenant-lite loans.

164. CLO Portfolio Overlap: European Managers May Look Beyond Their First Choice Of Assets In The COVID-19 Era, Sept. 1, 2020

Abhijit A Pawar, London, (44) 20-7176-3774, abhijit.pawar@spglobal.com

  • European CLO managers in the COVID-19 era face a complex challenge of selecting creditworthy loans to build portfolios for both new and existing transactions.
  • The average overlap of loans in European CLOs issued since mid-March stands at 37.73%, which is almost 2% higher than the European average of 36% for all CLOs rated by S&P Global Ratings, including those issued before the COVID-19 outbreak.
  • Following the corporate downgrades since March this year and negative outlooks on some of the sectors, CLO managers may have been building portfolios with new names, resulting in less overlap than in previous years.
  • Factors like cashing in gains to cover losses due to the pandemic, reshaping the portfolios to manage various tests that are close to breaching their thresholds, and managing the weighted-average cost of debt--may have also led to a decline in overlap than in previous years.
  • We review the level of CLO portfolio overlap yearly to understand differences in portfolios, observe new trends, and to identify possible reasons for why the overlap differs from previous years.

165. European Structured Finance Outlook H2 2020: Weathering The Storm, July 28, 2020

Andrew H South, London, (44) 20-7176-3712, andrew.south@spglobal.com

  • Issuance: European securitization issuance now looks set to end the year substantially lower than in 2019, at about €60 billion-€70 billion, while benchmark covered bond volumes also look set to decline.
  • Central banks: Across Europe, central bank responses to the public health emergency have included renewed large-scale provision of cheap term funding for credit institutions, which is likely to stifle bank-originated structured finance supply.
  • Macro: With social distancing likely to constrain economic activity for several more months, we expect both the U.K. and Eurozone economies to contract by about 8% this year, before rebounding in 2021.
  • Credit performance: Given the macro backdrop, fundamentals will continue to be under pressure across structured finance sectors. However, structural protections mean most asset classes appear robust, and we have only taken negative rating actions on 4% of our outstanding ratings.

166. Global Structured Finance: Credit Concerns Loom On COVID-19 Resurgence, Oct. 21, 2020

Antonio Farina, +34-91-788-7226, antonio.farina@spglobal.com

  • Economic activity rebounded strongly in the third quarter, though momentum has begun to fade and recovery will take time. Top global risks include extended containment measures and transition to post-COVID-19 policies as well as corporate solvency risk and new highs in government debt.
  • As of Oct. 2, 2020, we have taken rating actions on 2,320 structured finance tranches globally due to the effects of the COVID-19 pandemic and the decline in oil and gas prices. Based on our current global economic forecasts, we expect the bulk of the cumulative negative rating actions to affect tranches rated 'BBB' and below.
  • Following a period of rising delinquencies and/or extensions, the performance of prime auto ABS collateral around the globe appears to have improved during the past few months.
  • The credit quality of loan portfolios backing CLOs is now stabilizing, although there have been widespread downgrades on speculative-grade tranches in U.S. transactions.
  • Distress in the retail and lodging sectors has led to CMBS downgrades on both sides of the Atlantic. We continue to monitor the office and multifamily sectors for any potential signs of distress.
  • Arrears rates in RMBS pools have recently improved, although some borrowers have benefitted from payment holidays and job support schemes, which are now coming to an end.

167. Inside Global ABCP: Issuance Growth Tempered As Economic Recovery Takes Shape, Oct. 8, 2020

Dev C Vithani, New York, (1) 212-438-1714, dev.vithani@spglobal.com

  • U.S.: Issuance volumes have declined since April 2020, but we expect increased utilization rates from existing programs as well as new conduit activity to support our projected year-end volumes. We anticipate no material impact on our ratings in the second half of 2020.
  • EMEA: Issuance has also declined, though our ratings on conduits largely remained resilient. We expect reduced potential negative impact on ratings for the remainder of the year, as economies start to heal.
  • APAC: China saw the ABCP market's inaugural issuance in June 2020. Programs we rate in Australia have either wound down or ratings have been withdrawn at issuers' request. Issuance volumes in Japan gained 45% over December 2019.

168. Japanese Securitizations Largely Stable Amid COVID-19, July 29, 2020

Yuji Hashimoto, Tokyo, (81) 3-4550-8275, yuji.hashimoto@spglobal.com

  • Total rated new issuance in Japan's securitization market rose 10% year on year to about ¥1.1402 trillion (11 transactions) in the first half of calendar 2020, but is likely to decline in the second half.
  • During surveillance, there were two downgrades of asset-backed commercial paper (ABCP).
  • Servicers we rank are generally operating as normal, with telework arrangements.

169. Latin American Cross-Border Repackaged Transactions Show Resilience During The COVID-19 Pandemic, Sept. 24, 2020

Daniela Fernandez Gil, Buenos Aires, +54 (11) 4891-2162, daniela.fernandez@spglobal.com

  • We have taken rating actions on three of the 22 repackaged transactions we rate in Latin America since the COVID-19 outbreak.
  • These transactions have high dependency on our ratings on the related sovereigns and counterparties.
  • Construction and milestone deliveries--and thus the issuance of the underlying certificates backing some repacks--could face delays due to COVID-19 containment measures. However, several mechanisms such as reserves and LOCs ensure that repack investors will be fully repaid.

170. COVID-19 Update: Latin America Structured Finance Collateral Performance, Aug. 6, 2020

Jose Coballasi, Mexico City, (52) 55-5081-4414, jose.coballasi@spglobal.com

  • Latin America structured finance collateral performance has been mostly negative since the start of the COVID-19 pandemic.
  • ABS commercial is currently the hardest hit, while ABS consumer has shown the most resilience.
  • As of July 3, we have taken 67 negative rating actions, including 26 downgrades, due to the impact of the pandemic.
  • We believe conditions will remain challenging in the region, and we will continue to monitor ongoing developments and take rating actions as we deem appropriate.

171. U.K. Mortgage Payment Holiday Risks Emerge As COVID-19 Requests Have Peaked, Sept. 2, 2020

Arnaud Checconi, London, (44) 20-7176-3410, ChecconiA@spglobal.com

  • Based on a sample of U.K. residential mortgages, we estimate that between 55% and 90% of borrowers have resumed their mortgage payments depending on their credit profile.
  • Loosely underwritten pre-crisis loans and those granted over the last few years with stretched affordability tend to show a higher level of payment holidays. We estimate that 10.7% of borrowers on a payment holiday have had previous arrears, although only 1.7% of all loans are both on payment holiday and in arrears.
  • In certain transactions, we could witness a sharp rise in delinquencies by mid-single-digits, especially in nonconforming transactions.

172. U.S. And European CMBS COVID-19 Impact: Retail And Lodging Are The Hardest Hit, Sept. 28, 2020

James M Manzi, CFA, Washington, D.C. (1) 202-383-2028, james.manzi@spglobal.com

  • Our recent review of U.S. CMBS ratings resulted in 185 downgrades, comprising 88 SASB and large loan classes and 97 conduit classes.
  • Meanwhile, our surveillance of European CMBS since the COVID-19 outbreak has resulted in rating actions on approximately 20% of the transactions we rate.
  • Retail and lodging are the sectors hardest hit by the pandemic, and it remains uncertain how pandemic-related changes may affect the office and multifamily sectors.

173. Sector Averages Of Reinvesting U.S. BSL CLO Assets: COVID-19 Caused Significant Deterioration In Second-Quarter 2020, Aug. 31, 2020

Daniel Hu, FRM, New York, (1) 212-438-2206, daniel.hu@spglobal.com

  • Credit quality of CLO assets deteriorated across a number of corporate sectors due to downgrades and negative CreditWatch placements resulting from the economic and credit impact of COVID-19. The pace of negative rating actions on corporate entities whose loans back S&P Global Ratings-rated CLOs slowed down after peaking in the beginning of the quarter.
  • During first and second quarters, about one third of the issuers whose loans are held in U.S. BSL CLOs had their ratings lowered or placed on CreditWatch.
  • Due to changes in companies' capital structures (issuance of additional debt and resulting increased leverage, full draw of revolver, etc.), a number of corporate recovery ratings (and the resulting recovery assumption used in our CLO analysis) dropped in the second quarter.
  • The WAP of the loans in our CLO portfolios have tracked the trajectory of the broader markets. After dropping to 82 cents to the dollar, they recovered and appear to have stabilized at around 91 cents to the dollar.
  • The proportion of CLO collateral with a negative bias (negative outlook or Creditwatch negative) has increased to 43%, up from 32% at the end of first-quarter 2020.

174. Can COVID-19 Cause A Cash Crunch For Certain U.S. RMBS?, Aug. 21, 2020

Jeremy Schneider, New York, (1) 212-438-5230, jeremy.schneider@spglobal.com

  • Forbearance plans in non-agency U.S. RMBS and the related remittance reporting show two general states: delinquency statuses based on actual missed payments and monthly deferral plans that indicate loans in a "current" status.
  • Interest shortfall exposure in non-agency U.S. RMBS falls into four general buckets: shifting interest senior subordinate structures, excess interest structures (with and without delayed reimbursements), and credit risk transfer structures, which are largely immune to interest shortfalls. Higher forbearance/deferral activity in trusts tend to be correlated with excess interest structures, which could help mute interest shortfalls.
  • To the extent economic conditions improve and COVID- 19 subsides, concerns regarding negative rating pressure from forbearance- and/or deferral-related interest shortfalls should diminish.

175. Tender Option Bond Ratings Recap As Of June 2020: How COVID-19 Has Affected The Secondary Derivative Market, July 31, 2020

Mindy Xu, New York, (1) 212-438-2879, mindy.xu@spglobal.com

  • All of our U.S. public finance sector outlooks continue to have a negative outlook, and we will take rating actions as we deem appropriate.
  • Our tender option bond (TOB) surveillance rating actions year to date have primarily been downgrades and CreditWatch placements.
  • About 35% of all our TOB rating actions have been a direct result of the COVID-19 pandemic and efforts to contain it.
  • New TOB issuance volume declined sharply in March, but has since rebounded and is now steady relative to March.

176. Though Still Elevated, Drops In May Extensions Are The First Signs Of A Possible Road To U.S. Auto Loan ABS COVID-19 Recovery, July 16, 2020

Amy S Martin, New York, (1) 212-438-2538, amy.martin@spglobal.com

  • New extensions in May dropped significantly from April.
  • Even so, at May end, several issuers have 10% or more of their pools (on a dollar basis) in some form of extension status.
  • Of the loans extended from March to May in the prime segment, 63.5% are still in extension status, while only 21.0% have come out of extension status and made a payment. Similarly, in subprime, of the loans extended since March, 81.5% are still in extension status, while only 11.3% have come out of extension status and made a payment.

177. Student Housing In The COVID-19 Pandemic Era: School's Out, But For How Long?, July 9, 2020

Dennis Q Sim, New York, (1) 212-438-3574, dennis.sim@spglobal.com

  • Due to the COVID-19 pandemic, student housing properties are facing unique challenges. We analyze the exposure CMBS has to mortgages secured by student housing properties, as well as our view on the risks facing this segment.
  • The current data on pre-leasing indicates a slight decline from the same period last year, but the COVID-19 pandemic is creating headwinds for those properties.
  • US CMBS exposure to mortgage loans secured by student housing properties totals $18.2 billion across 1,066 loans, of which 33 loans totaling $662.9 million (3.5%) are currently in special servicing.
  • In the near term, uncertainty surrounding the COVID-19 virus and how public policy may change regarding social distancing will likely affect performance for student housing properties. Longer-term considerations include whether distance learning will become a bigger part of higher education.
Technology

178. 2020 Global IT Spending Outlook Improves Through COVID-19 Disruption, Sept. 21, 2020

Andrew Chang, San Francisco (1) 415-371-5043, andrew.chang@spglobal.com

  • We are revising our 2020 global information technology (IT) spending to negative 3% year over year, up from our previous forecast of a 4% decline.
  • First-half 2020 global IT spending held up better than we had expected because of work-from-home-related spending and an accelerated move to the cloud, but second-half 2020 spending will be weaker than expected as enterprise customers pull back amid a slow economic recovery.
  • The software segment has performed the best, despite growing less than we previously forecast, because it remains mission critical within enterprises.
  • Hardware sales will decline the most, but they will still perform better than expected, and semiconductor sales will grow this year in large part because of the memory market.
  • Digital transformations, accelerated by the pandemic, require significant investments over the longer term, and as a result, we expect the rate of increase in IT spending to exceed global GDP over the next decade.

179. Changing Work And Education Trends Will Deepen The Divide Between Winners And Losers In U.S. Software, But Long-Term Fundamentals Remain Strong, Sept. 14, 2020

James W Thomas, New York, + (212) 438-0181, james.w.thomas@spglobal.com

  • We believe that the U.S. software industry is well-positioned to weather and recover from the pandemic-related macroeconomic slowdown and that the recent acceleration of ongoing trends toward cloud-based computing and remote work will provide opportunities to many issuers.
  • Despite our generally positive view of the sector, we expect that the impact of the COVID-19 pandemic will sharpen the divergence in fortunes between software firms capable of providing cloud-based, remotely serviced offerings and those with already lagging legacy solutions.
  • We expect firms offering communication and collaboration tools, IT security, and educational software will be best-positioned to capitalize on shifting spending priorities.
  • There could be more negative rating actions if the virus persists and leads to further spending weakness in the second half of the year, but investment-grade firms with strong balance sheets should have stable ratings.
  • High leverage going into 2020--particularly amongst smaller issuers--will leave many legacy players with little headroom to endure even a modest revenue decline.

180. U.S. Tech Q2 Better Than Feared; Soft Enterprise Demand Coming, Sept. 9, 2020

Christian Frank, San Francisco, + 1 (415) 371 5069, christian.frank@spglobal.com

  • Credit in the U.S. technology sector held up to the impact of the COVID-19 pandemic in the second quarter of 2020 better than expected. The shift of the workforce to working from home improved spending on cloud computing and networks.
  • We expect weaker second-half enterprise demand as customers delay discretionary projects and because of a digestion period after strong first-half spending by hyperscalers.
  • New 5G mobile phone models are likely to drive growth across the entire market in the second half while normal erosion will return to memory pricing.

181. A Slow Recovery And U.S.-China Trade Tensions Could Test U.S. Investment-Grade Tech Companies, June 3, 2020

David T Tsui, CFA, CPA, San Francisco, (1) 212-438-2138, david.tsui@spglobal.com

  • S&P Global Ratings revised three rating outlooks on U.S. investment-grade tech companies since the COVID-19 outbreak, a stark contrast to 43 rating actions on speculative-grade peers.
  • The resilience in investment-grade ratings is due to these companies' strong balance sheet and liquidity, reduced business volatility over time, and the growing demand for their services in the global economy-which has allowed the tech industry to outgrow global GDP.
  • Credit quality could suffer, however, if the recovery in IT spending is slower than we forecast amid lower global GDP growth arising from the lingering effects of COVID-19.
  • U.S.-China trade tensions could alter the semiconductor and hardware landscape for decades to come, with mostly negative consequences for U.S. investment-grade technology companies as China invests in its native semiconductor industry.

COVID-19 Impact Article Series

Table 1

Coronavirus Impact Article Series
Sector Region/country No. Article title Publication date
Credit conditions Asia-Pacific 1 Credit Conditions Asia-Pacific: Recovery Roads Diverge Sept. 29, 2020
Credit conditions Emerging Markets 2 Credit Conditions Emerging Markets: Fragile And Uneven Recovery, Virus Resurgence Looms Sept. 29, 2020
Credit conditions Europe 3 Credit Conditions Europe: Ill-Prepared For Winter Sept. 29, 2020
Credit conditions Global 4 Global Credit Conditions: The K-Shaped Recovery Oct. 6, 2020
Credit conditions North America 5 Credit Conditions North America: Potholes On The Road To Recovery Sept. 29, 2020
Autos Global 6 Global Auto Sales Forecasts: Hopes Pinned On China Sept. 17, 2020
Aviation Global 7 From Bad To Worse: Global Air Traffic To Drop 60%-70% In 2020 Aug. 12, 2020
Capital Goods China 8 China's Cyclical Capital Goods Makers Brace For Downcycle Oct. 11, 2020
Chemicals U.S. 9 Specialty, Commodity Chemicals Recovery Stuck Behind Autos In Slow Lane Sept. 30, 2020
Commodities - Metals and mining Global 10 S&P Global Ratings Lifts Price Assumptions For Most Metals Sept. 24, 2020
Commodities - Oil and gas Global 11 S&P Global Ratings Revises Oil And Natural Gas Price Assumptions Sept. 16, 2020
Consumer goods Global 12 COVID-19 Is A Wake-Up Call For The Food Processing Industry Oct. 20, 2020
Consumer goods Global 13 COVID-19 Battered Global Consumer Discretionary Sectors But Lifted Staples; Recovery Varies By Subsector Aug. 4, 2020
Corporates China 14 Carmakers Are A Step Behind In Industrial China's COVID Comeback July 16, 2020
Corporates Europe 15 European Corporate Recoveries Over 2003-2019: The Calm Before The COVID-19 Storm Aug. 5, 2020
Corporates Global 16 From Crisis To Crisis: A Lookback At Actual Recoveries And Recovery Ratings From The Great Recession To The Pandemic Oct. 8, 2020
Corporates Global 17 COVID-19 Heat Map: Updated Sector Views Show Diverging Recoveries Sept. 29, 2020
Corporates Gulf Cooperation Council 18 Twin Shocks Of Low Oil And COVID-19 Mean Double Trouble For GCC Corporates July 21, 2020
Corporates Ireland 19 COVID-19 Casts Cloud Over Rated Irish Corporates’ Performance Gains Sept. 17, 2020
Corporates Korea 20 Korea's COVID Comeback Holds Lessons For The World Oct. 15, 2020
Corporates Taiwan 21 Taiwan Top 50 Corporates: Credit Profiles Extend Their Downward Trend Amid COVID-19 Sept. 7, 2020
Credit trends and market liquidity Europe 22 Credit And Economic Deterioration Signals A Rising European Speculative-Grade Default Rate Despite Market Optimism Aug. 18, 2020
Credit trends and market liquidity Global 23 Downgrade Potential Eases But Remains Above Pre-Pandemic Levels Oct. 20, 2020
Credit trends and market liquidity Global 24 Distressed Exchanges Boost Corporate Defaults In The Second Half Of 2020 Oct. 16, 2020
Credit trends and market liquidity Global 25 The Travel And Entertainment Business Faces Elevated Default Risk Despite Easing Market Pressures Oct. 12, 2020
Credit trends and market liquidity Global 26 BBB' Pulse: Potential Fallen Angels Remain Stable In August, With Five Outlook Revisions To Stable And Just One Downgrade Sept. 28, 2020
Credit trends and market liquidity Global 27 Global Financing Conditions: Bond Issuance Is Expected To Finish 2020 Up 6% After A Strong Second Quarter July 27, 2020
Credit trends and market liquidity Global 28 Global Refinancing--Rated Corporate Debt Due Through 2025 Nears $12 Trillion July 27, 2020
Credit trends and market liquidity Global 29 The Potential Fallen Angels Tally Holds Steady At A Record High Of 126 July 21, 2020
Credit trends and market liquidity Global 30 Market Liquidity In A Crisis: Five Key Lessons From COVID-19 July 16, 2020
Credit trends and market liquidity Global 31 Historically Low Ratings In The Run-Up To 2020 Increase Vulnerability To The COVID-19 Crisis May 28, 2020
Credit trends and market liquidity North America 32 Risky Credits: The Number Of 'CCC' Category Ratings Stabilizes Sept. 21, 2020
Credit trends and market liquidity U.S. 33 U.S. Corporate Downgrades Fell To Pre-Pandemic Levels In The Third Quarter Oct. 14, 2020
Credit trends and market liquidity U.S. 34 One-Third Of U.S. Distressed Issuers Have Faced Downgrades Or Default Since March Oct. 8, 2020
Credit trends and market liquidity U.S. 35 How ETFs Contributed To Liquidity And Price Discovery In The Recent Market Dislocation July 8, 2020
Credit trends and market liquidity U.S. 36 The Gap Between Market Expectations And Credit-Based Indications Of U.S. Defaults Is Growing Aug. 27, 2020
Cross-sector Asia-Pacific 37 Sector Roundup Asia-Pacific: Net Negative Bias Hits One-In-Five Oct. 6, 2020
Cross-sector China 38 China Debt After COVID-19: Flattening The Other Curve June 4, 2020
Cross-sector Emerging Markets 39 Emerging Markets Monthly Highlights: Recovery Losing Momentum, Volatility Looms Oct. 15, 2020
Cross-sector Europe 40 European Corporate Credit Outlook Mid-Year 2020: Living In A Different World July 30, 2020
Cross-sector Latin America 41 The Pandemic's Impact On Latin America's Corporate And Infrastructure Sectors Oct. 20, 2020
Cross-sector Sub-Saharan Africa 42 Sub-Saharan Africa: Emerging From COVID-19? Aug. 18, 2020
Cross-sector U.S. 43 U.S. Corporate Credit Outlook: Midyear 2020: Pitfalls And Possibilities July 16, 2020
Economics Asia-Pacific 44 Asia-Pacific's Recovery: The Hard Work Begins Sept. 24, 2020
Economics Canada 45 Despite A Bounce In the Summer, Canada's Economic Recovery Is Far From Complete Sept. 28, 2020
Economics China 46 China's Careful Stimulus Dims Outlook For 2021 Oct. 19, 2020
Economics Emerging Markets 47 Emerging Markets: A Tenuous And Varied Recovery Path Sept. 29, 2020
Economics Europe 48 Pandemic Won’t Derail European Housing Price Rises Oct. 20, 2020
Economics Europe 49 European Economic Snapshots : A Second COVID-19 Wave Is Dampening The Recovery Oct. 14, 2020
Economics Europe 50 Keynes And Schumpeter Are What The European Economy Needs Right Now Oct. 12, 2020
Economics Europe 51 The Eurozone Is Healing From COVID-19 Sept. 24, 2020
Economics Global 52 A Double-Digit Rebound Has Begun, But It’s No Time To Celebrate Oct. 6, 2020
Economics India 53 India's Economy Likely To Tank 9% Due To COVID Sept. 14, 2020
Economics Latin America 54 Latin America's Pre-COVID-19 Growth Challenges Won't Go Away Post-Pandemic Sept. 24, 2020
Economics U.K. 55 The Second Wave And Brexit Will Test The U.K. Recovery Oct. 1, 2020
Economics U.S. 56 U.S. Biweekly Economic Roundup: U.S. Consumer Spending Continues To Outperform Expectations Oct. 16, 2020
Economics U.S. 57 The U.S. Economy Reboots, With Obstacles Ahead Sept. 24, 2020
Energy Transition China 58 China's Energy Transition Stalls Post-COVID Sept. 21, 2020
Energy Transition Global 59 Does COVID-19 Bend The Emissions Curve To 2 Degrees? Sept. 24, 2020
Energy Transition Global 60 A Pivotal Moment For Climate Policies And Energy Companies Sept. 24, 2020
Energy Transition Global 61 The Effect Of COVID-19 Economic Recovery Policies Sept. 24, 2020
Energy Transition Global 62 COVID-19 Could Make 2020 Crucial For Renewables Sept. 24, 2020
Energy Transition Global 63 COVID-19 Undermines The Role Of Gas As A Bridge Fuel Sept. 24, 2020
Energy Transition Global 64 COVID-19 And Peak Oil Demand Sept. 24, 2020
Environmental, social, and governance Europe 65 The EU Recovery Plan Could Create Its Own Green Safe Asset July 15, 2020
Environmental, social, and governance Global 66 The ESG Pulse: Better Climate Data Could Provide Foundation For Understanding Physical Risks Oct. 8, 2020
Environmental, social, and governance Global 67 A Pandemic-Driven Surge In Social Bond Issuance Shows The Sustainable Debt Market Is Evolving June 22, 2020
Financial institutions Africa 68 Central Banks In Africa Are Guiding Banks Through COVID-19’s Economic Fallout July 22, 2020
Financial institutions Asia-Pacific 69 Asia-Pacific Financial Institutions Monitor 4Q2020: Downside Risks Dominate Oct. 18, 2020
Financial institutions Asia-Pacific 70 Top 60 Asia-Pacific Banks: COVID-19 Drives Downside Risks As Credit Losses Jump And Earnings Fall July 14, 2020
Financial institutions Australia 71 Australian Banks Poised For A Slow And Long Recovery Oct. 7, 2020
Financial institutions Canada 72 Canadian Banks Mid-Year Outlook 2020: Navigating Through The Pandemic Cautiously Aug. 14, 2020
Financial institutions Chile 73 Chilean Banks' Asset Quality Hasn't Slumped Yet Due To COVID-19--Helped By Government Measures Aug. 13, 2020
Financial institutions China 74 China's $420 Billion Small-Loan Push Puts Policy Before Profit Sept. 14, 2020
Financial institutions Europe 75 COVID-19 Puts The Brakes On Capital Strengthening For The 50 Largest European Banks Oct. 14, 2020
Financial institutions Europe 76 Banking Horizons Europe 2020: COVID-19 As A Catalyst For Change Oct. 13, 2020
Financial institutions Europe 77 Managing Through The Crisis, Europe’s Banks Look To The Future Sept. 28, 2020
Financial institutions Europe 78 European Bank Asset Quality: Half-Year Results Tell Only Half The Story Sept. 28, 2020
Financial institutions Europe 79 European Investment Banks Face A Continued Fight To Remain Competitive Sept. 28, 2020
Financial institutions Europe 80 The Resolution Story For Europe's Banks: More Flexibility For Now, More Resilience Eventually Sept. 28, 2020
Financial institutions Europe 81 Embedding Environmental Factors In Strategy And Risk Management: For Banks, A Long Journey Just Begun Sept. 28, 2020
Financial institutions Europe 82 The European Sovereign-Bank Nexus Deepens By €200 Billion Sept. 21, 2020
Financial institutions Global 83 Global Banking: Recovery Will Stretch To 2023 And Beyond Sept. 23, 2020
Financial institutions Global 84 The $2 Trillion Question: What’s On The Horizon For Bank Credit Losses July 9, 2020
Financial institutions Global 85 Global Banks Outlook: Midyear 2020: Temporary Shock, Profound Implications July 9, 2020
Financial institutions Global 86 Global Banking Country-By-Country Outlook: Midyear 2020: More Or Less Resilient To COVID-19 Shocks July 9, 2020
Financial institutions India 87 India Banks Boost Capital For Rocky Times July 15, 2020
Financial institutions Japan 88 COVID-19 A Further Blow To Japan’s Regional Banks July 1, 2020
Financial institutions Korea 89 Korea's Major Commercial Banks Resilient In Face Of COVID-19 July 29, 2020
Financial institutions Nordic 90 Nordic Banks' Strong Capital Deflects COVID-19 Impact Sept. 8, 2020
Financial institutions Russia 91 Russian Banks: Asset Quality's Worst Is Yet To Come Sept. 7, 2020
Financial institutions Spain 92 Spanish Banks:COVID-19 Changes Everything July 24, 2020
Financial institutions U.K. 93 Sterling Money Market Funds Are Living Up To Their Name July 2, 2020
Gaming, leisure, and lodging Macau 94 How Macau Gaming's Recovery May Unfold May 21, 2020
Gaming, leisure, and lodging U.S. 95 Strengthening Trends Underpin A Better Outlook For The U.S. Gaming Industry July 24, 2020
Gaming, leisure, and lodging U.S. 96 U.S. Lodging, Leisure, And Gaming Sectors Face Rocky Road To Recovery June 30, 2020
Healthcare and pharmaceuticals Global 97 Medical Devices And Life Sciences: Improving Vitals, Ratings Remain In Guarded Condition Sept. 10, 2020
Healthcare and pharmaceuticals Global 98 COVID-19 May Accelerate Disruption In The Global Vaccine Market Aug. 3, 2020
Healthcare and pharmaceuticals Global 99 What Does Pharma’s Quest For A COVID-19 Vaccine Mean For Its Credit Quality And ESG Profile? July 8, 2020
Healthcare and pharmaceuticals U.S. 100 The Health Care Credit Beat: A Rapid Bounce Back In Demand Accelerates The U.S. Industry’s Recovery Timelines Sept. 16, 2020
Healthcare and pharmaceuticals U.S. 101 U.S. Not-For-Profit Acute Health Care Mid-Year Sector View: Recovery Continues, Likely Uneven For The Rest Of The Year Aug. 13, 2020
Infrastructure China 102 China's Infrastructure Push Plucks E&C Firms From COVID Lows Sept. 29, 2020
Infrastructure - transportation Australia and New Zealand 103 Australia and New Zealand Airports : Uncertain Recovery Keeps Downward Bias High July 28, 2020
Infrastructure - transportation Europe 104 COVID-19 Recovery: European Airports Face More Woes Ahead July 27, 2020
Infrastructure - transportation Global 105 Infrastructure: Global Toll Roads' Steep Climb Out Of COVID June 19, 2020
Infrastructure - transportation Global 106 Airports Face A Long Haul To Recovery May 28, 2020
Infrastructure - transportation U.S. 107 This Time Is Different: An Anemic And Uncertain Passenger Recovery Will Challenge U.S. Airports' Credit Quality Aug. 7, 2020
Infrastructure - utilities Europe 108 Despite COVID-19 Disruption, European Utilities Are Set For Growth June 25, 2020
Infrastructure - utilities Global 109 Power Markets Outlook And Credit Implications In The Age Of COVID-19 July 9, 2020
Infrastructure - utilities U.S., Europe 110 Energy Transition: The Outlook For Power Markets In The Age Of COVID-19 June 25, 2020
Infrastructure - utilities U.S. 111 COVID-19 And The Resulting Recession Are Having A Limited Impact On U.S. Municipal Utility Credit Quality So Far July 8, 2020
Insurance Global 112 COVID-19 Highlights Global Insurance Protection Gap On Climate Change Sept. 28, 2020
Insurance Global 113 Down But Not Out: Insurers' Capital Buffers Are Proving Resilient In The Face Of COVID-19 Sept. 22, 2020
Insurance Global 114 Black Swan Or Not, COVID-19 Is Disrupting Global Reinsurers' Profitability Sept. 8, 2020
Insurance Global 115 Global Reinsurers Face Threat If COVID-19 Losses Are Followed By A Major Catastrophe Sept. 8, 2020
Insurance Global 116 Cyber Risk In A New Era: Insurers Can Be Part Of The Solution Sept. 2, 2020
Insurance Latin America 117 COVID-19 And Oil Price Shock Further Darken Outlook For Latin American Insurers Aug. 27, 2020
Insurance Netherlands 118 Dutch Insurers' Strong Capital Pads Economic Pressure From COVID-19 Sept. 30, 2020
Insurance New Zealand 119 Risks For New Zealand's Insurers Stable As COVID-19 Recovery Supports Sector Aug. 3, 2020
Insurance U.S. 120 A Look At U.S. Life Insurers' $4.5 Trillion Investment Portfolios Amid COVID-19 Sept. 16, 2020
Insurance U.S. 121 What To Expect When U.S. Insurers Report Second-Quarter Results Amid COVID-19 Pandemic July 21, 2020
Leveraged finance Europe 122 European Leveraged Finance And Recovery Second-Quarter 2020 Update: Finding Equilibrium July 20, 2020
Leveraged finance U.S. 123 Monitoring Middle Market Entities Amid COVID-19 Aug. 6, 2020
Media and telecom U.S. 124 Reassessing The Pace Of Recovery For U.S. Media Oct. 20, 2020
Media and telecom U.S. 125 Down To Three, U.S. Wireless Industry Enters A Period Of Uncertainty With A New T-Mobile And 5G Investments Sept. 14, 2020
Public finance Australia 126 Shock And Ore: Surging Debt To Test Australian States Sept. 29, 2020
Public finance Australia 127 Checks And Imbalances: Delayed Australian State Government Budgets Will Embrace More COVID-19 Stimulus Sept. 7, 2020
Public finance Global 128 COVID-19: Fiscal Response Will Lift Local And Regional Government Borrowing To Record High June 9, 2020
Public finance Sweden 129 Extra Funding In Sweden's 2021 Budget Will Support LRGs Sept. 24, 2020
Public finance U.K. 130 University Challenge: Will International Students Keep A Distance From English Universities? Oct. 8, 2020
Public finance U.S. 131 U.S. State Casino Gaming Tax Revenues Start Long Road To Recovery Following Spring Closures Oct. 7, 2020
Public finance U.S. 132 How COVID-19 And The Recession Could Affect Credit Quality For U.S. K-14 Schools Sept. 3, 2020
Public finance U.S. 133 Checkup On Not-For-Profit Health Care SBPA-Backed VRDOs In The COVID-19 Era Aug. 24, 2020
Public finance U.S. 134 Sudden-Stop Recession Pressures U.S. States' Funding For Pension And Other Retirement Liabilities Aug. 3, 2020
Public finance U.S. 135 U.S. Local Government Mid-Year Sector View: Unprecedented And Unpredictable July 29, 2020
Public finance U.S. 136 U.S. States Mid-Year Sector View: States Will Continue To Be Tested In Unprecedented Ways July 13, 2020
Real estate Europe 137 European Office Real Estate Companies: After A Resilient First Half, Upcoming Lease Maturities Should Test The Market Sept. 18, 2020
Real estate Europe 138 European Retail Property Companies' First-Half Results Highlight Looming Risks Sept. 3, 2020
Real estate Global 139 COVID-19 Accelerates Structural Shifts In Global Office Real Estate And REITs June 9, 2020
REITs North America 140 COVID-19 Pressured Second-Quarter Earnings And Credit Metrics For North American REITs Sept. 2, 2020
REITs North America 141 Retail REITs Will Contend With Retail Distress Until At Least 2021 July 21, 2020
REITs U.S. 142 Residential REITs: Why Renters Are Flocking To Suburban Markets Oct. 7, 2020
REITs U.S. 143 Rent Pressure And Development Delays Heighten Risks For U.S. Office REITs July 2, 2020
Retail and restaurants Canada 144 Canadian Grocers: Are They Ready For The Next Stage Of E-Commerce? Oct. 15, 2020
Retail and restaurants Europe 145 EMEA Retail And Restaurants : Industry Overview, Credit Trends, And Outlook Oct. 16, 2020
Retail and restaurants Global 146 COVID-19 Will Shape The Future Of Retail May 27, 2020
Retail and restaurants North America 147 As The North American Retail And Restaurant Sector Braces For Another Wave Of Downward Rating Actions, A Few Subsectors See Signs Of Hope July 16, 2020
Retail and restaurants U.S. 148 The Worst Could Be Over For U.S. Retail With Slower Pace Of Negative Rating Actions; Malls And Restaurants Remain At Risk Sept. 25, 2020
Retail and restaurants U.S. 149 Retail Trends In August Illustrated Consumers' Resilience And Shifts In Spending Sept. 22, 2020
Sovereigns Asia-Pacific 150 Asia-Pacific Sovereign Rating Trends Midyear 2020 July 31, 2020
Sovereigns Brazil 151 The Key Sovereign Rating Considerations For Brazil Amid COVID-19 Sept. 18, 2020
Sovereigns Dubai 152 Dubai's Already High Debt Burden Set To Worsen Amid A Deep Pandemic-Related Macroeconomic Shock Sept. 30, 2020
Sovereigns Emerging Markets 153 EM Central Banks Risk Reputations With Bond-Buying Programs Sept. 13, 2020
Sovereigns Europe 154 European Developed Sovereign Rating Trends Midyear 2020 July 31, 2020
Sovereigns Europe 155 What The EU Recovery Fund Breakthrough Could Mean For Eurozone Sovereign Ratings July 22, 2020
Sovereigns Global 156 Global Sovereign Rating Trends Midyear 2020: Outlook Bias Turns Negative As Governments Pile On Debt To Face COVID-19 July 30, 2020
Sovereigns Global 157 How Multilateral Lending Institutions Are Responding To The COVID-19 Pandemic June 9, 2020
Sovereigns Global 158 Can Multilateral Lenders' Capital Bases Hold Up Against COVID-19? June 9, 2020
Sovereigns Global 159 IMF Lending And Sovereign Ratings May 28, 2020
Sovereigns Gulf Cooperation Council 160 GCC Government Funding Needs Increase Sharply On Low Oil Prices And COVID-19 July 20, 2020
Sovereigns India 161 India's COVID-19 Recovery Will Be Key To The Sovereign Ratings June 11, 2020
Structured finance Australia 162 Australian Structured Finance Mostly Resilient In Face Of Protracted Recovery Oct. 13, 2020
Structured finance Europe 163 How The European CLO Market Has Developed Over 180 Days Of COVID-19 Sept. 2, 2020
Structured finance Europe 164 CLO Portfolio Overlap: European Managers May Look Beyond Their First Choice Of Assets In The COVID-19 Era Sept. 1, 2020
Structured finance Europe 165 European Structured Finance Outlook H2 2020:Weathering The Storm July 28, 2020
Structured finance Global 166 Global Structured Finance: Credit Concerns Loom On COVID-19 Resurgence Oct. 21, 2020
Structured finance Global 167 Inside Global ABCP: Issuance Growth Tempered As Economic Recovery Takes Shape Oct. 8, 2020
Structured finance Japan 168 Japanese Securitizations Largely Stable Amid COVID-19 July 29, 2020
Structured finance Latin America 169 Latin American Cross-Border Repackaged Transactions Show Resilience During The COVID-19 Pandemic Sept. 24, 2020
Structured finance Latin America 170 COVID-19 Update: Latin America Structured Finance Collateral Performance Aug. 6, 2020
Structured finance U.K. 171 U.K. Mortgage Payment Holiday Risks Emerge As COVID-19 Requests Have Peaked Sept. 2, 2020
Structured finance U.S., Europe 172 U.S. And European CMBS COVID-19 Impact: Retail And Lodging Are The Hardest Hit Sept. 28, 2020
Structured finance U.S. 173 Sector Averages Of Reinvesting U.S. BSL CLO Assets: COVID-19 Caused Significant Deterioration In Second-Quarter 2020 Aug. 31, 2020
Structured finance U.S. 174 Can COVID-19 Cause A Cash Crunch For Certain U.S. RMBS? Aug. 21, 2020
Structured finance U.S. 175 Tender Option Bond Ratings Recap As Of June 2020: How COVID-19 Has Affected The Secondary Derivative Market July 31, 2020
Structured finance U.S. 176 Though Still Elevated, Drops In May Extensions Are The First Signs Of A Possible Road To U.S. Auto Loan ABS COVID-19 Recovery July 16, 2020
Structured finance U.S. 177 Student Housing In The COVID-19 Pandemic Era: School's Out, But For How Long? July 9, 2020
Technology Global 178 2020 Global IT Spending Outlook Improves Through COVID-19 Disruption Sept. 21, 2020
Technology U.S. 179 Changing Work And Education Trends Will Deepen The Divide Between Winners And Losers In U.S. Software, But Long-Term Fundamentals Remain Strong Sept. 14, 2020
Technology U.S. 180 U.S. Tech Q2 Better Than Feared; Soft Enterprise Demand Coming Sept. 9, 2020
Technology U.S. 181 A Slow Recovery And U.S.-China Trade Tensions Could Test U.S. Investment-Grade Tech Companies June 3, 2020

This report does not constitute a rating action.

Primary Credit Analyst:David C Tesher, New York (1) 212-438-2618;
david.tesher@spglobal.com
Secondary Contacts:Terry E Chan, CFA, Melbourne (61) 3-9631-2174;
terry.chan@spglobal.com
Jose M Perez-Gorozpe, Mexico City (52) 55-5081-4442;
jose.perez-gorozpe@spglobal.com
Paul Watters, CFA, London (44) 20-7176-3542;
paul.watters@spglobal.com
Contributors:Joe M Maguire, New York (1) 212-438-7507;
joe.maguire@spglobal.com
Yucheng Zheng, New York + 1 (212) 438 4436;
yucheng.zheng@spglobal.com
Lekha Prabhakar, Mumbai;
lekha.prabhakar@spglobal.com

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