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COVID-19 Impact: Key Takeaways From Our Articles

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As European Hotels Grapple With Prolonged Restrictions, Are Operators And Landlords Sharing The Pain?

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Pharma Outlook: Eighth Straight Year Of Credit Deterioration In 2021

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Default, Transition, and Recovery: Revenue Pressures Continue To Weigh On Consumer-Related Weakest Links

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How We Rate Nonfinancial Corporate Entities


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 Europe's air passenger traffic, the COVID-19 heat map for corporates, the global default tally, weakest links and triple-B rated entities, risky credits in North America, U.S. speculative-grade default forecast, emerging markets, the European housing market, the U.S. and Southeast Asian economies, banks in Brazil, emerging markets, the Nordic region, the Philippines, Saudi Arabia, the lodging industry in Europe, outlook for the pharmaceutical industry, insurers in Asia-Pacific and the Gulf Cooperation Council, independent schools in the U.S., and U.S. auto loan asset-backed securities.)

To date, S&P Global Ratings has published more than 950 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 believes there remains high, albeit moderating, uncertainty about the evolution of the coronavirus pandemic and its economic effects. Vaccine production is ramping up and rollouts are gathering pace around the world. Widespread immunization, which will help pave the way for a return to more normal levels of social and economic activity, looks to be achievable by most developed economies by the end of the third quarter. However, some emerging markets may only be able to achieve widespread immunization by year-end or later. We use these assumptions about vaccine timing 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--Friday Credit Focus. Each month, 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 Ratings Weekly Digest, which spotlights key developments, economic and credit market updates, and asset class trends on a weekly basis. See the latest published Feb. 17 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 Feb. 23.

Structured finance ratings are also affected due to the COVID-19 crisis, see "COVID-19 Activity In Global Structured Finance As Of Dec. 11, 2020," published Dec. 18. Moreover, "COVID-19 Activity In U.S. Public Finance," published Feb. 19, 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 112 million worldwide, with the death toll exceeding 2.48 million (see charts 1 and 2). Complications related to vaccine rollout and new variants of the virus could threaten to undermine recovery prospects. Globally, about 56% 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: The Rebound Has Begun, Dec. 3, 2020

Eunice Tan, Hong Kong, + 852 2533-3553, eunice.tan@spglobal.com

  • Overall: Asia-Pacific is beginning to recover from the COVID-19 crunch. China is ahead, many other economies have infection rates under control, but certain countries, such as India and Indonesia, have more work to do. In any case, until vaccines are widely available and the population is immunized, the rebound is fraught with risks.
  • Risks: Rising debt, a slow return to revenue growth, and disruption from COVID-19- containment measures and post-COVID policies are the main threats. High risks stem from trade tensions between the U.S. and China (despite the U.S. election) and access to U.S. dollar funding.
  • Credit: Negative rating actions have tapered over the past quarter, with no defaults by rated issuers, indicating some stabilization of credit quality. However, one-fifth of our ratings carry negative outlooks, which implies a significant likelihood of downgrades.

2. Credit Conditions Emerging Markets: A Vaccine Won't Erase All Risks, Dec. 3, 2020

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

  • Overall: Credit conditions in emerging markets (EMs) continue to improve following positive news about progress in developing a coronavirus vaccine, which augurs well for a faster recovery over the second half of 2021.
  • Credit: Negative rating actions have plateaued, but lower ratings overall and a record high number of negative outlooks indicate increased vulnerability. A slower economic recovery or delays in delivering a vaccine could lead to further downgrades.
  • Risks: Short-term risks still loom large. The coming winter could lead to a resurgence of COVID19 cases in EM countries in the northern hemisphere. A recent spike of cases in Europe and the U.S. are already denting economic activity in the final quarter of 2020. The pandemic will also undermine another relevant season for tourism.

3. Credit Conditions Europe: Waiting For Relief, Dec. 3, 2020

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

  • Overall: Europe is facing a difficult winter. Infection rates are still high and governments are tightening restrictions, so the road to recovery will remain bumpy until an effective vaccine becomes widely available.
  • Risks: The economic fallout of protracted national lockdowns and potential corporate insolvencies remain a concern. Other elevated risks relate to global trade, uncertainty about consumer spending, and failure of the U.K. and EU to reach a free-trade agreement.
  • Credit: In 2021, the economic damage from the pandemic will become clearer, once the recovery takes hold and fiscal, if not monetary, support starts to be scaled back. Corporate restructurings, asset quality, and bank loan provisioning are key areas to watch.

4. Global Credit Outlook 2021: Back On Track?, Dec. 3, 2020

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

  • More downgrades in 2021. Corporates and governments that we rate have a 36% negative bias, pointing to more downgrade potential in 2021. However, our base-case economic and credit assumptions do not suggest a large second wave of changes akin to the post-March adjustment to COVID-19. Instead, changes will reflect the widening outlook gaps between and within sectors and regions. Sectors hit hardest by COVID will only recover by 2022 or later; those least affected should be back on track next year.
  • Recouping COVID-19 costs will take time. After peaking at 265% of global GDP at the end of 2020, global leverage is likely to ease only slightly in 2021, and mostly as a result of a rebound in global GDP. With vaccine availability and a 5% rebound in the global economy, the focus in the second half of 2021 will likely turn to the gradual unwinding of extraordinary fiscal support, revealing the extent of credit losses for banks. Governments face the difficult task of balancing near-term risks of premature austerity with a medium-term need to curb debt expansion.
  • Defaults will continue to rise. Even though we expect very low funding costs through 2021, higher leverage and a large share of vulnerable corporates are likely to induce further defaults, resulting in the 12-month speculative-grade default rate rising to around 9% in the U.S. and 8% in Europe by September 2021, versus 6.3% and 4.3% in September 2020.

5. Credit Conditions North America: Some Relief, Sizable Risks, Dec. 3, 2020

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

  • Overall: Progress toward a coronavirus vaccine bodes well for the U.S. and Canadian economies, and industries hit hardest by the pandemic. But the recent surge in COVID-19 cases shows we're still a long way from normal activity, so economic and credit pressures will persist.
  • Credit: Still, borrowing conditions remain favorable for many issuers, especially those in the investment-grade and high speculative-grade categories. Issuance has been fairly robust at a time of year when there is often a slowdown in the number of borrowers coming to market.
  • Risks: Commercial real estate (CRE) is high on our list of sectors most at risk of declining asset quality. The U.S.-China confrontation, too, remains a threat to the region.
Autos

6. After Ending 2020 Strongly, U.S. Auto Sales Are Set To Continue Recovery In 2021, Jan. 19, 2020

Nishit K Madlani, New York, + 1 (212) 438 4070, nishit.madlani@spglobal.com

  • We expect U.S. light-vehicle sales to rise by 10%-15% year over year to over 16 million in 2021 before stabilizing to 16.5 million in 2022.
  • Following several rating actions in the second half of 2020, the negative bias (the share of issuers with negative outlooks or ratings on CreditWatch with negative implications) has reduced to under 50% compared to over 80% at the peak of the pandemic in April 2020.
  • The likelihood of another recession in the next 12 months and downside to our base-case remains at 25%-30%.
  • We expect that used vehicle prices will likely decline mid single-digits in 2021 after a sizeable increase in 2020.
  • Electric and plug-in hybrid vehicles' combined market share will likely remain under 3% in 2021.

7. 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

8. Europe's 2021 Air Passenger Traffic Likely To Stall At 30%-50% Of 2019 Level, Feb. 18, 2021

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

  • Governments across Europe are finding it more difficult to control the COVID-19 pandemic, as numerous new virus variants have emerged which appear more transmissible and have led to concerns over vaccine efficacy. This has prompted a new round of lockdowns and tighter travel restrictions.
  • European air passenger confidence and demand have understandably faltered, depressing the rebound in European air traffic and likely delaying a more meaningful recovery to after the crucial summer season. This will fuel further cash burn and debt accumulation for European airlines and airports and could cause some downgrades.
  • If the EU can accelerate vaccine production and rollouts, we think it could achieve widespread immunization by the end of the third quarter, enabling air passenger traffic to recover more meaningfully later in 2021. Consequently, we assume 2021 European air passenger traffic will recover only to 30%-50% of 2019 levels.

9. As COVID-19 Cases Increase, Global Air Traffic Recovery Slows, Nov. 12, 2020

Philip A Baggaley, CFA, New York, (1) 212-438-7683, philip.baggaley@spglobal.com

  • Rapidly rising COVID-19 cases are causing renewed travel restrictions in some regions.
  • Reports that at least one vaccine for COVID-19 could gain initial approval by the end of this year are promising, but widespread availability and acceptance, important for restoring air travel demand, may not occur until the middle of next year.
  • We now expect the recovery of global air traffic to be weaker than we previously foresaw, leading to increased cash outflows and debt accumulation for most, if not all, airlines.
  • Our updated assumptions could lead to negative rating actions or outlook revisions for some airlines, aircraft leasing companies, and airports.
Capital Goods

10. Large Capital Goods Companies Are Positioning Themselves For A Post-Pandemic Recovery, Dec. 7, 2020

Tuomas E Ekholm, CFA, Frankfurt, + 49 693 399 9123, tuomas.ekholm@spglobal.com

  • The first half of this year was dismal for the capital goods sector, but we've seen significant catch-up in the third quarter. We expect the trend to continue this quarter, with growing order books, and improving profitability and cash flows.
  • For 2021, we forecast aggregate sector revenues to increase by about 5% after an expected 8%-10% drop this year and EBITDA margin to increase by 140 basis points (bps) after a 160 bps erosion this year, fueled by forecasted economic growth with increased industrial investment across most end markets.
  • We expect to see the current highly negative sector outlook bias of 45% to start unwinding next year with an expectation of gradually improving operating performance and credit metrics. Large investment-grade issuers will lead this development.
  • Our economic forecast and sector base case incorporate the assumption of a widely available COVID-19 vaccine by mid-2021, which is critical for the sector to eliminate the uncertainty hanging over consumption and investment.
Chemicals

11. Top 20 EMEA Chemical Companies And COVID-19: The Credit Impact Relies Largely On Subsector Exposures And Responses, Oct. 22, 2020

Oliver Kroemker, Frankfurt, (49) 69-33-999-160, oliver.kroemker@spglobal.com

  • Although ratings have largely been stable, the negative outlook bias for the top 20 rated EMEA chemicals companies is up significantly in 2020.
  • For about half, mainly in industrial gases, fertilizers, and specialty chemicals, we continue to view rating headroom as healthy; for the other half, including those in the petrochemical industry or with high exposure to construction or autos, rating headroom has significantly diminished.
  • Thanks to supportive financial policies and resilient free cash flow, we forecast many issuers to restore their credit metrics by end-2021, but markets will not fully recover before 2022.
Commodities - Metal And Mining

12. Metal Price Assumptions: Vaccinations To Restore Vigor In 2021, Dec. 18, 2020

Minh Hoang, Sydney, + 61 2 9255 9899, minh.hoang@spglobal.com

  • We are raising our assumptions for most commodity metals prices for 2021-2023, as a global economic recovery gathers pace around the world.
  • The launch of COVID-19 vaccines boosts optimism for a faster market recovery than we previously expected.
  • The pace and sustainability of China's economic recovery will likely set the tone for 2021.
  • Prolonged economic weakness, particularly if Chinese demand weakens, could derail any price recovery.
Commodities - Oil And Gas

13. 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

14. China Consumer Products And Retail--Opportunity Knocks, Jan. 26, 2021

Ava Chang, Hong Kong, (852) 2533-3530, ava.chang@spglobal.com

  • China's consumers continue to hold back on some discretionary purchases. Fundamentals of different consumer sub-categories are diverging, and so is the credit quality of issuers.
  • Changes in lifestyle and increasing online penetration will fuel long-term growth for food retail. Apparel should lead the recovery as demand for household goods lag in 2021.
  • Demand is strong for online local services, given the lockdown provided a chance for new users to try online services, especially in lower-tier cities. Suppliers will expand service range and invest in new business models.
  • Most rated issuers are leaders in their respective markets. They have adapted better to the pandemic and are likely to increase market shares in 2021, with more financial resources to fund their growth aspirations.
  • The outlook on rated issuers is largely stable. Most should see their EBITDA and leverage recover to the pre-COVID level by mid-2021. The outlook on several issuers is positive as they strengthen their market positions and enjoy favorable operating trends.
Corporates

15. China Recovery Could Bring More Defaults, Nov. 17, 2020

Chang Li, Beijing, + 86 10 6569 2705, chang.li@spglobal.com

  • The market in China is refocused on corporate default risk and market workouts as several state-owned enterprises (SOEs) come under credit stress. Last week's missed payment by a company that seemed to be getting state support shows government willingness to accept default could be on the rise as the economy recovers from the COVID-19 shock.
  • More defaults are coming as Chinese authorities refocus on deleveraging of SOEs now that the worst of the pandemic has passed.
  • Default rates are still low overall, however, and will unlikely lead to systemic risk.

16. European Corporate Credit Outlook: Struggling To Get Back On Track, Feb. 3, 2021

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

  • Negative ratings actions have slowed, but a third of European non-financial ratings still have a negative outlook.
  • Vaccines have created a crisis exit path but a difficult winter wave, complex and uneven rollouts and contagious new variants are threatening progress. Assumptions of a summer recovery are at risk.
  • The differential impact on sectors (and within sectors) most and least-affected by COVID-19 is dramatic. Vulnerable sectors also have a high share of weaker credits and may face further pressure if Q2/Q3 prove worse than expected. More resilient corporate sectors are already recovering well.
  • This is not a "normal" recovery: broader technology disruption has accelerated and COVID effects may linger, ESG is having a material impact, significant country differences in vaccine progress and financial support remain.
  • Expect to see both defensive and constructive M&A as companies try to survive and position for post-COVID world. Leverage reduction is likely to be slow and not top priority.
  • Capex outlook suggests confidence in recovery still low. Sectors that need to spend – autos, telecoms, utilities – are doing so, but little evidence of a wider upturn.
  • Fiscal and monetary support remains crucial to financing costs, market confidence and suppressing defaults. Europe may struggle to match enhanced U.S. stimulus from the new Biden administration.
  • We expect the European trailing-12-month speculative-grade corporate default rate to rise to 8% by September 2021 from 5.3% in December 2020. Defaults in this cycle have been, and are likely to continue to be, pre-emptive and orderly.

17. French Corporates Face An Uneven Climb-Out From COVID-19, Jan. 27, 2021

Eric Tanguy, Paris, +33 14 420 6715, eric.tanguy@spglobal.com

  • In 2020, France was no exception within Europe: because of the COVID-19 pandemic, we downgraded 35 French nonfinancial companies in 2020, reflecting depressed earnings and cash flow over 2020-2021 that could extend well into 2022 for some.
  • We don't foresee a second wave of downgrades though because our ratings already capture poor financial results for fiscal 2020 and weak demand momentum in early 2021.
  • State support has been widely available throughout the pandemic, supporting French corporates' liquidity and solvency; unwinding this aid will prove challenging for smaller companies with weak credit standing.
  • Sectors in which the pandemic has durably changed consumer habits also face a tougher path to recovery: hotels and restaurants, nonfood retail, transportation companies, auto companies, and the leisure and media industries are forecast to continue suffering through 2022.

18. COVID-19 Heat Map: Some Bright Spots In Recovery Amid Signs Of Stability, Feb. 17, 2021

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

  • We are updating our COVID-19 sector recovery expectations, with those views beginning to stabilize. Consistent with our previous expectations, there is tremendous variance of recovery prospects across different corporate sectors. We still believe it will take until well into 2022 or, in some cases, 2023 and beyond for many sectors to recover to 2019 credit metrics.
  • Our views of recovery are beginning to stabilize after the approval of several COVID-19 vaccines and as visibility into the nascent but bumpy vaccine rollout grows. Still, regional disparities are emerging based on case counts, mitigation efforts, and the timeline to achieve widespread immunity.
  • Leisure and travel, especially those focused on more profitable business and international travel, remain under pressure, compounding the impact of higher debt loads for those sectors and in many cases, further delaying a recovery.
  • Recovery expectations remain fluid and will rely on many factors, including companies' ability to adapt to the inevitable post-pandemic changes in consumption patterns and to adhere to more conservative financial policies in order to reduce elevated debt loads in harder hit sectors.

19. U.S. Corporate Credit Outlook 2021: Economic And Political Transition, Jan. 21, 2021

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

  • President Joe Biden's first goal will almost certainly be to gain control of the pandemic and bolster the economic recovery, and he has proposed an additional $1.9 trillion in stimulus; for U.S. companies we rate, planning for post-pandemic conditions is taking on greater urgency.
  • The recovery looks much as we've been expecting; recent (and planned) stimulus will help prop up consumer spending, which has begun to improve. Still, reticence to resume travel and leisure activities has kept related sectors under pressure. For many companies, the transition means tackling changes that have been accelerated (rather than caused) by the crisis.
  • Borrowing conditions remain, arguably, at their best. Corporate yields have hit historic lows—even for the riskiest borrowers—while maturities have lengthened. Meanwhile, excess liquidity could become problematic, as soaring debt could lead to more defaults and lower recovery rates, and ultimately a drawn-out default cycle.

20. U.S. Corporates Hold Record $2.5 Trillion Cash To Meet Pandemic Shock; Debt Reaches $7.8 Trillion, Dec. 8, 2020

Geoffrey Wilson, San Francisco, + 1 (415) 371 5061, geoffrey.wilson@spglobal.com

  • Cash and investments held by U.S. nonfinancial/nonutility corporate issuers rated by S&P Global Ratings rose 30% to a record $2.5 trillion in the first half of 2020, and debt rose 9% to $7.8 trillion, as companies issued a record amount of debt to make it through the COVID-19 pandemic-related shock to their businesses.
  • The pandemic has led many corporate borrowers to reverse the shedding of cash from their balance sheets that began in early 2018 in the wake of passage of the Trump administration's corporate tax cut.
  • While this has eased near-term liquidity concerns for all but the highest-risk issuers, the trajectory of post-pandemic cash balances will depend on management teams' decisions about whether to use the added cash to proactively ensure liquidity, pay down debt, or put it toward shareholder-friendly activities and acquisitions.
Credit Trends And Market Liquidity

21. The European Speculative-Grade Corporate Default Rate Could Reach 8% By September 2021, Nov. 25, 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% by September 2021 from 4.3% in September 2020. To reach this baseline forecast, 58 speculative-grade companies would need to default.
  • In our optimistic scenario, we expect the default rate to fall to 3.5% by September 2021 (25 defaults), and in our pessimistic scenario, we expect the default rate to expand to 11% (80 defaults).
  • Despite continued market optimism, recent positive news on vaccine development, and the economic recovery in the third quarter, new waves of infections and lockdowns provide risks to the baseline.
  • Continued fiscal and monetary support could lessen defaults over the near term. However, given a still-high (though falling) proportion of 'CCC'/'C' rated issuers and the eventual removal of these supports, defaults may remain elevated for a protracted period.

22. Revenue Pressures Continue To Weigh On Consumer-Related Weakest Links, Feb. 22, 2021

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

  • The global weakest links tally has declined since our last report to 466 as of Jan. 31, 2021, but it remains well above its December 2019 level of 282.
  • The consumer products sector (primarily composed of discretionary consumer and retail) added the most to this month's count (with three issuers), reaching 65 (chart 1).
  • The high number of weakest links supports our expectation for elevated defaults, especially for sectors most affected by measures to curb the spread of COVID-19.

23. Two European Corporate Defaults Push The 2021 Global Tally To 11, Feb. 19, 2021

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

  • The 2021 global corporate default tally has increased to 11 after two Europe-based defaults since our last report.
  • At this point in 2020, 2019, and 2018, there were 15, 16, and 15 global corporate defaults, respectively.
  • By region, the U.S. is leading the default tally, with eight out of 11 defaults in 2021.
  • By sector, media and entertainment and retail and restaurants are leading 2021 defaults, with three each, followed by the oil and gas sector, with two.
  • Defaults related to distressed exchanges lead so far in 2021, with seven.

24. 'BBB' Pulse: Cautious Optimism Grows With No Fallen Angels And Three Rising Stars In January, Feb. 19, 2021

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

  • There were no fallen angels in January 2021, continuing a trend of general improvement in the 'BBB' category as the global economy is set to largely recover this year and financing conditions remain favorable.
  • The number of potential fallen angels continued to ease gradually, with only one issuer on CreditWatch negative, signaling less immediate risk of broad credit deterioration compared to second-quarter 2020.
  • The difference in spreads between 'BBB-' and 'BB+' is narrowing, indicating lower incremental cost of issuance for investment-grade issuers that become fallen angels.
  • Strong mergers and acquisitions activity resulted in three rising stars in January, a noteworthy development after 2020 saw the lowest tally of rising stars ever.

25. Downgrade Risk Among Nonfinancial Corporates Remains Elevated In 2021, Feb. 2, 2021

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

  • The count of potential bond downgrades was 1,178 as of Dec. 25, after decreasing for the fifth consecutive month, while potential upgrades increased for the sixth consecutive month.
  • The gap between potential downgrades and upgrades remains above what it was during the 2009 global financial crisis. Combined with more vulnerable credit (even before the pandemic) and an anticipated slow economic and business recovery, we believe additional credit deterioration, albeit slower, is expected in 2021, especially for sectors whose revenue generation prospects have not yet meaningfully improved.
  • The pace of downgrades should continue to slow as the ratio of issuers with a negative outlook, compared with a CreditWatch with negative implications, rose to 15.8 in December, from 15.3 in November, signaling less immediate downgrade pressure.

26. Global Financing Conditions: Bond Issuance Could Decline 3% To $8 Trillion In 2021, Jan. 28, 2021

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

  • Annual bond issuance totals reached all-time highs across nearly all sectors in 2020, making growth in 2021 difficult, particularly as the global economy and financial markets begin their slow returns to more normal conditions. Our base-case scenario still reflects growth of 14.4% relative to 2019.
  • Uncertainties remain, and their potential impacts elevated. That said, some relative stability returned compared to the start of the fourth quarter of 2020.
  • Low yields, increasing inflation expectations in the U.S., and record-high cash balances on corporate balance sheets could pose headwinds for both the need for additional funds and their current attractiveness to investors.
  • Despite a likely decline, supporting factors for issuance in the year ahead include still-favorable financing conditions, anchored by increasing amounts of sovereign debt with negative yields, and a rejuvenated merger and acquisition pipeline for corporations.

27. Global Sukuk Issuance Is Set To Increase In 2021, Jan. 12, 2021

Mohamed Damak, Dubai, + 97143727153, mohamed.damak@spglobal.com

  • The global sukuk market should continue to enjoy record-low interest rates and abundant liquidity throughout 2021 and beyond.
  • We expect global sukuk issuance to increase to about $140 billion–$155 billion in 2021 as issuers in core Islamic finance countries return to the market.
  • We could finally see progress on the development of a global legal and regulatory framework for Islamic finance in 2021-2022.
  • Sukuk targeting social needs and the green agenda are likely to remain embryonic, despite opportunities arising from the pandemic and the energy transition.

28. Risky Credits: U.S. And Canadian Upgrades Outpace Downgrades In 'CCC' Category As Issuers Access Debt, Feb. 23, 2021

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

  • The number of 'CCC' category ratings on U.S. and Canadian companies declined for the fifth consecutive month to 227, as of Jan. 31, 2021.
  • Upgrades outpaced downgrades in four of the last five months as downgrades slowed and some outperforming companies received upgrades.
  • 'CCC' rated issuance in January remained stronger than previous years as investors remained optimistic about vaccines and stimulus measures and continued to search for yield, absent many lower risk alternatives.
  • U.S. 'B' and 'CCC' composite spreads tightened further in January to 451 and 686 basis points, respectively, suggesting that favorable market conditions continue.

29. The U.S. Speculative-Grade Corporate Default Rate Could Reach 7% By December 2021, Feb. 18, 2021

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 7% by December 2021 from 6.6% in December 2020. To reach this baseline forecast, 133 speculative-grade companies would need to default.
  • In our optimistic scenario, we expect the default rate to fall to 3% by December 2021 (57 defaults), and in our pessimistic scenario, we expect the default rate to expand to 9.5% (180 defaults).
  • Credit stress has markedly receded since the second quarter of 2020, but the COVID-19 pandemic has left the speculative-grade segment with a particularly weak rating distribution.
  • Economic recovery prospects in 2021 appear on more solid footing recently, supported by increased fiscal stimulus, while refinancing risk appears very low this year; risks remain on both fronts.

30. U.S. Distress Ratio Eases With Ample Liquidity For Lower-Rated Borrowers, Feb. 1, 2021

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

  • The U.S. distress ratio in December hit its lowest level since 2014, narrowing to 5%--from 7.6% as of Nov. 16--as lower-rated borrowers found ample liquidity.
  • Despite the low distress ratio, defaults in the U.S. continue to rise. The U.S. speculative-grade default rate reached 6.6% in December 2020, the highest level since 2010.
  • While liquidity eased and spreads tightened, lingering revenue strains and curbed demand plagued many low-rated borrowers, especially in sectors most hurt by COVID-19 and the accompanying macroeconomic pressure.
  • Moreover, eight of the 19 sectors still have higher distress ratios than they did at the start of 2020, led by oil and gas, which accounts for one-quarter of the distressed credits with a distress ratio of 16.8%.
Cross-Sector

31. Asia-Pacific Corporate And Infrastructure Credit Outlook 2021: A Two-Tier Recovery Of Credit And Funding Conditions, Feb. 9, 2021

Xavier Jean, Singapore, +65 6239 6346, xavier.jean@spglobal.com

  • Downside risk remains prevalent in Asia-Pacific's rated corporate sector, with about 25% of the investment-grade companies and about 33% of the speculative-grade ones on negative outlook.
  • Credit divergences are appearing within the region. The downside rating bias has reduced in China and India but stays high in Indonesia, Japan, and Pacific.
  • Some funding green shoots are appearing, with a growing number of smaller issuers, 'B' rated and below, able to refinance albeit at higher costs and sometimes much shorter tenors.
  • Our recovery base case still assumes a profit recovery and improving credit metrics in 2021 for most issuers. Nearly 40% of credit ratings could be at risk if profit recovery is delayed to 2022, especially in China, Japan, and Pacific.

32. Watch For COVID Tail Risk In Asia-Pacific, Panelists Say, Jan. 31, 2021

Charles Chang, Hong Kong, + 852-2912-3028, charles.chang@spglobal.com

  • Participants in our recent webcasts pointed to tail risks that could strike this year even amid a post-COVID recovery.
  • These include surprise SOE defaults, shifts in government support, and bond-market volatility when interest rates normalize.
  • 2021 will likely see more Asia-Pacific corporate and infrastructure issuers lose their investment-grade ratings.

33. Asia-Pacific Credit Outlook 2021: Comebacks, Setbacks, And Divergent Tracks, Dec. 7, 2020

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

  • Divergent Outlook. Issuers have reason to hope for COVID vaccination breakthroughs, an improved economic outlook, and continued favorable financing conditions, but some hard-hit borrowers may find it hard to reverse their pandemic-era debt build up and earnings drop.
  • Better macro conditions. Assuming the wide availability of vaccines by mid-2021, many of the regional economies should bounce back. Funding conditions will likely remain favorable with rates low and credit widely available, although we expect investors to keep pushing back on weaker credits.
  • Mixed sector prospects. We still have a net negative outlook bias on about one-fifth of our rated issuer portfolio. Most corporate sectors will not likely return to pre-COVID operating conditions until 2022. Indeed, we assume that banks' COVID-related credit losses will hit US$500 billion by year-end 2021. The insurance, public finance and sovereign portfolios should fare somewhat better.

34. Emerging Markets Monthly Highlights: Despite Vaccines, Normality Still Elusive, Feb. 17, 2021

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

  • There are early signs that economic conditions across most emerging markets (EMs) have improved marginally, following an overall setback in activity in late December early January. COVID-19 cases started to decline at the end of January and into February, which coincided with an improvement in mobility-related indicators. Manufacturing confidence indices remain near their recent highs, and so do commodity prices, suggesting the goods-driven recovery remained broadly in place in January. However, downside risks to growth are still considerable, given the fluid pandemic-related developments and varying degrees of lockdowns in most EMs.
  • The vaccination pace is starting to pick up, with wide variations across EMs, most of which are lagging advanced economies. Chile is an outlier given that roughly 10% of its population is now vaccinated after a ramp-up this month. Poland and Turkey are not far behind. Most of the rest of EMs are significantly behind. Widespread immunity in those countries will lag considerably, potentially delaying the opening of services sectors sensitive to social-distancing measures, such as tourism. This raises concerns about the prevalence of the pandemic in EMs and potential setbacks for their economies and overall credit risk.
  • Fiscal metrics have worsened during the outbreak across key EMs due to shrinking revenue stemming from the falling output, and pandemic-related fiscal packages. By 2023, about half of key EMs that we rate should at least stabilize government debt to GDP, according to our forecasts. Seven out of 16 key EMs that we rate are unlikely to stabilize their debt ratios by 2023, under our current assumptions regarding their fiscal policy choices, nominal growth prospects, and effective funding costs.
  • Financing conditions in EMs have remained supportive in January, but concerns are growing about potential spillovers to EMs from higher yields in the U.S. The low yield/high-liquidity environment means that EM credit in primary and secondary markets remains attractive. However, the increasing likelihood of a passage of more sizeable stimulus in the U.S., is boosting inflation expectations and pushing U.S. yields higher. This could have a negative impact on capital flows to the riskier EMs. For now, this seems more of fat tail risk.

35. GCC Corporate And Infrastructure Outlook 2021: Proceeding With Caution, Feb. 2, 2021

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

  • We expect GDP in the Gulf Cooperation Council (GCC) countries to recover modestly, by about 2% in 2021 on average, from the sharp contraction in 2020.
  • The business cycle is likely to take several quarters at least to fully recover. Corporations will continue to focus on optimizing costs, managing liquidity, and preserving cash flow. We expect new investments will take a back seat in most sectors over the next 12 months.
  • Aviation, tourism, real estate, hospitality, non-staple retail, and oil and gas remain the most exposed sectors. Telecommunications, utilities, and food retailers, meanwhile, are relatively better protected.

36. Industry Top Trends 2021: Key Themes, Jan. 29, 2021

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

  • 2021 will likely see a sharp rebound in aggregate revenues and cash flows, but this isn't quite the panacea for credit quality it appears.
  • Beneath the surface, there's a wide divergence in prospects across and within sectors, right down to individual product mixes. COVID-19 casts a long shadow in itself, but it has also accelerated disruption and amplified many of the changes being wrought by ESG concerns and the energy transition.
  • Rated nonfinancial corporates added an estimated $1.2 trillion of cash to balance sheets in the first three quarters of 2020. Our industry reports suggest M&A and shareholder returns are more likely destinations than capex or deleveraging.

37. Global Debt Leverage: Risks Rise, But Near-Term Crisis Unlikely, Oct. 27, 2020

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

  • We believe a near-term debt crisis is unlikely. Although we project global debt-to-GDP in 2020 to jump 14% to a record 265%, a debt crisis within the next two years is not likely given the expected economic recovery, a vaccine by mid-2021, favorable financing conditions, and sovereign, corporate and household spending and borrowing behaviors.
  • But there will be more insolvencies and defaults. Increased leverage means rising insolvency risk, while defaults will likely rise substantially to levels not seen since the 2009 crisis. The heavier corporate debt will delay the recovery of credit metrics beyond 2022 for the hardest hit sectors (such as airlines, leisure and oil and gas).
  • Risks remain on the downside. These include the economic recovery stumbling, a continued spread of the pandemic or poor vaccine distribution, a sustained surge in interest rates and dramatic widening of credit spreads, no notable deceleration of growth in debt after this year, and consumption demand rebounding less than we expect.

38. Cross-Sector Outlook: India's Escape From COVID, Feb. 15, 2021

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

  • The Indian economy is on track for a recovery in fiscal 2022, bolstering corporate earnings and demand for utilities. The recovery's pace and scale determines the sustainability of the government's higher fiscal deficit and debt stock.
  • A few sectors, such as airports, construction, real estate development, tourism, restaurants, continue to struggle with suboptimal activity levels.
  • We expect material improvement in Indian banks will happen with a lag; weak loans are currently 12% of total loans.

39. Latin America Corporate And Infrastructure Outlook 2021, Feb. 9, 2021

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

  • Economic activity continues showing a gradual recovery, although uneven across countries and sectors. We don't forecast full recovery to pre-pandemic levels until at least 2022-2023. Recovery in the infrastructure space more likely in 2021, except for airports that are not expected to recover before 2023.
  • Commodity-driven industries and construction activities have outperformed our previous expectations.
  • Companies to maintain conservative strategies with respect to leverage and liquidity, which somewhat supports the improvement in the negative rating bias, although downside risks persist.
  • Corporate default rates surprisingly low due to active liability management. While this rate could climb in 2021, we don't expect default to exceed 5% of our rated portfolio.
  • Most countries in the region to continue pushing forward energy transition towards renewables. Mexico to focus on dispatch priority for CFE.

40. As Biden Preps For Presidency, Senate Sway May Mean More For Credit, Nov. 19, 2020

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

  • As President-elect Joe Biden prepares to take office in January, much of what he can accomplish depends heavily on the partisan makeup in Washington. Ultimate Senate control, to be set by two run-off elections in Georgia, could significantly influence the new administration's policy agenda.
  • Still, the new president could accomplish a fair amount through executive orders and other non-legislative actions. Mr. Biden has pledged to tighten environmental regulations, which could add to costs for certain industries. On trade, it seems unlikely that he would move quickly to reverse the Trump Administration's policies or to take a much friendlier stance toward China.
  • The key issue for the broader U.S. economy in the near term is the prospect of further federal fiscal stimulus designed to offset the effects of the coronavirus pandemic. Reports that at least two experimental vaccines are highly effective and might gain initial approval by yearend may give the new administration a leg up in battling the health and economic crisis— and could be the most important factor for longer-term growth.
Economics

41. Delay Risk On The Rise For Southeast Asia's Recovery, Feb. 21, 2021

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

  • Lingering COVID-19 outbreaks in Southeast Asia threaten to delay recoveries in sequential growth rates.
  • A two-month delay would reduce our Southeast Asia growth estimate by 1 percentage point in 2021, to 5.2%, and further delays would lead to higher permanent economic losses.
  • Our base case still assumes vaccines should be widely distributed by the second half of 2021, ushering in robust activity.

42. Asia, We Have A Demand Problem, Feb. 3, 2021

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

  • Asia is not leading the global demand recovery. The rest of the world is helping the region dig itself out of an economic hole.
  • Asia is exporting its surplus savings to the rest of the world even though it is managing the pandemic well. This is not healthy, but we should see improving Asian demand this year.
  • If Asia's current account surpluses do not start shrinking, this may become a flashpoint with the new U.S. administration.

43. Asia-Pacific Forecasts Stabilize, Risks Now Balanced, Nov. 29, 2020

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

  • Our forecasts have stabilized for the first time since the pandemic began. Risks to growth are more balanced as acute downside risks ease and upside risks emerge.
  • Notable recent developments--including the just-signed Asia-Pacific free trade deal, a new U.S. administration, and China's quest for technology independence--are more important for growth over the next five years more than the next 12 months.
  • We still see the region's economy shrinking 2% in 2020 and expanding almost 7% next year. The region will get back to pre-COVID activity levels only at the end of 2020. For the region excluding China, activity will not return to pre-COVID levels before the third quarter of 2021.
  • We forecast Chinese GDP to grow 7% in 2021 as households spend more. We retain our assumption that India will rebound 10% in fiscal 2021. We see a faster rebound in Australia, a more gradual pick up in Japan. Emerging markets face a slower climb back.

44. Canada's Growth Slows As The Pandemic Trudges Into Winter, Dec. 3, 2020

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

  • We forecast real GDP in Canada will expand 4.5% in 2021 (was 4.9%) following a 5.6% contraction this year (unchanged). The economy will get back to its pre-pandemic level in late 2021.
  • Recent gains in consumer spending and employment will likely slow as goods spending retreats and many services go on ice for the winter amid reimposed restrictions.
  • While harsher-than-expected lockdowns tilt risks to our near-term baseline forecast to the downside, a broad investment package outlined in the government's Fall Economic Statement on Nov. 30 (after we completed our forecast) implies a better outcome than our baseline once the vaccine is widely rolled out.
  • Monetary policy is poised to stay extraordinarily accommodative to support the transition to a full-employment economy.

45. The Missing Factor In China's Remarkable Recovery, Jan. 18, 2021

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

  • Consumers in China are still cautious and financial conditions remained tight at the end of 2020. This may not derail the recovery, but it will restrain its momentum.
  • The government recently said that the recovery is "not yet solid" and is "unstable and unbalanced." This has been our view for some time.
  • Our 7% growth forecast for 2021 is at the low end of the consensus range. Upside risks stem mainly from the possibility of an official growth target closer to 8%, implying more stimulus.

46. Emerging Markets: Risks To Outlook Balanced As Recovery Momentum Set To Pick Up In 2021, Dec. 2, 2020

Tatiana Lysenko, Paris, + 33 14 420 6748, tatiana.lysenko@spglobal.com

  • After a solid rebound in the third quarter, growth momentum in emerging markets (EMs) has slowed, and the near-term outlook is facing headwinds from the recent resurgence in COVID-19 cases in Europe, the U.S., as well as in several key EMs. S&P Global Ratings' baseline assumption is that the recovery will strengthen starting in mid-2021, when a safe and effective vaccine becomes widely available.
  • Important recent developments--including the outcome of the U.S. presidential election and the progress on the vaccine--affect the distribution of risks around our central scenario for EM economies, rather than alter the baseline forecast at this point. We now view the risks to EMs' growth in 2021 as balanced.
  • Record-breaking stimulus measures in most advanced economies are likely to continue to fuel general appetite for EM assets as we head into 2021, in search for higher yield. However, several country-specific risk factors can trigger significant variation in EMs' performance next year. Some of these risk factors, such as weakening fiscal positions, uncertainty over growth trajectories, and political and social instability, have been amplified by the pandemic-induced downturn.

47. Europe’s Housing Market Will Chill In 2021 As Pent-Up Pandemic Demand Eases, Feb. 22, 2021

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

  • Europe's housing prices should grow more slowly in 2021 after a strong 2020, as pent-up demand from lockdowns last year is absorbed, affordability worsens, and economic activity remains subdued.
  • Prices in 2020 were more dynamic than in 2019 because of strong demand and worsening constraints on supply--despite the biggest economic contraction in decades.
  • We see reinvigorated demand for housing and housing price growth beyond 2021 after a likely easing of pandemic-related restrictions toward end-2021. This should pave the way for a sustained recovery in the economy and employment.

48. The Eurozone Can Still Rebound In 2021 After Lighter Lockdowns, Dec. 1, 2020

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

  • We forecast the eurozone economy will shrink by 7.2% this year before rebounding by 4.8% in 2021; constraints on economic activity--while much less stringent than in March and April--have interrupted the recovery in place.
  • The extension of support for fiscal and monetary policies, as well as their coordination, will be essential to restart the economy from 2021 onward.
  • The European central bank will have no choice but to keep its interest rates lower for longer and extend its asset purchases into the end of 2021, given inflationary pressures are unlikely to build before 2023.

49. Rising Demand, Falling Infections Temper India's COVID Hit, Dec. 15, 2020

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

  • S&P Global Ratings has revised real GDP growth to negative 7.7% for the year ending March 2021, from negative 9.0% previously. Our revision reflects a faster-than-expected recovery in the quarter through September.
  • Our new forecasts suggest more small businesses can survive and more workers can hold onto their jobs or find new ones. The less intense and the more transient the effect of the pandemic on economic activity, the lower the permanent damage.
  • It is no surprise that India is following the path of most economies across Asia-Pacific in experiencing a faster-than-expected recovery in manufacturing production. Manufacturing output was about 3.5% higher in October 2020, compared with a year ago, while output of consumer durables rose by almost 18%. This recovery underscores one of the more striking aspects of the COVID-19 shock--the resilience of manufacturing supply chains.

50. Latin America's Economic Recovery From The Pandemic Will Be Highly Vulnerable To Setbacks, Dec. 1, 2020

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

  • We continue to expect the recovery in most major Latin American economies from the COVID-19 downturn to be among the slowest in emerging markets. This is due to the severity of the damage inflicted to the labor market and investment, and in some cases economic weakness that preceded the pandemic.
  • Our 2021 GDP growth forecast for the six largest Latin American economies is relatively unchanged at 4.1% (versus 4.5% in our previous update). We expect a contraction of 7.7% for 2020.
  • We expect that most major Latin American economies will return to their pre-pandemic GDP level in the second half of 2022, with Mexico doing so toward the end of 2023 and Argentina beyond that.
  • The fragility of the recovery--combined with the limited ability to implement any additional stimulus--leaves the region highly vulnerable to additional economic shocks. But for now, given the rising prospects of a COVID-19 vaccine in the near term, we view the risks to our growth outlook as balanced.

51. U.S. Biweekly Economic Roundup: A Stronger-Than-Expected January Sets The Stage, Feb. 19, 2021

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

  • The Economic data for January was better than expected because of mild weather, a decline in COVID-19 infections, and stimulus checks from the government. However, weather in February will likely lead to some economic weakness.
  • A rise in housing permits counterbalanced lower starts in January to extend the solid trajectory of the housing sector.
  • Retail sales rose 5.3% month over month in January--five times higher than consensus expectations.

52. Within Reach: How Stimulus Proposals Lift U.S. GDP To Pre-Pandemic Levels, Feb. 1, 2021

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

  • In our analysis, President Joe Biden's proposed $1.9 trillion stimulus package brings U.S. GDP back to precrisis levels by second-quarter 2021, one quarter sooner than our $1 trillion base case.
  • The boost is demand-driven and temporary, with GDP decelerating to trend growth by 2023.
  • Additional stimulus lowers our estimated risk of recession over the next 12 months to 20%-25%, near the bottom of the range (from 25%-30% estimated in December).
  • Social distancing will hamper economic activity and inflation for the duration of the virus. While price pressures will accelerate when social distancing ends, the Federal Reserve's new monetary policy framework will likely keep the Fed on hold through year-end.

53. Staying Home For The Holidays, Dec. 2, 2020

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

  • The U.S. economy, which has recouped two-thirds of the economic losses from the COVID-19 recession, is now showing signs of weakness this holiday season in the midst of climbing COVID-19 infection rates.
  • S&P Global Economics expects real GDP to contract 3.9% this year and not get back to precrisis levels until the third quarter of 2021 The U.S. unemployment rate won't reach its precrisis low until after 2023.
  • We have said, since June, that it's not a far-fetched possibility the U.S. economy could see a scenario of no more fiscal stimulus and a COVID-19 resurgence that cripples growth in the fourth quarter, which we are seeing now. In our downside scenario, GDP would drop by 4.4% in 2020 and would rise by only 0.8% in 2021.
  • But there may be reasons to be joyful. In our upside scenario, reopenings take place sooner than we thought amid promising treatment and vaccine news, with the government providing additional support in the tune of $1.5 trillion. The U.S. economy contracts by 3.8% in 2020 and rebounds 4.5% in 2021.
Energy Transition

54. Consumers Can Help Deliver A Carbon Neutral China, Dec. 10, 2020

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

  • Economic rebalancing to consumption from investment can make a decisive contribution to China's efforts to become carbon neutral by 2060.
  • China's carbon emissions could fall by about one-third if private consumption rises to 55% from 38% of GDP by 2040, bringing the country closer to high-income economies, and energy use follows the Platts Analytics base case.
  • Rebalancing with a more ambitious "2-degree scenario" results in an even more dramatic 61% fall in emissions by 2040 and puts China firmly on the path to carbon neutrality.
  • Both scenarios are plausible but tough. The pace of rebalancing will need to double over coming decades. The upcoming five-year plan will need to set out a clear roadmap to accelerate the energy transition.

55. 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.

56. The Energy Transition And The Diverging Credit Path For European Utilities, Feb. 16, 2021

Pierre Georges, Paris, + 33 14 420 6735, pierre.georges@spglobal.com

  • Prospects for European utilities generally improved in the past year as they came to terms with pandemic-induced changes to the markets and continued to align themselves more closely with the stronger political commitment to the energy transition, specifically a net-zero carbon economy by 2050.
  • This commitment is creating conditions for an investment supercycle, given that European energy policies aim to double renewables capacity by 2050 and need to strengthen power networks amid low interest rates and increasing investor appetite for sustainable finance.
  • What's more, we expect the sector this year as a whole will continue to contain key downside risks triggered by the pandemic, including lower energy demand, lower power prices, bad debt, and supply chain disruption.
  • Yet, all players will not benefit the same way in coming years in our view and lead to a greater divergence in operating performance, depending on their business portfolios, in-house expertise, and strategies.
  • Utilities most exposed to renewables and power networks will perform better, we believe, than those exposed to commodity-linked generation, retail, and supply or gas infrastructure--all less aligned with a net-zero carbon economy.

57. The Energy Transition And What It Means For European Power Prices And Producers: January 2021 Update, Jan. 27, 2021

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

  • We anticipate European power prices will only partly recover in 2021, given still relatively low commodity prices and continued subdued demand. For 2022-2023, we think prices will increase to or above 2019 levels owing to stronger demand and more closures of baseload capacity on the back of generally higher commodity prices.
  • Power prices in 2020 dropped more than 20% in response to a 4%-5% drop in demand induced by two waves of lockdowns, a drop in commodity prices, and a continuously increasing supply of renewable energy.
  • We expect our rated European power generators to remain resilient through 2023 because they are almost fully hedged this year, after which they will benefit from higher, supportive prices. Last year, these companies proved fairly resilient to power price drops thanks to significant price hedges and an increasingly long-term contracted generation mix.
  • After 2023, we believe the acceleration of planned closures of nuclear and coal capacity will keep power prices relatively high. The penetration of renewables will grow, underpinned by government pledges to put their economies on a net zero carbon path by 2050 and dedicate more funds to the energy transition. Therefore, renewables and gas and carbon prices will assume a greater role in power price formation over the next decade.
Environmental, Social, And Governance

58. The ESG Pulse: 2020 Lookback, Feb. 15, 2021

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

  • To increase transparency, we have been explicitly referencing environmental, social, and governance (ESG) factors in our rating actions since March 30, 2020.
  • In this look-back study, we show that ESG-related rating actions--comprising rating, CreditWatch, and outlook changes--totaled over 2,300 during April-December 2020. Of these, 96% stemmed from the COVID-19 pandemic (social). Governance influenced 69 actions and environmental credit factors contributed to 24.
  • ESG-related downgrades totaled just over 1,000 over the period: 481 in structured finance, 335 in corporates and infrastructure, 156 in U.S. public finance, and 30 in sovereigns and international public finance.
  • Lists with individual entity ESG-related rating actions are attached to this report.

59. The ESG Pulse: 2021 Lookahead, Feb. 11, 2021

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

  • We recently revised our long-term industry assessments for the oil and gas (O&G) exploration and production sector, and subsequent took rating actions on highly rated O&G majors. This shows the rising importance of environmental credit factors. Although we cannot accurately predict the pace of the energy transition (likely spread over decades) we recognize that governments' broad alignment with net-zero-emissions commitments raises transition risks.
  • Social credit factors have also become more important as a result of the pandemic, and for the year ahead. Successful vaccine rollouts in the U.S. and Europe could lead to stabilizing rating activity in the second half of the year. However, near-term pressures may affect sectors that are highly sensitive to health and safety if there is a wider-than-expected spread of more-contagious variants or substantial delays in vaccine distribution or adoption. We currently assume most developed economies will achieve widespread immunization by the end of the third quarter.
  • S&P Global's ongoing transparency efforts to highlight ESG impacts on credit ratings align with investors' and issuers' increased focus on sustainability. For instance, with hydrocarbon producers we factor in that investors' and financial institutions' increasing adoption of ESG investment mandates also means market access may gradually become more challenging and costly for the former.
  • ESG's rising importance is also reflected in the rise in sustainable debt issuance, which we think could surpass $700 billion in 2021. This is up by one-third from last year and double the 2019 level. Underpinning our expectation is the acceleration in green-labeled bond issuance and the building momentum for social and sustainability instruments. We are also seeing the development of transition bonds, which would enable the more carbon-intensive companies to raise capital that helps reduce their carbon footprint.

60. How COVID-19 And ESG Factors Are Weighing On Airports' Credit Quality, Dec. 10, 2020

Beata Sperling-Tyler, London, + 44 20 7176 3687, beata.sperling-tyler@spglobal.com

  • The COVID-19 pandemic has led us to lower our stand-alone credit profiles (SACPs) and/or ratings, by one or two notches, on most airports globally. While we believe airports continue to exhibit strong credit fundamentals, we note their inherently higher exposure to unpredictable disruptions compared to infrastructure companies or other rated providers of essential services.
  • We believe social factors, including potentially more frequent health and safety emergencies--which we classify as an ESG credit factor given the direct impact on airports and airlines--have become at least as important as environmental risks in their propensity to significantly disrupt airports' operations.
  • COVID-19 has also put a spotlight on airports' counterparty exposure. It has brought into question airports' ability to transfer traffic risk to airlines via increasing aeronautical charges, and to commercial tenants via executing minimum revenue guarantees as well as their ongoing viability.
  • Increasing exposure to long-term chronic and acute physical climate events requires building resilience into airports' assets. In the short term, we anticipate that ever-greater environmental transition risks (greenhouse gas emissions for example) could affect air travel behavior via potential carbon taxation and government-led climate-friendly policies.
  • Strong governance and management is key to anticipating and mitigating climate and social risks. In the post-pandemic world, we believe management teams will aspire to create more variable cost structures for airports to become more flexible to adapt to remote and less visible, but high impact, risks.

61. Sustainable Covered Bonds: Assessing The Impact Of COVID-19, Dec. 1, 2020

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

  • In terms of issuance volumes, sustainable covered bonds are lagging behind other types of sustainable issuance from financial institutions: having passed the €20 billion mark, covered bonds still represent only about 5% of total sustainable bond issuance (euro-denominated, minimum size of €250 million).
  • Our investor panelist cited a lack of liquidity, especially for a buyer, as a key risk. So-called "green washing" is another challenge but the EU has helped to mitigate this issue with its taxonomy, better defining defines what makes an investment green.
  • S&P Global Ratings has always included environmental, social, and governance considerations in its credit analysis. Overall, governance is currently the most important ESG credit factor in our analysis of covered bonds, but we believe that environmental and social credit factors will play a larger role in the future.
Financial Institutions

62. Asia-Pacific Financial Institutions Monitor 1Q2021: The Climb Out Of COVID, Feb. 7, 2021

Gavin J Gunning, Melbourne, + 61 3 9631 2092, gavin.gunning@spglobal.com

  • Globally, we expect credit losses will increase more than US$1 trillion over the three years to end-2022, from the 2019 level.
  • For 2021, we see four key risks: Economic disruption from COVID-19 that is worse or lasts longer than our base-case assumption (see below for more details); Short-term support to banks and borrowers that may leave longer-term overhangs; A likely surge in leverage and corporate insolvencies; A weakening in property--the age-old nemesis for bank credit quality.

63. Seven Potential Fallen Angel Banks Across Asia-Pacific Face COVID-19 Threat, Dec. 1, 2020

Sharad Jain, Melbourne, + 61 3 9631 2077, sharad.jain@spglobal.com

  • Seven of the 15 'BBB-' rated banks in Asia-Pacific face elevated downside risks.
  • For five of the 15 banks, sovereign-related factors afford some headroom for a weakening in stand-alone creditworthiness at current ratings.
  • Only one of the 11 'BBB-' rated nonbank financial institutions in Asia-Pacific faces elevated downside risks.

64. S&P Stress Test Suggests Large Brazilian Banks Could Withstand Second Virus Wave, Feb. 22, 2021

Guilherme Machado, Sao Paulo, + 30399700, guilherme.machado@spglobal.com

  • The second COVID-19 wave is hitting Latin America, and its effect on the largest Brazilian banks' 2021 results is still uncertain.
  • S&P Global Ratings has come up with three stress scenarios to estimate potential losses and to what degree the large banks' capital adequacy would erode.
  • Despite a potentially sharp drop in regulatory capital ratios, we believe that large Brazilian banks are capable to withstand another year of business shutdowns, restrictions, and social-distancing measures.

65. Tech Disruption In Retail Banking: COVID-19 May Accelerate Canadian Banks' Digital Transformation, Jan. 28, 2021

Felix Winnekens, New York, + 1 (212) 438 0313, felix.winnekens@spglobal.com

  • In the near term, Canadian banks' dominant market position will likely help them to fend off fintech challengers, although the regulatory environment continues to evolve and become more accommodative to new market players.
  • Fintech adoption is largely bank-driven, as Canadian banks are steadily adapting to the new digital environment by implementing digital offerings and adhering to updated regulations, although at a slower pace than international peers.
  • We believe the COVID-19 pandemic--and associated containment measures--will increase consumer adoption of financial tech, accelerating Canada's transition to a technology-based financial system with a smaller physical footprint.

66. Canadian Banks 2021 Outlook: Entering A Crucial Phase Of The Credit Cycle With Good Resilience, Dec. 8, 2020

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

  • S&P Global Ratings is forecasting strong balance sheets for Canadian domestic systemically important banks. We expect banks' revenues will improve as business loan growth strengthens, although this will be somewhat offset by lower contributions from capital markets, which drove DSIBs' 2020 operating performance. Expenses will increase marginally, reflecting higher service costs and investments in personnel and technology. Still, we believe positive operating leverage is likely at most banks.
  • We believe that net income will improve, reflecting lower credit loss provisions, higher revenue growth, and cost containment, with the possibility of operating performance for DSIBs returning to the 2019 level.
  • Provisions for credit losses will decline as loan losses materialize and peak in mid-2021. However, the level of asset quality deterioration will depend on the effectiveness of the government stimulus and the rebound in economic activity.

67. Good Earning Capacity Gives Rated Banks In Emerging Markets A Buffer From COVID-19's Effects, Feb. 22, 2021

Mohamed Damak, Dubai, + 97143727153, mohamed.damak@spglobal.com

  • The good earning capacity of rated banks in emerging markets (EM) will help them navigate the COVID-19 shock, although we expect some weakening of metrics.
  • We simulated how much in credit losses the top 41 rated banks in EM can absorb under different scenarios, one focusing on banks' profitability and excess provision on existing nonperforming loans and one considering buffers exceeding our internal capital thresholds.
  • Based on our calculations, the total credit loss absorption, before being in the red, ranges from $491 billion-$602 billion, depending on the assumptions.
  • Based on margins, some South American banks can absorb the most losses, with those in South Africa on the opposite end of the spectrum.
  • Although these calculations are not an indication of a potential rating action, they do provide valuable insight in our analysis.

68. EMEA Finance Companies Show Surprising Resilience To COVID-19 Disruption, So Far, Jan. 28, 2021

Gabriella Vicko, London, + 442071768656, gabriella.vicko@spglobal.com

  • Finance companies in EMEA are facing uneven pressure from ongoing restrictions related to COVID-19, with some subsectors proving more resilient than others.
  • The sector's debt maturity profile appears to be satisfactory, with much of the outstanding due to mature from 2024.
  • Ratings prospects for this diverse sector will depend on earnings resilience and asset quality after the phase out of extraordinary support measures to the broader economy.
  • Of the 22 finance companies we rate, eight carry a negative outlook, indicating the potential of a downgrade in the next 12 months.

69. Capital Resilience Alone Won’t Stabilize European Bank Ratings In 2021, Feb. 3, 2021

Giles Edwards, London, + 44 20 7176 7014, giles.edwards@spglobal.com

  • With European banks' fourth-quarter results season now underway, we see a continuation of broad trends evident in the latter part of 2020: sluggish revenues, modest upside from cost-cutting, and elevated, but not punishing, levels of new provisioning.
  • As a result, we expect weak, but not negative, profitability for most, and robust capitalization even if some banks restart modest dividend payments.
  • Asset quality remains central to future bank profitability and capitalization, but with fiscal support and moratoria likely remaining widespread for many more months, we expect no conclusive indication of the eventual impact on loan book quality and ultimate provisioning requirement until late 2021.
  • The slow emergence of nonperforming assets, incremental provisioning, and cautious shareholder distributions all support our long-held base case that the pandemic proves to be an acute event for bank earnings but not for capitalization, and that funding and liquidity profiles will remain robust.
  • Nevertheless, we expect differentiation in the creditworthiness trend among the European banks, and will continue to take rating actions on an individual or national sector basis where possible.
  • These actions will focus not only on banks' short-term resilience, but also their long-term health in the context of persistent low economic growth, ultra-low interest rates, and rapid structural change through digitization. 2020 was hard for European banks, 2021 may be even harder.

70. Low-For-Even-Longer Interest Rates Maintain Margin Pressure On European Banks, Feb. 2, 2021

Richard Barnes, London, + 44 20 7176 7227, richard.barnes@spglobal.com

  • Due to the economic impact of the COVID-19 pandemic, European banks face an even longer period of ultra-low interest rates and flat yield curves.
  • Margin compression increased last year but strong asset growth and supportive central bank actions partly mitigated the impact on aggregate net interest income.
  • Prolonged margin pressure requires the sector to act more decisively to address long-term cost inefficiency and overcapacity.
  • The medium-term profitability of European banks' business models is a key factor in our rating analysis.

71. French Bank Outlook 2021: All About Efficiency And Asset Quality, Jan. 21, 2021

Nicolas Malaterre, Paris, + 33 14 420 7324, nicolas.malaterre@spglobal.com

  • The fundamentals of French banks, which have robust balance sheets and diversified banking and insurance activities, remain sound and support their creditworthiness.
  • We believe they can absorb still-high credit losses in 2021 through profits before cost of risk.
  • Yet, issues the industry faced before the pandemic will worsen because of prolonged low interest rates, intense competition, the erosion of revenues in profitable activities, and high costs.
  • Therefore, it will be key for French banks to implement lasting remedies to increase efficiency gains and support revenues, notably in domestic retail activities, as they pursue digital and ESG-related initiatives.
  • Our outlooks are negative on most French banks, including the largest ones, reflecting a possibility of downgrades if threats to profitability increase either if provisioning against loan losses increases further from 2020 highs or efficiency weakens relative to peers in Europe.

72. Securities Firms Should Benefit From Global Economic Recovery In 2021 As Risks Abound, Jan. 21, 2021

Robert B Hoban, New York, + 1 (212) 438 7385, robert.hoban@spglobal.com

  • We expect a global economic recovery in 2021, albeit with substantial geographic variation and risks to the forecast that could cause market volatility.
  • We expect short-term interest rates to remain low, which may help support economic and market conditions but could cause asset price bubbles and reduce revenue from spread and clients' cash.
  • We do not anticipate increased ratings volatility in 2021, given our expectations that most rated firms will maintain relatively consistent risk-adjusted capitalization, funding, and liquidity.

73. Asset Managers Have Stable Outlook With Risks Balanced For 2021, Jan. 15, 2021

Elizabeth Campbell, Director, +1-212-438-2415, elizabeth.campbell@spglobal.com

  • Our outlook on both the traditional and alternative asset managers is stable.
  • We return to a stable outlook (from negative) on the traditional asset managers after two years that saw 19 negative rating actions, meaning negative outlook, or downgrade, out of 32 negative rating actions and 48 total rating actions. Alternative asset managers saw 10 negative rating actions while investment holding companies rounded out the difference.
  • We continue to believe that alternative asset managers are better positioned vis-à-vis their traditional peers. That said, we expect the traditional asset managers credit risk to be more balanced over 2021 as accommodative monetary and fiscal policy offsets some of the industry headwinds. Our current ratings incorporate these more balanced conditions and should result in a more equal distribution of upgrades and downgrades over the year.
  • Mergers and acquisitions (M&A) remain a focal point. 2020 saw a series of large acquisition announcements, both within the sector and involving banks and insurance companies. While the size of the deals may taper, we expect M&A to be a key strategy in the sector as firms reach for greater scale, capital, and capabilities.
  • In the U.S., which represents the largest pool of assets under management (AUM) and where the majority of ratings are based, S&P Global Economists expect a 4.2% U.S. real GDP rebound in 2021, after a 3.9% contraction in 2020. U.S. unemployment is forecasted to decline to 6.4% by the end of 2021, after ending 2020 at 8.3%. The Fed Funds rate is expected to be zero bound at least until 2023, while 10-year Treasuries are expected to climb to 2% over the same period, 90 basis points (bps) from current levels. The average S&P 500 value is projected to be approximately 3500. Ongoing fiscal support underpins these assumptions, so the backdrop could be volatile.

74. Global FMI Sector Outlook 2021: Digesting Major Deals Amid Possible Market Turbulence, Jan. 15, 2021

Giles Edwards, London, + 44 20 7176 7014, giles.edwards@spglobal.com

  • We anticipate less cyclical support to trading volumes in 2021 than 2020, but we expect that revenues in the global financial market infrastructure (FMI) sector will continue to grow due to organic initiatives and acquisitions.
  • FMIs will remain acquisitive, but new transactions are likely to dip as a series of major deals just closed or will do so in the first half.
  • Despite higher leverage arising from these deals, strong cashflow generation and disciplined financial risk appetite remain supportive features, and cheap debt financing is likely to remain readily available.
  • FMIs navigated volatile markets well in March and April 2020, but bouts of extreme volatility remain possible and could provide a renewed test of operational resilience and clearinghouse financial safeguards.
  • Amid a broadly stable view of sector creditworthiness, positive and negative outlooks in the sector reflect idiosyncratic risks.

75. Global Banks 2021 Outlook: Banks Will Face The Next Test Once Support Wanes, Nov. 17, 2020

Emmanuel Volland, Paris, +33-1-4420-6696, emmanuel.volland@spglobal.com

  • The sharp rebound in global growth we expect in 2021, together with strong bank balance sheets, support from authorities to retail and corporate markets, and regulators' flexibility, should limit bank downgrades in 2021.
  • Deviation from our base case, if the economic rebound is weaker or delayed, could result in more negative rating actions, particularly in regions with a second wave of infections and the reimposition of restrictions.
  • The extent of prospective asset quality stress as government support programs tail off will be a key driver for our bank rating actions. The pathway to recovery to preCOVID-19 performance levels will be slow and uneven.
  • Central banks' actions will remain positive for funding but weigh on banks' interest margins and profitability.
  • The pandemic accelerates bank digitalization and could trigger another round of restructuring and consolidation.
  • ESG factors are rapidly moving to the forefront of banks' business strategies and regulators' priorities.

76. Global Finance Companies Face Uneven Recovery From The COVID-19 Pandemic, Dec. 14, 2020

Ricardo Grisi, Mexico City, + 52 55 5081 4494, ricardo.grisi@spglobal.com

  • In our view, the recovery to pre-pandemic levels will be slow, uncertain, and highly variable across regions of the world.
  • We expect nonbank finance companies (fincos) to remain under significant pressure during 2021 and potentially beyond, depending on the duration and intensity of the pandemic's effects on the economy.
  • Our country anchors reflect our view of the economic and industry risks that fincos face in each country where we rate such entities.

77. Indonesian Banks Gird For Arduous Recovery From COVID, Feb. 1, 2021

Nikita Anand, Singapore, + 65 6216 1050, nikita.anand@spglobal.com

  • The pandemic will continue to dominate the credit conditions of Indonesian banks in 2021. Lenders' recovery will likely be drawn out, hinging on strong domestic economic growth and vaccine rollouts. Any rebound in infections and associated containment measures will likely delay the economic recovery and present key risks to banks.
  • Indonesian banks' reported NPLs will likely spike once regulatory relief measures are phased out.
  • Banks have made heavy provisions in 2020 for expected credit losses, and provisions are likely to stay elevated at 2.5%-3.0% of total loans in 2021.
  • Indonesian banks' capitalization should stay strong. We assume single-digit growth in lending and better earnings in 2021.

78. For Italian Banks, The Big Test Could Come In 2021, Jan. 13, 2021

Mirko Sanna, Milan, + 390272111275, mirko.sanna@spglobal.com

  • Italian banks will likely have their creditworthiness tested in 2021 as the COVID-19-induced economic downturn will become more apparent once the temporary relaxation on NPE recognition is gradually lifted.
  • Most banks entered the year with stronger balance sheets than in previous crises, while authorities' measures provided banks with time and tools to enhance capital, build provisions against future losses, take proactive action on their loan books, and eliminate legacy NPE.
  • However, we anticipate a meaningful rise of NPE and credit losses throughout 2021 as the effect of economic downturn unfolds and some support measures are gradually lifted.
  • Moreover, significant additional risks could materialize if pace of economic recovery over the next 12-24 months is weaker than anticipated.
  • We expect the pandemic will leave scars, amplifying the differences among banks and speeding up structural changes; consolidation will remain a hot topic for the foreseeable future.

79. Japan Banking Outlook 2021: Expect Rising Credit Risks, Jan. 14, 2021

Ryoji Yoshizawa, Tokyo, + 81 3 4550 8453, ryoji.yoshizawa@spglobal.com

  • Significant government support for corporations and households has prevented a spike in bankruptcies and limited a rise in bank credit costs.
  • We expect credit costs in fiscal 2021 will be higher than in fiscal 2019 but below those in fiscal 2020.
  • However, government support measures are temporary and the corporate sector's ability to repay debt is weakening amid falling revenue and profits.
  • We foresee Japan having a weaker economic recovery than other economies and believe credit risks may emerge two to three years after support ends.

80. Leading Nordic Banks Keep Calm And Carry On Despite COVID-19 Stress, Feb. 23, 2021

Salla von Steinaecker, Frankfurt, (49) 69-33-999-164, salla.vonsteinaecker@spglobal

  • We expect a solid rebound for all Nordic economies in 2021 after single-digit contractions in 2020, supported by strong household consumption and government aid packages.
  • Nordic society's high digital preparedness supported a smooth transition to remote working following the COVID-19 outbreak, and banks' advanced digitalization will continue to boost operating efficiency post pandemic.
  • Given Nordic banks' robust capitalization and good profitability, we expect the impact of the COVID-19 pandemic will be manageable, despite some deterioration in asset quality, revenue, profitability, and, in only a few cases, capitalization.
  • Nonetheless, downside risks persist due to high uncertainty related to new strains of COVID-19, which could weigh on recovery.

81. Nordic Banks: Strong Fundamentals And Digital Preparedness Shield Against COVID-19 Stress, Feb. 18, 2021

Olivia K Fleischmann, Stockholm, + 46 84 40 5904, olivia.fleischmann@spglobal.com

  • The largest Nordic banks booked fairly stable end-of-year results for 2020 despite the COVID-19-related stress that affected all European banks.
  • Fiscal and monetary stimulus has reinforced asset prices and household lending demand despite increased unemployment, and companies found somewhat firmer footing in second-half 2020.
  • While costs have increased because of more digital product offerings, the banks' operating efficiency comes from a strong starting point relative to that of European peers.
  • Heading into 2021, we believe the leading Nordic banks have strong fundamentals that should provide a safeguard if the pandemic situation worsens.

82. True Picture Of North African And Jordanian Banks' Creditworthiness Will Emerge In 2021, Feb. 1, 2021

Anais Ozyavuz, Paris, + 33 14 420 6773, anais.ozyavuz@spglobal.com

  • We assume a gradual economic recovery in 2021 in most of North Africa and Jordan, which could be delayed by the resurgence of COVID-19 cases, new mutations, and potential delay in Europe's economic recovery.
  • We expect North African and Jordanian banks' asset quality to deteriorate in 2021 once regulatory forbearance measures are lifted.
  • In our view, the current crisis continues to be a profitability event for the banks; except in Tunisia, where some banks' capitalization might also be affected.
  • Banks' increasing exposure to sovereigns amid the risk of delayed reforms could affect their creditworthiness.

83. Philippine Banks: Buffers Won't Hold If COVID Comes Back, Feb. 21, 2021

Nikita Anand, Singapore, + 65 6216 1050, nikita.anand@spglobal.com

  • High provisioning will help Philippine banks absorb a jump in the NPL ratio to 6% in 2021, from 3.6%.
  • Capital buffers are sufficient if recovery stays on track, and will be supported by improving profitability.
  • Weaker than anticipated economic recovery, in the event of prolonged COVID-19, is a key downside risk.

84. Russian Banks Face A Tougher Path To Profit, Jan. 27, 2021

Dmitry Nazarov, CFA, Moscow, + 7 49 5783 4160, dmitry.nazarov@spglobal.com

  • Russian banks could miss out on RUB1.4 trillion-RUB1.6 trillion of net interest income in 2021-2022, due to narrower interest margins linked to low interest rates.
  • A gradual decrease in credit losses and rising commission revenue are unlikely to compensate for this, and the resulting slower capital buildup could weaken the banking sector's resilience to potential stress in the medium term.
  • Banks with large corporate lending books and a digital gap to peers are the most vulnerable in this situation.
  • However, we don't anticipate negative rating actions in the short term, since there will be no significant pressure on banks' capital adequacy from lower profitability.

85. Saudi Banking Sector 2021 Outlook: Growth Hinges On Mortgage Lending And Public Spending, Feb. 23, 2021

Roman Rybalkin, CFA, +7 495 783 40 94, roman.rybalkin@spglobal.com

  • The Saudi economy will recover in 2021-2022 from the shocks of 2020 as global demand for oil recovers and private consumption increases. That said, real GDP will not return to 2019 levels until 2022, in our view.
  • The roll out of the vaccine may help avoid further lockdowns but remains contingent on availability. In addition, downside risks related to the virus remain.
  • We expect credit growth to stabilize in 2021 or reduce slightly. Mortgage origination will remain buoyant and corporate lending is likely to pick up as Public Investment Fund programs create business for contractors.
  • Cost of risk will remain elevated in 2021, despite stronger-than-expected estimates for 2020, as the Saudi Central Bank lifts its forbearance measures. Combined with very low interest rates, this will weigh on banks' profitability.
  • We expect ratings on banks to remain stable in the next 12-24 months. The merger between National Commercial Bank (NCB) and Samba Financial Group (SFG) may create a national champion that could focus on financing large strategic projects.

86. South Africa Banking Sector 2021 Outlook: Still Beset By Pandemic Woes, Feb. 11, 2021

Samira Mensah, Senior Director, samira.mensah@spglobal.com

  • Weak economic growth prospects and large fiscal deficit will weigh on banks' performance in 2021. After a sharp recession in which GDP shrank by an estimated 7.3% in 2020, we expect GDP to grow by 3.6% in 2021.
  • The government focused its attention on the pandemic but is still formulating vaccination plans. Strict lockdowns are unlikely to return, but we do not expect vaccines to be more widely available until the second half of 2021.
  • We forecast that the growth of credit to the private sector will be subdued in 2021. Credit leverage (private sector credit to GDP) in the economy will remain high at about 80% of GDP after gradually declining through 2020-2021.
  • Earnings proved resilient in the face of rising credit losses in 2020-2021. We estimate that credit losses rose to about 1.8% in 2020 and will moderate to 1.4% in 2021; nonperforming loans comprised 6% of total loans over this period.
  • Although top-tier banks are exposed to wholesale short-term deposits, these largely stem from domestic nonbank financial institutions. We expect liquidity coverage ratios to exceed the 80% minimum set by South African Reserve Bank (SARB) in A2020.
  • We consider the regulatory framework supports stability in the banking sector. We expect SARB to lift regulatory forbearance measures around capital relief and liquidity support only gradually. The Prudential Authority took swift action to support the banking sector and the stability of the capital markets.
  • This will, in turn, support banks' strong regulatory capital levels, despite high earnings pressure from higher loan impairments in 2020-2021.

87. Spanish Banks Need To Bolster Provisions, Cut Costs, And Preserve Capital In 2021, Jan. 25, 2021

Elena Iparraguirre, Madrid, + 34 91 389 6963, elena.iparraguirre@spglobal.com

  • Spanish banks' provisioning will remain elevated this year, while nonperforming assets will start to build, but may not peak until the middle to end of 2022.
  • Banks' underlying profitability will improve only slightly in 2021, and remain below their cost of capital. With margins still under pressure and impairments barely declining, cost savings will be crucial.
  • More consolidation is likely, as persistent ultra-low interest rates and technological change are structurally disrupting banks' business models.
  • Capitalization will likely hold up, but may prove too tight for some banks if the macroeconomic situation proves harsher than we expect.

88. UAE Banking Sector 2021 Outlook: A Long Recovery Road Ahead, Jan. 26, 2021

Puneet Tuli, Dubai, + 97143727157, puneet.tuli@spglobal.com

  • We expect GDP growth to recover in the United Arab Emirates (UAE) this year from the sharp recession of 2020 triggered by the COVID-19 pandemic and low oil prices.
  • However, we think the 2020 shock will continue to reverberate through the economy and banking sector. We expect real GDP (in dollar terms) will only return to the 2019 level by 2023. Key sectors, particularly real estate, hospitality, and retail, will likely remain under pressure for the next 12 months.
  • The country's target to vaccinate 50% of the population by end Q1 2021 is positive, but further virus waves and mutations pose significant downside risks.
  • We expect banks' asset quality to deteriorate and cost of risk to increase further as they start recognizing the impact of the 2020 shock and as the Central Bank of UAE (CBUAE) lifts its forbearance measures progressively in H2 2021. Given continued low interest rates, banks' profitability will, therefore, remain low in 2021 with a few banks potentially showing losses.
  • Strong and stable capital buffers, good funding profiles, and expected government support should continue to support banks' creditworthiness in 2021.

89. U.K. Banks Face A Bumpy Road To Earnings Recovery In 2021, Jan. 11, 2021

Richard Barnes, London, + 44 20 7176 7227, richard.barnes@spglobal.com

  • U.K. bank earnings are likely to improve in 2021, but the sector must first negotiate a tricky start to the year, including renewed COVID-19 lockdown restrictions.
  • The expected economic recovery means that credit impairment charges are set to fall from last year's elevated level, but remain above the historical average.
  • We could revise our negative outlooks on the sector and certain banks to stable if we become more confident in the trajectory of the recovery and the scale of banks' ultimate loan losses.

90. Tech Disruption In Retail Banking: COVID-19 Accelerates A Digital Shift In The U.S., Jan. 28, 2021

Stuart Plesser, New York, + 1 (212) 438 6870, stuart.plesser@spglobal.com

  • The COVID-19 pandemic has accelerated tech disruption among U.S. banks.
  • Based on our four-factor analysis of a banking system's technology, regulation, industry, and customer preferences, we believe U.S. banks must continue to heavily invest in their digital capabilities to remain competitive.
  • The greatest threat could come from Big Tech companies, should they diverge from their current strategy of engaging in only limited, peripheral banking activities.

91. For U.S. Finance Companies, Economic Rebound And Government Support Will Help Ease The Strain From COVID-19, Jan. 15, 2021

Stephen F Lynch, CFA, New York, + 1 (212) 438 1494, stephen.lynch@spglobal.com

  • We expect the Biden Administration to be more proactive with regulations and enforcement actions than the Trump Administration, which could affect operations for some of the nonbank financial institutions that we rate.
  • We expect the Consumer Financial Protection Bureau (CFPB) to shift its stance and messaging the most, followed by the Department of Justice (DOJ) and other government enforcement branches such as the Federal Trade Commission (FTC).
  • Other broader items on President-elect Biden's agenda, such as taxes and certain policy goals, will undoubtedly affect businesses, but we expect the consequences to be less acute than those potentially targeted toward consumer protections for nonbank financial institutions.

92. U.S. Bank Outlook 2021: Picking Up The Pieces And Moving On, Jan. 13, 2021

Brendan Browne, CFA, New York, + 1 (212) 438 7399, brendan.browne@spglobal.com

  • Bank earnings will improve on lower credit loss provisions, although pandemic-related asset quality challenges and decades-low net interest margins will keep profitability ratios below 2019 levels.
  • The recently passed $900 billion stimulus bill, continued economic growth, and vaccine distribution will keep credit losses from rising as high as we had anticipated earlier in the pandemic.
  • Loan charge-offs triggered by the pandemic will move toward our updated estimate for the U.S. banking system of 2% rather than our prior 3% estimate.
  • With provisions, which equated to about 1.2% of loans in the first three quarters of 2020, falling to 1% or less of loans in 2021, allowances for credit losses will shrink.
  • The Biden Administration and a Democrat-controlled Congress could push for more stimulus--which may benefit the economy and bank asset quality--but also higher corporate taxes and tougher regulatory and legal enforcement, which could pose risks for banks.
  • Capital and liquidity will remain in good shape. However, regulatory capital ratios, which rose in 2020 in part due to restrictions on shareholder payouts, will likely decline with the easing of those restrictions.
Gaming, Leisure, And Lodging

93. APAC Gaming Sector Update: Don’t Bet On A Quick Recovery, Oct. 27, 2020

Joel Yap, Melbourne, joel.yap@spglobal.com

  • The sector's negative outlook bias points to more potential downgrades following two so far, despite the Asia-Pacific gaming sector recovering from trough conditions.
  • We expect earnings to rebound gradually to pre-COVID levels from 2022 given that international VIP gaming and tourism remain subdued.
  • Debt issuances and refinancing have supported issuers' liquidity profiles, along with certain dividend suspensions and equity raisings.
  • Increasing leverage and lower cash generation have coincided with a period of heightened development activity, constraining the speed of recovery and credit metrics.
  • Financial policies remain a key factor and variable that could further shape the recovery timeline.

94. As European Hotels Grapple With Prolonged Restrictions, Are Operators And Landlords Sharing The Pain?, Feb. 24, 2021

Kathleen Allard, Paris, + 33 14 420 6657, kathleen.allard@spglobal.com

  • With a negative sector outlook, the hotel and lodging industry has begun the year facing continued disruption due to the ongoing pandemic. As vaccine rollouts pick up pace, we expect that European hotel operators and landlords will recover gradually, starting from the second half of 2021, though we don't expect a full recovery until 2023.
  • Since the onset of the pandemic to the first half of 2021, hotel landlords could lose 15%-30% of fixed-lease and 50%-80% of variable rental income on average, compared with 2019 levels. Owners of economy to midscale hotels leased to creditworthy operators in markets that benefit from domestic demand and stronger government support should fare better and recover faster.
  • Asset valuations for European hotel properties will likely decline, reflecting constrained daily occupancy levels, higher costs, and lower operating revenues. We assume a 10%-15% asset correction relative to 2019 levels for the hotel real estate investment trusts (REITs) we rate.

95. Macau Gaming: Why We've Lowered Our Gross Gaming Revenue Forecast For 2021, Feb. 9, 2021

Aras Poon, Hong Kong, (852) 2532-8069, aras.poon@spglobal.com

  • We have revised our forecast for gross gaming revenue (GGR) in Macau for 2021 to 30%-40% below 2019 levels (vs. 10%-20% previously). We expect full recovery in 2022.
  • We maintain our view that the premium mass segment will recover faster than that of the VIP and base mass segments. This should support EBITDA since it is the most profitable segment.
  • Macau remains a strong gaming market. Improving infrastructure and planned hotel capacity expansion should fuel long-term growth.
  • Although operating conditions are improving from a trough, downside risk to ratings persists.
  • Operators have solid liquidity profiles that should help to mitigate risks if the recovery is slower than expected.

96. The U.S. Lodging Sector Faces A Challenging Recovery From The Effects Of The COVID-19 Pandemic, Dec. 7, 2020

Natalka H Chevance, New York, + 1 (212) 438 1236, natalka.chevance@spglobal.com

  • The lodging sector has been one of the hardest hit by COVID-19, but the effects are unequal between location and property type.
  • Recovery will be slow, especially for properties that depend on corporate, and meeting and group demand. We don't expect revenue per available room to recover to 2019 levels until at least 2023.
  • We spotlight and review our rated exposure to some of the most impacted urban markets.
Health Care And Pharmaceuticals

97. EU Could Meet 70% Vaccination Target By Late July If Production Steps Up, Feb. 11, 2021

Marketa Horkova, London, + 44 20 7176 3743, marketa.horkova@spglobal.com

  • According to S&P Global Ratings' calculations, the EU could be able to vaccinate 70% of its adult population against COVID-19 by late July 2021 and its more vulnerable demographic group of over 65s by end-April. The U.K. and the U.S. should reach 70% by July 2021.
  • Any delays in ramping-up production or distribution, approving the Johnson & Johnson one-dose vaccine, or significant hesitancy in getting vaccinated could see the 70% EU adult threshold only reached in late August or early September.
  • While necessary to enable restrictions on society and business to largely be lifted, some restrictive measures may need to remain in place while COVID-19 remains prevalent around the world.
  • We believe the global immunization program needs to be accelerated to reduce the risk of more aggressive strains of the coronavirus emerging from countries unable to procure the necessary vaccine.

98. Pharma Outlook: Eighth Straight Year Of Credit Deterioration In 2021, Feb. 23, 2021

David A Kaplan, CFA, New York, + 1 (212) 438 5649, david.a.kaplan@spglobal.com

  • Our ratings outlook for the pharmaceutical industry is negative for 2021 as we expect downgrades to exceed upgrades for the eighth consecutive year.
  • Three key drivers of rating pressure are our expectation for continued mergers and acquisitions, constraints on increasing branded drug prices in the U.S., and renewed potential for drug price reform. Many more credits have ratings with negative outlooks (or on CreditWatch with negative implications) than those with positive outlooks, reinforcing our industry outlook.
  • Still, we expect several positive developments to temper the severity of the downgrade-to-upgrade ratio. These include increased confidence around the size of opioid-related liabilities, the return to a more normal pace of price erosion in the generic drug market, the industry's improved reputation on the heels of the COVID-19 pandemic, and to a lesser extent revenue growth in 2021 from pandemic-related drug products and products for which revenues were constrained by the pandemic in 2020.

99. The Health Care Credit Beat: U.S. Herd Immunity By Midyear Is Possible With Additional Vaccine Approvals, Feb. 11, 2021

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

  • The U.S. is running behind S&P Global Ratings' prior estimates of vaccination rates against COVID-19 to reach 230 million, or about 70% of the total U.S. population, by midyear. At the end of January, 25.5 million patients had received their first dose, or 7.7% of the total U.S. population. Still, there has been rapid recent improvement, and we believe the U.S. could still reach 70%, and thereby achieve herd immunity, by midyear.
  • The situation remains highly dynamic, and a number of key positive developments are necessary to reach the midyear target, such as new vaccine approvals, increased production, and improved distribution.
  • Both Pfizer and Moderna recently raised their vaccine manufacturing capacity estimates, and the U.S. allocation for both vaccines increased to 400 million doses total (enough for 200 million people), with Pfizer indicating delivery of its 200 million doses by the end of July and Moderna its 200 million in the first half of 2021.
  • Vaccination rates have improved to a daily average of 1.3 million per day at the end of January, from around 750,000 per day several weeks ago. The Biden Administration also recently raised its goal to 1.5 million vaccinations a day, from the initial goal of 1 million per day for the first 100 days of its administration. To achieve midyear herd immunity, the rate has to accelerate to over 2.5 million doses per day (assuming a two-dose regimen).
  • We see additional vaccine approvals as key to meeting the milestone, especially ones with a single dose regimen and that do not require freezing, such as the Johnson & Johnson vaccine candidate. Such a vaccine would not only bring on additional doses but also simplify the logistics of distributing, storing, and administering, and help speed up vaccinations.
  • We expect improvement in hospitalization and death rates to be front-loaded as vulnerable patients are vaccinated first. This could accelerate the normalization of the economy, as behaviors and regulations are likely to be tied to those statistics at least as much as immunization rates.

100. Outlook For U.S. Not-For-Profit Acute Health Care: Navigating The Bumps While Getting Back On Track, Jan. 12, 2021

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

  • Sector View: Negative
  • We believe many providers may still experience pandemic-related volume and operating challenges that could yield cash flow and margin compression throughout 2021. These challenges are compounded by industry headwinds which had been growing for several years. These factors, on balance, could continue to stress credit quality as the industry continues to evolve, and strategic investments and capital remain necessary to maintain longer-term enterprise and competitive strength. Effective leadership and balance sheet strength could provide a foundation for a return to stability post-COVID-19.
Infrastructure - Transportation

101. Outlook For U.S. Not-For-Profit Transportation Infrastructure: Light At Tunnel’s End – But How Long Is The Tunnel?, Jan. 13, 2021

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

  • Sector View: Mostly Negative.
  • S&P Global Ratings' 2021 view of business conditions and credit quality across U.S. public transportation infrastructure is negative for the airport, mass transit, parking, and toll road sectors and stable for the ports and federal grant-secured sectors.

102. Updated Activity Estimates For U.S. Transportation Infrastructure Show Public Transit And Airport Operators Still Face A Long Recovery, Jan. 13, 2021

Joseph J Pezzimenti, New York, + 1 (212) 438 2038, joseph.pezzimenti@spglobal.com

  • U.S. public transit and airport sectors face the longest recovery relative to other U.S. transportation subsectors, with our current baseline activity estimates for 2021 compared with pre-COVID-19 levels showing annualized declines of approximately 50% for public transit, and 40% for airports; and public transit ridership recovering to approximately 15% below pre-COVID-19 levels by the end of 2023 and enplanements returning to or near pre-pandemic levels in 2024 for most airports.
  • We believe there is still a relatively high degree of uncertainty regarding the demand for transportation infrastructure over the next six to 12 months, which will depend on the conquering of COVID-19 and the economic effects of the pandemic.
  • Outlooks on individual debt ratings on public transit and airport-related issuers sensitive to changes in ridership and air travel demand, respectively, are likely to remain negative, although we could revise outlooks if we believe there is a sustained and sufficient recovery and stabilization in activity levels, and forward-looking financial metrics we consider achievable and aligned with current ratings.
  • In 2021, we could revise the outlook to stable from negative on debt ratings on transportation infrastructure providers whose finances are less sensitive to changes in user behavior compared with pre-COVID-19 levels.
Infrastructure - Utilities

103. North American Regulated Utilities’ Negative Outlook Could See Modest Improvement, Jan. 20, 2021

Gabe Grosberg, New York, + 1 (212) 438 6043, gabe.grosberg@spglobal.com

  • Credit quality for the North American regulated utility industry weakened in 2020. At the beginning of the year about 18% of the industry had a negative outlook or ratings on CreditWatch with negative implications. By the end of the year that percentage had doubled, to about 36%.
  • For the first time in a decade downgrades outpaced upgrades for the predominately investment-grade industry.
  • The industry generally performed well throughout the pandemic and we expect it will continue to mostly manage through the remaining COVID-19-related risks.
  • The main causes of weakening credit quality reflected environment, social, and governance (ESG) risks, regulatory issues, and companies' practice of strategically managing financial measures close to their downgrade threshold with little or no cushion.
  • Despite our negative 2021 industry outlook, we expect a modest improvement to credit quality over the next 12 months. We believe Congress is more likely to raise the corporate tax rate, which would improve the industry's financial measures, offset in part by a continued focus on ESG risks.

104. Outlook For U.S. Water And Sewer Utilities: 2021 Provides 2020 Hindsight, Jan. 19, 2021

Theodore A Chapman, Farmers Branch, + 1 (214) 871 1401, theodore.chapman@spglobal.com

  • Sector View: Stable
  • The negative pressures from COVID-19 may take longer to present themselves, if they materialize at all. Many factors that steadied ratings in 2020 might be less of a factor in 2021, depending on both the recovery and additional federal actions; still, just enough positives exist to lend rating stability.

105. Outlook For U.S. Public Power And Electric Cooperative Utilities: Ratings Should Remain Resilient, Jan. 14, 2021

David N Bodek, New York, + 1 (212) 438 7969, david.bodek@spglobal.com

  • Sector View: Stable
  • We expect most of the sector's ratings to remain stable in 2021. Nearly all the sector's utilities are displaying resilience in the face of the pandemic's disruptions. We expect low prices for natural gas, and cost cutting measures, will continue to temper the financial pressures on the economy and electric sales. Nevertheless, we recognize that financial performance and credit ratings could be pressured, particularly at utilities that rely on electric revenues from customers hardest hit by the pandemic, such as businesses engaged, and residential ratepayers employed, in the hospitality and travel industries, or utilities required to make transfer payments to offset declines in municipal tax revenues.
Insurance

106. APAC Insurance 2021: Managing Higher Volatility, Feb. 23, 2021

Craig A Bennett, Melbourne, + 61 3 9631 2197, craig.bennett@spglobal.com

  • Pandemic-related losses are so far manageable across APAC.
  • Equity market buoyancy has reduced mark-to-market impact on capital adequacy.
  • We expect capital adequacy to remain well-managed.
  • Economic conditions and market sentiment are generally improving.

107. China Insurance 2021: Balancing Growth With Governance, Feb. 2, 2021

WenWen Chen, Hong Kong, + 852 2533 3559, wenwen.chen@spglobal.com

  • Tightening regulation of the Chinese insurance sector presents the biggest challenge to growth in 2021.
  • Large insurers have more resources to repurpose platforms to adapt to this new regimen, while smaller entities will have a harder time with the cost of the changes.
  • Cross-border firms are ramping up their presence in China, to maximize their niche strengths despite their limited scale.

108. EMEA Insurance Outlook 2021: Choppy Waters Ahead, Nov. 17, 2020

Volker Kudszus, Frankfurt, +49-69-3399-9192, volker.kudszus@spglobal.com

  • While we estimate COVID-19-related market stresses could have initially wiped out up to 85% of the EMEA insurance industry's capital buffer, capital market recovery has subsequently helped restore it sufficiently to support ratings into 2021/2022.
  • However, the pandemic has had an impact on 38% of ratings and outlooks in the EMEA corporate sector this year, with asset stresses, particularly equity stresses, remaining a key rating risk for insurers.
  • We expect global reinsurers and global multiline insurers' industrial lines will see the most COVID-19-related claims, likely totaling €30 billion-€43 billion. However, such claims are not a sole rating driver.
  • COVID-19-related risks to economies and capital markets, including potential downward migration of ratings on corporate bonds, could have an impact on insurer capital and ratings in 2021.

109. After Showcasing Resiliency During An Unprecedented Year, Global Insurance Brokers And Servicers Enter 2021 On Sound Footing, Jan. 28, 2021

Julie L Herman, New York, + 1 (212) 438 3079, julie.herman@spglobal.com

  • Our outlook for insurance services firms (insurance brokers, health servicers, and warranty and claims administrators) is stable.
  • While trends varied by subsector, insurance service firms have shown overall resiliency amid the pandemic and global economic downturn.
  • We believe all subsectors will demonstrate growth and profitability in 2021, though risks remain relative to the pandemic and still fragile economic recovery.

110. GCC Insurers In 2021: Robust Capital Supports Credit Quality, Feb. 22, 2021

Emir Mujkic, Dubai, + (971)43727179, emir.mujkic@spglobal.com

  • We expect our ratings on insurers in the Gulf Cooperation Council (GCC) to remain broadly stable in 2021, mainly thanks to robust capital buffers and despite ongoing economic uncertainty relating to the COVID-19 pandemic.
  • Real GDP in the GCC countries will likely recover to about 2% in 2021 on average, after the sharp contraction in 2020, but we believe that key sectors, particularly real estate, hospitality, and retail, will remain under pressure this year.
  • Ongoing high competition, a contraction in population of about 4% across the GCC on average, and economic uncertainty will weigh on growth prospects and earnings, while elevated asset risk could lead to further volatility in the coming quarters.
  • With the relatively large number of insurers in the region, some of which are small or posting losses, we expect to see further capital raising and consolidation, particularly in Kuwait and Saudi Arabia where regulators may introduce higher capital requirements.

111. Japan Insurer Outlook: Stable In Strange Times, Jan. 7, 2021

Eiji Kubo, Tokyo, + 81 3 4550 8750, eiji.kubo@spglobal.com

  • Non-life insurer creditworthiness can endure short-term profit hits, rising reinsurance premiums, and pandemic-related losses.
  • Life insurers continue to strengthen their capital baes for regulatory reasons, despite pressure on underlying profits from ultralow interest rates.
  • The outstanding balance of subordinated debt is rising, despite a temporary slowdown in issuance, and could eventually worsen leverage-related ratios.

112. Nordic Insurers Shake Off The Lows Of 2020, Feb. 1, 2021

Andreas Lundgren Harell, Stockholm, + 46 8 440 5921, andreas.lundgren.harell@spglobal.com

  • As the capital markets recover, merger and acquisition (M&A) activity in the Nordic insurance market is resuming, with a twist. Some Nordic insurers are looking to diversify beyond the region.
  • S&P Global Ratings estimates that the Nordic insurance industry lost about two-thirds of its capital buffers at the height of last year's pandemic-inspired market turbulence. Despite this, we took few rating actions, given the robust capitalization displayed by rated entities.
  • The sector maintained its underlying stability and capital markets revived in the second half. This facilitated the restoration of capital buffers and supports ratings on the region's insurers into 2021-2022.

113. U.S. Property/Casualty Insurers Demonstrate Extraordinary Resilience During The Pandemic, Jan. 14, 2021

John Iten, Princeton, + 1 (212) 438 1757, john.iten@spglobal.com

  • Underwriting profitability of U.S. property/casualty insurers remained strong in 2020, assisted by virus exclusions in most commercial property policies, significant improvement in auto insurance results from lower miles driven, and rate increases in excess of loss cost trends. We expect 2021 underwriting profitability--excluding natural catastrophe losses--to be similar to results achieved in 2020.
  • Capital adequacy remains a relative strength to the ratings on most property/casualty insurers as the industry's statutory capital hit another record high, driven by a rapid recovery in equity markets following a sharp selloff in March.
  • In the property/casualty sector, we have stable outlooks on more than 90% of financial strength ratings.

114. U.S. Health Insurers' Credit Quality Will Likely Hold Up In 2021, Jan. 14, 2021

James Sung, New York, + 1 (212) 438 2115, james.sung@spglobal.com

  • We expect U.S. health insurers' credit quality to hold up in 2021 despite the COVID-19 pandemic and economic weakness.
  • Risks include potential policy proposals from a Democratic-led Congress, pricing uncertainty, and reduced commercial membership.
  • Positive trends include Medicaid and Medicare Advantage growth and healthy capital cushions bolstered by 2020 earnings.
Leveraged Finance

115. European Leveraged Finance And Recovery Fourth-Quarter 2020 Update: Leverage Increases, Recovery Slips, Feb. 1, 2021

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

  • The average expected recovery rate on European speculative-grade senior secured debt dropped to 57% at the end of 2020 from 59% at the end of 2019, due to debt-funded liquidity lines, mergers and acquisitions, and more aggressive first-lien leverage in sponsor-backed transactions.
  • Although credit quality stabilized in the second half of 2020, the negative outlook bias remains high, with 38% of all speculative-grade issuers having a negative outlook.
  • Defaults more than doubled to 40 in 2020 from 15 in 2019, with preemptive restructurings and technical defaults dominating in the second half of the year.
  • Add-on debt to shore up liquidity, the prospect of recession, and changing supply and demand dynamics may mean that defaults and preemptive restructurings continue in 2021, particularly among companies adversely affected by lockdown measures.

116. Global Leveraged Finance 2021, Jan. 13, 2021

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

  • A record level of vulnerable corporate credits will lead to even more defaults in 2021 and long-lasting solvency issues in certain industries, but trillions in monetary and fiscal support have cushioned the blow for global leveraged finance.
  • Overall, CLO ratings remained generally resilient in 2020, with rating actions largely contained to speculative-grade tranches, reflecting the relatively diversified portfolio of broadly syndicated CLOs and cushion to absorb downgrades. Next year will continue put CLO managers to the test, as credit pressure unfolds and recoveries trend down.

117. U.S. Leveraged Finance Q4 2020 Update: Leverage Jumps A Full Turn For The Worse In The Second Quarter Before Managing A Partial Turnaround In The Third Quarter, Jan. 27, 2021

Hanna Zhang, New York, (1) 212-438-8288, Hanna.Zhang@spglobal.com

  • Looking into 2021, we expect the continued search for yield to support the demand for leveraged loans and high-yield bonds and forecast a rising default rate that peaks below the levels during the last financial crisis. The share of entities we rate 'B-', which was already on the rise prior to the pandemic, peaked last year and will likely remain elevated. The extent to which these predictions will play out hinges on two interconnected factors: the trajectory of the economic recovery and the sustainability of investor optimism.
  • What we know is that companies have increased their leverage and their leverage levels remain elevated. Based on a pool of 1,240 corporate entities in the U.S. and Canada that we rate in the speculative-grade category, their median last-12-month (LTM) leverage peaked in the second quarter of 2020--up by nearly one turn relative to pre-pandemic levels--before subsiding in the third quarter.
  • On the whole, the entities' median LTM leverage rose by 0.5x over the first nine months of 2020.
  • The transportation and restaurants/retailing sectors led the way in reducing their leverage in the third quarter, while the auto/trucks and real estate industries saw the largest cumulative deterioration in their leverage levels among the sectors with their median leverage surging by 1.7x and 1.6x, respectively, between the fourth quarter of 2019 and the third quarter of 2020.
  • Our average recovery estimate for first-lien new issues declined to 62% in the last quarter of 2020, which is the lowest level in four years. This drop is largely explained by a shift in borrower quality toward riskier 'B'-rated entities and away from 'BB'-rated entities.
Media And Telecom

118. The U.K. Telecoms Market Will Pick Up In 2021-2022 As Pandemic Headwinds Ease And Fiber Investments Accelerate, Dec. 10, 2020

Osnat Jaeger, London, + 44 20 7176 7066, osnat.jaeger@spglobal.com

  • Following three years of decline, the U.K. fixed broadband market should start recovering from next year, thanks to a gradual letup in pandemic headwinds and sales of gigabit-speed broadband on the back of network upgrades.
  • At the same time, we expect an uptick in churn and pressure on average revenue per user from the practice of end-of-contract notification, while a no-deal Brexit could subdue the pick-up in fixed broadband revenue.
  • The U.K. mobile market should stop declining as quickly in 2021, before gradually recovering in 2022, supported by rational pricing and customers moving to larger data allowances.
  • The benefits of the merger of Virgin Media and O2 to create a solid No. 2 converged player behind BT might be limited by the U.K.'s low uptake of converged fixed and mobile services compared with other European markets.
  • A short-term recovery in pay-TV revenue will not mitigate medium-to-long term structural pressure as customers switch from pay-TV to subscription video on demand services.
  • Of all the U.K. telecoms companies we rate, the pandemic has hit BT the hardest, and we forecast only a modest recovery in 2021-2022.

119. 2021 U.S. Telecom And Cable Outlook: Rising Leverage Overshadows Economic Resilience, Jan. 15, 2021

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

  • Bidding in the C-Band auction has already surpassed our estimates by a substantial margin, and we expect the auction will have a significant effect on balance sheets for U.S. wireless operators.
  • U.S. telecommunications and cable proved to be resilient during the recession due to the increased necessity of mobile and broadband services.
  • The traditional live TV bundle will continue to unravel as more consumers opt for less expensive over-the-top (OTT) video platforms, though satellite operators are more vulnerable than cable providers because they do not provide a true broadband product.
  • We have a favorable outlook for U.S. cable because of continued healthy growth rates for high-margin broadband services, despite the loss of linear video customers.
  • Secular and competitive pressures, along with higher levels of capital spending, could hurt credit quality for U.S. wireless and wireline providers.

120. Here's What The U.S. Media And Entertainment Sector Has In Store For 2021, Jan. 6, 2021

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

  • Consumer behavior could determine the fate of those media and entertainment companies that have elevated leverage or marginal liquidity, with the global film industry suffering the most damage.
  • U.S. advertising recovered faster than expected in the last half of 2020 and is on target to continue.
  • Legacy media sectors will have varying speeds and degrees of recovery, with local TV benefitting from election ads in even-number years and upcoming new NFL broadcast contracts helping or hindering some networks and TV station operators.
  • More streaming video choices will become available this year, while social media is in the hot seat, with several lawsuits and investigations pending.
  • Mergers and acquisitions will likely pick up this year as companies look to resize and refocus by adding or divesting assets.
Public Finance

121. Outlook For Global Not-For-Profit Higher Education: Empty Chairs At Empty Tables, Jan. 20, 2021

Jessica L Wood, Chicago, + 1 (312) 233 7004, jessica.wood@spglobal.com

  • U.S. Sector View: Negative
  • For the fourth consecutive year, we have a negative view of rating stability for U.S. higher education as colleges and universities continue to experience significant COVID-related operating challenges. While many schools were having difficulty meeting enrollment and revenue targets pre-COVID, the pandemic has exacerbated those pressures, and has forced a fundamental shift in business models for all. The effectiveness of vaccination will be critical to in-person class resumption, but challenges facing the industry are not affecting all schools equally. Schools with weaker demand and financial profiles will have less operating flexibility and could face credit deterioration.
  • Non-U.S. Sector View: Negative
  • The COVID-19 pandemic has brought significant and novel challenges to universities outside the U.S., threatening enrollment and government funding, and consequently introducing greater downside credit risks in 2021. However, the pressures are not equally distributed.

122. Major Capital Cities Must Be Vigilant About Rising ESG Risks As They Look To A Post-Pandemic World, Dec. 10, 2020

Daniela Brandazza, Mexico City, + 52 55 5081 4441, daniela.brandazza@spglobal.com

  • Governance will be key to counteract the elevated social risks experienced by local and regional governments (LRGs) globally and maintain credit quality.
  • Rating stability remains uncertain with the full social and economic consequences of COVID-19 in major cities still unknown, especially after the resurgence of new cases in some countries.
  • The most heavily populated cities, such as Rome, Madrid, Paris, London, and New York, were harder hit by COVID-19 compared with other global centers. S&P Global Ratings did not change its ratings on major cities in 2020; however, we revised the outlook to negative from stable on some cities.

123. Local And Regional Governments Outlook 2021: Gradual Recovery Will Test Rating Resilience, Dec. 10, 2020

Felix Ejgel, London, + 44 20 7176 6780, felix.ejgel@spglobal.com

  • The consequences of the COVID-19 pandemic will weigh on the credit quality of non-U.S. local and regional governments (LRGs) in 2021. Nearly one-quarter of our ratings now have a negative outlook.
  • We expect economies to recover only gradually and that many LRGs will, in turn, face elevated budget deficits and accelerated debt accumulation.
  • LRGs may also come under pressure in 2021 to increase spending on demographic challenges or to catch up with years of underspending on public services, or by the trajectory of the respective sovereign ratings.
  • In particular, financial headwinds will affect the credit quality of the regions applying a proactive countercyclical fiscal policy, as well as those in tourist centers, large urban areas, and emerging markets.
  • LRG ratings nevertheless remain resilient, partly due to availability of additional grants from central governments and favorable borrowing conditions. The majority (79%) have investment-grade ratings.

124. Outlook 2021: Strong Liquidity Should Help Social Housing Providers Remain Resilient, Dec. 8, 2020

Karin Erlander, London, + 44 20 7176 3584, karin.erlander@spglobal.com

  • Our ratings on social housing providers (SHPs) globally are expected to remain largely resilient in 2021.
  • Favorable credit markets and accumulated liquidity buffers should help SHPs cope with increased maintenance and capital spending.
  • We think that the SHP's debt-servicing capacity will remain stressed owing to the continued increase in debt-funded investments in existing stock and new affordable housing.

125. Pandemic Spending Review Provides Only Short-Term Relief For U.K. Local Authorities' Financial Needs, Dec. 3, 2020

Luke Linnell, London,luke.linnell@spglobal.com

  • The U.K. government's Comprehensive Spending Review 2020 (SR20) provided a one-year funding settlement for U.K. local authorities.
  • Although it offers short-term financial support to shore up operating performance, the sector's long-term underlying financial needs have yet to be addressed.
  • Most local authorities will benefit from the cut in interest rates for Public Works Loan Board (PWLB) debt, but the tighter lending conditions may catch out a small minority.

126. Outlook And Medians For U.S. Independent Schools: Pandemic Tests All, But Weaker Credits May Need A Booster, Feb. 18, 2021

Avani K Parikh, New York, + 1 (212) 438 1133, avani.parikh@spglobal.com

  • Sector View: Negative
  • Although many of our rated independent schools are weathering the COVID-19 pandemic reasonably well, we expect issuers with weaker demand and less financial flexibility will face greater stress in 2021. With a growing bifurcation in credit quality, we expect more negative actions at the lower end of the rating spectrum, while higher-rated issuers will see more stability, supported by healthy demand and resources.

127. 2021 Credit Outlook For U.S. Public Finance: Back On Track?, Jan. 29, 2021

Robin L Prunty, New York, + 1 (212) 438 2081, robin.prunty@spglobal.com

  • Active management has supported credit quality. Across sectors, the pandemic and associated economic and fiscal pressures have been actively managed, and that has supported credit quality, but the magnitude and duration of this crisis will contribute to credit pressure for many.
  • The health and economic recoveries will continue to be uneven. Different state and local protocols to manage the pandemic and the vaccine rollout continue to influence the economy generally and consumer demand--especially for transportation and higher education—in particular.
  • Federal policy will influence credit trajectory. A new administration will mean a new policy and funding priorities in key areas, which will influence sectors in different ways. In addition to general fiscal and monetary policy, issues such as stimulus funding, health care initiatives, regulatory changes, and prospects for a funded infrastructure initiative are key things we are watching for 2021.

128. Five U.S. State And Local Government Pension And OPEB Trends To Watch For In 2021 And Beyond, Jan. 25, 2021

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

  • Pension contribution deferrals are likely to increase among some U.S. local governments experiencing severe budgetary stress.
  • Declining government payrolls and early retirements will contribute to shortfalls in required plan contributions and demographic changes could increase costs.
  • As interest rates remain low, safer investment options may appear less attractive for pension funds needing to meet targeted returns.
  • Governments struggling with budgetary stress may find certain pension reform initiatives, like pension obligation bonds (POBs), could be helpful for long-term system health but do not necessarily solve near-term credit pressures.
  • We expect governments and asset managers will be increasingly guided by environmental, social, and governance (ESG) factors in making investment decisions.

129. Outlook For U.S. Public Finance Housing: Sheltered From The Storm, Jan. 21, 2021

JMarian Zucker, New York, + 1 (212) 438 2150, marian.zucker@spglobal.com

  • Sector View: Stable
  • Our view on the sector has shifted to stable based on a demonstrated combination of organizations' credit fundamentals and direct support: the financial strength and resilience of housing issuers, near-term government support helping to stabilize at-risk households' finances and added funding for institutions. While we expect unemployment levels to remain elevated through 2021 and the evolution of the pandemic remains uncertain, we expect most housing entities will experience minimal credit pressures. Certain subsectors may even receive additional support from the new administration.

130. What The Latest COVID-19 Economic Relief Bill Means For U.S. Public K-12 Schools, Jan. 21, 2021

Cora Bruemmer, Chicago, + 1 (312) 233 7099, cora.bruemmer@spglobal.com

  • The COVID-19 Economic Relief Bill provides approximately 4x the amount of aid to schools that was provided in the CARES Act, providing some stabilization for local school districts' credit quality.
  • We view the permissible uses of the additional aid to be flexible.
  • Some of the benefit to schools could be offset by state aid cuts, given that state and local governments have yet to receive any direct aid to offset revenue loss.

131. Outlook For Charter Schools: State Revenue Weakness May Test Credit Quality, Jan. 7, 2021

Jessica L Wood, Chicago, + 1 (312) 233 7004, jessica.wood@spglobal.com

  • Sector View: Negative
  • While there are several factors that could influence credit quality over the next year, revenue pressures caused by cuts, delays, or deferrals to per-pupil funding have the most potential to bring on credit deterioration.
  • We do not expect all credits will weaken in 2021 and beyond, but in the current environment we still expect downgrades to outpace upgrades. Any major policy changes negatively affecting school choice could also cause disruption. Schools with relatively stronger enrollment trends and greater financial reserves are likely to fare better, while lower rated schools in challenged states will have less operating flexibility.

132. Outlook For U.S. Local Governments: Revenue Pressures Mount And Choices Get Harder, Jan. 6, 2021

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

  • Sector View: Negative
  • Our view of the sector remains negative given the level of pressures brought by COVID-19 and the recession. While we expect most credits will experience only slight, if any, deterioration in 2021 and beyond, in the current environment we still expect downgrades to outpace upgrades. Credits that maintain higher reserves are better positioned to withstand revenue and expenditure pressure, but for most, active management of any shortfalls will still be critical to maintaining credit quality.
  • Local governments that have weaker financial reserves and less flexibility, and don't proactively manage their budgets in 2021, will be most at risk for credit deterioration..

133. Outlook For U.S. States: Symptoms Persist, But A Shot In The Arm Could Lead To Growth, Jan. 5, 2021

Geoffrey E Buswick, Boston, + 1 (617) 530 8311, geoffrey.buswick@spglobal.com

  • Sector View: Negative
  • Negative now, but potentially back on track at some point in 2021. Although signs of a recovery have begun to take hold with the approval of vaccines and the stabilizing of certain revenues, many headwinds will continue to bear down on state credit stability in 2021.
  • The severity of the sudden-stop recession and the reintroduction of social distancing measures in the winter will have a lasting effect on local economies and thus budget stability. S&P Global Economics expects national real GDP to have contracted 3.9% in 2020 and to grow 4.2% in 2021. Should vaccinations progress smoothly and economic growth match expectations, credit pressures could wane by mid-year.
Real Estate

134. German Residential Real Estate Is Unfazed By COVID-19, Nov. 30, 2020

Nicole Reinhardt, Frankfurt, + 49 693 399 9303, nicole.reinhardt@spglobal.com

  • The German residential real estate market is proving highly resilient to the COVID-19 shock as investors seek safe havens.
  • Transaction volumes are likely to exceed those of 2019, rents rose by 2.6% on average in the first nine months of 2020, while occupancy and rent collection remained stable and high as undersupply of homes persists.
  • The market is still highly fragmented, but is on a consolidation trend as residential landlords seek growth through M&A and real estate development.
  • In these favorable conditions, residential REITs that we rate have good headroom under their credit metrics and stable prospects.

135. COVID-19 Is Only Part Of The Threat Facing U.K. Real Estate Companies, Nov. 16, 2020

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

  • The retail property sector has suffered more in the U.K. than in continental Europe over the past couple of years, this being more acute since the start of the COVID-19 pandemic; differences in market fundamentals, such as a higher ecommerce penetration, more elevated rent cost, and higher density of retail shops, are part of the reason.
  • The London office market is one of the largest and most dynamic in Europe, but it faces three challenges: the pandemic and its work-from-home consequences, strong competition from flex-office providers, and Brexit.
  • While remote working and travel restrictions have forced a shift in social behavior for now, U.K. residential rents, among the highest in Europe, could come under stress in prime metropolitan locations the longer the pandemic lasts.
  • How well real estate companies adapt to these issues will be important factors in U.K. landlords' future credit quality.
REITs

136. Australian And New Zealand Retail REITs: Pandemic Leaves Lasting Pain, Jan. 10, 2021

Rhys Corry, Melbourne, + 61 3 9631 2109, Rhys.Corry@spglobal.com

  • For Australian and New Zealand retail REITs, COVID-19 containment measures are eroding their earnings, reducing asset values, and worsening their credit quality, amid unprecedented structural disruption.
  • Faster take-up of online shopping and rising retailer defaults will weigh on demand for retail space, reducing rental levels and occupancy rates.
  • Landlords' ability to replace vacating tenants and resist pressure for greater turnover-linked rents will be critical to defending the sector's credit quality. Greater differentiation in credit quality could occur as retail landlords with a larger exposure to more vulnerable secondary-grade assets will be hit more than those with superior assets.

137. Remote Working Is Testing U.S. Office Landlords' Credit Quality, Feb. 11, 2021

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

  • The COVID-19 pandemic has accelerated the adoption of remote working and we think tenants downsizing their footprint is a growing risk, pressuring demand for office real estate.
  • We tested our ratings using a scenario analysis, which assumes a more severe and prolonged change for office real estate, driven by large-scale office downsizing and a lack of meaningful job growth, driving higher vacancy rates and more severe rent declines. Ratings impact under this scenario include downgrades of up to two notches based on significant deterioration of credit metrics in the next two years.
  • We also tested a sample set of our CMBS office SASB ratings. While we expect our SASB ratings in our base case to maintain adequate overcollateralization, under our downside scenario, most ratings indicate potential downgrades of two to three notches, with a few outliers at either one or four notches.
  • Gateway urban markets (specifically New York City and San Francisco) will likely experience more pressure than suburban markets as the return to the office remains slower in densely populated cities because of logistical complexities involving public transportation and existing office space layouts, along with employers offering more work flexibility.
  • Our rating bias on office REITs remains negative and our base-case assumptions include flat to slightly negative same-property net operating income (NOI) in 2021 with relatively flat results projected in 2022.

138. REITrends: Recovery In The U.S. REIT Sector Will Likely Be Choppy, Dec. 7, 2020

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

  • Rating bias among the U.S. REITS we rate remains negative.
  • The subsectors with the greatest downside risk are retail REITs (as the number of distressed tenants remains high) and office REITs (many tenants are considering reducing the amount of space they occupy).
  • Industrial assets have continued to perform well.
  • Despite pandemic-related stress, REITs have maintained solid liquidity and are on pace to issue a record amount of debt.
Retail And Restaurants

139. Holiday Sales Could Bring More Chill Than Cheer To Struggling U.S. Retailers, Nov. 6, 2020

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

  • S&P Global Ratings retail analysts forecast a 0.3% increase in consumer spending (excluding food and beverage services) during the November and December holiday season. This is well below the 4.6% average of the past 20 years, but beats our economists' forecast of a 3.3% year-over-year contraction.
  • Rising COVID-19 cases, social distancing behavior, and continued high unemployment will likely constrain in-store shopping during what is traditionally the sector's strongest period.
  • Consumers appear to have started holiday purchases early in anticipation of capacity limitations in stores and bottlenecks in delivery logistics. We also expect continued elevated digital sales and omnichannel purchases.
Sovereigns

140. Global Sovereign Rating Trends 2021: Mounting Debt And Uncertainty Underpin A Negative Outlook Bias, Jan. 27, 2021

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

  • Over the next six months, the global outlook balance for sovereign ratings continues to have a negative bias, with 26 negative outlooks and one positive outlook as of Dec. 30, 2020.
  • Governments globally continue to do the heavy lifting to support their battered economies. Massive fiscal and monetary stimulus are expected to remain in place during 2021.
  • Several vaccines are now available, but uncertainties about the capacity to produce and distribute them, as well as the emergence of new strains of COVID-19, are likely to delay the recovery.
  • While we still expect global economic growth to resume around the third quarter of 2021, the debt load on government balance sheets will remain substantive for several years to come.
Structured Finance

141. Australia Structured Finance Outlook 2021: Where To From Here?, Jan. 26, 2021

Erin Kitson, Melbourne, + 61 3 9631 2166, erin.kitson@spglobal.com

  • Ratings outlook for most Australian structured finance asset classes is stable.
  • New issuance could surprise on the upside as housing demand heats up and the search for yield continues.
  • Impact of COVID on collateral performance is yet to be revealed but sustained economic recovery will help ease the transition off stimulus measures.

142. China Structured Finance Outlook 2021: Expect Another Record Year, Jan. 12, 2021

Andrea Lin, Hong Kong, + 852 2532 8072, andrea.lin@spglobal.com

  • Economic recovery and funding diversification will boost overall issuance.
  • New caps on mortgage lending could limit comeback in RMBS volumes.
  • Low delinquencies and good structures underly our stable to positive outlooks on our rated transactions.

143. European RMBS Outlook 2021, Jan. 25, 2021

Arnaud Checconi, London, + 44 20 7176 3410, ChecconiA@spglobal.com

  • Although the major European RMBS markets all entered the COVID-19 pandemic in a relatively comfortable situation from a macroeconomic point of view, all of them suffered a severe economic downturn in 2020. We expect unemployment rates in these countries to rise by 1%-2% through 2021.
  • The willingness and capacity of governments and banking sectors to cushion the shock of the pandemic will determine the scale and pace of any rise in arrears for the mortgage collateral backing RMBS transactions.
  • Central banks' response to the pandemic saw them revive their large-scale provision of cheap term funding for credit institutions, which will likely stifle bank-originated structured finance supply once again. In the longer term, RMBS issuance may be bolstered as borrowers affected by COVID-19--with complex income or minor adverse credit--are forced away from the high street to capital markets-funded specialist lenders.
  • COVID-19 will likely accelerate the pace of change in mortgage lending practices for those markets already exhibiting moves toward automation and hand further advantages to fintech companies.
  • Green mortgages have temporarily taken a back seat because of COVID-19. That said, EU initiatives and an increasing appetite for green assets could provide impetus for further mortgage product development in the medium term.

144. European Structured Finance Outlook 2021: In Short Supply, Jan. 20, 2021

Andrew H South, London, + 44 20 7176 3712, andrew.south@spglobal.com

  • Issuance: European securitization issuance should bounce back to €75 billion in 2021 and benchmark covered bond volumes also look set to recover modestly to €100 billion. However, issuance in both sectors will likely remain depressed by pre-pandemic levels.
  • Central banks: The monetary policy response to COVID-19 pandemic has included renewed provision of cheap term funding for credit institutions by central banks, which will likely stifle bank-originated structured finance supply.
  • Credit fundamentals: We expect unemployment and speculative-grade corporate default rates to rise in Europe in 2021, placing some pressure on both consumer and corporate-related collateral backing structured finance transactions.
  • Ratings performance: Most ratings have been resilient to the effects of the pandemic so far, but underlying credit stress could become more apparent as support schemes end.

145. European ABS: Initial Liquidity Risk Evolves To Medium-Term Credit Risk In The Wake Of COVID-19, Dec. 8, 2020

Doug Paterson, London, + 44 20 7176 5521, doug.paterson@spglobal.com

  • We have reviewed the performance of European ABS transactions following the COVID-19 pandemic by considering transaction performance data, outreach with servicers, and our macroeconomic forecasts, along with the impact of regulatory developments and government support schemes.
  • Liquidity, credit risk, and residual values are key aspects of transactions that have been affected by the pandemic.
  • We believe the volume of payment holidays in European ABS transactions has peaked and will generally continue to decline. Similarly, prepayment levels and net losses are generally reverting toward pre-COVID-19 levels, although 90+ day delinquencies remain slightly elevated. We expect to see some moderate increases in defaults for certain transactions.
  • We continue to incorporate our view of the latest developments for both new issuance and surveillance of outstanding ratings. We will continue to monitor early performance indicators and reflect them in our analysis on a forward-looking basis as warranted.

146. 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.

147. Global Structured Finance 2021 Outlook: Market Resilience Could Bring Over $1 Trillion In New Issuance, Jan. 8, 2021

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

  • Market resilience could bring over $1 trillion in global structured finance new issuance in 2021, despite the COVID-19 pandemic's impact on global macroeconomic growth and the knock-on effects on asset prices, market sentiment, interest rates, and consumer credit (to name a few.
  • Much like our outlook for the ongoing recovery of the global economy, performance may remain somewhat uneven, depending on the specific structured finance asset class or region. With this in mind, we believe the following seven trends and observations will shape structured finance issuance and performance in the year ahead:
  • Downside ratings bias still exists, but a large second wave of downgrades is unlikely; Issuance is set to rebound, led by the U.S. and China; The commercial real estate downturn remains an area of focus; Forbearance and payment holidays are ending soon; An uneven recovery for the global economy; The LIBOR transition will continue; and Environmental, social, and governance (ESG) factors to play an expanding role in structured finance.

148. Japanese Securitizations' 2020 Rated New Issuance Barely Touched By COVID-19, Feb. 1, 2021

Yuji Hashimoto, Tokyo, + 81 3 4550 8275, yuji.hashimoto@spglobal.com

  • Total new issuance that we rated in Japan's securitization market was about ¥2.1333 trillion (21 transactions) in 2020.
  • We downgraded eight tranches of four transactions during our surveillance; no actions resulted directly from COVID-19; the performance of owner-occupied housing loans we rate temporarily worsened, partly because of the pandemic, before recovering in autumn 2020.
  • Certain Japanese REIT (J-REIT) markets, such as those for office properties, are likely to continue weakening.

149. Japan Structured Finance Outlook: Recovery Or Relapse?, Jan. 8, 2021

Hiroshi Sonoda, Tokyo, (81) 3-4550-8474, hiroshi.sonoda@spglobal.com

  • Our credit analysis of Japanese residential mortgage loan pools, which incorporates our current outlook, reflects our view on expected losses for an archetypal pool of Japanese residential mortgage-backed loans.
  • Our outlook is for Japan's residential mortgage and real estate market to remain benign. Given our outlook, we consider base-case projected losses of 0.4% at the 'B' rating level for an archetypal pool of Japanese mortgage loans.
  • We believe relatively stable employment conditions and historically low interest rates will likely support mortgage performance in 2021 following a slight deterioration beginning in spring 2020.

150. Outlook For The Japanese Residential Mortgage Market, Jan. 8, 2021

Hiroshi Sonoda, Tokyo, (81) 3-4550-8474, hiroshi.sonoda@spglobal.com

  • We expect Japan's economy to moderately recover and the unemployment rate to remain around 3% in 2021; pandemic effects remain a risk for Japanese structured finance.
  • We believe assets backing owner-occupied housing loan receivables and condominium investment loan receivables will perform stably; other asset classes will be somewhat negative.
  • We believe rating trends will generally remain stable, except for apartment loan RMBS, which will likely be somewhat negative.

151. Norwegian And Finnish Covered Bond Market Insights 2021, Jan. 19, 2021

Casper R Andersen, Frankfurt, + 49 69 33 999 208, casper.andersen@spglobal.com

  • We expect the COVID-19 pandemic to have a modest impact on Finnish and Norwegian mortgage loan performance as house prices increase.
  • Both Norwegian and Finnish cover pools present unique loan features and government support initiatives continue to support credit performance.
  • EU harmonization will bring changes to the legal frameworks, but we believe these changes are manageable without disrupting these markets.

152. Spanish Covered Bond Market Insights 2021, Feb. 2, 2021

Ana Galdo, Madrid, + 34 91 389 6947, ana.galdo@spglobal.com

  • While we expect the Spanish economy to recover in 2021, asset performance will remain under pressure at least until 2022 as various support measures are withdrawn.
  • Spanish authorities are transposing the European harmonization directive into the national legal framework, focusing on liquidity and overcollateralization requirements and provisions for a cover pool register and cover pool monitor.
  • The outlook for covered bond ratings remains broadly stable due to available overcollateralization that should compensate for asset deterioration, but risks are skewed to the downside, given the sensitivity to sovereign downgrade.

153. Flattening The Curve--The Outlook For U.K. RMBS Arrears In The Wake Of COVID-19, Nov. 23, 2020

Alastair Bigley, London, + 44 20 7176 3245, Alastair.Bigley@spglobal.com

  • The extended furlough and mortgage payment deferral schemes, along with the tactical use of these schemes by borrowers, mean that U.K. RMBS arrears will rise slower and to lower peaks than would otherwise be the case.
  • Servicing strategies and enhanced servicer operational readiness, when compared with the Global Financial Crisis (GFC), mean that reported arrears are likely to take time to build up.
  • Generally robust housing equity levels at a borrower level, combined with the low interest rate environment, will positively affect borrower behavior compared with the GFC.
  • Later stage arrears buckets are unlikely to clear quickly as court backlogs and the prevailing mood for servicers to be seen to be reasonable and offer as much flexibility as possible will combine to limit repossession activity.

154. The Majority Of December's Delinquent Loans In U.S. Auto Loan ABS Had Received A COVID-19-Related Extension, Feb. 23, 2021

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

  • With December's spike in extension rates, loan deferrals reached their highest levels since the summer.
  • As a result, the percentage of loans in active extension status increased to 1.0% and 7.65% for prime and public subprime issuers, respectively.
  • COVID-19-related extensions recorded an average of 4.1 and 3.0 full payments for prime and subprime public issuers, respectively. In addition, obligors with high FICO scores have needed fewer COVID-19-related extensions.
  • We also found that the majority of delinquent loans as of December month-end had received an extension since March.

155. As The Economy Shows Signs Of Recovery, The U.S. CMBS Delinquency Rate Continues Its Decline, Feb. 5, 2021

Tamara A Hoffman, New York, + 1 (212) 438 3365, tamara.hoffman@spglobal.com

  • The U.S. CMBS overall delinquency rate decreased by 18 basis points (bps) month over month in January 2021, to 6.8%.
  • 7.7% of the loans are in forbearance or have made a forbearance request that is currently in process.
  • The delinquency rates by balance for all major property types decreased: lodging by 72 bps, industrial by 31bps, multifamily by 28 bps, retail by 18 bps, and office by 10 bps.

156. How COVID-19 Affected U.S. Middle-Market And BSL CLO Performance In 2020, Feb. 4, 2021

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

  • Both U.S. broadly syndicated loan collateralized loan obligations (BSL CLOs) and middle-market (MM) CLOs experienced credit stress due to the pandemic, but most transactions saw material improvement in the second half of the year (though not enough to make up for the deterioration from the first half).
  • Like BSL CLOs, MM CLOs experienced a significant increase in their 'CCC' buckets in 2020.
  • However, unlike BSL CLOs, MM CLOs, on average, did not lose par in 2020.
  • MM CLOs experienced a less severe decline in O/C cushion. About 5% of our sample of MM CLOs experienced a junior O/C failure at some point in 2020, compared to just under 25% of our BSL CLO sample.
  • From an asset diversity standpoint, we find most MM obligors tend to be held by one CLO manager, while most BSL obligors are much more widely held across numerous CLO managers.

157. Tender Option Bond Ratings Recap As Of January 2021: Overall Steady New Issuance Levels In 2020 Despite COVID-19, Jan. 29, 2021

Nicholas Breeding, New York, (303) 721-4362, nicholas.breeding@spglobal.com

  • While there was unprecedented tender option bond (TOB) new issuance volatility in first-quarter 2020 due to the COVID-19 pandemic, it rose to stable levels by year-end compared to previous years.
  • The volume of credit-enhanced transactions continued increasing throughout 2020, accounting for nearly one-third of new issuance in the year.
  • Almost two thirds of jointly supported TOB transactions would be affected by a one-notch downgrade of the underlying security, and over 90% would be affected by a two-notch downgrade.
  • Of the 581 rating actions taken in 2020, almost 90% were downgrades and CreditWatch placements, an uptick from 60%-65% negative actions in 2018 and 2019 (out of approximately 350 and 200 actions, respectively).
  • We anticipate our outlook on TOBs to remain negative in the near future, as TOBs are exposed to the credit quality of the underlying securities and of the banks providing liquidity and credit support. Currently, most of our U.S. public finance sectors have a negative outlook; Barclays Bank PLC, which provides liquidity support to 13.8% of the TOB transactions in our rated portfolio, also has a negative outlook.

158. U.S. Residential Mortgage And Housing Outlook: Positive Momentum Carries Into 2021, Jan. 22, 2021

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

  • Home price appreciation should be positive in 2021, but the rocket fuel may have burned off.
  • Refinancing burnout will set in as mortgage origination shifts to purchase originations from refinancing.
  • In terms of mortgage credit, the spring may bring a reckoning for 12-month COVID-19 forbearance plan resolutions, which are set to expire.
  • Non-agency securitization will see growth depending on agency loan pricing, the new qualified mortgage (QM) rule, optional terminations, and non-QM originations.
Technology

159. Remote Work Trends Jam The Printing Industry, And The Latest On Xerox, Feb. 5, 2021

Tuan Duong, New York, + 1 (212) 438 5327, tuan.duong@spglobal.com

  • Work-from-home trends accelerated digital transformation and the structural decline in the printing industry. A recovery path to pre-COVID-19 demand levels is uncertain.
  • Mature industry conditions and stronger competitive pressures will likely spur investments and mergers and acquisitions, which might be the best path to shore up business and financial profiles and better enable the advancement of digital transformation and innovation.
  • We see potential rating pressures among less diversified vendors (e.g., Canon, Ricoh, and Xerox) that have high enterprise printing exposure.

160. Positive Third Quarter For U.S. Tech Shows The Beginnings Of Recovery, Dec. 8, 2020

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

  • 5G smartphone models are rolling out, which we expect to drive 7% unit growth in 2021, up from a decline of 10% in 2020.
  • Enterprises are still keeping a lid on spending, but we expect them to release pent-up demand in 2021, resulting in global information technology (IT) spending growth of 3.5%.
  • The cyclical auto and industrial end markets are recovering, a good leading indicator for the rest of the semiconductor market.
  • Memory markets are diverging on supply discipline, with DRAM likely to recover in the first quarter of 2021, while NAND will remain weak at least through the first half.
  • Companies are using stock for mergers, keeping balance sheets in good health.

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: The Rebound Has Begun Dec. 3, 2020
Credit conditions Emerging Markets 2 Credit Conditions Emerging Markets: A Vaccine Won't Erase All Risks Dec. 3, 2020
Credit conditions Europe 3 Credit Conditions Europe: Waiting For Relief Dec. 3, 2020
Credit conditions Global 4 Global Credit Outlook 2021 : Back On Track? Dec. 3, 2020
Credit conditions North America 5 Credit Conditions North America: Some Relief, Sizable Risks Dec. 3, 2020
Autos Global 6 Global Auto Sales Forecasts: Hopes Pinned On China Sept. 17, 2020
Autos U.S. 7 After Ending 2020 Strongly, U.S. Auto Sales Are Set To Continue Recovery In 2021 Jan. 19, 2021
Aviation Europe 8 Europe's 2021 Air Passenger Traffic Likely To Stall At 30%-50% Of 2019 Level Feb. 18, 2021
Aviation Global 9 As COVID-19 Cases Increase, Global Air Traffic Recovery Slows Nov. 12, 2020
Capital Goods Global 10 Large Capital Goods Companies Are Positioning Themselves For A Post-Pandemic Recovery Dec. 7, 2020
Chemicals Europe 11 Top 20 EMEA Chemical Companies And COVID-19: The Credit Impact Relies Largely On Subsector Exposures And Responses Oct. 22, 2020
Commodities - Metals and mining Global 12 Metal Price Assumptions: Vaccinations To Restore Vigor In 2021 Dec. 18, 2020
Commodities - Oil and gas Global 13 S&P Global Ratings Revises Oil And Natural Gas Price Assumptions Sept. 16, 2020
Consumer goods China 14 China Consumer Products And Retail--Opportunity Knocks Jan. 26, 2021
Corporates China 15 China Recovery Could Bring More Defaults Nov. 17, 2020
Corporates Europe 16 European Corporate Credit Outlook : Struggling To Get Back On Track Feb. 3, 2021
Corporates France 17 French Corporates Face An Uneven Climb-Out From COVID-19 Jan. 27, 2021
Corporates Global 18 COVID-19 Heat Map: Some Bright Spots In Recovery Amid Signs Of Stability Feb. 17, 2021
Corporates U.S. 19 U.S. Corporate Credit Outlook 2021 : Economic And Political Transition Jan. 21, 2021
Corporates U.S. 20 U.S. Corporates Hold Record $2.5 Trillion Cash To Meet Pandemic Shock; Debt Reaches $7.8 Trillion Dec. 8, 2020
Credit trends and market liquidity Europe 21 The European Speculative-Grade Corporate Default Rate Could Reach 8% By September 2021 Nov. 25, 2020
Credit trends and market liquidity Global 22 Revenue Pressures Continue To Weigh On Consumer-Related Weakest Links Feb. 22, 2021
Credit trends and market liquidity Global 23 Two European Corporate Defaults Push The 2021 Global Tally To 11 Feb. 19, 2021
Credit trends and market liquidity Global 24 BBB' Pulse: Cautious Optimism Grows With No Fallen Angels And Three Rising Stars In January Feb. 19, 2021
Credit trends and market liquidity Global 25 Downgrade Risk Among Nonfinancial Corporates Remains Elevated In 2021 Feb. 2, 2021
Credit trends and market liquidity Global 26 Global Financing Conditions: Bond Issuance Could Decline 3% To $8 Trillion In 2021 Jan. 28, 2021
Credit trends and market liquidity Global 27 Global Sukuk Issuance Is Set To Increase In 2021 Jan. 12, 2021
Credit trends and market liquidity North America 28 Risky Credits: U.S. And Canadian Upgrades Outpace Downgrades In 'CCC' Category As Issuers Access Debt Feb. 23, 2021
Credit trends and market liquidity U.S. 29 The U.S. Speculative-Grade Corporate Default Rate Could Reach 7% By December 2021 Feb. 18, 2021
Credit trends and market liquidity U.S. 30 U.S. Distress Ratio Eases With Ample Liquidity For Lower-Rated Borrowers Feb. 1, 2021
Cross-sector Asia-Pacific 31 Asia-Pacific Corporate And Infrastructure Credit Outlook 2021: A Two-Tier Recovery Of Credit And Funding Conditions Feb. 9, 2021
Cross-sector Asia-Pacific 32 Watch For COVID Tail Risk In Asia-Pacific, Panelists Say Jan. 31, 2021
Cross-sector Asia-Pacific 33 Comebacks, Setbacks, And Divergent Tracks Dec. 7, 2020
Cross-sector Emerging Markets 34 Emerging Markets Monthly Highlights : Despite Vaccines, Normality Still Elusive Feb. 17, 2021
Cross-sector Gulf Cooperation Council 35 GCC Corporate And Infrastructure Outlook 2021: Proceeding With Caution Feb. 2, 2021
Cross-sector Global 36 Industry Top Trends 2021: Key themes Jan. 29, 2021
Cross-sector Global 37 Global Debt Leverage: Risks Rise, But Near-Term Crisis Unlikely Oct. 27, 2020
Cross-sector India 38 Cross-Sector Outlook: India's Escape From COVID Feb. 15, 2021
Cross-sector Latin America 39 Latin America Corporate And Infrastructure Outlook 2021 Feb. 9, 2021
Cross-sector North America 40 As Biden Preps For Presidency, Senate Sway May Mean More For Credit Nov. 19, 2020
Economics Asia 41 Delay Risk On The Rise For Southeast Asia's Recovery Feb. 21, 2021
Economics Asia 42 Asia, We Have A Demand Problem Feb. 3, 2021
Economics Asia-Pacific 43 Asia-Pacific Forecasts Stabilize, Risks Now Balanced Nov. 29, 2020
Economics Canada 44 Canada's Growth Slows As The Pandemic Trudges Into Winter Dec. 3, 2020
Economics China 45 The Missing Factor In China's Remarkable Recovery Jan. 18, 2021
Economics Emerging Markets 46 Emerging Markets: Risks To Outlook Balanced As Recovery Momentum Set To Pick Up In 2021 Dec. 2, 2020
Economics Europe 47 Europe’s Housing Market Will Chill In 2021 As Pent-Up Pandemic Demand Eases Feb. 22, 2021
Economics Europe 48 The Eurozone Can Still Rebound In 2021 After Lighter Lockdowns Dec. 1, 2020
Economics India 49 Rising Demand, Falling Infections Temper India's COVID Hit Dec. 15, 2020
Economics Latin America 50 Latin America's Economic Recovery From The Pandemic Will Be Highly Vulnerable To Setbacks Dec. 1, 2020
Economics U.S. 51 U.S. Biweekly Economic Roundup: A Stronger-Than-Expected January Sets The Stage Feb. 19, 2021
Economics U.S. 52 Within Reach: How Stimulus Proposals Lift U.S. GDP To Pre-Pandemic Levels Feb. 1, 2021
Economics U.S. 53 Staying Home For The Holidays Dec. 2, 2020
Energy Transition China 54 Consumers Can Help Deliver A Carbon Neutral China Dec. 10, 2020
Energy Transition China 55 China's Energy Transition Stalls Post-COVID Sept. 21, 2020
Energy Transition Europe 56 The Energy Transition And The Diverging Credit Path For European Utilities Feb. 16, 2021
Energy Transition Europe 57 The Energy Transition And What It Means For European Power Prices And Producers: January 2021 Update Jan. 27, 2021
Environmental, social, and governance Global 58 The ESG Pulse: 2020 Lookback Feb. 15, 2021
Environmental, social, and governance Global 59 The ESG Pulse: 2021 Lookahead Feb. 11, 2021
Environmental, social, and governance Global 60 How COVID-19 And ESG Factors Are Weighing On Airports' Credit Quality Dec. 10, 2020
Environmental, social, and governance Global 61 Sustainable Covered Bonds: Assessing The Impact Of COVID-19 Dec. 1, 2020
Financial institutions Asia-Pacific 62 Asia-Pacific Financial Institutions Monitor 1Q2021: The Climb Out Of COVID Feb. 7, 2021
Financial institutions Asia-Pacific 63 Seven Potential Fallen Angel Banks Across Asia-Pacific Face COVID-19 Threat Dec. 1, 2020
Financial institutions Brazil 64 S&P Stress Test Suggests Large Brazilian Banks Could Withstand Second Virus Wave Feb. 22, 2021
Financial institutions Canada 65 Tech Disruption In Retail Banking: COVID-19 May Accelerate Canadian Banks' Digital Transformation Jan. 28, 2021
Financial institutions Canada 66 Canadian Banks 2021 Outlook: Entering A Crucial Phase Of The Credit Cycle With Good Resilience Dec. 8, 2020
Financial institutions Emerging Markets 67 Good Earning Capacity Gives Rated Banks In Emerging Markets A Buffer From COVID-19's Effects Feb. 22, 2021
Financial institutions EMEA 68 EMEA Finance Companies Show Surprising Resilience To COVID-19 Disruption, So Far Jan. 28, 2021
Financial institutions Europe 69 Capital Resilience Alone Won’t Stabilize European Bank Ratings In 2021 Feb. 3, 2021
Financial institutions Europe 70 Low-For-Even-Longer Interest Rates Maintain Margin Pressure On European Banks Feb. 2, 2021
Financial institutions France 71 French Bank Outlook 2021: All About Efficiency And Asset Quality Jan. 21, 2021
Financial institutions Global 72 Securities Firms Should Benefit From Global Economic Recovery In 2021 As Risks Abound Jan. 21, 2021
Financial institutions Global 73 Asset Managers Have Stable Outlook : With Risks Balanced For 2021 Jan. 15, 2021
Financial institutions Global 74 Global FMI Sector Outlook 2021: Digesting Major Deals Amid Possible Market Turbulence Jan. 15, 2021
Financial institutions Global 75 Global Banks 2021 Outlook : Banks Will Face The Next Test Once Support Wanes Nov. 17, 2020
Financial institutions Global 76 Global Finance Companies Face Uneven Recovery From The COVID-19 Pandemic Dec. 14, 2020
Financial institutions Indonesia 77 Indonesian Banks Gird For Arduous Recovery From COVID Feb. 1, 2021
Financial institutions Italy 78 For Italian Banks, The Big Test Could Come In 2021 Jan. 13, 2021
Financial institutions Japan 79 Japan Banking Outlook 2021: Expect Rising Credit Risks Jan. 14, 2021
Financial institutions Nordic 80 Leading Nordic Banks Keep Calm And Carry On Despite COVID-19 Stress Feb. 23, 2021
Financial institutions Nordic 81 Nordic Banks: Strong Fundamentals And Digital Preparedness Shield Against COVID-19 Stress Feb. 18, 2021
Financial institutions North Africa and Jordan 82 True Picture Of North African And Jordanian Banks' Creditworthiness Will Emerge In 2021 Feb. 1, 2021
Financial institutions Philippines 83 Philippine Banks: Buffers Won't Hold If COVID Comes Back Feb. 21, 2021
Financial institutions Russia 84 Russian Banks Face A Tougher Path To Profit Jan. 27, 2021
Financial institutions Saudi Arabia 85 Saudi Banking Sector 2021 Outlook : Growth Hinges On Mortgage Lending And Public Spending Feb. 23, 2021
Financial institutions South Africa 86 South Africa Banking Sector 2021 Outlook: Still Beset By Pandemic Woes Feb. 11, 2021
Financial institutions Spain 87 Spanish Banks Need To Bolster Provisions, Cut Costs, And Preserve Capital In 2021 Jan. 25, 2021
Financial institutions U.A.E. 88 UAE Banking Sector 2021 Outlook : A Long Recovery Road Ahead Jan. 26, 2021
Financial institutions U.K. 89 U.K. Banks Face A Bumpy Road To Earnings Recovery In 2021 Jan. 11, 2021
Financial institutions U.S. 90 Tech Disruption In Retail Banking: COVID-19 Accelerates A Digital Shift In The U.S. Jan. 28, 2021
Financial institutions U.S. 91 For U.S. Finance Companies, Economic Rebound And Government Support Will Help Ease The Strain From COVID-19 Jan. 15, 2021
Financial institutions U.S. 92 U.S. Bank Outlook 2021: Picking Up The Pieces And Moving On Jan. 13, 2021
Gaming, leisure, and lodging Asia-Pacific 93 APAC Gaming Sector Update: Don’t Bet On A Quick Recovery Oct. 27, 2020
Gaming, leisure, and lodging Europe 94 As European Hotels Grapple With Prolonged Restrictions, Are Operators And Landlords Sharing The Pain? Feb. 24, 2021
Gaming, leisure, and lodging Macau 95 Macau Gaming : Why we’ve lowered our gross gaming revenue forecast for 2021 Feb. 9, 2021
Gaming, leisure, and lodging U.S. 96 The U.S. Lodging Sector Faces A Challenging Recovery From The Effects Of The COVID-19 Pandemic Dec. 7, 2020
Healthcare and pharmaceuticals Europe 97 EU Could Meet 70% Vaccination Target By Late July If Production Steps Up Feb. 11, 2021
Healthcare and pharmaceuticals Global 98 Pharma Outlook: Eighth Straight Year Of Credit Deterioration In 2021 Feb. 23, 2021
Healthcare and pharmaceuticals U.S. 99 The Health Care Credit Beat: U.S. Herd Immunity By Midyear Is Possible With Additional Vaccine Approvals Feb. 11, 2021
Healthcare and pharmaceuticals U.S. 100 Outlook For U.S. Not-For-Profit Acute Health Care: Navigating The Bumps While Getting Back On Track Jan. 12, 2021
Infrastructure - transportation U.S. 101 Outlook For U.S. Not-For-Profit Transportation Infrastructure: Light At Tunnel’s End – But How Long Is The Tunnel? Jan. 13, 2021
Infrastructure - transportation U.S. 102 Updated Activity Estimates For U.S. Transportation Infrastructure Show Public Transit And Airport Operators Still Face A Long Recovery Jan. 13, 2021
Infrastructure - utilities North America 103 North American Regulated Utilities’ Negative Outlook Could See Modest Improvement Jan. 20, 2021
Infrastructure - utilities U.S. 104 Outlook For U.S. Water And Sewer Utilities: 2021 Provides 2020 Hindsight Jan. 19, 2021
Infrastructure - utilities U.S. 105 Outlook For U.S. Public Power And Electric Cooperative Utilities: Ratings Should Remain Resilient Jan. 14, 2021
Insurance Asia-Pacific 106 APAC Insurance 2021: Managing Higher Volatility Feb. 23, 2021
Insurance China 107 China Insurance 2021: Balancing Growth With Governance Feb. 2, 2021
Insurance Europe 108 EMEA Insurance Outlook 2021: Choppy Waters Ahead Nov. 17, 2020
Insurance Global 109 After Showcasing Resiliency During An Unprecedented Year, Global Insurance Brokers And Servicers Enter 2021 On Sound Footing Jan. 28, 2021
Insurance Gulf Cooperation Council 110 GCC Insurers In 2021: Robust Capital Supports Credit Quality Feb. 22, 2021
Insurance Japan 111 Japan Insurer Outlook: Stable In Strange Times Jan. 7, 2021
Insurance Nordic 112 Nordic Insurers Shake Off The Lows Of 2020 Feb. 1, 2021
Insurance U.S. 113 U.S. Property/Casualty Insurers Demonstrate Extraordinary Resilience During The Pandemic Jan. 14, 2021
Insurance U.S. 114 U.S. Health Insurers' Credit Quality Will Likely Hold Up In 2021 Jan. 14, 2021
Leveraged finance Europe 115 European Leveraged Finance And Recovery Fourth-Quarter 2020 Update: Leverage Increases, Recovery Slips Feb. 1, 2021
Leveraged finance Global 116 Global Leveraged Finance 2021 Jan. 13, 2021
Leveraged finance U.S. 117 U.S. Leveraged Finance Q4 2020 Update: Leverage Jumps A Full Turn For The Worse In The Second Quarter Before Managing A Partial Turnaround In The Third Quarter Jan. 27, 2021
Media and telecom U.K. 118 The U.K. Telecoms Market Will Pick Up In 2021-2022 As Pandemic Headwinds Ease And Fiber Investments Accelerate Dec. 10, 2020
Media and telecom U.S. 119 2021 U.S. Telecom And Cable Outlook: Rising Leverage Overshadows Economic Resilience Jan. 15, 2021
Media and telecom U.S. 120 Here's What The U.S. Media And Entertainment Sector Has In Store For 2021 Jan. 6, 2021
Public finance Global 121 Outlook For Global Not-For-Profit Higher Education: Empty Chairs At Empty Tables Jan. 20, 2021
Public finance Global 122 Major Capital Cities Must Be Vigilant About Rising ESG Risks As They Look To A Post-Pandemic World Dec. 10, 2020
Public finance Global 123 Local And Regional Governments Outlook 2021: Gradual Recovery Will Test Rating Resilience Dec. 10, 2020
Public finance Global 124 Outlook 2021: Strong Liquidity Should Help Social Housing Providers Remain Resilient Dec. 8, 2020
Public finance U.K. 125 Pandemic Spending Review Provides Only Short-Term Relief For U.K. Local Authorities' Financial Needs Dec. 3, 2020
Public finance U.S. 126 Outlook And Medians For U.S. Independent Schools: Pandemic Tests All, But Weaker Credits May Need A Booster Feb. 18, 2021
Public finance U.S. 127 2021 Credit Outlook For U.S. Public Finance: Back On Track? Jan. 29, 2021
Public finance U.S. 128 Five U.S. State And Local Government Pension And OPEB Trends To Watch For In 2021 And Beyond Jan. 25, 2021
Public finance U.S. 129 Outlook For U.S. Public Finance Housing: Sheltered From The Storm Jan. 21, 2021
Public finance U.S. 130 What The Latest COVID-19 Economic Relief Bill Means For U.S. Public K-12 Schools Jan. 21, 2021
Public finance U.S. 131 Outlook For Charter Schools: State Revenue Weakness May Test Credit Quality Jan. 7, 2021
Public finance U.S. 132 Outlook For U.S. Local Governments: Revenue Pressures Mount And Choices Get Harder Jan. 6, 2021
Public finance U.S. 133 Outlook For U.S. States: Symptoms Persist, But A Shot In The Arm Could Lead To Growth Jan. 5, 2021
Real estate Germany 134 German Residential Real Estate Is Unfazed By COVID-19 Nov. 30, 2020
Real estate U.K. 135 COVID-19 Is Only Part Of The Threat Facing U.K. Real Estate Companies Nov. 16, 2020
REITs Australia and New Zealand 136 Australian And New Zealand Retail REITs: Pandemic Leaves Lasting Pain Jan. 10, 2020
REITs U.S. 137 Remote Working Is Testing U.S. Office Landlords' Credit Quality Feb. 11, 2021
REITs U.S. 138 REITrends: Recovery In The U.S. REIT Sector Will Likely Be Choppy Dec. 7, 2020
Retail and restaurants U.S. 139 Holiday Sales Could Bring More Chill Than Cheer To Struggling U.S. Retailers Nov. 6, 2020
Sovereigns Global 140 Global Sovereign Rating Trends 2021: Mounting Debt And Uncertainty Underpin A Negative Outlook Bias Jan. 27, 2021
Structured finance Australia 141 Australia Structured Finance Outlook 2021: Where To From Here? Jan. 26, 2021
Structured finance China 142 China Structured Finance Outlook 2021: Expect Another Record Year Jan. 12, 2021
Structured finance Europe 143 European RMBS Outlook 2021 Jan. 25, 2021
Structured finance Europe 144 European Structured Finance Outlook 2021: In Short Supply Jan. 20, 2021
Structured finance Europe 145 European ABS: Initial Liquidity Risk Evolves To Medium-Term Credit Risk In The Wake Of COVID-19 Dec. 8, 2020
Structured finance Europe 146 COVID-19 Tests The Resilience Of European CLOs In 2020 Dec. 1, 2020
Structured finance Global 147 Global Structured Finance 2021 Outlook: Market Resilience Could Bring Over $1 Trillion In New Issuance Jan. 8, 2021
Structured finance Japan 148 Japanese Securitizations' 2020 Rated New Issuance Barely Touched By COVID-19 Feb. 1, 2021
Structured finance Japan 149 Japan Structured Finance Outlook: Recovery Or Relapse? Jan. 8, 2021
Structured finance Japan 150 Outlook For The Japanese Residential Mortgage Market Jan. 8, 2021
Structured finance Norway and Finland 151 Norwegian And Finnish Covered Bond Market Insights 2021 Jan. 19, 2021
Structured finance Spain 152 Spanish Covered Bond Market Insights 2021 Feb. 2, 2021
Structured finance U.K. 153 Flattening The Curve--The Outlook For U.K. RMBS Arrears In The Wake Of COVID-19 Nov. 23, 2020
Structured finance U.S. 154 The Majority Of December's Delinquent Loans In U.S. Auto Loan ABS Had Received A COVID-19-Related Extension Feb. 23, 2021
Structured finance U.S. 155 As The Economy Shows Signs Of Recovery, The U.S. CMBS Delinquency Rate Continues Its Decline Feb. 5, 2021
Structured finance U.S. 156 How COVID-19 Affected U.S. Middle-Market And BSL CLO Performance In 2020 Feb. 4, 2021
Structured finance U.S. 157 Tender Option Bond Ratings Recap As Of January 2021: Overall Steady New Issuance Levels In 2020 Despite COVID-19 Jan. 29, 2021
Structured finance U.S. 158 U.S. Residential Mortgage And Housing Outlook: Positive Momentum Carries Into 2021 Jan. 22, 2021
Technology U.S. 159 Remote Work Trends Jam The Printing Industry, And The Latest On Xerox Feb. 5, 2021
Technology U.S. 160 Positive Third Quarter For U.S. Tech Shows The Beginnings Of Recovery Dec. 8, 2020

This report does not constitute a rating action.

Primary Credit Analyst:David C Tesher, New York + 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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