Portafogli e Strategie (investimento) Investment Grade, entro le frontiere conosciute.

Fitch Upgrades JPM's IDRs to 'AA-'/'F1+'; Outlook Stable
21 JUN 2018 4:24 PM ET


Fitch Ratings-New York-21 June 2018: Fitch Ratings has today upgraded JPMorgan Chase & Co's (JPM) Long- and Short-term IDRs(Issuer Default Ratings) to 'AA-'/'F1+' from 'A+'/'F1' with a Stable Outlook. Fitch has also upgraded JPM's Viability Rating (VR) to aa-. With today's action, JPMorgan Chase Bank, N.A.'s (JPMCB) Long-Term IDR was upgraded to 'AA' from 'AA-' and it's VR upgraded to 'aa-' from 'a+'. JPMCB's Short-Term IDR was affirmed at 'F1+'. There has been no change to JPM's and JPMCB's Support Ratings (SR) or Support Rating Floor (SRF).

The IDRs, VRs and senior debt ratings have all been upgraded due to the bank's strong company profile, which has resulted in consistent performance over the long term. JPM has outperformed its peer Global Trading and Universal Banks (GTUBs) and is solidly placed relative to its similarly rated global peers. The Stable Outlook reflects Fitch's view that JPM will continue to leverage its diversified business model, strong global franchise to produce consistent and stable earnings, while maintaining sufficient levels of capital and liquidity.

The rating actions have been taken in conjunction with Fitch's periodic review of the Global Trading and Universal Banks.
 

Lloyd's Insurance Co. S.A. Assigned 'A+' Rating As Core Subsidiary Of Lloyd's Of London; Outlook Negative
  • 25-Jun-2018 10:11 EDT
View Analyst Contact Information


  • Lloyd's Insurance Co. S.A. (Lloyd's Brussels) is a newly established
    Belgian subsidiary of the U.K.-based specialist insurance market Society
    of Lloyd's (Lloyd's). It was created to ensure Lloyd's can continue to
    provide cover to its EU-based customers after the U.K. leaves the EU.
  • We assess Lloyd's Brussels as a core subsidiary of Lloyd's, based on the
    sizable revenue and profits it will generate for the overall group and
    the high level of reinsurance support it will receive from Lloyd's.
  • We are assigning a rating of 'A+' to Lloyd's Brussels, equalized with the
    rating on its parent to reflect its status as a core subsidiary.
  • The negative outlook is in line with our outlook on Lloyd's.
LONDON (S&P Global Ratings) June 25, 2018--S&P Global Ratings said today that
it assigned its 'A+' financial strength rating to Lloyd's Insurance Co. S.A.
(Lloyd's Brussels), a Belgian subsidiary of the U.K.-based specialist
insurance market Society of Lloyd's (Lloyd's). The outlook is negative.

Lloyd's Brussels has been incorporated to allow Lloyd's to continue to serve
its EU-based customers following the U.K.'s exit from the EU. Lloyd's Brussels
has been authorized by the National Bank of Belgium, and Lloyd's will start
writing business through the subsidiary from January 2019. Lloyd's expects the
subsidiary to write approximately €2 billion of gross written premium once
fully operational. This would make up approximately 6% of the Lloyd's group's
gross written premium in 2017 (using current exchange rates). The subsidiary
will benefit from a 100% reinsurance agreement with Lloyd's, whereby the risk
will flow back to the Lloyd's market. Due to the materiality of the subsidiary
and the reinsurance support, we assess the Brussels entity as core to the
Lloyd's group. We therefore equalize our rating on Lloyd's Brussels with the
'A+' rating on the Lloyd's market.

As a Belgium-domiciled insurance company, Lloyd's Brussels will be regulated
under the EU's Solvency II framework. We expect that Lloyd's Brussels will
hold levels of capital comfortably in excess of its solvency capital
requirement (SCR), with a target coverage level of 125% of its SCR. Due to the
reinsurance cover from Lloyd's, we expect Lloyd's Brussels' solvency ratio to
be less volatile than that of the group. Lloyd's itself reported an SCR of
144% at year-end 2017.

The negative outlook on Lloyd's Brussels mirrors that on Lloyd's. As long as
we continue to view it as a core subsidiary, the rating on Lloyd's Brussels
will move in lockstep with the group.

We could revise our outlook to stable if the market manages to remain
attractive to its members and restores its capital position to the 'AAA' level
in our model through strong earnings in 2018-2019.

We could lower our ratings by one notch if Lloyd's is not able to restore its
capital position to the 'AAA' level in our model in 2018-2019 through either
further major losses or weaker earnings.
 
Province of Ontario Issuer Credit Rating Affirmed At 'A+' Following Election; Outlook Remains Stable
  • 25-Jun-2018 17:02 EDT
View Analyst Contact Information

OVERVIEW

  • The Progressive Conservative Party won the June 7, 2018 Ontario general
    election and will take office with a strong majority on June 29, ending
    15 years of Liberal government.
  • It remains to be seen how quickly and to what extent the new government
    will convert its election promises of tax cuts and spending efficiencies
    into actual fiscal policy.
  • However, we assume that some form of tax cuts, together with the
    significant time and effort needed to extract meaningful spending
    efficiencies, will contribute to worsening trends in Ontario's
    after-capital deficits and tax-supported debt. This would partly unwind
    the gradual improvement in credit metrics that Ontario achieved since we
    lowered our ratings on the province to 'A+' in June 2015.
  • We are affirming our 'A+' long-term issuer credit and senior unsecured
    debt ratings and our 'A-1' short-term debt rating on Ontario.
  • The stable outlook reflects our expectations that, within the next two
    years, fiscal results will weaken somewhat, leading to a rising
    tax-supported debt burden; liquidity will stay steady; and the economy
    will grow moderately despite greater uncertainty over trade.
RATING ACTION
On June 25, 2018, S&P Global Ratings affirmed its 'A+' long-term issuer credit
and senior unsecured debt ratings and its 'A-1' short-term debt rating on the
Province of Ontario. At the same time, S&P Global Ratings affirmed its 'A+'
senior unsecured debt rating on Ontario Electricity Financial Corp. The
outlook is stable.

OUTLOOK
The stable outlook incorporates our view that, within the next two years,
Ontario's operating and after-capital results will gradually worsen, reversing
the three-year trend of annual declines in the tax-supported debt burden. We
expect the government will put additional fiscal measures in place to ensure
Ontario's long-term fiscal sustainability. The economy should grow moderately
despite increased trade frictions with the U.S. and liquidity should stay
steady.
 
Fitch Affirms Oman at 'BBB-'; Outlook Negative
26 JUN 2018 7:11 AM ET


Fitch Ratings-Hong Kong-26 June 2018: Fitch Ratings has affirmed Oman's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Negative Outlook.

A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS
Oman's ratings balance its undiversified economy and still-high fiscal and external deficits against relatively high GDP per capita and a public sector balance sheet that remains, for now, stronger than that of other 'BBB' category sovereigns.

Higher oil and gas prices have brought a temporary reprieve to Oman's public finances, but the authorities have not yet identified a policy mix consistent with debt stabilisation in the medium term, in our opinion. We forecast Oman's budget deficit at 6.3% of GDP in 2018. Although this will represent a sharp narrowing of the deficit compared with 13.5% of GDP in 2017, the deficit will still be more than twice the 'BBB' category median. We expect the budget deficit to widen again in 2019 under the baseline assumption that oil prices will moderate to an average of USD65/bbl from USD70/bbl in 2018. We estimate that Oman's fiscal break-even Brent price will stay high at USD86/bbl in 2018 and fall only gradually.

There are near-term upside risks to public finances from higher hydrocarbon production and prices. If oil prices stayed at an average of USD70/bbl in 2019, the budget deficit would narrow to 5.3% of GDP. Our forecasts are based on the assumption of no change in oil production volume from 970,000 bbl/day in 2017. A 2.5% increase in average volume, for example as a result of a change in Oman's voluntary commitment to OPEC to cut production, would reduce the deficit by around 0.7% of GDP in 2018. The pass-through from higher hydrocarbon revenue to the government budget could be greater than we expect.

Higher oil prices present a key test of the government's commitment to improving its structural fiscal position. The government continues to face significant spending pressures, including providing economic opportunities for a young and rapidly growing Omani population. The budget deficit in 2017 was 25% wider than budgeted, despite oil prices averaging well above the government's assumption of USD45/bbl, largely due to under-performance of non-hydrocarbon revenue.

We expect spending to increase by 7% in 2018 (after a broad-based cumulative decline of 19% since 2014), as higher expenditure on subsidies, debt interest and oil and gas exploration offsets continued moderation in defence, capital and civil ministries spending. Completion of long-running infrastructure projects and a freeze on public sector hiring and wages have contributed to spending reductions so far, but it is not clear whether this is sustainable.

Deficit reduction will be helped by measures to boost non-hydrocarbon revenue, although our assumptions on this are conservative. We expect non-hydrocarbon revenue to increase by 0.4% of non-oil GDP between 2017 and 2019 (a cumulative 16% in nominal terms). Implementation of excise and value added tax has been delayed until 2H18 and 2H19, respectively. Although non-oil revenue rose 15% in 2017 (excluding OMR287 million of one-offs in 2016), tax revenue registered a slight decline on account of falling corporate profitability and the implementation of free trade agreements leading to lower collection of customs fees.

Oman's sovereign balance sheet strengths are dwindling. We forecast government debt will rise to 48% of GDP by end-2019, up from just 5% of GDP at end-2014 and above the 'BBB' median of 36% of GDP. Sovereign net foreign assets (SNFA) will fall to 10% of GDP by end-2019, down from a peak of 65% of GDP at end-2014 but still better than the 'BBB' median of 2% of GDP. This reflects government external borrowing and the use of the State General Reserve Fund (SGRF) for financing.

We estimate that the government's USD6.5 billion eurobond issue in early 2018 will cover its financing needs for the rest of the year and allow some pre-financing of the 2019 deficit. This is in addition to the budgeted USD1.3 billion drawdowns from the SGRF (which the government has not spent so far in 2018), and some domestic bond issuance. We expect a similar level of SGRF drawdowns in 2019, along with over USD4 billion of foreign issuance, including refinancing of maturities.

Our forecasts have SGRF foreign assets declining to USD17.7 billion by 2019 from USD19.5 billion as of the end of 2017, excluding assets held at the Central Bank of Oman (CBO) and local commercial banks. Asset market returns boosted the value of SGRF foreign assets in 2017, while SGRF deposits at the CBO fell. Just as investment returns were supportive in 2017, any correction in global asset markets could reduce the government's fiscal cushion.

The country's broader external position is also deteriorating. Current account deficits and the draw-down of non-resident deposits at the CBO will continue to put pressure on foreign exchange reserves, which are separate from SGRF assets but are included in SNFA. We estimate that the country's net external debt will rise to 38% of GDP in 2019 from a net creditor position of 35% of GDP in 2014, partly reflecting borrowing by state-owned enterprises (SOEs). The 'BBB' median net external debt is 6% of GDP. SOE debt reached 30% of GDP in 2017, of which nearly 21% of GDP was foreign and 5% of GDP was guaranteed by the government.

We expect a pick-up in real GDP growth, to 3.6% in 2018 (led by an expansion of LNG output related to gas production at the Khazzan field) and 2.5% in 2019, from 0.2% in 2017. In 2017, a reduction in oil output in line with Oman's commitment to OPEC reduced real hydrocarbon GDP by about 2.5%, while the non-oil economy grew 2%. Further oil and gas expansion, including Phase 2 of the Khazzan gas field, and investments in the country's capital stock such as ports, airports and roads support Oman's long-term growth potential, even as they strain government finances in the near term. A strong pipeline of hotel projects and the opening of the new Muscat airport should unlock new tourist flows.

Most structural indicators are in line with the 'BBB' median, including World Bank governance indicators. Fitch views the banking system as relatively strong, with regulatory capital at around 16% of risk-weighted assets and non-performing loan ratios in the low single digits (despite a recent up-tick). The low employment rate of young Omanis is creating economic and social pressure. The domestic political scene remains stable, but uncertainty continues to surround the eventual succession to 77-year old Sultan Qaboos, who has not publicly designated a successor. The constitution stipulates that the ruling family must choose a new Sultan within three days of the post becoming vacant, otherwise a letter containing the sultan's recommendation is
 
Rating Action:
Moody's affirms ratings of GE and GE Capital at A2; outlook remains negative

26 Jun 2018
New York, June 26, 2018 -- Moody's Investors Service ("Moody's") affirmed the ratings of General Electric Company ("GE"), including the A2 senior unsecured rating and the P-1 short term rating. Concurrently, Moody's also affirmed the ratings of GE Capital Global Holdings, LLC ("GE Capital") and its subsidiaries, including the A2 long-term issuer rating of GE Capital. The outlook of the ratings of GE, GE Capital and its subsidiaries is negative. These rating actions follow the announcement by GE of its plans to separate its healthcare business ("GE Healthcare"), likely to be completed sometime in 2019.



RATINGS RATIONALE



Moody's views GE's plan to separate the GE Healthcare business and its 62.5% ownership in Baker Hughes, a GE company ("BHGE"), as a net credit positive, and a key driver behind the affirmation of the company's ratings. In Moody's view, there was urgency for GE to achieve substantial improvements in financial condition, in particular to generate the amount of cash flow expected for an enterprise of its breadth. As such, Moody's anticipated that the company would need material changes to its business portfolio. The planned separation of GE Healthcare would be the most significant move to date, and follow closely on the planned sale of GE Transportation to Westinghouse Air Brake Technologies Corp., and other asset divestitures.



Absent such actions, a profile consistent with the A2 rating would be unlikely given expected market conditions and GE performance. Once completed, these asset separations would result in a portfolio of fewer but more focused businesses. GE would have the opportunity to further streamline corporate expenses, while optimizing synergies in sales and engineering. Also, as the plan contemplates a $25 billion reduction in debt, it would result in a meaningful step towards deleveraging GE. The lower debt would offset the reduced revenue diversity as well as the loss of earnings and cash flow attributable to this unit while demonstrating the company's commitment to de-risking its capital structure. As well, the planned separation of GE's investment in BHGE over the next two to three years can potentially provide significant additional capital for further debt reduction or investments.



GE's strong implicit and explicit support of GE Capital, including through debt guarantees and provision of borrowing capacity on an unconditional and irrevocable basis, results in Moody's equalization of GE Capital's senior unsecured rating with the senior unsecured rating of GE.



Nonetheless, the ratings outlook remains negative as continued weakness in earnings and cash flows are expected through 2019 and into 2020. GE's largest segment, Power, has endured a prolonged period of demand weakness in gas turbine demand, which is expected to continue for several years, constraining growth in margins and cash flows in this segment for some time. As well, only modest growth is anticipated for GE's much smaller Renewable Energy segment, with segment operating margins expected to remain at or near 7%. GE's Aviation segment, while highly profitable with segment operating margins of over 24%, is not currently generating robust cash flow due to a ramp up of investments in new engine platforms, and is not expected to do so before 2020.



As a result, GE's free cash flow (excluding BHGE), which was substantially negative in 2017 and Q1 2018, is not expected to surpass $2 billion annually over the next few years despite a significant reduction in dividends starting this year. Likewise, EBITA margins are only expected to be in the 11-12% range through 2019, lagging historical GE averages and below the mid- to upper-teens levels typical among A2 rated diversified industrial companies. As well, debt to EBITDA, currently at nearly 4 times, compares unfavorably to other industrial companies at the same rating level.



A ratings upgrade is unlikely given the current weakness in earnings and cash flow, and change to a stable outlook would require a return to revenue growth and margin improvement in GE's Power segment, and the resumption of strong free cash flow generated by both the Power and Aviation businesses. Through 2019, clear evidence of consolidated EBITA margins progressing towards levels sustainably above 15% with free cash flow consistently above $3 billion would be important factors supporting a stable outlook. As well, the commitment of the company to appropriately deploy proceeds from the sale or separation of businesses, while maintaining conservative financial policies will also be important towards a stable outlook. Moody's expectations that debt to EBITDA will approximate 2.5 times pro forma for the GE Healthcare separation and debt reduction in 2020, with identifiable prospects for further deleveraging thereafter, would be necessary for a stable outlook.



GE's ratings could be downgraded if Moody's anticipates GE is not on a steady trajectory of improving cash flow, return on asset and profits, even before the GE Healthcare unit is separated. Specifically, lower ratings could be considered with EBITA margins remaining in the low- to mid-teens, retained cash flow to net debt of less than 20%, or debt to EBITDA that is expected to remain above 2.5 times. Ratings could be lowered if the company experiences difficulty in executing planned portfolio actions or cost restructuring initiatives. As well, the inability to maintain sufficient resources at GE Capital, including in the form of assets that can be divested, to meet the planned capital infusions into the insurance business, could also cause a ratings downgrade. Once GE Healthcare is separated, given the loss of diversification of business and the cash flows associated with GE Healthcare, the ratings could be pressured down absent expectations of EBITA margins in the mid teens level, with free cash flow well over $3 billion and improving financial leverage.



GE Capital's ratings could be upgraded if GE's ratings are upgraded and if GE's support of GE Capital, including of future debt issuance, remains strong. A downgrade of GE Capital's ratings could result from a weakening of GE's support or weaker than anticipated support of future debt issuance. GE Capital's standalone credit profile could improve if the company strengthens its ratio of tangible common equity to tangible managed assets towards levels comparable to those of finance and leasing company peers and meaningfully reduces its insurance exposures. Conversely, GE Capital's standalone credit profile could be lowered if liquidity or the operating performance of GE Capital's aircraft leasing business weakens materially, or if other events meaningfully reduce the firm's capital position.
 
Harley-Davidson Inc. 'A-' Ratings Placed On CreditWatch With Negative Implications; EU Tariffs Add To Headwinds
  • 27-Jun-2018 09:11 EDT
View Analyst Contact Information


  • U.S. motorcycle manufacturer Harley-Davidson Inc. announced that
    retaliatory tariffs recently imposed by the European Union (EU) will
    result in an expected incremental average cost of approximately $2,200
    per motorcycle exported to the EU. Harley estimates the total incremental
    cost will be $30 million-$45 million in 2018 and $90 million-$100 million
    on an annual basis.
  • The company says it will not raise prices on its motorcycles as a result
    of the tariffs, and it plans to shift some production internationally to
    help reduce the financial impact.
  • We are placing the corporate credit ratings and all issue-level ratings
    on Harley on CreditWatch with negative implications, reflecting a
    possible sustained increase in business risks as a result of tariffs and
    other headwinds, such as retail sales and shipment declines.
  • We will resolve the CreditWatch following the company's second-quarter
    earnings announcement and its presentation of details about the
    previously announced acceleration and enhancement of certain strategy
    initiatives.
NEW YORK (S&P Global Ratings) June 27, 2018--S&P Global Ratings today placed
its 'A-' corporate credit rating and all issue-level ratings on U.S.
motorcycle manufacturer Harley-Davidson Inc. on CreditWatch with negative
implications.

The CreditWatch placement reflects our belief that near-term cost increases
due to retaliatory tariffs recently imposed by the EU, combined with other
significant headwinds, could cause margin deterioration and increase business
risks over the next several years. We could lower our rating on Harley as a
result. The CreditWatch placement follows our outlook revision to negative in
January 2018 due to persistent sales declines, elevated marketing costs, and
our expectation that EBITDA margin would decline over the next two years while
Harley consolidates some assembly plants to achieve longer-term cost savings.

We will resolve the CreditWatch following Harley's second-quarter earnings
announcement and its presentation of details about the previously announced
acceleration and enhancement of certain strategy initiatives. We could lower
the rating if we lose confidence the company can improve and sustain our
measure of captive-adjusted EBITDA margin above 17% by 2020, likely as a
result of sales declines, and restructuring or other cost overruns. We could
also lower the rating if worldwide retail sales declines do not moderate, such
that Harley is forced to reduce shipments by more than the low-single-digit
percentage declines in our forecast. This would likely result from U.S. retail
sales that decline more than they did in 2017, or international sales growth
slower than the low-single-digit percentage growth we expect. Our base-case
forecast for Harley's 2018 shipments is at the high end of the company's
guidance range, thus we could lower the rating even if the company hits the
low end of its guidance range. Any potential change in Harley's current
financial policies of maintaining very low adjusted leverage and strong
liquidity could also lead to a downgrade.
 
You must log in or register to reply here.

Users who are viewing this thread

Total: 1 (members: 0, guests: 1)
Back
Alto