A potential US Government shutdown is focusing attention on Sovereign credit risk, with a risk to US Treasury bond payments. A missed payment would be a major market event, but the broader issue is how Governments around the world handle the cost of COVID. The latest consensus data examines credit risk trends for Global Sovereign Governments, plus compares consensus vs CRA ratings for 12 major economies.
There are fears that investors in the broader high yield space are not being properly compensated for the risks. Though recent private equity investments have focused on firms that have weathered the pandemic with stable revenues and strong cash flows, which could boost the average credit quality of leveraged loan assets, the latest consensus credit data shows a more mixed picture.
Shipping container unit costs have skyrocketed and delivery times doubled in the past 18 months, with the pandemic causing port closures, trade flow disruptions and capacity reductions. Consensus credit data tracks the credit trend of Global Marine Transportation companies and suggests that the sector may be a leading indicator for broader corporate credit risk.
Air travel is currently running at about 50% of its pre-pandemic peak and the sector still faces uncertainty from new virus variants, patchy tourism traffic and a shift in business travel norms. While many Global Airlines are unrated by traditional agencies, consensus credit risk data shows that 80% of the sector is below investment grade – but some remain good credit risks.
Wildfires are growing in intensity and frequency, and in the US are sometimes attributed to outdated electricity infrastructure, presenting a legal hurdle for companies in the sector. Addressing these issues requires investment, and companies with stronger credit ratings are better placed to fund the necessary capital spending. This note looks at the credit profile and recent trends for 371 US electricity companies.
Australia has so far weathered the Covid storm in reasonable shape, and is one of the few Sovereigns rated AAA by the three largest traditional rating agencies. A credit consensus rating of aa+ reflects a slightly more cautious Bank view. This research analyses a number of Australian industries, sectors and companies to demonstrate the Covid effect on national credit quality comparative to global trends.
As vaccine rollout varies globally, it is clear that the economic bounceback from Covid will be led by the largest and most developed economies. Overall vaccination figures show that the global pandemic is far from over; but trends in the credit consensus are already giving some clues to the shape of the expected global economic recovery.
As widespread lockdowns forced millions indoors in 2020, consumer spending habits shifted from live entertainment and travel to home-based recreation. But how did the credit fortunes of each sector of leisure providers compare before COVID – and is a shift in leisure habits likely to persist?
Supply chains and trade credit are now critical in a post-COVID world. With disruption the new status quo, trade volumes are likely to fluctuate in the coming months. Though technology is helping to create more flexible supply chains. there is a long way to go to repair the damage from COVID. It is more important than ever for businesses to understand the end-to-end credit risk of their supply chains. This whitepaper demonstrates how credit consensus ratings provide part of the solution.
With environmental awareness becoming a more significant influence on the way we consume and invest, how do the largest CO2 emitting organisations stack up from a credit perspective? And does public versus private ownership impact projected emissions and credit risk?
Credit Benchmark brings together internal credit risk views from over 40 leading global financial institutions. The contributions are anonymized, aggregated, and published in the form of consensus ratings and aggregate analytics to provide an independent, real-world perspective of credit risk. Risk and investment professionals at banks, insurance companies, asset managers and other financial firms use the data for insights into the unrated, monitoring and alerting within their portfolios, benchmarking, assessing and analyzing trends, and fulfilling regulatory requirements and capital.
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