Tag Archive: credit ratings

2016
03/01

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Credit Ratings

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S&P Raises Argentina Credit Ratings: Macri Policies Working?

Argentinas beleaguered economy has managed to take a significant step toward recovery on Wednesday, Feb. 3, as the countrys local credit ratings were significantly raised by Standard and Poors. The Samp;Ps approval comes as a clear sign that the current projects and financial decisions of newly-elected Argentine president Mauricio Macri are working well, according to Bloomberg Business.

The new Administration has presented a credible plan to deal with long-standing macroeconomic imbalances, eliminated foreign-exchange restrictions, and begun negotiations with its holdout creditors. As a result, we are raising our long-term unsolicited local currency rating to B- from CCC+, analysts from Samp;P stated.

Since coming to power last December, President Macri has been particularly keen on settling cases that have been embroiling Argentinas economy. He has also been putting a lot of effort in expanding the countrys access to global markets.

2016
02/29

Category:
Credit Ratings

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‘K’ Line, MOL credit ratings reviewed as profits slide

Two of Japan’s big three shipping lines sailed into the crosshairs of Moody’s ratings agency, with the outlook of Mitsui OSK. Lines being reviewed to negative and K Line heading for a downgrade as weaker than expected profitability clouded their 2016 prospects.

2016
02/28

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Credit Ratings

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S&P’s Cuts BHP Billiton’s Credit Ratings

Samp;Ps Cuts BHP Billitons Credit Ratings

(RTTNews.com) – BHP Billiton (BHP.AX, BLT.L, BBL, BHP) noted the announcement, 1 February 2016, by Standard amp; Poors that it has lowered the credit ratings of BHP Billiton Limited and BHP Billiton Plc from A+ to A.

The rating on BHP Billitons senior secured notes has been lowered from A+ to A and subordinated notes from A- to BBB+.

Standard amp; Poors noted that it recently lowered its price assumptions for iron ore, oil, and copper, reflecting very challenging market conditions and increased demand uncertainty over the coming years. It now forecasts that global diversified miner BHP Billiton could see its ratio of funds from operations to debt fall to 30%-40% over 2016 and 2017, well below threshold for an A+ rating.

2016
02/28

Category:
Credit Ratings

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North Sea oilfield services company Proserv takes heavy credit ratings hit

North Sea oilfield services company Proserv takes heavy credit ratings hit

Samp;P says the companys creditworthiness is significantly deteriorating

2016
02/27

Category:
Credit Ratings

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Moody’s says Axiall’s ratings not impacted by Westlake bid; potential credit positive

New York, February 08, 2016 — Moodys said that Axiall Corporations ratings and outlook are not
immediately impacted by the announcement that it received and rejected
an unsolicited bid by Westlake Chemical Company to acquire Axiall for
$2.9 billion.

For more information, please refer to the Issuer Comment on moodys.com.

Axiall Corporation (Axiall, formerly known as Georgia Gulf Corporation)
is an Atlanta, Georgia (US)-based manufacturer of commodity
chemicals and building products.

This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.

Benjamin Nelson
Vice President – Senior Analyst
Corporate Finance Group
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Brian Oak
MD – Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moodys says Axialls ratings not impacted by Westlake bid; potential credit positive

2016
02/26

Category:
Credit Ratings

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Ecopetrol Takes Out Additional Financing, Sees Credit Ratings Downgraded

Colombian petroleum company Ecopetrol (BVC:ECOPETROL, NYSE:EC, TSX:ECP) announced Friday that it opened a $175 million USD ($578 billion COP) line of credit with The Bank of Tokyo-Mitsubishi UFJ,Ltd. (NYSE:MUFG, TSE:MUFG) The loan was approved by Minhacienda, Colombia’s finance and public credit ministry by Authorization Resolution 168 of January 28,2016.

The credit line has a term of five years, amortizable for 2.5 years, with interest and principal payments to be made biannually (twice a year) at LIBOR+145 basis points. The terms are similar to the loan taken out by Ecopetrol in February of last year.

Meanwhile, Moody’s Investors Service downgraded Ecopetrol’s credit rating from Baa2 to Baa3 and placed the company’s outlook under review. While Ecopetrol remains investment grade under the new rating, the downgrade reflects a persistent environment of low oil prices, which will continue to negatively affect the company’s cash flow and financial indicators, said Moody’s. Ecopetrol’s baseline credit assessment was downgraded from Baa3 to ba3, and does not include implicit government support, said Moody’s.  While Ecopetrol is publicly traded, the government of Colombia maintains a controlling majority of shares in the company.

Standard amp; Poors has downgraded its outlook on Ecopetrol from stable to negative, yet the firm maintains Ecopetrol at a steady BBB credit rating. Ecopetrols stand-alone credit profile, which does not include the governments implicit support, was downgraded from bbb- to bb. This decision was based on the expectation that the companys credit metrics will likely be weaker because of lower hydrocarbon price assumptions by the rating agency.

Standard amp; Poors credited Ecopetrol for austerity and cost efficiency measures the company has taken to reduce the effects of the current low oil price environment. In a report, Standard amp; Poors observed that because of Ecopetrol’s importance, the company could likely count on backing from Colombia’s national government.

According to Standard amp; Poors, Ecopetrol’s liquidity resources for the next 12 months should be adequate, estimating that the sources of liquidity will exceed their uses by 1.2 times and as indicated by the Bank of Tokyo financing, should continue to have good access to market based financing resources.

2016
02/24

Category:
Credit Ratings

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S&P Takes Ratings Actions on Genworth Financial (GNW), Operating Units; Places on CreditWatch Negative

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Standard Poors Ratings Services said today that it lowered its financial strength ratings on Genworth Life Insurance Co. (GLIC), Genworth Life and Annuity Insurance Co. (GLAIC), and Genworth Life Insurance Co. of New York (GLICNY) to BB from BBB-. We have placed the life insurance companies on Creditwatch Developing. We also lowered our counterparty credit and senior unsecured debt ratings on Genworth Financial Inc. and Genworth Holdings Inc. to B from BB-. We placed the holding companies on Creditwatch Negative. We also lowered our rating on guaranteed Genworth Financial Mortgage Insurance Ltd. to B from BB- (this rating is tied to that on Genworth Holdings). Lastly, we have placed Genworth Mortgage Insurance Corp. on Creditwatch Negative.

Our ratings on Genworths Australia- and Canada-based mortgage insurance units remain unaffected and unchanged.

The lowering of the group credit profile to bb from bbb- and the downgrade of the US life insurance companies reflect the announced suspension of traditional life and annuity sales, our reduced statutory earnings and surplus projections for the US life division, and a prospective business profile that is less diversified and becoming more centered on mortgage insurance and long-term care–two businesses that have exhibited significant volatility historically. The downgrade also reflects our updated view of the organizations enterprise risk management (ERM) to weak from adequate.

The downgrade of the parent and intermediate holding companies is attributable to our lowering the group credit profile, and continued less-than-adequate financial flexibility. Intermediate holding company Genworth Holdings Inc. relies on the divided capacity of its international subsidiaries and holding company cash to fund its debt-servicing requirements of approximately $260 million annually, as well as debt repayment.

We view the credit quality of the Australian and Canadian mortgage insurance entities as relatively insulated at the respective current rating levels given local regulatory oversight, external minority ownership, and restriction on capital fungibility. We have not de-linked the ratings on Genworths ongoing Australian and Canadian entities from the group credit profile. However, we have allowed greater notching at this time relative to the group credit profile due to our updated assessment around level of insulation from credit deterioration in the US operations. We reasonably expect local regulators in Australia and Canada to act to prevent the subsidiaries from supporting the group to an extent that would impair the subsidiaries stand-alone creditworthiness. We believe that our current ratings capture the likely minimum capital requirements to be enforced in both Australia and Canada.

We currently view Genworth Mortgage Insurance Corp. as insulated, within a one-notch limit of the group credit profile, from decreasing credit strength across the remainder of the US business platform. The rating reflects the entitys progress in building its earnings profile and capital strength in recent years, adequate ERM, and the parents economic incentive to preserve the credit profile of the US mortgage insurance business as much as possible.

The CreditWatch Developing on GLIC, GLICNY, and GLAIC reflects the unanticipated suspension of traditional life and annuity sales and managements intent to unstack the organizational structure and isolate GLIC and GLICNY subject to regulatory approval. Depending on further clarification of strategic direction, prospective capitalization of the individual companies, and regulatory approvals, we could affirm the current ratings or raise or lower the ratings on the individual companies by one or more notches. The unstacking process, if approved, may not be achieved until late 2016.

The Creditwatch Negative on Genworth Mortgage Insurance Corp., Genworth Financial Inc., and Genworth Holding Inc. reflects our general uncertainty around the potential for future block asset sales and their financial impact on the holding companies and US mortgage operations.

We expect to refresh our rating and Creditwatch opinions within 90 days, or whenever sufficient information becomes available.

2016
02/23

Category:
Credit Ratings

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Commentary: Weak macros pressure US chemical credit ratings

The US chemical sector’s credit ratings could come under pressure on falling commodity prices, US dollar strength and slowing global economic growth.

On 27 January, credit ratings agency Moody’s Investors Service placed the ratings of three US-based titanium dioxide (TiO2) producers – Tronox (B2), Kronos Worldwide (Ba3) and Chemours (Ba3) on review for downgrade. The ratings are already in the speculative grade (or junk) category.

“The review for downgrade reflects the ongoing weakness in TiO2 markets and resulting stressed metrics for each of the TiO2 producers.” said Joseph Princiotta, senior analyst at Moody’s.

The review also reflects “growing concerns across commodity markets in general against a backdrop of a cautious economic outlook and concerns about China’s economy, and how a slowdown there might affect local demand and exports of TiO2,” Princiotta added.

In a 26 January special report, Moody’s warned about the impact of deteriorating macro conditions on the chemical sector but also noted that liquidity remains relatively solid.

“We have previously cited an unusual and growing disparity in profitability that developed in the chemicals industry during 2015 and now expect that certain sectors… will be pressured by an extended downturn in commodity prices,” said Benjamin Nelson, senior analyst at Moody’s.

“Moody’s expects this trend will intensify in light of expected deterioration in several downstream industries (metals, mining, construction, steel) and significant exposure to slowing emerging markets,” he added.

And the global economic outlook is less than inspiring. The ratings agency expects modest growth in the US and Europe, continued recession in Brazil and Russia, and slowing growth in China – about the consensus view and certainly not disastrous in and of itself.

Yet commodity chemical producers are poised to feel the brunt of the pain. Overcapacity has emerged as companies have been slow to shut down or idle capacity in response to lower-than-expected demand, especially from the slowing in China.

“China’s ongoing transition to a consumer-led economy will reduce the demand for some commodity chemicals over the next several years,” said Nelson. “The impact of a slowing economy in China is particularly evident in overcapacity situations that have developed in titanium dioxide, chlor-alkali/PVC (polyvinyl chloride), methanol and organosilicones.”

One positive for now is that chemical debt prices have not collapsed, as has been the case with the energy, and metals and mining sectors (see table).

ROOT CAUSES OF SLOWDOWN

As for the global economic slowdown, rather than being transitory, it may be something the industry will have to get used to, for an extended period.

The global economy is continuing along the path of the “Great Unwinding” following the withdrawal of major stimulus programmes in the US and China, contends Paul Hodges, chairman of UK consultancy International eChem.

This Great Unwinding has manifested in slowing China economic growth, and the collapse in crude oil and other commodity prices. And it’s not just about the removal of stimulus and China’s shift away from an export-driven economy, but long-term global demographics.

“Attention will now turn to the real cause of the growth slowdown now under way – the fact that 1bn people are now moving into the lower-spending, lower-earning, New Old 55+ generation,” said Hodges.

“They will be an unprecedented one in five of the global population by 2030. We suggest this means deflation is becoming almost inevitable, as the excess supply created by the stimulus policies cannot be absorbed,” he added.

For central banks, it’s one thing fighting a “normal” cyclical downturn with fiscal stimulus and loose monetary policy, but another fighting demographics. The latter will be swimming against the tide.

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ICIS and International eChem are publishing a new study: “How to survive and prosper in today’s chaotic petrochemical markets:Five critical questions every company and investor needs to answer”. The study covers the olefins, aromatics and polymers markets. See how feedstocks and product supply and demand will impact your business and investments over the next 10 years. Visit www.icis.com/services/consulting/scenario-planning/supply-and-demand-study

2016
01/07

Category:
Credit Ratings

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Morningstar Credit Ratings Assigns Preliminary Ratings to LSTAR Securities …

NEW YORK, Nov. 18, 2015 /PRNewswire/ — Morningstar Credit Ratings, LLC today assigned preliminary ratings to two classes of residential notes from LSTAR Securities Investment Ltd. 2015-10 and LSTAR Securities Investment 2015-10, LLC (LSTAR 2015-10), a resecuritization of previously issued residential mortgage-backed securities (RMBS). The preliminary ratings are based on information known to Morningstar as of Nov. 18, 2015.