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Outlooks 2020

Credit Outlooks 2020 Series Launches

As we enter a new decade, ripe with risk and opportunity, a fluid geopolitical backdrop, and an aging credit cycle, Fitch's Credit Outlook research and events provide in-depth insight into credit in 2020 and beyond.

 

View all Outlooks: 

Credit Outlooks 2020

Global Sovereigns Outlook 2020

Shape of Next US Economic Cycle Will Inform USPF Macro Stress

The federal government's two primary tools to stimulate the economy, fiscal and monetary policy, may be constrained relative to previous cycles, potentially exacerbating cyclical US public finance (USPF) funding deficits and delaying the rebuilding of issuer reserves during and coming out of the next downturn. More limited possibilities for aggressive macro policy easing could culminate in a slower path of recovery after any future recession.

Political Risk An Acute Issue for Latin American Sovereign Ratings

Recent political volatility in a number of Latin American countries, including Argentina, Bolivia, Chile, Ecuador and Peru, reflects a broader theme of rising political risk that could amplify negative sovereign credit trends in the regions. There are currently no positive Ratings Outlooks among Latin American sovereigns and a large number of Negative Outlooks.

Fiscal Policy Easing Ahead in 2020

Global sovereigns enter 2020 with the world economy slowing and policymakers debating what to do about it, says Fitch Ratings. Most countries are exposed to the trade dispute between China and the US, making it more difficult to calibrate domestic policy settings given the international uncertainties.

Election Pledges Heighten UK Fiscal Risks

Spending plans from the two largest UK political parties suggest that the period of budget deficit reduction is over, Fitch Ratings says. We anticipated fiscal loosening when we affirmed the UK's 'AA' sovereign rating in October but, while the scale and timing remains uncertain, risks to our fiscal projections have risen substantially.

Regulatory Change Presents Greatest Event Risk to US Corporates

Regulatory change is the most likely near-term event risk for US corporate business models and financial profiles, particularly in the healthcare & pharmaceuticals; real estate; and gaming, lodging & leisure sectors.

China's Merger Plan May Support Clean-Up of Small Banks

China's reported plans for widespread mergers could complement the authorities' efforts to address significant weaknesses at small banks, potentially over time leading to stronger and more transparent institutions.

Events

¡2020 Outlook for Latin America and the Global Economy!

Nov 21st from 3:15pm – 6:30pm at Hearst Tower in New York City (map)

With the region’s three largest economies either in recession or struggling to grow, Latin America is forecast to recover modestly in 2020. However, risks remain on the downside amid persistent external headwinds and domestic policy uncertainties. 

Join us for our global macroeconomic overview, a fireside chat with Katherine Renfrew, Managing Director at Nuveen, and a panel discussion with the Latin America Ratings Group. Cocktail reception to follow. 

Register Now

Secular Trends Spur Xerox-HP Bid but Terms, Investor Demand Key

Xerox's confirmed buyout offer for HP could provide strategic benefits for both companies due to challenging secular trends in commercial printing and personal computers, but any potential transaction would likely require significant debt funding given HP's large size.

Fitch Ratings Launches ESG Heat Map for Structured Finance and Covered Bonds

Fitch Ratings has launched an ESG 'heat map' covering 54 different sub-sectors across 4,821 transaction and programme ratings for structured finance (SF) and covered bonds (CVB), to provide further insight into the relevance of ESG factors to credit ratings. The map is designed to help users understand how relevant individual ESG topics are to credit ratings across different sub-sectors for ABS, CMBS and RMBS transactions, and CVB programmes.

Policy Clarity on Urgent Challenges Key For New Argentina Gov't

Argentina's new president-elect, Alberto Fernandez, faces urgent policy challenges including turning vague campaign promises into a detailed economic plan, renegotiating the IMF Stand-by Arrangement, and restructuring debts with bondholders.

Related

Subscribe on iTunes: Fixed Interests Podcasts

China Corporate Bond Market Blue Book: Defaults More Common; Documentation and Legal Framework Still Evolving

The China Corporate bond market has been evolving rapidly in recent years. The latest issue of China Corporate Bond Market Blue Book is an update to our last edition published in May 2015 which presents our observations on key market developments, including corporate bond defaults, post-default workouts, new bond categories, and emerging credit derivatives products.

 

Listen to Webinar:
China’s Corporate Bond Market: Rising Defaults Amid Further Opening-up

Chilean Unrest: Challenges Ahead

On Demand

Join us for a webinar with the Latin America Ratings Group to discuss Chile’s ratings and the risks the protests pose to economic growth, the fiscal deficit and debt trajectory, and President Piñera’s reform agenda as well as the corporate, bank and insurance sectors in the country.

Register Now

 

Related: Chilean Unrest Has Mixed Effect on Corporate, Sovereign Credit

Synergies in Fiat Chrysler-Peugeot Merger May Be Credit-Positive

Achieving the announced synergies in the merger between automakers Fiat Chrysler Automobiles (FCA, BBB-/Stable) and Peugeot (PSA, BBB-/Stable) could be a positive credit factor in the medium term, Fitch Ratings says.

Fitch Upgrades Mozambique to 'CCC'

Fitch Ratings has upgraded Mozambique's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'RD' and Long-Term Local-Currency IDR to 'CCC' from 'CC'.

Most GCC Budget Positions Weakening on Lower Oil Prices

 Headline fiscal balances will weaken across much of the Gulf Cooperation Council (GCC) in 2019 and 2020, maintaining pressure on sovereign and external balance sheets, Fitch Ratings says. Last year's fiscal policy loosening has been exacerbated by lower oil prices.

Commodities Credit Journal

Our Credit Journals are a curated compilation of Fitch Ratings’ in-depth research and commentary. 

Download the Commodities Credit Journal.

Fitch Revises Turkey's Outlook to Stable; Affirms at 'BB-'

Fitch Ratings has revised the Outlook on Turkey's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative, and affirmed the IDR at 'BB-'. Turkey has continued to make progress in rebalancing and stabilising its economy, leading to an easing in downside risks since our previous review in July.

Fitch + CRU

European Steel Prices to Remain Subdued in the Short Term

Prices for steel products in western Europe have fallen in 2019 from their 2017-2018 peak and are likely to remain subdued into 2020, Fitch Ratings and CRU say. Steel producers' margins have been pressured, but this could ease towards 2H20 due to capacity cuts and a decline in input costs. 

20/20 Vision

Manufacturing and Labour Market Disconnect Persists in Advanced Economies

The contrast between labour market performance and manufacturing activity indicators in the advanced economies is persisting. There has been widespread further weakness in recent months in Manufacturing Purchasing Managers' indices across larger economies including eurozone, UK, Germany, Spain, Russia and South Africa.

South Africa's MTBPS Fails to Stabilise Government Debt

South Africa's Medium-Term Budget Policy Statement (MTBPS) does not outline a clear path to its stated objective of stabilising government debt/GDP by 2025/2026. Rising real primary expenditure underlines the difficulty of reining in the public sector wage bill and persistent social pressures for better services in the context of divisions within the governing ANC

Typhoon Hagibis an Earnings Event for Japan's Insurers

Typhoon Hagibis is likely to be an earnings event for Japan's three main non-life insurance groups, MS&AD, Sompo and Tokio Marine, with no material effects on capital and no rating implications. We expect the companies' net losses after reinsurance and catastrophe reserve releases to be limited in relation to their overall earnings.

New Minority Parliament Raises Fiscal Questions for Canada

The return of a hung parliament following Canada's recent federal election should not lead to significant changes to major economic policies. However, the lack of a single-party governing majority raises risks that power-sharing pressures could lead to a more expansionary federal government fiscal policy and that the country's elevated general government debt may not stabilize as Fitch expects.

2020 Outlook

Competition to Maintain Pressure on BDC Lending Terms in 2020; Negative Sector Outlook

Business development companies (BDCs) will face continued challenges heading into 2020, including competitive underwriting conditions, earnings pressure from lower interest rates and unsustainable asset quality metrics, according to Fitch Ratings' 2020 BDC outlook report. Fitch believes competition in the middle market will continue to pressure deal structures and terms in 2020 as low interest rates drive elevated demand for higher-yielding middle-market paper.

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