Credit Benchmark have released the February Credit Consensus Indicators (CCIs). The CCI is an index of forward-looking credit opinions for US, UK and EU Industrials based on the consensus views of over 30,000 credit analysts at 40 of the world’s leading financial institutions. Last month suggested improving sentiment for EU Industrials, but this month’s CCI has dropped back below 50 and sits lower than the US CCI.
A growing divide in credit quality and default risk for the US and UK retail sectors emerged in recent years. Since Credit Benchmark began tracking data on the retail sector, default risk has been higher for the UK than for the US, a trend that persists with the latest monthly update. In recent months the gap in default risk between US and UK retailers has been getting wider.
The Oil & Gas sector was in trouble even before the first Covid lockdown, and it was one of the worst credit performers in 2020. A perfect storm of falling oil prices, the spectacular rise of alternative energy sources, and the effective collapse of global tourism took many oil companies to the brink of bankruptcy and pushed some of them over the edge. Recent agency downgrades have cited climate change and permanently higher oil price volatility; agency ratings for some of the US majors are now aligned with the more conservative bank consensus.
Credit Benchmark have released the January Credit Consensus Indicators (CCIs). The CCI is an index of forward-looking credit opinions for US, UK and EU Industrials based on the consensus views of over 30,000 credit analysts at 40 of the world’s leading financial institutions. Drawn from more than 800,000 contributed credit observations, the CCI tracks the total number of upgrades and downgrades made each month by credit analysts to chart the long-term trend in analyst sentiment for industrials.
The 2020 pandemic brought various forms of disruption, hardship and human tragedy. Governments and businesses around the world had to rely on trial and error to find the best response. There have been some high-profile corporate winners – companies that support home working, online delivery and logistics providers, packaging firms, some pharmaceuticals. But Covid has highlighted economic and social inequalities, and added “health poverty” to the lexicon.
Few industries have been impacted more severely by the COVID-19 pandemic than Travel & Leisure. According to Credit Benchmark, which captures the credit risk views of over 40 of the world’s leading financial institutions, 44% of companies in the global Travel & Leisure sector fell from investment grade to high yield between March and November of 2020. That means the consensus credit risk scores for these so-called ‘fallen angels’ fell below the bbb- threshold at some point during the pandemic.
Problems in the energy sector are far from new, and are continuing to worsen slightly each month. This is particularly true for the US and UK energy sectors which have seen a great deal of volatility and distress in the last year or so. The picture isn’t so dire for the EU energy sector however.
Credit Benchmark have released the December Credit Consensus Indicators (CCIs). The CCI is an index of forward-looking credit opinions for US, UK and EU Industrials based on the consensus views of over 30,000 credit analysts at 40 of the world’s leading financial institutions.
Traditionally, corporate supply chain information has been patchy. But over the past few years, Bloomberg have collected extensive supplier and purchaser data to shed light on the huge network of linkages between global coporate giants and the myriad of small and/or unquoted and unrated companies that form the fabric of the global economy.
Credit Default Swap (“CDS”) prices are often cited as a proxy for solvency risk. When CDS are not available, consensus credit estimates can be a robust alternative – provided they are adjusted by the market risk premium. GSIBs are the most scrutinised financials in the world. From a solvency perspective, regulators and investors are as well informed about these firms as it is possible to be.
US General Retailers may not yet feel like the proverbial child in the toy store, but for the first time in a long time they have some cause for hope. Sales continue to rise, even if the pace is less than anticipated. A lack of in-store shopping has, in some instances, transferred to online shopping.
Credit Benchmark have released the end-month Industry Monitor for November, based on the final and complete set of the contributed credit risk estimates from 40+ global financial institutions.
COVID has led to waves of downgrades across many sectors, with an unprecedented number of Fallen Angels. While there have also been some clear COVID winners, Rising Stars have so far been in a minority. But with vaccines now being rolled out, an end to the economic crisis could be in sight even for some of the hardest-hit sectors.
If there’s one major sector that has borne the brunt of problems during COVID, it’s the US energy sector. Credit quality deterioration may not be as pronounced in the UK or EU energy sectors, but similar industry strains exist in both. Prices remain below their pre-pandemic levels, and demand will likely remain weakened until normal transportation habits and schedules return. The threat of COVID remains ever-present.
Credit Benchmark have released the November Credit Consensus Indicators (CCIs). The CCI is an index of forward-looking credit opinions for US, UK and EU Industrials based on the consensus views of over 30,000 credit analysts at 40 of the world’s leading financial institutions.
The outlook for the US retail sector is now less bleak than in earlier months. After disappointing sales data in September, data released in October was more upbeat, even amid ongoing concerns about the economy. The economic situation is similar in the UK, with sales data released in September and October showing gains despite ongoing weaknesses in the economy, but credit quality for the UK retail sector continues to deteriorate.
The rays of light within credit markets are slowly growing. Known as Rising Stars, companies moving from high-yield or “junk” to investment-grade status are increasing across many sectors. According to the latest consensus credit data from Credit Benchmark, which tracks collective credit quality estimates of lenders to firms in various sectors, the total number of new Rising Stars has increased by 24 since the previous update.
The number of Fallen Angels – companies whose credit quality has shifted from investment-grade to high-yield or “junk” status – continues to increase, yet each update brings a smaller total number than the last.
Once again, no news may be good news for the US housing sector. There are positive forces, such as interest rates for mortgages at or near record lows, and a potential trend of buyers moving away from urban areas amongst other factors that may buoy demand for housing and support construction. Similar trends are occurring in the UK housing market, where mortgage demand is red hot.
Challenges in the energy sector are numerous and persistent. These challenges are perhaps most evident in the US energy sector, where strained prices and weakened demand have accompanied months of reduced travelling for professional and personal reasons. Bankruptcies are increasing. Some firms are doing better than others, yet few are in great shape.