Fitch Wire

Fitch Ratings expects the rise in U.S. investor interest in European Community (EC) infrastructure products to be tempered by several structural and regulatory challenges. Issuers of project and infrastructure debt in the EC are facing substantially...

The Spanish central government’s approval of the regions’ Economic and Financial Plans (EFP) could contribute to an improvement in their liquidity and market access, but the regions need to deliver on their plans. And it does not substantially...

According to a survey conducted by Fitch Ratings, the majority of nonprofit hospitals expect capital spending to either increase or remain at current levels over the next five years. Many factors are influencing capital plans, including potential...

The introduction of a legislative framework for New Zealand covered bonds is positive for investors, Fitch Ratings says. It endorses the segregation of cover pool assets through an asset owning SPV, reinforces the legal certainty on their treatment...

Bank regulators Monday forged ahead with final guidance regarding internal stress testing for large banking organizations with consolidated assets greater than $10 billion. Fitch Ratings views the supervisory guidance as sound and sufficiently...

Telecom Italia’s credit profile hinges on its exposure to a weak Italian economy, not its proposed asset sales.TI is thought to be looking for a buyer for Telecom Italia Media, which has an estimated value of EUR250m. But a successful sale would...

Spanish corporates’ ability to issue scrip dividends may be under threat due to economic and regulatory pressures, Fitch Ratings says. These pressures could make banks and private investors less willing to accept shares in lieu of cash. Scrip issues...

The Lloyd’s insurance market’s planned expansion into emerging markets is a net positive, even though writing insurance outside of established markets carries additional risks, Fitch Ratings says.Fitch expects the economic development of emerging...

The Japanese “mega banks” have been among the major beneficiaries of European bank deleveraging, as highlighted in their latest results.We expect these banks to continue to search for growth by increasing their exposure outside of Japan. However,...

Delta Air Lines, Inc.'s acquisition of the Trainer refinery near Philadelphia represents an innovative but unproven approach to the long-term management of the airline's jet fuel costs. Although Delta has outlined the potential for high returns on...

Fitch believes the post-crisis new issue RMBS landscape is characterized by high-quality transactions backed by pristine collateral and more straightforward deal structures. While new issue volume has slowly improved, with three new issue prime...

Shale gas is proving a boon for US chemical companies, but is making life difficult for their European counterparts, Fitch Ratings says. A likely prolonged cost disadvantage for European companies will exacerbate expected pressure on cash flow and...

Covenant-lite loans seem to be staging a mini-comeback, but Fitch Ratings believes the recent spike in volume doesn't likely signal a long-term rally. While we acknowledge the general tone of the covenant-lite loan market has become more...

Fitch Ratings believes the increase in California's budget gap projection is unsurprising given the disappointing actual tax collections through the current fiscal year, adverse court and federal actions, and higher spending needs. Yesterday,...

The reforms to the Spanish banking system announced on Friday are a net negative for the sovereign because some banks will require state support. Even so, they are positive for the banks themselves. The increase in provisioning for performing real...

Swedish covered bonds could be more exposed to liquidity risk in the event of an insolvency of the sponsoring bank than covered bonds from other northern European countries, Fitch Ratings says. Swedish covered bonds are issued with hard bullet...

European investors are moving towards the possibility of another long-term refinancing operation (LTRO) next year, according to Fitch Ratings' quarterly credit market investor survey. Fitch believes that another round of cheap three-year financing...

The successful passage of pension legislation through the Polish parliament is positive for the country, both because of the long-term contribution that pension reform can make to fiscal consolidation, and as an indication of the broad political...

Fitch Ratings notes an increase in the offering of prepaid cards, as U.S. banks look to offset revenue reduction resulting from implementation of the Durbin Amendment. We believe Durbin could, on average, cut potential fees on debit card...

A significant increase in enforced loan impairment provisions by Spanish banks is likely to trigger more consolidation between the mid-sized and small banks. The government has incentivised banks to merge by giving them a longer time to comply with...

Upstream oil and gas firms have on average kept a lid on finding, development, and acquisition (FD&A) costs over the past three years, even as higher crude oil prices have pushed industry capex and service costs up quickly. Based on a sample of...

The spillover from a hypothetical Greek eurozone exit could hurt corporates throughout Europe, but principally only if the exit is disorderly, says Fitch Ratings. A disorderly exit would have a wide-ranging impact with the potential for corporate...

The Federal Deposit Insurance Corporation's (FDIC) elaboration of its plan to unwind failing banks has further clarified and reinforced the trend to remove federal support from U.S. banks. Fitch had previously downgraded U.S. support ratings based...

Fitch Ratings believes the recent increases in commercial REO assets are significant enough to bring down the CMBS delinquency rate. We expect the rate to vary by about 25 bps in both directions in 2012 and that the current REO inventory will put...

The inconclusive outcome of Greece’s May 6 parliamentary elections and the subsequent failure to form a coalition government make fresh elections in June probable. The election or formation of a Greek government unwilling or unable to abide by the...

Funding costs for the larger Indian non-bank financial institutions (NBFIs) could rise after the guidelines on securitization and direct assignment of loan receivables were released by the Reserve Bank of India (RBI) earlier this week. The...

The medical professional liability insurance (MPLI) market continues to stand out as a relatively strong corner of the U.S. property/casualty business, with recent underwriting performance remaining favorable. However, Fitch Ratings sees more...

Fitch's April 27, 2012 commentary on the regulatory covered bond framework introduced by Canada's Minister of Finance on April 26 incorrectly referenced an overcollateralization (OC) limit for covered bond programs issued under new legislation.The...

Fitch Ratings believes a potential industry shift toward electronic trading bond platforms could, over time, compress fixed-income margins. However, any margin compression would likely be less acute for major trading banks than what had been...

European fixed-income investors are bullish on high-yield bonds relative to other sectors, according to Fitch Ratings’ quarterly credit market investor survey.High yield (HY) rose in popularity to become the most favoured sector, with nearly a...

Fitch Ratings believes the recent increase in U.S. consumer credit and subtle loosening of underwriting standards are not yet a cause for concern for consumer ABS. The Federal Reserve reported on May 7 that consumer borrowing rose in March by $21.4...

Fitch believes the recent proposed expansion of rules concerning fracking is unlikely to increase natural gas prices and/or wholesale power costs over the near term, largely because of the narrow scope of the rules. Therefore, the impact on public...

Even in a watered-down form the potential application of Solvency II to European occupational pensions could have a significant negative impact on corporate cash flows. This initiative’s insurance-style funding requirements could negate the progress...

Fitch Ratings expects the crash of the Sukhoi Superjet 100 (SSJ 100), while on a demonstrator flight, to negatively affect orders for the aircraft in the short term, but not the ‘BB’/Stable rating of JSC Sukhoi Civil Aircraft (SCAC), the plane’s...

The Reserve Bank of India’s (RBI) guidelines on securitisation transactions, published this week, could promote the long-term growth of the Indian securitisation market, pending clarity on the tax treatment of Pass-Through-Certificates (PTCs), Fitch...

Historically low loss rates on U.S. automobile and credit card loans reflect improved consumer financial health and previously tightened underwriting standards and explains the loosening of lending terms which is underway in the auto and credit card...

The proposed strengthening of UK shareholders’ say in executive compensation arrangements would increase their influence over company policies, but considering the tools shareholders already possess to impose their will on boards are unlikely to...

European fixed-income investors are unconvinced by recent policy efforts to solve the eurozone crisis, indicating that additional measures are needed, according to Fitch Ratings’ quarterly investor survey of asset managers’ outlook for the credit...

Argentina's government still maintains sufficient fiscal flexibility to avoid direct intervention in the country's private banking system, but future efforts to divert liquidity from Argentine banks cannot be ruled out. Fitch Ratings believes that a...

Price increases in the July reinsurance renewal period are likely to be restricted to loss-affected sectors unless there is a further significant insured loss for the industry.We believe an insured loss of more than USD50bn would reduce capital...

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are finalizing their cohesive definition of "swap dealer," a key part of the new Dodd-Frank regulatory framework for over-the-counter derivatives, but...

Recent refinancing activity by high-yield Spanish issuers Abengoa and OHL shows that they have access to capital markets, despite their nationality. However, we don’t think it is possible to assume that most other Spanish high-yield companies will...

The Australian government’s fiscal consolidation plans are positive, says Fitch Ratings. Aimed at balancing the FY2012-13 budget, they should bolster the country’s fiscal position and reinforce its future flexibility.Balancing the Commonwealth...

Most Spanish RMBS transactions show resilience to a further collapse in house prices and a jump in mortgage defaults in two stress tests Fitch Ratings has put the transactions through.The two scenarios demonstrate the stress required over the next...

U.S. rail carload traffic continues to contract on a year-over-year basis, driven in large part by the ongoing decline in coal demand from utility customers. Fitch Ratings views weak year-to-date rail volume trends as a reflection of fundamental...

Fitch Ratings believes that several proposals introduced to the Illinois Legislature have potential for reducing the state's long-term pension obligation. Illinois's unfunded pension liability totals more than $80 billion, and pensions have been a...

The May 1 announcement by Bolivian President Evo Morales that local assets of Spanish electricity firm Red Electrica will be nationalized represents the latest example of state intervention in the Bolivian economy, and highlights the challenges the...

The Federal Reserve's "Enhanced Prudential Standards and Early Remediation Requirements for Covered Companies" proposal attempts to address interconnectedness between U.S. financial firms and their impact on financial stability, specifically...

Royal Bank of Scotland’s good progress in reducing its non-core assets and re-shaping the balance sheet reinforces Fitch Ratings’ view that the UK bank’s restructuring plan is largely achievable. The bank reduced its non-core funded assets by...

Increases in the standard variable rates (SVRs) announced by various UK building societies and banks may have only a limited impact on affordability for the majority of affected borrowers, Fitch Ratings says.Fitch remains concerned however that...

The acquisition of 60% of Weetabix by Chinese food producer Bright Food highlights the increasingly two-way nature of Western brand expansion into emerging markets, Fitch Ratings says. Richer Western multinationals are seeking to push into emerging...

The announcement on Wednesday of further hikes to Russian extraction taxes will cause a substantial dent to its gas companies’ cash flows but should be manageable at current rating levels, Fitch Ratings says.On 2 May the Russian government approved...

The end of the government and insurance industry’s Statement of Principles (SoP) agreement to provide insurance in high flood risk areas in June 2013 may prove positive for the UK insurance industry, Fitch Ratings says. Although potentially...

Indian banks may need to raise up to USD50bn of additional equity under the Basel III capital regulations announced by the Reserve Bank of India, on top of retained earnings. Most of the requirement is back-ended – with over 75% needed to be added...

Fitch Ratings believes the potential sales tax revenue that could be collected on Internet transactions could have a positive, albeit limited, effect on some state and local budgets. However, the additional revenues, while welcome, would be of...

Fitch Ratings believes that most U.S.-regulated utilities will be able to weather the impact of the warm winter in the first quarter through continued operation and maintenance (O&M) cost discipline, regulatory recovery, and active fuel purchase...

Rising demand from institutional investors contributed to a further concentration of the market for Chinese money market funds (CMMFs) in Q112, Fitch Ratings says. But it also helped reduce the fund-flow volatility normally seen at the end of the...

Australian banks will continue to retain some of the interest-rate cuts by the Reserve Bank of Australia, or even increase lending rates independent of any RBA rate action, in order to reduce pressure on net interest margin caused by higher funding...

Fitch Ratings believes growth in institutional financing to closed-end funds (CEFs) via banks and insurers will continue, albeit at slower rates than previously observed.Since the end of 2007, banks and insurance companies have increased financing...

A number of recent U.S. economic data releases, as well as management comments during earnings season, continue to support Fitch Ratings' view that companies are proceeding cautiously when considering expanded investment in plant and equipment. We...

The restructuring plan for Tokyo Electric Power Co. is unlikely to lead to significant near-term bank losses on loans to the power company or their existing equity stakes in the business, Fitch Ratings says. Financial institutions still face credit...

Emerging markets’ economic growth rates make them an obvious and potentially highly profitable target for capital goods companies, but increasing dependence on these regions creates additional risks that need to be carefully managed.Capital goods...

The divergence between two versions of China’s manufacturing PMI is baffling investors about the current state and outlook for corporates in China. Fitch believes the difference may be explained by tighter credit conditions facing China’s private...

The political events of late April in the Czech Republic, which saw the centre-right government led by Prime Minister Petr Necas survive a confidence vote with a reduced parliamentary majority, do not in themselves have any implications for the...

The likelihood of further electricity blackouts in China this summer underlines Fitch’s view of the basic problem facing thermal electricity generators – that the tariff framework is not sustainable in the long term.  The problem centres on China’s...

Fitch Ratings believes the move toward slightly riskier borrowers in prime auto ABS pools is unlikely to present a near-term risk to bondholders. We believe prolonged softness in unemployment rates and jobless claims could have a bigger...

U.S. regulators' approval of the first major U.S. export facility for liquefied natural gas (LNG) is likely to trigger an acceleration of project approval requests. Moreover, as new export contracts are signed with major LNG customers, Fitch Ratings...

Santander’s plan to launch an IPO of its Mexican division shows the bank has more flexibility to boost its capital than other Spanish lenders. The listing of a 25% stake in the business will reduce revenue from the region, but is not an indication...

The risk to insurance companies of consumers demanding their money early on guaranteed savings products is increasing as early surrender penalties reduce and households’ disposable income is squeezed by the tough macroeconomic environment, Fitch...

Authorities in several European countries may be unwilling to impose a fixed limit on asset-encumbrance as part of any future bail-in legislation because of the deep-rooted role covered bonds play in their markets, Fitch Ratings says. If such a...

Fitch Ratings believes higher balance commercial real estate loans are more likely to be modified than liquidated by special servicers. And A/B notes are almost exclusively used in that end of the market. Fitch also believes that the smaller volume...

The fall of the second government in Romania in less than three months has increased political uncertainty. The former opposition Social Liberal Union (USL), clearly ahead in opinion polls, will most likely form the new government and run the...

At nearly 200% mobile penetration, the Saudi mobile market should be close to maturity, but surprisingly it is still growing, despite possible slowing in H212. The main growth engine is demand for mobile broadband services, which has offset the...

Covered bonds would attract significantly lower capital charges than securitisations under Solvency II because of an excessively conservative calibration of the rules. Fitch Ratings expects that the differences in capital charges would lead to...

The completion of Banco BTG Pactual's BRL3.7 billion ($2 billion) IPO is a credit positive for the fast-growing Brazilian investment bank. Fitch sees the IPO as supportive of the bank's liquidity, capitalization, and competitive strength at a time...

Fitch believes Canada's exclusion of insured mortgages from regulated covered bonds is likely to increase the cost of future issuance via higher credit enhancement levels. This measure may also cause a contraction in credit availability, which has...

Fitch Ratings believes MetLife's move to exit the reverse-mortgage business and the company's strategy to depart from the banking business via a shedding of its bank holding company units are in line with our expectations.We believe the company's...

The rise in rents and occupancies in the multifamily sector is close to the peak last seen before the beginning of the recession, according to Fitch. However, we believe that favorable demographics and a limited new supply will ensure the market...

The fact that corruption in Nigeria’s oil subsidy programme has been officially uncovered is encouraging, both politically and economically, Fitch Ratings says.Politically it shows the government can clean up the system if there is political will....

The Chinese auto market has significant growth potential over the medium to long term, notwithstanding negative unit sales growth in Q112. Competition is likely to intensify from additional capacity scheduled to come on stream throughout 2012, which...

A scheduled doubling of interest rates on subsidized undergraduate Stafford student loans could create a short-term opportunity for private lenders, although Fitch Ratings believes that regulatory uncertainty with respect to the student lending...

Abanka's attempt to raise EUR50m from its shareholders underlines Slovenia's position as one of the weakest banking markets in Central and Eastern Europe due to rising non-performing loans. This is compounded by pressured capital bases, a weak...

Fitch Ratings believes a thoughtful approach to the long-term implementation and support of managed lanes (MLs) is critical as state departments of transportation (DOTs) evaluate such projects. Revenue from these projects tends to be volatile,...

The future ability of insurance firms to invest in infrastructure projects is likely to depend heavily on whether they use internal models to determine their Solvency II capital requirements and can persuade regulators that infrastructure investment...

A rebound in excess spread levels is supporting Spanish consumer ABS transactions, helping transaction performance recover despite the weakness in the Spanish economy, Fitch Ratings says.The improvement in the majority of transactions in the sector...

The European Commission’s announcement that it will start financial aid talks with Hungary is positive. Nonetheless, the process of securing assistance will be uncertain and the news does not negate our long-term concerns relating to the country,...

HSBC Bank plc’s recent RMB2bn issue marks a logical step in the bank’s aspiration to capitalise on its significant investments in China, and a natural extension of HSBC group’s dominant market position in Hong Kong where it leads in underwriting...

Generally solid first-quarter operating results for large U.S. manufacturers are masking significantly weaker demand trends in China, especially in markets tied closely to construction. Fitch sees the potential for the recovery in Chinese orders and...

Fitch Ratings believes timing and price are key when it comes to the pace at which Morgan Stanley (MS) will acquire Citigroup's remaining stake in brokerage Smith Barney (SB).MS already owns 51% of the business and beginning next month has the...

Obrascon Huarte Lain’s sale of its Brazilian and Chilean toll roads to Abertis Infraestructuras increases the group’s ability to hit its deleveraging target and should provide a more reliable dividend stream, Fitch Ratings says.OHL’s FY11 leverage,...

Fitch Ratings forecasts that the Netherlands’ budget deficit will be 4.5% of GDP this year, with larger risks around next year’s 3% target following the breakdown in negotiations over austerity measures and possibility of early elections.The Dutch...

The expected introduction of direct elections for regional governors in Russia will strengthen governance in local authorities and their independence from the state.Regional governors currently depend on central government for their nomination as...

The oil and gas and telecoms sectors have seen CDS spreads widen the most in the market fall since mid-March. In Fitch Ratings’ opinion, the former probably reflects a run of individual bad news while telecoms suffer from more deep-seated...

Fitch Ratings believes that the fiscal stability agreement (FSA) between Detroit and the state of Michigan provides a strong framework for the city to address its severe budgetary issues but does not by itself resolve those issues. The FSA's...

Fitch believes that the origination of Mexican fixed-rate mortgages and their subsequent peso-denominated securitization presents an opportunity with some manageable risks. This week Infonavit, Mexico's state lender, announced it will begin...

Fitch Ratings believes the U.S. banking industry will remain under intense regulatory scrutiny regarding overdraft practices. The Consumer Financial Protection Bureau (CFPB) is continuing its inquiry into overdraft methods, focusing on what...

The resolution of a shareholder dispute over MegaFon will help to reduce TeliaSonera’s leverage to a level that is more comfortable for its ‘A-’/Stable rating, Fitch Ratings says. Any additional future cash from MegaFon, however, is more likely to...

Reforms to Spanish healthcare spending announced by the central government last week should be credit positive in that they will reduce the escalating cost of the provision of health care by the regions. However, Fitch is of the opinion that further...

Falling interest rates in Brazil are contributing to modest margin compression for the country's largest banks as interest spreads continue to tighten. Still, Fitch Ratings expects credit cost trends to be the most important determinant of operating...

Fitch Ratings views a potential acquisition of Avon Products, Inc. by Coty as credit negative.However, we note that Avon's quick decline of Coty's $10 billion bid combined with Coty's stated desire to not initiate a hostile offer lessen the...

Fitch Ratings believes that a port in Peru stands to benefit from an array of local advantages but faces some global challenges. Terminales Potruarios Euroandinos Paita S.A. (Port of Paita) recently issued US$110 million senior secured notes and...

While funding costs for many of the largest European corporates are at historic lows, few are likely to take advantage of cheap money for acquisitions or other uses until there is more evidence of stronger growth and a rebalancing of the European...

The recent amendment to the Irish Asset Covered Securities (ACS) Act will have no rating impact on existing ACS programmes because our covered bonds analysis focuses primarily on the cover pool assets, rather than the total mortgage assets of the...

Fitch Ratings does not expect Best Buy's decision to close 50 stores this year to have a significant impact on the ratings of CMBS deals. Of the CMBS deals we rate, all have sufficient diversification and credit enhancement to maintain their ratings...

The Federal Reserve clarified for banks Thursday that its enforcement of the Volcker Rule will not take effect until July 21, 2014, surpassing by two years its original implementation deadline. Fitch Ratings believes the extension is generally a...

Following this week's decision by Argentina's government to nationalize energy producer YPF S.A., the country is likely to see a decline in foreign direct investment. Among large Fitch-rated companies in Latin America, Europe, and the U.S., a...

Fitch-rated European supermarket operators are likely to cut capital expenditure by around 9% in 2012 in aggregate, reflecting a more cautious approach to expansion in their core markets and a focus on opening smaller stores, Fitch Ratings says.The...

Fitch Ratings believes the trend toward more short sales of distressed residential real estate loans in the U.S. is gaining momentum. The Federal Housing Finance Agency's (FHFA) recent announcement government-sponsored enterprises (GSEs) will...

Fitch Ratings believes Pfizer's sale of its infant nutrition unit could be construed as strategically beneficial for potential suitors, but might also produce some ratings pressure.One potential petitioner for Pfizer's nutrition business is Swiss...

The International Organization of Securities Commissions (IOSCO) has asked for comments on a series of questions about structured finance surveillance, one of which is whether variations in disclosure increase uncertainty and lack of comparability...

The multiyear downturn in the U.S. housing market has driven notable and sustained changes in new home buyer behavior, and regional differences in the pricing mix remain clear in recent data. Fitch Ratings notes that average new home prices in the...

Fitch Ratings views the recent Rialto securitization of nonperforming commercial real estate (CRE) loans, the first in years, as the beginning of a trend given the volume of distressed CRE lingering with servicers and lenders and the increased use...

Saudi Arabian banks have plenty of scope to fund loan growth in 2012 as the sector relaxes the cautious approach to lending that has dominated in the last few years, Fitch Ratings says.Rising deposits and several years of subdued loan growth have...

The approval Tuesday of a constitutional amendment requiring both Italy’s central and its regional and local governments to balance their budgets from 2014 should not require further adjustment from Italian cities or regions, which are already...

Most U.S. equity Real Estate Investment Trusts (REITs) have historically had limited, if any, international exposure. Fitch Ratings notes that a recent increase in REIT overseas investment announcements could signal a renewed opportunity for REITs...

China’s decision to allow the renminbi to move in a wider daily trading range against the US dollar does not necessarily signal a shift to a new exchange rate framework, Fitch Ratings says. Furthermore, we do not think a meaningful change in...

The Reserve Bank of India’s decision to cut its repurchase rate by 50 basis points to 8% Tuesday is neutral for India’s ‘BBB-’ rating with Stable Outlook, Fitch Ratings says. We regard some monetary easing as an appropriate response to India’s...

The recent bankruptcy filing by Hangzhou Glory Real Estate Co, a comparatively small homebuilder focused on the high-end residential market in Hangzhou, illustrates how restrictive regulations continue to polarise the Chinese property market between...

Fitch believes today's decision by Argentina's government to begin the process of nationalizing YPF S.A., the country's largest energy producer, adds to Argentina's policy uncertainty and could prove to be harmful for long-term private investment....

Fitch Ratings believes many U.S. banks will likely follow suit after JPMorgan and Wells Fargo reclassified $1.6 billion and $1.7 billion, respectively, in second lien mortgages as nonperforming loans. Most of these loans are still performing but...

Fitch believes the denial of the property tax exemption for not-for-profit hospitals in Illinois is an additional credit concern, which could further pressure the financial performance and credit profile of healthcare providers in the state....

Ally Financial Inc.'s (Ally) announcement today that it has agreed to extend the maturity of its secured debt facility with its wholly owned subsidiary Residential Capital LLC (ResCap) is in line with Fitch Ratings's expectation of continued...

Fitch Ratings sees that the increase in cost of attendance at U.S. colleges and universities, which began during the mid-1990s and accelerated through the end of the past decade, has not yet had a meaningful impact on enrollment at most...

U.S. corporate bond issuance soared in the first quarter, driven not only by historically low borrowing costs, but also by strong investor demand for both investment-grade and high-yield securities. Fitch Ratings' preliminary tabulation of...

Fitch Ratings believes credit unions could face significant challenges should they be allowed to make more small business loans. We believe few credit unions might successfully compete with those banks already heavily involved in the small business...

South Korea’s social spending bill will jump after its recent National Assembly election, but Fitch Ratings does not expect this to lead to a significant deterioration in public finances.The incumbent Saenuri Party won the elections, albeit by a...

Fitch Ratings expects Macau's gaming market fundamentals to remain positive following the opening of Las Vegas Sands Corp.'s (LVS) new casino property on the Cotai Strip. Although gaming revenue growth in Macau continues to decelerate, new supply...

Fitch Ratings notes the growing popularity of short-term fixed-income Exchange Traded Funds, or ETFs. These are short-term bond funds that market themselves as a close alternative to money market funds.We note one example that underscores the...

High funding costs and patchy access to markets will be key challenges for Spanish banks for some time, adding to the pressure on earnings from stricter impairment charges, higher capital requirements and a challenging operating environment, Fitch...

Fitch Ratings believes mortgage servicers, including big banks, will be subjected to increased operational, compliance, and reporting expenses if U.S. Consumer Financial Protection Bureau (CFPB) rules targeting lenders take effect. The proposed...

The announced sale by AT&T of a 53% stake in its yellow pages directories unit to Cerberus Capital provides additional evidence that directory publishers' credit fundamentals are deteriorating, likely pointing to a new round of restructuring in...

The Elgin gas field accident in the UK North Sea makes it more likely that the European Commission will implement stricter licensing and safety requirements on oil and gas companies, Fitch Ratings says. Some of the proposals could dramatically...

The first quarter saw very strong retail investment flows into high-yield debt securities and the rapid growth of exchange-traded funds (ETFs), as bond investment vehicles appears to be a major driver of the market's growth. Fitch believes leveraged...

Fitch believes the increase in rehabilitated student loans in some recent FFELP ABS transactions heightens near-term liquidity risk despite the U.S. government guarantee on these loans.Rehabilitated student loans are those in which the borrower...

Samsung Electronics is likely to have amassed a record-high operating profit of KRW5.8trn in Q112 – up 96% from the same period in 2011 – and with an operating margin 12.9%, based on the release of preliminary figures. This impressive performance...

Fitch Ratings says Royal Bank of Canada's (RBC) 'AA/F1+' short- and long-term issuer default ratings remain unchanged following the announcement of a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) regarding potential wash...

Fitch Ratings notes nonbank financial companies are one step closer to finding out if regulators view them as systemically important institutions.On Tuesday, the U.S. Financial Stability Oversight Council (FSOC) finalized criteria that will help...

Fitch Ratings' research has shown that U.S. prime money market funds (MMF) have moderately increased their exposure to Eurozone banks over the past few months after significantly reducing these positions during the second half of 2011. Despite this...

A mixed bag of first-quarter revenue results from the largest U.S. airlines could set the stage for the onset of renewed industry margin pressure as jet fuel costs stay high and the air travel demand outlook remains uncertain. Fitch Ratings sees...

The Irish government's decision to settle its 31 March EUR3.06bn promissory note instalment by delivering a government bond, rather than cash, is neutral for the sovereign's finances. But it may herald a fuller restructuring that delivers...

A Presidential Directive requiring state-owned Coal India Limited to sign fuel supply agreements (FSAs) with independent power producers will do little to relieve domestic coal shortages in the near term. Over the long term, the directive could...

Fitch believes that CalPERS' decision to lower the pension plan's earnings forecast from 7.75% to 7.5% is positive for local government credit quality in the long term.  However, changing to the more conservative rate will present near-term...

The enactment of the new draft civil code proposed by Russian President Dmitry Medvedev could be an important step towards improving corporate governance and transparency in Russian companies. Nevertheless, we will need to see evidence of...

Legislation recently passed in some states and under review in others could reduce underwriting losses for the largest U.S. auto insurers. Fitch Ratings sees prospective reform of no-fault insurance systems in Florida, Michigan, and New York as a...

The decision to raise the combined lending ceiling of the European Stability Mechanism and the European Financial Stability Facility is positive for vulnerable eurozone sovereigns.As we have previously said, increasing the size of the eurozone’s...

The amended Indonesian fuel price bill passed on Saturday has very little impact on the overall balance of risks in Indonesia’s credit profile, but it does highlight how the momentum for reform is likely to stall between now and the 2014...

The introduction of bail-in legislation in Europe has taken a step forward with the publication of a discussion paper from the European Commission, but governments’ willingness to provide support for banks will remain strong in the near-term....

Fitch Ratings views legislation in Washington aimed at making private student loans dischargeable in bankruptcy as a negative for lenders heavily concentrated in that product. While passage of bankruptcy reform isn't likely during a presidential...

The decision by RWE and E.ON not to proceed with their Horizon Nuclear Power projects in the UK is unsurprising given the need of these companies to improve their financial profiles, the long lead-times, cost of new nuclear construction and...

Commerzbank’s renegotiated deal to hold on to its Eurohypo division does not contain any restrictions that would harm the bank’s strategy or credit profile. The new agreement has no ratings impact for either Commerzbank or Eurohypo. The Issuer...

Fitch believes the new Canadian federal budget proposal for fiscal 2012/2013 confirms the Harper government's stated commitment to long-term fiscal consolidation, which is supportive of Canada's 'AAA' sovereign rating.On the back of better than...

The Spanish government wants to reduce its electricity tariff deficit, but the exact route is still unclear. Whichever policy is chosen is likely to require the Spanish utilities to share in the burden, says Fitch Ratings. Fitch believes it is...

The Australian government could be about to exclude Huawei from participating in building the country’s national broadband network (NBN), because of supposed concerns that it could impinge on national security – despite assurances to the contrary....

After suffering through a year of elevated property losses and poor underwriting results in 2011, U.S. commercial lines insurers are in a position to deliver improved operating results this year. Fitch Ratings believes that increasing commercial...

Fitch Ratings sees the impact of the Environmental Protection Agency (EPA) proposal on new coal-fired plants as having little short-term effect. Over the long term, it could increase the cost of electricity as a result of handicapping a historically...

Fitch Ratings believes meaningful purchase volume growth on credit cards in recent years is only now starting to translate into modest portfolio expansion, as the U.S. has been in the midst of widespread consumer de-leveraging. Credit card purchase...

The collapse of Gala Coral Group’s casino disposal plan puts more pressure on the company’s turnaround strategy amid weak trading in some divisions and fierce competition across the sector, Fitch Rating says.We believe a sale of the casino business...

The Co-operative Bank’s 2011 results this morning shed little light on its potential takeover of part of Lloyds Banking Group’s branch network. While the deal – if completed – offers the potential to transform Co-op’s business, an acquisition of...

The recent Royal Decree will result in a higher incidence of payment in kind arrangements in the Spanish mortgage market, whereby banks take ownership of the property and borrowers’ mortgage loan obligations are terminated. The impact on...

For the third year in a row, a sharp rise in petroleum prices will likely drive an increase in the first-quarter U.S. trade and current account deficits, both of which have worsened steadily since the end of the recession.  With benchmark Brent...

Fitch Ratings believes the Financial Accounting Standards Board's (FASB) review of repurchase agreement (repo) accounting rules could help close a major loophole used by some in repo accounting. We continue to believe that greater transparency in...

The recent rise in Greek government bond yields demonstrates the continuing correlation between liquidity in the sovereign credit default swap market and yields on the underlying cash bonds, Fitch Solutions says.Yields on new Greek bonds, created as...

Fitch Ratings notes that an uptick in unsecured bond issuance by aircraft lessors could signal that the capital markets are once again becoming a viable financing alternative for the sector.Aircraft leasing companies, including International Lease...

Turkish banks’ switch to Basel II regulations for credit risk will release capital held against customer loans and facilitate lending. Fitch does not consider this release of capital to be credit negative because of more stringent treatment of other...

Current reports of the three-day leak on Total’s wellhead platform at the Elgin gas field suggest this unfolding incident is not as serious as BP’s Deepwater Horizon accident in 2010. Even in the event of the shutdown of the whole Elgin field, Fitch...

Fitch Ratings believes a proposed 3% increase in the proportion of mortgage compulsory lending in Venezuela will not result in significant additional pressure to that already incorporated in the banking system. On Monday, the Venezuelan government...

The extension of two Italian forbearance schemes for small- and medium-sized enterprises may hinder clear performance reporting. This could weaken some structural triggers of Italian SME collateralised loan obligations and leasing asset-backed...

China’s economic slowdown is unlikely to hurt the financial profile of Australia’s major iron ore exporters - BHP Billiton Limited/Plc (BHPB; ‘A+’/Stable), Rio Tinto Limited/Plc (RT; ‘A-’/Stable) and Fortescue Metals Group Limited (Fortescue;...

The potential sale or IPO of Birds Eye Iglo is driven more by the desire of its financial sponsor to finally realise a profit on its investment than any refinancing pressure, says Fitch Ratings. But if the sale does not go ahead the company will...

Queensland’s new government has pledged to address the challenges of budgetary recovery and debt growth. Its ability to do this successfully will be an important component of our assessment of the state’s rating, Fitch Ratings says.Worsening public...

The imposition of US duties on Chinese solar panel exports is unlikely to slow China's growing market share and the overall fall in solar panel prices. But the cash flow generation of downstream Chinese solar panel exporters may be negatively...

Further privatisation of Russia’s banks could reduce the potential for state support, resulting in moderately lower Support Rating Floors (SRFs), Fitch Ratings says.President Dmitry Medvedev has asked the government and the Central Bank of Russia to...

Fitch believes that the House of Representative's federal budget proposal published this week, if enacted in its current form, would pressure the credit ratings of not-for-profit hospital and healthcare system. This proposal was authored by House...

Toll roads built to reduce congestion are exposed to volatile traffic volumes, and therefore have a weaker credit profile than toll roads built on new routes that do not face competition from existing, toll-free roads. Their status as “peaker...

Weak PMI data published March 22 is not enough to signal a downward lurch in the European economy, Fitch Ratings says. However, in the hypothetical shock scenario of a severe double-dip recession, we would expect the pain in the corporate sector to...

Germany’s savings banks and cooperative banks will be a key source of stability for the German banking system in 2012 and for the foreseeable future as the drivers of their strong performance are largely structural and downside risk is limited,...

Fitch believes most student loan asset-backed securities (ABS) transactions remain well protected due to the government guarantee on Family Federal Education Program (FFELP) loans. The Federal Reserve Bank of New York recently reported that as many...

Fitch believes that the strategic review completed by Hartford Financial Services Group (HFSG) generally supports a strengthening of the insurer's credit profile by sharpening its focus on high-return business units while mitigating exposure to...

Fitch expects the positive operating performance of the multifamily sector to continue during the next 12 months and to continue contributing significantly to the performance of real estate investment trusts (REITs) that invest in those properties....

A rebound in the solvency ratios of European insurers, while welcome, largely reflects the recovery in sovereign bond markets, rather than any underlying improvement to insurers’ balance sheets. Insurers targeting high investment-grade ratings may...

Fitch Ratings says that the 2012 UK budget and the latest OBR economic and fiscal outlook confirm the agency's expectation that the UK government remains committed to the deficit-reduction strategy set out in previous budgets and the 2011 Autumn...

Fitch Ratings says Jefferies Group Inc. Tuesday reported relatively good first quarter 2012 earnings buoyed by a 20% jump in investment banking revenue from the prior year period.  Jefferies fixed income trading rose 6.6% versus 1Q11 and doubled...

Fitch Ratings believes the U.S. Supreme Court's pending decision on the constitutionality of the Patient Protection and Affordable Care Act (ACA) could have some implications for the healthcare sector. However, we do not expect the outcome to affect...

Shale gas in Poland could still be a game changer for the country’s energy sector despite the disappointing shale gas reserve estimate published today by the Polish Geological Institute (PGI), says Fitch Ratings. PGI assessed most likely recoverable...

The recent start of a high-level dialogue with the European Union would be positive for Macedonia if it revives momentum towards official accession negotiations, Fitch Ratings says.The benefits of embarking on formal accession talks with a clear...

Fitch believes the benefit of a state's agreement with on-line retailers like Amazon depends on more than new jobs and sales tax revenue but also hinges on infrastructure and other local issues.New Jersey's state legislature is currently considering...

Fitch Ratings believes the Argentine government's increasingly bold and unpredictable intervention in oil and gas production could force Spain's Repsol to pay a heavy price. Following last week's decision by two of Argentina's oil-producing...

Fitch Ratings expects high-profile Native American gaming enterprises to face continuing capital structure and cash flow challenges even after debt restructurings are complete. It remains to be seen whether completed restructuring agreements, most...

Fitch Ratings believes stricter banking regulations such as Basel III could push some bank-intermediated activities, particularly those involving riskier exposures subject to higher capital charges, into the "shadow banking" sector. Repurchase...

The sharp decline in Spanish house prices highlights the need for tougher real estate asset provisions to increase transparency in banks’ balance sheets. In addition, the Spanish banking sector faces significant challenges such as the tough economic...

Fitch Ratings believes a recent court of appeals decision could set a precedent for the banking industry. The court of appeals for the second circuit in Manhattan Thursday ruled to delay a civil fraud trial involving Citigroup and the Securities and...

Fitch Ratings says the Federal Reserve's latest stress test results are inconsistent with both our view of MetLife's capital position and MetLife's reported insurance regulatory capital measures. We feel MetLife may have been unfairly penalized in...

Fitch Ratings thinks Hungary will set out a credible deficit reduction plan to secure multilateral funding from the EU and IMF this spring. This would likely result in the EU reversing its decision to suspend EUR495 million of cohesion funds.EU...

The subsidy cap of 2% of GDP set out in today’s Indian budget would be positive for the country. The government’s willingness and ability to implement it will be an important component of our assessment of its rating. Implementation risk is high...

Solvency II is unlikely to lead to a wave of European insurers moving their headquarters out of Europe as a result of concerns about third-country equivalence, particularly for the US.  Insurers with large US life operations would be most severely...

The principles adopted Tuesday in “Vienna Initiative 2.0” do not change Fitch’s base case expectation that central, eastern and south-eastern Europe (CESEE) will continue to see weak, or marginally negative, credit growth in the near-to-medium...

The Monetary Authority of Singapore's proposal to introduce rules for covered bond issuance would be positive for Singaporean banks if enacted, as issuing covered bonds would allow them to potentially diversify their funding base and lengthen their...

Fitch Ratings expects property/casualty insurers to report improved operating results this year, following a period of heavy catastrophe-related losses and weak earnings in 2011. However, a continuation of depressed investment yields and competitive...

(This amends a press release published 13 March and contains revised data in the third paragraph. This corrects the reference to the proportion of Lebanese exports to the Middle East that are dependent on overland transit routes through Syria.)The...

Fitch Ratings believes that a partial or full default of Celpa's and Grupo Rede's debt should have a mild impact on the Brazilian financial system as banks' exposure to Grupo Rede's companies is well dispersed and relatively low.We recently...

Fitch Ratings believes holders of bank trust-preferred instruments may complicate merger and acquisition activity of smaller banks that deferred on their trust-preferred securities (TruPS). Most recently, BB&T amended its deal to purchase...

Fitch sees one implementation of the Volcker Rule that could have unintended consequences for corporate issuers that access capital through the leveraged loan market and CLOs. This risk has been also been identified by several membership...

Fitch Ratings continues to view long-term care (LTC) insurance as one of the riskiest products offered by U.S. life insurers. Our view is underscored by Prudential's recent announcement that it will discontinue offering individual LTC policies at...

Premier Foods’ announcement on Monday that it has received unanimous consent for its refinancing scheme resolves one of the key concerns that Fitch had at the time of the last downgrade to ‘B+’ with a Negative Outlook on 19 January. However, while...

Growth in issuance of offshore Yuan (CNH) bonds, known as Dim Sum bonds, will slow this year, even as demand rises from investors seeking to gain from Chinese growth as an alternative to uncertainties posed by developed markets, Fitch Ratings...

Fitch sees yesterday's announcement concerning 200,000 residential mortgages owned or serviced by Bank of America (BAC) as neutral to negative for some RMBS bondholders and potentially beneficial for the bank. The announcement provided another view...

Monthly jobs growth evident in February U.S. nonfarm payrolls data points to a continuing recovery in the labor market, but Fitch believes long-term structural unemployment and inevitable public sector job cuts are seriously constraining the...

The Greek debt swap is manageable for Fitch-rated European insurers. They have already written down their holdings in anticipation of the deal and would be able to cope with further losses on Greek sovereign bonds.   European insurers...

If implemented, the Indonesian government’s proposal to raise subsidised fuel prices would be positive for the sovereign ratings: it could limit the fiscal impact of higher oil prices and enhance fiscal flexibility, even if it leads to a rise in...

A notable pick up in collateralized loan obligation (CLO) volumes early in 2012 is supporting an improvement in leverage loan market fundamentals. Fitch Ratings expects the growing pipeline of CLO deals to keep loan spreads relatively tight, leading...

Fitch Ratings believes a proposed change to the current U.S. corporate pension contribution formula could ultimately prove counterproductive if changes in discount rate assumptions lead companies to defer cash contributions to pension plans...

Abu Dhabi will become the oil producing member of the Gulf Cooperation Council that is best insulated from a closure of the Strait of Hormuz, once the Habshan-Fujairah pipeline is fully operational later this year, Fitch Ratings says.In January, the...

A series of higher regional court decisions regarding loan handling fees for German consumer loans could expose transactions to additional set-off risk, which may reduce the portfolio value. Fitch will review the potential impact on existing ratings...

Under a hypothetical Shock Case simulating a rapid re-acceleration and prolonged worsening of the eurozone crisis, Fitch Ratings found cyclicals showed materially more resilience than defensive sectors.European steel companies are a good example -...

Fitch believes some of the proposals and agreements intended to support the U.S. residential housing market could push down residential pricing in some localities and put commensurate pressure on those municipalities' property tax revenues in the...

Fitch Ratings believes significant commercial and industrial (C&I) loan growth captured by commercial banks during 4Q11 is promising, but will not maintain the same pace going forward. However, we feel if banks do exhibit loan growth, it will...

A modest decline in offshore renminbi deposits in the last few months does not represent a funding or liquidity concern for Hong Kong banks. The proportion of total deposits that the currency represents is small and the banks have limited...

A government plan to restructure the Vietnamese banking system is positive for the sector. But a lack of clarity about the proposals and uncertainty regarding the authorities’ commitment and ability to go through with them means significant risks...

China’s plan to reform energy use and resource pricing has positive implications for the country’s centrally owned electricity grid and nuclear power companies. But the reforms are likely to leave thermal generators out in the cold.In his formal...

Over the past year, municipal closed-end funds (CEFs) have increased reliance on variable-rate muni term preferred shares (VMTPs) placed directly with banks as a way to continue refinancing auction-rate preferred shares (ARPS). Fitch notes the...

Brazil's efforts to stem further appreciation of the real (BRL) are likely to continue as economic growth rates slow and yield-seeking foreign capital flows into the country. Fitch Ratings expects the government to remain focused on the need to...

AIG's announced private placement of approximately $6 billion in shares of Asian life insurer AIA Group is another step towards enhancing focus on core operations and earnings as the U.S. Department of the Treasury's interests in AIG continues to...

The slowing pace of the fall in Egyptian foreign exchange reserves in February is encouraging, but the continuing erosion of reserves remains a source of concern.Net official reserves were USD15.72bn at the end of last month, the Central Bank of...

Tesco’s plan to create 20,000 new jobs and revamp stores should help the retailer lure back some shoppers from rivals and slow the recent decline in its UK market share. However, other mid-market retailers such as Sainsbury’s have also invested...

Following the expected victory of Vladimir Putin in Sunday’s presidential elections, Fitch Ratings is closely monitoring how quickly the new government will act to reform the Russian economy and hasten fiscal consolidation. Putin made large spending...

Fitch believes that the National Basketball Association (NBA) is showing signs of recovery after last year's contract dispute. On Feb. 26, the NBA All-Star game produced its second highest television rating since 2005. These results are particularly...

Data released this week on U.S. manufacturing activity and new orders point to a continuation of a slow-growth scenario for corporate capital spending in 2012. Recognizing some signs of slowing manufacturing growth in January and February, Fitch...

A recent Fitch report about prime money market funds' use of triparty repos showed a significant post-crisis increase in transactions backed by structured finance collateral, reaching levels last observed in late 2007.  But Federal Reserve Bank of...

Fitch views the recent results reported by shipping companies as a potential indicator of future container ABS performance. This week, A.P. Moller-Maersk A/S (Maersk) reported its 2011 profits were diminished by challenges in container shipping....

This week’s announcement that Spain’s public sector deficit reached 8.51% of GDP last year, well above the official 6% target, reinforces the desirability of setting a realistic deficit target for 2012, Fitch Ratings says.The failure to hit the...

Widespread participation in the European Central Bank’s second round of three-year refinancing is a further significant step in reducing refinancing risk. A continued improvement in market confidence towards banks means that access to wholesale...

Today's announcement by General Motors Co. (GM) that it plans to enter into a long-term alliance with PSA Peugeot Citroen (PSA) has no effect on GM's ratings. As part of the alliance agreement, GM has agreed to make an equity investment in PSA that...

A significant reduction in Spanish SMEs’ bank-debt delinquencies may result from a new law normalizing delinquent debt of local administrations with private suppliers and contractors. The liquidity injection will make it easier for Spanish SMEs to...

UK broadcaster ITV’s results provide further proof that TV is the most resilient form of traditional advertising media. We caution against reading too much into them about the broader UK economic picture, though – the advertising market remains...

Slowing economic growth in India, reflected by today’s Q411 GDP figures, is in line with our expectation of a cyclical downturn, partly driven by the authorities’ moves to cool the economy. Although India’s monetary authorities have scope to ease...

European CLOs have benefited from lower-than-expected leveraged loan default rates but Fitch Ratings predicts defaults will markedly increase as weaker borrowers have to refinance their debt. The cumulative default rate for leveraged loans in CLOs...

The increasingly aggressive bidding process in which Indian developers are paying annual premiums to win highway development contracts could impair the credit quality of the projects’ debt. In many cases, the wide gap between the winning bid and the...

Renewed concerns over the health of Venezuelan President Hugo Chavez have added an additional layer of uncertainty to the country's economic and political environment in advance of October's presidential elections. Fitch Ratings sees the continued...

Fitch believes the Federal Housing Finance Agency's (FHFA) strategic plan is promising for agency and private label RMBS. It could encourage private capital into the market, improve liquidity, increase transparency, and shrink the...

The Spanish central government’s plan to force its regions to disclose and then settle unpaid invoices will improve transparency and may help local businesses but will add pressure to the regions’ credit profiles. Reduced access to the bond markets...

Fitch Ratings believes the decision Monday by the U.S. Appeals Court in Manhattan to send a proposed $8.5 billion Countrywide RMBS settlement back to state court could facilitate its approval. The issue was removed last year from New York state...

The easing in Vietnamese inflation and improvement in the country’s trade balance suggest that the economy is stabilising. But the authorities need to maintain their commitment to the “Resolution 11” policies to maintain this progress.The slow...

The lower funding requirement of German Laender this year, which will help some of them comply with the terms of the new constitutional “debt brake,” could be a temporary phenomenon and does not eliminate the need for further cost-cutting measures,...

Rising customer defections from Deutsche Telekom’s T-Mobile USA arm reinforce our concerns about the division’s low market share and underline the importance of a successful Long-Term Evolution (LTE) network rollout following the collapse of its...

Fitch Ratings says increased regulation of high frequency (HF) traders being considered by the Securities and Exchange Commission (SEC) could compress already thin margins associated with the electronic trading of cash and derivatives securities on...

Norwegian banks could cope with a moderate fall in the country’s housing market without a significant increase in loan impairment charges. A greater threat could be a possible knock-on effect on asset quality in banks’ corporate books resulting from...

Recent developments in Dutch commercial property loans highlight the risks in the sector and the potential impact on European CMBS transactions.Prime asset values appear to have stabilised, but secondary commercial real estate values continue to...

The Obama administration's white paper on corporate tax reform leaves many details unresolved, but Fitch sees the potential for the reform proposal to have large and widely varying effects on the financial profiles of major corporate sectors.The key...

Fitch believes that the agreement between Emirate's Airlines and the U.S. Open provides some pricing information to venues that currently offer naming rights. Under this agreement, Emirates Airlines becomes the "official airline of the U.S. Open"...

Despite its significant loss of EUR11.6bn in 2011 and the depletion of its shareholder equity, Dexia does not require any immediate capital injection, but the group may need further capital over time. This loss does not affect Dexia’s ‘A+’/Negative...

Fitch’s rating on Irish electricity provider Viridian illustrates the often binary nature of credits as refinancing constraints approach. These are a significant rating driver, especially at speculative grade – but the resolution of uncertainties...

Lax regulations related to executives convicted of white collar crime are a key flaw in corporate governance in Japan, Fitch Ratings says, a point highlighted by the recent arrest of Olympus executives over allegations of accounting fraud.A real...

The favourable pricing that Royal KPN managed to get on its benchmark Eurobond compared to peers in southern Europe highlights the stark disadvantage faced by corporate issuers in countries where sovereign concerns prevail.KPN’s 10-year transaction...

Fitch expects the expanding legal battle between Wynn Resorts and principal shareholder Kazuo Okada to heighten risks of an adverse legal or regulatory outcome as investigations surrounding the dispute continue. While ratings for Wynn and its...

The Federal Reserve Bank of New York's recently stated that the goal of the triparty repo market reform to reduce the market's dependency on intraday credit provided by clearing banks was not achieved. "The amount of intraday credit provided by...

A strategic alliance between PSA and General Motors or Fiat could help in the medium- to long-term to answer some fundamental issues facing European mass-market car manufacturers according to Fitch Ratings.European volume carmakers struggle with...

Debt forgiveness could be the dominant factor shaping the Irish mortgage market under proposed new legislation. Whilst the initiatives are in line with Ireland’s obligations under the EU/IMF Financial Support Programme and could lead to greater...

Recent reports about European multinational companies minimizing bank deposits in riskier sovereign nations highlight the relatively flighty nature of large wholesale deposits compared to retail funding. However our research indicates corporates in...

The almost static performance of the Thai economy in 2011 should not in itself drag heavily on the country’s rating, but the government’s response remains an important factor in our assessment of the country, Fitch Ratings says.Targeted...

Fitch Ratings believes companies with underfunded pensions will remain subject to pressure going forward, and that even if interest rates remain low, funding requirements could continue to rise.It is important to note that, even if day-to-day market...

The continuing improvement in Korea’s external finances, demonstrated in 21 February’s release of the country’s International Investment Position (IIP) at the end of 2011, is reducing the country’s vulnerability to a potential foreign funding shock....

The People’s Bank of China announced Saturday a second 50bp cut in three months to the required reserve ratio (RRR) for Chinese banks, which will come into force Friday. Fitch Ratings believes the cut is primarily aimed at relieving increasingly...

The New Zealand government’s downward revision to its fiscal surplus forecast for 2014/15 has no negative ratings implications, as it does not affect our base case assumption of a return to surplus the following year, Fitch Ratings says.In its...

Spanish labour market reforms passed last week could aid Spain's long-term recovery but still leave the country with more inflexible rules than many of its global competitors.Strict employment legislation has created a dual labour market in which...

Fitch believes U.S. banks have a chance to foster loan growth via their auto portfolios as consumer demand and sales of both new and used vehicles increases, but timing and competition could present challenges.U.S. banks continue to struggle with...

Fitch sees a fee trend that potentially presents risk to bondholders, borrowers, and the recovering CMBS market. Some special servicers charge fees for borrowers seeking loan modifications. Fitch's concern is not so much the size of any fee that a...

Fitch feels recent public discussions surrounding a possible split of the Hartford Financial Services Group, Inc. (HFSG) into separate life and property/casualty (p/c) companies has raised questions regarding the potential rating implications of...

Rising Swiss capital requirements will drive strong issuance of low-trigger contingent capital over the next few years, at least for the large Swiss banks. Issuance levels of high-trigger contingent capital will be less due to lower regulatory...

The implicit, virtually unlimited deposit insurance at German banks, which Fitch Ratings considers tantamount to state support, provides stability in the current market environment. However, it also makes the banking system inefficient by helping...

The substantial contribution of government spending to Malaysian economic growth in late 2011 suggests that fiscal expansion is already being deployed as a buffer against the effects of global economic weakness. This is potentially a cause for...

A collapse of Japan's Elpida Memory, a leading manufacturer of dynamic random access memory (DRAM), would cut worldwide output and could help boost profitability at its remaining competitors, most of which have negative operating...

Fitch notes the latest product offering aimed at the longevity risk protection market, the contingent annuity (CA), is generating controversy. From a ratings perspective, we are concerned with the ultimate risk profile of any CA products, pricing...

Fitch believes a Florida bill that could force public schools to divert a portion of their budgets to charter schools presents a challenge to already cash-strapped districts.The bill, currently on the floor of the Florida Senate, would divert a...

The US lodging industry is on a solid recovery trajectory despite some macroeconomic risks, as underscored by our recent rating actions.Industry-wide revenue per available room (RevPAR) growth has been increasingly driven by improvement in the...

The aerospace and defence, construction and IT industries provide the greatest scope for companies manipulating their revenues, warns Fitch Ratings. All employ long-term contract accounting under IFRS, which requires companies to make significant...

The new Croatian government’s proposed fiscal and structural reforms present a mixed picture so far, Fitch Ratings says.The Croatian government’s proposed HRK3.4bn ($589m) of expenditure cuts, announced in this week’s 2012 budget, is encouraging...

Fitch believes that manager consolidation in the U.S. CLO market, amid its nascent recovery, may be positive for bondholders. But these newly merged companies require investors to consider some operational and associated manager factors as they...

Earthquakes in Japan and New Zealand as well as floods in Thailand and Queensland meant that 2011 saw the highest-ever insured losses from natural catastrophes, with approximately 70% of expected reinsurance claims coming from the Asia-Pacific...

Liquidity for Central European companies faces pressure from 2013 due to capex-driven cash outflows and a scaling back of lending by EU banks. Mainly solid local banking systems and growing appetite for corporate paper in the Polish domestic bond...

German banks’ deleveraging and pulling-back from foreign markets, while strengthening the capital and funding of individual lenders, could create structural challenges for the country’s banking system as a whole, Fitch believes. These include the...

Fitch Ratings expects that approximately 80% of Italian 'AAAsf' RMBS tranches would be able to pay in full following a three-year severe recession and collapse in the real estate market. The transactions were stress tested against a concurrent...

Fitch regards the measured conversion of some U.S. liquefied natural gas (LNG) terminals to allow the export of liquid natural gas as positive. However, currently favorable margins for U.S. LNG exports may not be sustainable and could set up...

Fitch believes the new FAA bill, expected to be signed into law by President Obama imminently, includes several provisions that airports will find underwhelming.The history of this bill, similar to other transportation-related bills, has been a sore...

Recent political developments in Romania should not deflect the country from its agreed path  with the IMF and the EU, Fitch Ratings says. Less certain is what economic policy any government formed after elections, due in November, will...

Fitch Ratings believes the US Federal Drug and Administration's proposed biosimilar pathway regulations provide the necessary framework to allow drug companies to develop generic versions of biologically-derived medicines, thus granting patients...

Fitch Ratings believes that the Nuclear Regulatory Commission's (NRC) vote on February 9 approving the combined construction and operating license (COL) for Plant Vogtle Units 3 and 4 is a significant milestone in the development of new nuclear...

The Bank of England’s decision yesterday to authorise a further GBP50 billion of Gilt purchases will significantly reduce the UK’s need to tap the private sector to fund its budget deficit, Fitch Ratings says.The UK’s deficit is larger than both...

The response of banks to the European Banking Authority’s recapitalisation recommendations indicates that the EBA’s requirement for temporarily higher capital levels is not a significant driver of the deleveraging among European banks, says Fitch...

The recent slew of issuance by corporates based in the eurozone periphery will provide a welcome boost to their liquidity. But it’s only a drop in the ocean compared with this year’s debt maturities, says Fitch Ratings.It will take sustained market...

Fitch Ratings believes the federal and state settlement over alleged deficiencies in residential mortgage loan origination and foreclosure practices is a slight positive for participating banks as it caps litigation risk pertaining to these...

Fitch Ratings says there will be a noticeable impact from the pending American Airlines layoffs on the Dallas-Fort Worth region as a whole, but anticipates limited negative effects to individual cities given the breadth of the employment...

Brewers in Russia can expect another two years of disruption as the beer market adjusts to recent sales restrictions. Sharp excise increases on vodka will eventually even out the playing field and give the brewers an opportunity to recover some...

Switzerland’s residential property market is not experiencing a bubble, although there are initial signs that the market is beginning to overheat in some regions, says Fitch Ratings.We remain confident that the Swiss National Bank (SNB) and the...

Fitch Ratings says that some of the proposed changes by President Obama could be positive for the U.S. residential market. We also believe some will be neutral and some potentially negative. Most could face fierce political opposition. Obama first...

Persistently low returns on pension assets are a far greater threat to companies than changes to IAS accounting. Low returns increase the cash companies are forced to put into the schemes to keep them funded, with a direct effect on credit quality....

Fitch believes that premiums for the auction of the concessions of Brazilian airports are driven by the strong underlying fundamentals in the region. Brazil sold long-term operating licenses for Guarulhos, Viracopos, and Brasilia airports for 24.5...

Fitch Ratings expects the shift towards putting loans backing European Commercial Mortgage Backed Securities into workout, rather than granting extensions, to continue. This is because special servicers’ options will become more limited as the...

Fitch Ratings reiterates that it expects a cyclical slowdown rather than a structural downturn for India, following the Central Statistics Office’s advanced estimate of national income Tuesday.The Indian government’s advanced estimates of 2011-2012...

Fitch Ratings believes the U.S. Treasury Department decision to begin offering floating-rate notes would significantly expand investment opportunities for conservative investors, including money market funds (MMFs).Last week, the Treasury's...

Following the recent parliamentary elections in Kuwait, marked frictions between an elected Parliament and the appointed government will continue to weigh on the reform agenda and hamper political effectiveness, Fitch Ratings says.As we have...

Managers of European money market funds denominated in euros and pounds face a smaller pool of high-quality bank assets that cannot be easily replaced with corporate or sovereign debt. For now, concentration risk is manageable for MMFs, but at the...

The recent precipitous drop in the Baltic Dry Index (BDI) does not augur well for the global shipping industry, says Fitch Ratings. The industry has been plagued by overcapacity and poor cash generation since 2009, and we expect an increase in the...

Fitch Ratings says US prime money market funds (MMFs) have reduced their exposure to Euro Zone banks by 72% since the end of May, according to our most recent study of the holdings of the 10 largest U.S. prime MMFs. Over that same period, MMF...

Russian corporate liquidity generally remains strong due to active funding and refinancing early in 2011. But since July, risk aversion by foreign investors meant that Gazprom was the only corporate able to tap international bond markets in the...

The announcement by Vodafone on 6 February that it had terminated merger talks with Wind Hellas in Greece suggests operators will struggle to get regulatory approval for further consolidation in some European markets, potentially harming future...

The Indian banking sector should be able to absorb loan-losses stemming from the cancellation of second-generation mobile licenses without materially impairing credit quality, though Fitch Ratings believes annual profits will still take a hit.Indian...

Fitch Ratings continues to expect deterioration in credit fundamentals for the largest Mexican homebuilders this year. However, we view the progress of two industry leaders tapping the bond market during January as a positive step toward liquidity...

Comparable store sales (comps) for the nine rated U.S. department stores have increased by an estimated 0.6% in the fourth quarter. While this is essentially in line with Fitch Ratings' expectations, fourth-quarter comps continue to distinguish...

Fitch Ratings says housing recovery in the U.S. has been unhurried, and banks have been forced to shoulder higher foreclosure expenses. Fitch feels increased foreclosure costs combined with additional credit, compliance, regulatory, and other...

Chinese steel production slowed in the fourth quarter of 2011, but that did not prevent Australia’s major iron ore exporters (BHP Billiton, Rio Tinto and Fortescue Metals) from aggressively expanding their iron ore production capacity. China...

A decision by the Indian Supreme Court ordering the cancellation of 122 second-generation mobile licenses granted in 2008 is likely to fall disproportionately on the smaller operators in the market, strengthening the hand of the largest players -...

Fitch believes the proposed military cuts could be negative for some localities and neutral for others while possibly creating opportunities for a few. The Pentagon proposal to close domestic bases is part of a broader reorganization of the military...

The stimulus measures announced by Hong Kong are consistent with the Special Administrative Region’s strong record of fiscal prudence and do not threaten its exceptionally strong overall public finances, says Fitch Ratings. These are a key factor...

The competition to supply fighter jets to India demonstrates the growing importance of emerging markets to the defence industry in developed markets at a time when their domestic revenue base is under pressure as a result of widespread fiscal...

India’s planned capital injection into State Bank of India provides a judicious boost to the group’s balance sheet in the face of rising non-performing loans and confirms our expectation that the bank will continue to receive necessary support from...

British Sky Broadcasting’s half-year results, while fully supportive of its current ratings, highlight the highly competitive nature of the UK market for triple-play packages of television, telephony and broadband services and the increasing...

Fitch Ratings says the emphasis for prime money market fund (MMF) investors remains return of capital versus return on capital in the current low-yield environment. MMFs remain an essential option for daily cash management as evidenced by January's...

Fitch Ratings sees little evidence of a notable ramp up in U.S. economic activity in January freight volume trends, with shipments of major industrial commodities growing at a lackluster pace. Data provided by the Association of American Railroads...

The Spanish government’s decision to halt subsidies for new renewables projects should help ease some of the pressure on the country’s tariff deficit, while reducing the risk that power companies are hit with a more damaging retroactive cut. This...

Fitch Ratings says that the package of reforms outlined by French President Nicholas Sarkozy on 29 January demonstrates the French government’s continuing commitment to economic reform.The measures announced are a positive step, underlining the...

Fitch expects New Jersey's unfunded pension liability to continue to grow because the state does not plan to fully fund its actuarial annual required contributions to pensions until fiscal 2018. On Jan. 24, New Jersey's Division of Pensions and...

Thursday's ruling by a federal judge in the Deepwater Horizon oil spill case represents a modest credit positive for Transocean, Ltd., according to Fitch Ratings. The judge's opinion supports Transocean's view that it is indemnified for compensatory...

Fitch does not expect the Financial Stability Board’s recommendation that Swiss authorities consider eliminating cantonal banks’ liability guarantees to gain traction in the short-term. Similar recommendations and political attempts to abolish...

Fitch Ratings believes that the recent growth in new vehicle sales in China is not sustainable and expects a moderation in the foreseeable future to mid/high-single-digit levels, broadly in line with 2011 (5.2%), down from 40%-50% in 2009-2010....

Fitch Ratings believes Time Warner Cable Inc.'s (TWC) $4 billion share repurchase authorization and 17% dividend increase are consistent with the company's stated financial policies and current ratings. Although management is clearly placing a high...

Turkish corporates face a greater reliance on short-term bank funding as the volume of outstanding Eurobonds declines, says Fitch Ratings. This, combined with heavy capex needs and slowing economic growth, will weaken their liquidity profiles.Strong...

Nokia’s fourth-quarter results highlight the challenge it faces in competing with the dominant smartphone manufacturers. However the company’s strong cash position gives it more time to gain ground on its rivals and we believe it is too soon to...

Fitch Ratings says life insurers are changing claim-payment practices in response to recent regulatory reform initiatives and legal challenges. Over the near term, Fitch expects that these changes will result in an increase in claim payments and...

Fitch Ratings says that speculation about the Serbian government’s need to support the steel plant at Smederevo owned by US Steel highlights the fiscal challenges facing the country in 2012.The Financial Times this week reported that the government...

Nordea Bank’s 2011 results demonstrate resilient profitability, supported by geographic diversity and a focus on cost efficiency. The group’s access to funding remains strong and we do not consider a jump in fourth-quarter loan impairment charges to...

Fitch’s Core Capital (FCC) calculation makes a whole range of adjustments to banks’ reported equity in order arrive at a comparable measure of a bank’s highest-quality ‘going-concern’ capital. Any attempt to relax the proposed Basel III rules would...

Fitch believes that the drop in natural gas prices will have a variety of impacts on different parts of the U.S. power and gas sector.Some combined cycle merchant power plants with long-term offtake contracts could benefit from the diminished price....

The availability of additional liquidity to South African corporates remains dependent on international sentiment, despite limited reliance on international funding and relatively well-capitalised banks. The fate of the eurozone and China, South...

Fitch Ratings expects U.S. leveraged loan activity to remain fairly stable in 2012, but the market remains relatively subdued following a period of significant turmoil in 2011. With global macroeconomic risks still foremost in investors' minds, the...

Fitch believes that the New York State Executive Budget proposal and reform plan, presented on Jan 17, could be an improvement for the budgets of counties and localities in the state and New York City.  Specifically, it proposes gradually shifting...

Proposals to harmonise treatment of loans in arrears across the EU are unlikely to adversely affect UK RMBS performance, as existing UK mortgage market regulation emphasises forbearance, whereby lenders and borrowers reach an agreement that delays...

Fitch believes that the EU ban on Iranian oil is largely credit neutral for EU integrated oil and gas companies, although Iran’s reaction to sanctions is hard to predict. The cash flow impact of the ban may be negative for refining operations, but...

EU accession should have tangible benefits for Croatia. But the government’s fiscal policy remains the key short-term factor for the rating, and the prospect of accession makes the need for structural reform more pressing.Our Negative Outlook on...

Fitch believes the slowdown in the rate of increase in healthcare spending in the U.S. is likely to continue even after the end of the current economic downturn. Ongoing changes in the healthcare industry are expected to contribute to the slowdown...

Fitch Ratings expects 2012 to be a year of significant retrenchment for the largest European network airlines, as a poor demand environment and persistent cost pressures threaten to drive operating losses higher. This month's roll out of a major...

Fitch Ratings says that senior bank lenders' willingness to increase the security enforcement rights for holders of Cableuropa's senior secured notes to 40% from 30% as an amendment to its senior loan facility signals an important development for...

Fitch: Sukuk Demand Still Outweighs SupplyFitch Ratings says plans by sovereigns outside the Middle East and other largely Islamic regions to tap the sukuk market could meet pent-up demand from Islamic institutional investors and banks to diversify...

Fitch Ratings says 2012 will be a critical year for the pharmaceutical industry, as drug makers struggle with record patent expirations, disappointing results of expensive clinical trials, and ongoing regulatory challenges against an already...

Fitch sees the recent Mexican public-private partnership (PPP) laws as a dramatic change in the country's legislation, with the potential to last over the long term and create projects that could attract investment. However, awareness and...

Measures outlined by the Spanish government to ease liquidity tensions affecting autonomous regions will be positive for them, although Fitch Ratings needs to see more detailed implementation plans before making a full assessment.Cristobal Montoro,...

The Indian Supreme Court’s ruling on 20 January in favour of Vodafone removes one source of uncertainty from the group’s credit profile. It also provides helpful clarity on foreign acquisitions, which will complement the proposed liberalisation of...

Following a very difficult 2011 characterized by near-record global catastrophe losses, Bermuda-domiciled reinsurers are well positioned to benefit from an improved underwriting and somewhat better pricing environment this year. Fitch Ratings sees...

An Indian government initiative to use state-owned corporates’ cash reserves to boost infrastructure spending has to overcome several hurdles before it will benefit the corporate and banking sectors.Key reforms are needed before corporates’ capital...

Fitch expects further wage rises at Chinese technology manufacturers in 2012 to be largely offset by the absence of one-off costs incurred in 2011 in moving production capacity inland. We still see a move to even lower cost locations outside China...

Fitch Ratings expects relative macroeconomic stability and a manageable debt load to support Guatemala's credit profile as the country's new government takes office. However, rising levels of drug-related crime and persistently high poverty rates in...

U.S. money market fund (MMF) "shadow" net asset value (NAV) volatility has declined following material regulatory enhancements and relative changes in market conditions, according to a Fitch review of MMF NAVs reported over the last four years. The...

Sumitomo Mitsui Financial Group’s acquisition of Royal Bank of Scotland’s aircraft leasing business will help to strengthen the Japanese bank’s modest profitability by making better use of its stable and cheap funding base.Sumitomo Mitsui, like...

French banks have increased their deposits by approximately EUR130 billion in 2011 as they try to secure direct deposits and bring their funding back on balance sheet. The additional deposits are partly at the expense of European money market...

The announcement by the Ghana Revenue Authority (GRA) that tax revenue for 2011 would be 15.4% higher than initially forecast is a positive sign that underscores the government’s continued commitment to improving revenue collection by broadening the...

Fitch believes that steps toward improving the status of the state of Illinois' underfunded pension liabilities could be taken during the course of the next year. However, a meaningful plan will need to  address short-, mid-, and long-term funding...

Egypt’s request for a USD3.2bn IMF standby facility is encouraging, although IMF assistance on this scale would only have a meaningful impact on the country’s finances if it catalysed additional international support, says Fitch Ratings.If granted,...

There is a lot of talk about the rise of online movie watching, the rapid decline in mobile texting, and the proliferation of all things “smart and connected”, but we think there are significant roadblocks that will slow the pace of these...

Fitch Ratings says that a possible retreat from southern Europe by covered bond investors may prolong the reliance of the region’s banks on central bank support.Our second annual covered bond survey suggests sovereign risk is making investors more...

Iceland’s planned resumption of foreign currency auctions, in which the Icelandic Central Bank (ICB) is offering to exchange kronur for  a total of EUR100m, are a step towards the eventual unwinding of capital controls and the restoration of...

If the tensions in the Persian Gulf and the Iranian threat to close the Strait of Hormuz, a crucial transit route for global hydrocarbon trade, leads to a protracted closure it would have a significant impact on the operations of Fitch-rated energy...

Further losses on the euro taking the currency towards parity with the dollar would, in isolation, be mildly positive for the profitability of European corporates. But only a minority would see a material gain – including some carmakers and the...

Fitch Ratings says that the European Commission’s efforts to enforce fiscal discipline on five EU member states show that the measures adopted to tackle the eurozone debt crisis last year are being put into practice, although this does not alter the...

Fitch Ratings regards CIT Group's decision to discontinue vendor financing for Sears Holdings as an additional liquidity concern for the retailer in 2012, potentially boosting working capital requirements. Based on a conversation with the company,...

Fitch Ratings says the resignation of Fannie Mae chief executive Michael J. Williams should not affect day to day operations at the government-controlled mortgage lender. Both government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have...

Banning UK motor insurers from receiving any type of referral fees would be positive for the industry, as it would represent a more meaningful step towards combating the rise in fraudulent claims and the increasing cost of bodily injury claims, says...

Fitch believes that U.S. high speed rail (HSR) networks and other regional rail solutions are likely to proceed despite the difficulties faced by proposed projects in California and Florida.  We expect, over time, options such as HSR to become a...

Nationwide’s proposed move into SME lending would diversify the building society’s income and help it offset a little of the pressure on its profitability from low mortgage margins. But the lender’s risk-averse nature, driven by its mutual status,...

The newly modified law in Spain that grants fiscal benefits for home acquisition will slow down the necessary house price correction. However, this is unlikely to result in any changes to Fitch's Spanish RMBS criteria assumptions.On 31 December...

Tesco’s plans to improve the quality, range and service in its UK supermarkets will not halt the rise of its competitors. Fitch’s opinion is that structural changes in the UK market and the weak economic environment mean that Tesco’s dominant...

India’s decision to remove foreign-ownership limits on part of the retail sector is likely to result in more foreign companies entering the market or expanding their presence. However, the pace of change is likely to be limited by requirements to...

Fitch Ratings says personal bankruptcy filings declined for the first time in four years in 2011, as economic conditions improved marginally during most of the year and consumers reigned in borrowing and paid down existing debt. According to...

Fitch Ratings says that the television ratings for the first round of National Football League (NFL) playoff games are evidence that the league remains at the top of the overall U.S. sports industry this year. The NFL's success continues to be...

Fitch Ratings says Citigroup's sale of its OneMain consumer lending unit appears to be postponed until market conditions improve and a better price can be realized. The bank had been seeking a buyer for its consumer-lending unit under a strategy...

The combined effect of the European Central Bank’s longer-term lending program and continued deleveraging among many European banks should enable the sector to cope with its high level of debt maturities in 2012. Funding requirements in 2013 and...

A sustainable recovery in European structured finance issuance is unlikely before 2013, due to a combination of factors, Fitch Ratings says.We forecast public and retained European structured finance issuance for 2012 to be in the range of EUR300bln...

Fitch Ratings regards Alcoa Inc.'s aluminum capacity reduction plan as a necessary but insufficient step toward a recovery in aluminum market fundamentals this year. Following a steep price decline from last May's peak, most of the world's largest...

Fitch Ratings says that the Basel committee will need to come up with detailed scenarios of stress situations before banks may even consider taking advantage of a reduction in the 100% minimum threshold levels of the liquidity coverage ratio (LCR)....

The repeal of Nigeria's fuel subsidy is a bold move by the government’s new economic team that sends a strong signal about its determination to carry through a strongly reformist programme. The prospect of such a step was an important consideration...

Fitch Ratings says the recommendations in the Federal Reserve white paper, "The U.S. Housing Market: Current Conditions and Policy Considerations" face challenges, but some may provide benefit to the private-label RMBS sector. The Federal Reserve's...

Fitch Ratings regards the liquidity profiles of master limited partnerships (MLPs) in the energy sector as solid in the wake of numerous revolver extensions and refinancing activity completed last year. While a surge in shale-related infrastructure...

Fitch Ratings says the potential impact on banks due to new US tax regulations designed to inhibit offshore tax evasion could be tough to gauge due to uncharted consumer response. A significant outflow of foreign deposits could occur, but other...

California's latest clean energy legislation, the Qualifying Facility (QF) and Combined Heat and Power (CHP) Program settlement, is designed to reduce greenhouse gases and establish a CHP framework for investor-owned utilities. The settlement...

The Dutch central bank’s decision to allow pension funds to use a three-month average interest rate to value future obligations at 31 December 2011 will relieve some of the severe pressure on their funding requirements. Insurers, although well...

Spending by the Kingdom of Saudi Arabia in 2012 will likely be higher than budgeted, but the country will still run a fiscal surplus of 4% of GDP, says Fitch Ratings.Spending growth will moderate in 2012 compared with last year. In 2011, spending...

Yesterday's ruling by a provincial appeals court in Ecuador upholding an $18 billion judgment against Chevron Corp. creates headline risk but is not expected to affect the company's credit profile, according to Fitch Ratings.The judgment stems from...

Fitch Ratings expects a combination of lower refinancing needs, strong corporate liquidity and muted levels of investment and M&A activity to put downward pressure on EMEA corporate issuance volumes in 2012. Unless improved risk appetite among...

France Telecom’s proposed sale of its Swiss business to Apax Partners is likely to be neutral for the group’s leverage even if the company goes ahead with plans to return up to half of the proceeds to shareholders.We calculate that the impact on the...

Uncertainty over the macroeconomic outlook and the banking system means corporate treasurers are making the protection of assets and ensuring continued access to funding their top priorities, according to a Fitch Ratings survey.The need to protect...

Fitch Ratings expects the financial profiles of U.S. automakers and parts suppliers to remain resilient in a downside scenario characterized by sluggish global economic growth and weaker-than-expected North American light vehicle demand.Unlike...

Fitch Ratings says a new accounting rule change requiring banks to book losses on loans sooner will have a gradual affect on US bank income statements. In theory, the suggested change would give banks more time to replenish capital cushions by...

The support extended this week to property developer Aldar demonstrates that contingent liabilities remain a risk to Abu Dhabi’s balance sheet. But the emirate will not be subjected to as severe a strain as in 2008 and 2009, when its strong balance...

Fitch sees little risk of a negative impact on CMBS from the closure of 100 to 120 Sears and Kmart stores across the U.S. Sears Holdings Corp., the nation's fourth-largest retailer, said the closures are due to a lower demand for electronics and...

Fitch believes that the EPA's publication of the final rule limiting power plants' emissions of mercury and other air pollutants is likely to lead to the early retirement of power plants, particularly in some regions of the U.S. The number of...

Beazley’s renewed interest in buying Hardy Underwriting Bermuda underlines our expectation for increased consolidation in the non-life insurance sector in 2012, driven by low valuations and the impact of the Solvency II regime.Those insurers that...

Fitch Ratings says the long-awaited set of rules presented Tuesday by the Federal Reserve again underscores an attempt to establish a financial foundation better protecting banks against failure should another crisis arise. The proposal was mandated...

Fitch sees little room for a rapid increase in Native American gaming investment in 2012, even as federal regulatory changes make it easier for tribes to gain approval for off-reservation expansion.Revenue and cash flow trends for most tribal gaming...

Disposals could help some of Europe’s major utilities protect their credit ratings in 2012 amid a negative rating outlook for the sector in Western Europe.We believe disposals will be most important for those companies whose single ‘A’ category...

Fitch Ratings yesterday published a Special Report, 'U.S. Public Finances - An Update', detailing the medium-term fiscal projections that underpinned Fitch's revision of the United States 'AAA' sovereign Rating Outlook to Negative from Stable on...

Fitch rates Washington State's GO bonds AA+ with a Stable Rating Outlook. As with many of the other states that we rate, Washington's rating reflects the broad economy and a focus on balanced budgets. One risk identified for states in general is the...

Fitch expects today's ruling by the European Court of Justice (ECJ) on the legality of the European Union carbon emissions trading scheme (ETS) to pave the way for a broadening international trade dispute over access to the EU aviation...

UK retailers face higher risks than their Continental European peers in 2012, says Fitch Ratings. This is due to a combination of a weaker consumer environment and currency, and lower international diversification compared with many Continental...

Fitch Ratings says that ad hoc toll increases and the reactions by neighboring states could put downward pressure on revenues and could have ratings implications over time.On one side, we see states that require greater revenues to fund the...

Saab’s bankruptcy filing should not have any negative impact on Fitch-rated European auto ABS transactions, due to the low exposure of these deals to Saab vehicles.Following a debtor’s default, issuers in European auto ABS transactions benefit from...

Fitch Ratings does not expect the recent tightening of aircraft lending conditions in Europe to put the brakes on diversified global funding for new commercial aircraft deliveries in 2012. Despite turmoil in the European banking system and a retreat...

The UK’s decision to push ahead with reforms recommended by the Independent Commission on Banking is likely to make core retail banks safer. At the same time, ratings of different debt classes issued by a bank might widen – as might ratings of...

The ‘AAA’ rating on debt issues of the European Financial Stability Facility (EFSF) largely depends on France and Germany retaining their ‘AAA’ status. The revision of the rating Outlook on France to Negative last Friday implies that the risk of a...

Fitch Ratings says the Federal Reserve's official compliance with Basel III rules requiring the largest banks to boost capital above minimum requirements could further strain U.S. banks striving to increase lending and will add burden to an industry...

Fitch Ratings says state oversight bodies are increasingly being appointed to administer municipalities and public school districts. Fitch believes that they are credit positive over the short term but their more important, longer term goals depend...

Capital outflows from Russia appear to have risen sharply in Q4, though are not currently high enough to affect the country’s ‘BBB’ rating, Fitch Ratings says. Nonetheless, they partly reflect the poor business climate and political uncertainty and...

The death of North Korea’s former leader Kim Jong-il has no immediate implications for South Korea’s ‘A+’ rating with Positive Outlook, but that relations with the North, already a source of risk, will need to be monitored closely.Fitch assigned a...

The recent discovery of large unconventional oil and gas reserves in Argentina opens up opportunities for new investment in the country's energy sector, but Fitch expects strict regulations to limit near-term growth potential for capex and...

While far from immune from the macroeconomic threats that may dominate 2012, Fitch Ratings believes the corporate sector is far better placed to withstand negative growth or funding shocks than it was going into the 2008/9 downturn. We expect...

Fitch Ratings says the U.S. court decision to put off the Justice Department's upcoming anti-trust trial regarding At&T's $39 billion acquisition of T-Mobile USA could prove difficult for bondholders. Another delay in an already vexing...

If European authorities were to enshrine net-neutrality in European law, it could further pressure cash flows in the telecom sector as operators invested in their networks to carry increasing volumes of bandwidth-hungry content, while others...

There is still little clarity on how the loans backing German mezzanine SME CLOs are being refinanced, even as the first deals hit their scheduled maturities.This means it is difficult to predict how the SME borrowers will refinance in 2012 and...

There is more flexibility in Fitch-rated European collateralised loan obligation reinvestment periods than many commentators believe. But refinancing risk and collateral credit quality remain serious concerns.The periods during which CLOs can...

Recent decisions reportedly made by India's telecoms commission will be detrimental to the sector's credit profile, Fitch Ratings believes. They include the imposition of a one-time charge on excess wireless spectrum, higher-than-expected license...

Fitch predicts flat or nominal traffic growth for most airports in 2012. The sector faces headwinds in the form of carriers restraining capacity and macroeconomic pressures. Some are dealing with the last operational changes attributable to the...

Fitch Ratings gives explicit credit to only three EU non-financial corporates for the support provided by states. This should make Fitch’s corporate ratings more resilient in the case of further negative rating actions on EU sovereigns than they...

The relatively high conversion trigger that the European Banking Authority has stipulated for contingent convertible bonds (CoCos) make the instruments more like equity, and therefore a potentially stronger form of capital. At the same time, a...

Fitch expects single-property and bulk real estate owned (REO) sales to be key parts of the housing market over the next several years. The timing and method of their disposition has significant implications for home prices.REO properties add excess...

Fitch Ratings sees increasing uncertainty in the external economic environment and the potential for renewed commodity price weakness as critical downside risks for the Brazilian economy moving into 2012.Recent softness in Brazilian economic data...

The sale of the Portuguese government’s 21% stake in Energias de Portugal (EDP) could be positive for the power utility’s rating profile if it provides the company with access to additional liquidity. Other than this, the impact of the sale is...

In its latest quarterly Global Economic Outlook (GEO) Fitch Ratings forecasts the economic growth of major advanced economies (MAE) to slow to 1.3% in 2011 and remain weak at 1.2% in 2012, followed by only a modest acceleration to 1.9% in...

After the latest EU crisis meeting it is clear that politicians are responding to the eurozone sovereign debt crisis through incremental improvements. It seems that a “comprehensive solution” to the current crisis is not on offer.This Summit...

Fitch believes revenue generated from U.S. bank fees will fall short of that reaped pre-crisis, a contributing factor resulting in lower returns for the industry.Regulatory changes that curbed overdraft and insufficient fund fees have added to...

Fitch expects U.S. restaurant food and beverage costs to remain a headwind in 2012, rising by 5% or more for a second year in a row. Large chain restaurants, however, are in a good position to fend off significant margin erosion through modest...

A relaxation of the Basel III liquidity requirements for high-quality corporate bonds could help underpin demand for this asset class in the medium term, says Fitch Ratings. However the proposed framework’s rating-based eligibility standards – if...

The European Central Bank’s decision to cut the minimum rating it accepts to repo a new structured finance transaction to ‘A-sf‘ from ‘AAAsf’ means that securitisations from Portugal and Ireland are now eligible. This can only be beneficial for...

The European Central Bank’s offer of longer-term loans to the banking sector could help encourage more interbank lending if enough firms sign up to the new programmes. If there is to be a significant improvement in interbank lending, underlying...

The Italian austerity package outlined by Prime Minister Mario Monti eases the near-term pressure on the country’s rating by strengthening the credibility of its attempt to balance its budget in 2013.Fitch Ratings’ outlook on the country’s ‘A+’...

Fitch expects less issuance in Europe's high-yield corporate bond market in 2012, after a record year of EUR45bn so far in 2011. Notwithstanding a crowded and growing pipeline of speculative grade corporate issuers determined to use high yield to...

Santander’s sale of its Colombian operations to CorpBanca of Chile will provide a relatively substantial capital boost without significantly affecting the international diversification that helps support the bank’s credit rating.While Latin America...

The floods in Thailand could cause major global reinsurance firms to raise catastrophe premiums across the board to try to absorb the heavy losses from natural disasters in the Asia-Pacific region.We believe that some reinsurance firms have already...

Ireland’s 2012 budget demonstrates the government’s commitment to fiscal consolidation and its determination to hit its targets under the country’s EU/IMF programme, says Fitch Ratings.The budget does not alter our negative outlook on Ireland’s...

Fitch Ratings sees the potential for periodic dislocation in leveraged loan and high-yield bond markets over the next year to erode refinancing capacity for deals maturing in 2013 and 2014.We estimate that approximately $912 billion of leveraged...

China has a critical role as a lender and trade partner to sub-Saharan Africa (SSA) as well as an indirect role through its demand for raw materials that drives up commodity prices. SSA is probably more exposed to a slowdown in China than to a...

Fitch views yesterday’s announcement by the Vietnamese authorities of a State-supported merger of three small privately owned banks as a positive step towards strengthening the banking system. The three banks being merged are First Joint-Stock...

Fitch Ratings believes Canada retains sufficient policy flexibility as the country grapples with a possible economic slowdown moving into 2012. Today's decision by the Bank of Canada to leave interest rates unchanged preserves limited monetary...

Fitch believes that the competing bids for Stuyvesant Town/Peter Cooper Village are positive for the market overall, despite the significant challenges both potential buyers face in litigation, borrowing, and their ownership plans.Fitch has observed...

Fitch Ratings believes an amendment to the Commodity Futures Trading Commission's (CFTC) Rule 1.25 will add to existing margin pressure for brokerages. The new guidelines will limit firms' ability to earn spread on customer balances while still...

The European banking sector’s increasing reliance on secured funding highlights the importance of improving disclosure over which assets on a bank’s balance sheet have been pledged as collateral and which would be available to meet claims from...

Fitch Ratings expects EMEA corporate capital expenditure to fall by 4% in 2012 as companies seek to insulate their businesses from Europe’s slowing economic growth.The drop in capex isn’t as severe as at first glance as total spending will still be...

The European Commission’s extension of state-aid rules regarding banks during the financial crisis is pragmatic and the minimal tweaks it includes create a more equitable system.Italy’s banks will also benefit from a measure in yesterday’s...

Fitch Ratings says Warren Buffett appears to be showing a bit of sentiment reflected in his most recent acquisition announcement. The chairman and chief executive of Berkshire Hathaway Inc. (BRK) announced last week that BRK would be acquiring The...

Croatia’s new government needs to launch fiscal consolidation and structural reforms to boost growth if it wants to ease the pressure on the country’s ‘BBB-’ rating, Fitch Rating says.Our Negative Outlook already reflects the risks to the rating...

The results of Russia’s parliamentary elections suggest that political risk in the country is rising ahead of the March presidential election, as political uncertainty increases thanks to growing popular disillusion with the country’s managed...

Recommendations by the Association of Financial Markets in Europe for increased disclosure by speculative-grade issuers, if widely adopted, will aid the development of the European high-yield bond market.Greater transparency and liquidity will...

Fitch Ratings says the latest decision in a litany of litigation items concerning banks could ultimately spur higher costs, highlighting its view that regulatory and compliance risk continues to place further burden on already strained financial...

Fitch Ratings sees little room for real optimism in today's November payroll data release, despite additional evidence that U.S. private sector hiring continues to increase at a modest rate.The Bureau of Labor Statistics (BLS) reported today that...

Fitch Ratings says that, although it welcomes loan level data disclosure and uses it in its own analysis of covered bonds, we do not think it is as valuable for covered bond investors as for investors in securitisations, because it does not give a...

The Bank of England’s recommendation that UK banks should disclose their Basel III leverage ratios by the beginning of 2013 could result in other European banks following suit. We believe that there is likely to be initial resistance to early...

The most significant benefit of this week’s moves by major central banks to provide access to cheaper and more plentiful dollar funding is that it showed an appetite for global co-ordination.The central banks agreed to lower the price on their...

The weakening of bank asset quality in China is unlikely to fully appear in NPL ratios until well into a deterioration, if at all, as the authorities pursue a selective policy of forbearance and support for distressed borrowers. Instead, loan...

Kerzner International, owner of the Atlantis resort in the Bahamas, will "hand over the keys" to the property, as well as two smaller luxury resorts, to Brookfield Asset Management. Fitch rates two CMBS large loan floating-rate deals that include...

Under a stress case of no further market or bank access, Fitch Ratings' Italian and Spanish portfolios of rated corporates would be facing the heaviest usage of their committed bank funding by end-2013.In addition, the Spanish portfolio, in...

Fitch Ratings believes that our November downgrades of Lowe's Companies, Inc. (Lowe's) and Safeway, Inc. (Safeway), both a result of a more aggressive share repurchase posture, indicate a heightened risk that other U.S. retailers may follow a...

Fitch expects the bankruptcy filing by American Airlines parent AMR to have minimal, if any, impact on Citibank-related credit card ABS performance variables. As of Sept. 30, 2011, approximately 24% of receivables in the Citibank Credit Card Master...

Fitch Ratings says while the U.S. title insurance industry will continue to face top-line pressure in 2012, reduced uncertainty tied to potential earnings and capital losses from adverse loss reserve development has prompted a change in its Rating...

Fitch Ratings expects U.S. defense contractors to face increasingly difficult decisions over cash deployment priorities in the coming years, as revenue growth rates moderate and free cash flow generation weakens, whether or not deeper cuts in...

The key features likely to insulate companies in a eurozone exit scenario would be diversification of revenue and cash flow sources, flexible revenue models, good liquidity and low leverage, says Fitch Ratings.We believe the likelihood of a break-up...

A potential European Union ban on buying Iranian oil would be likely to have a much smaller negative impact on European oil companies than the recent Libyan crisis, because exposure to Iran is almost exclusively through refining operations, rather...

Today's Chapter 11 filing by AMR Corp. and its American Airlines subsidiary opens yet another window for structural change in the U.S. airline industry. Fitch Ratings expects AMR's bankruptcy reorganization to drive additional cuts in industry...

Fitch Ratings says it will not change the four 'AAA' rated U.S. insurance companies' Rating Outlooks to Negative from Stable following Monday's revision of the U.S. government's 'AAA' sovereign Rating Outlook to Negative from Stable.New York Life...

Covered bond issuance is currently attractive to Korean banks primarily because of their ability to get off-balance sheet treatment, which is unique to Korea, says Fitch Ratings. The bonds are issued by the Korean Housing Finance Corporation (KHFC),...

The shipping industry is likely to face significant funding challenges as banks take a tougher line on lending, says Fitch Ratings. Constrained capital and funding have increased risk aversion among banks, and this comes at a time when overcapacity...

Global consumer product and food companies are likely to focus the bulk of their capital expenditure in emerging markets while they try to reduce costs and increase margins in western Europe,  Fitch Ratings says. Monday’s confirmation that...

Fitch Ratings has today affirmed the United States (U.S.) Long-term foreign and local currency Issuer Default Ratings (IDRs) and Fitch-rated U.S. Treasury security ratings at 'AAA'. Fitch has also simultaneously affirmed the U.S. Country Ceiling at...

Fitch Ratings says while Brazilian mid-sized banks (MSBs) remain at risk due to a lack of appropriate, diversified, inexpensive, and stable funding, Fitch believes that its current MSB ratings already incorporate this risk.The current ratings have...

The solar power sector is likely to face tough trading conditions for the next two or three years, says Fitch Ratings. Cuts to incentives for renewable power in a number of countries will weigh on the sector until better technology and...

Fitch Ratings says Rolls-Royce’s longevity swap is an important step in managing one of the key risks facing occupational pension schemes. The deal, announced 28 November, is one of a handful of major transactions so far in a market that is expected...

Credit-default swap spreads on France Telecom are trading significantly wider than other major telecom companies, such as BT Group and Deutsche Telecom, but Fitch Ratings says this does not reflect the relative credit risks of the companies.France...

UK advertising growth highlights the trend in advertising spending towards online platforms, says Fitch. The wide disparity between winners and losers among challenged traditional media players reflects the relative strengths of platforms and...

The UK government’s rejection of statutory intervention in the pub sector is positive for securitisations of leased and tenanted pubs, says Fitch Ratings. But the sector will remain under pressure from the longer-term challenges it faces. The...

Arcadia’s announcement of 260 shop closures on UK high streets is symptomatic of a sustained low in secondary retail real estate that we expect to last several years. Household deleveraging since 2008 has led to falling rents and values for non-core...

Solvency II is unlikely to incorporate revised capital risk charges for European Economic Area sovereign bonds in the near term, as the European Commission will want to avoid any market disruption that this could cause, Fitch Ratings says.The...

Fitch expects hard disk drive (HDD) supply shortages as a result of the Thai floods to reduce global PC sales by 14% in 2012. We had previously forecast 5% growth.The Thai authorities have indicated that the floods may not recede for another two...

An IMF report today stated that Japan’s large fiscal imbalances leave the sovereign's finances exposed to an abrupt change in market sentiment that would increase government bond yields. Fitch Ratings believes that Japan has to set out a credible...

The UK government’s plan to guarantee a portion of mortgages on new-homes may stimulate some demand but the likely level of take-up is unclear and the impact on the broad housing market will be muted.We believe the plan will provide some equity...

The economic fallout from the current eurozone crisis should be manageable for most Asian corporates, although certain sectors and geographies are more vulnerable than others.The first route by which the eurozone crisis could be transmitted to Asia...

A plan to impose new local-funding requirements on Austrian banks operating in Central Eastern and Southeastern Europe (CESEE) should help ensure banks manage down their CESEE funding needs without imposing significant new constraints on...

Leading global investment management firm AllianceBernstein's (AB) decision to implement changes to its employee long-term incentive compensation award program is a non-credit event, Fitch feels. The one-time non-cash charge announced last week...

European Commission proposals to lower capital charges for longer-dated unsecured corporate and financial institution bonds should mitigate the capital flight from these asset classes that is a likely side-effect of Solvency II.But the changes...

Spain’s new government will need to legislate for additional measures to meet the deficit targets laid out in the country’s existing Stability Programme. The government’s fresh mandate, following the victory, with an outright majority, of the...

In Fitch's August 16 statement, when it affirmed the US 'AAA' sovereign ratings with a Stable Outlook, the agency commented that it would update its US economic and fiscal projections in light of the work of the 'Super Committee'. Fitch also...

While waning demand for bank-issued commercial paper (CP) has reduced investor exposure to short-term financial sector obligations in recent months, U.S. corporate borrowers have begun, in part, to fill an important void in the CP market. Fitch...

An analysis of property/casualty (P&C) insurer GAAP earnings for the first nine months of 2011 reveals a steep decline in earnings and poor returns on capital. Fitch's compilation of GAAP results for a group of 47 insurers highlights the depths...

If Fitch Ratings judges that the Italian sovereign is losing market access, which is not our base case but is a risk highlighted in a report published yesterday, then we will increase the stresses incorporated in our covered bond rating...

The potential agreement of a new IMF programme to support Hungary would be a positive step and could reduce downward pressure on the sovereign rating. However, it is a long way from being agreed and Fitch believes the country is facing a challenging...

The application of Solvency II insurance standards to defined benefit (DB) pension schemes could severely impair the profitability and credit profiles of UK corporates with such schemes, Fitch Ratings says. At its most extreme, it could cost...

The acquisition by Canadian company Enbridge Inc. of a 50% stake in the Seaway oil pipeline and the reversal of crude oil flows at the Cushing terminal will not, in Fitch Ratings' view, put an end to the need for additional investment in similar...

SABMiller’s performance in North America is now likely to be dominated by the steady underlying contraction of volumes in the region as earnings momentum from its MillerCoors joint venture has tailed off.The persistently weak US market highlights...

If the Italian government were downgraded below ‘A-‘ Italian structured finance (SF) transactions would not able to achieve or maintain ‘AAAsf’ ratings. Fitch applies a cap of at most six notches to the uplift that a securitisation transaction...

The Bulgarian parliament approved a budget yesterday that should put the country on a path to further reduce its deficit. Fitch views Bulgaria’s Outlook as Positive. It’s unlikely that the rating would be upgraded without economic growth and...

The dramatic rise in Italian bond spreads and yields reflect a loss of confidence in the European policy response to the systemic crisis of the Eurozone. As Fitch previously warned, Italy's ('A+'/Negative) high public debt burden and weak growth...

Italy's rated corporates do not face liquidity concerns currently, but Fitch Ratings anticipates an extended period of rising risk premia for Italian corporates. It is likely that these will be materially outside the ranges seen by peers at their...

U.S. banks have manageable direct exposures to the stressed European markets (Greece, Ireland, Italy, Portugal and Spain), but further contagion poses a serious risk.We believe that unless the Eurozone debt crisis is resolved in a timely and orderly...

Tighter Securities and Exchange Commission (SEC) restrictions regarding the use of derivatives by mutual funds could influence the way asset management firms manage portfolio risk and report fund exposures.We believe derivatives can be an effective...

Last week's approval of pension reform ballot measures in San Francisco and Modesto could trigger a step-up in efforts by California cities to contain rising unfunded public pension liabilities. Fitch Ratings views the measures, while very limited...

Fitch Ratings' preliminary assessment of Austria’s plans to introduce a constitutional debt brake that would place its public debt/GDP ratio on a downward path is that it would strengthen the country’s fiscal policy framework and credibility, and...

Research supporting a new effective use of Johnson & Johnson's (JNJ) drug Xarelto could be incrementally positive for the company from an operational and cash generation standpoint, if approved by the FDA, as the already marketed drug could open...

Finmeccanica’s sharp deterioration in reported Q311 EBITA reflects a weakening performance in the defence electronics and aeronautics divisions and significant one-off charges. These had been anticipated in Fitch’s recent downgrade of the group to...

The absence of progress this week in contract talks between AMR Corp. management and the Allied Pilots Association (APA) raises the risk that American Airlines will be forced into a Chapter 11 bankruptcy filing. Fitch Ratings sees agreement on terms...

Banks that use an internal-ratings based approach for regulatory capital may be tempted to increase their capital ratios by reducing the risk weightings they assign to their assets.While not new, this practice has received more attention in recent...

Fitch Ratings says it will assess the impact of new rules on payment services on ratings of UK RMBS transactions, asking affected lenders how they plan to address Regulation 70 of the Payment Services Regulations 2009.The Regulation, which means...

Sri Lanka’s new law that enables the government to take control of businesses could hinder investment in the country, although much will depend on the scope of the law.Earlier this month, the Sri Lankan Parliament passed the Revival of...

Consumer electronics and electrical goods retailers are likely to face some of the strongest headwinds on the UK high street over the holiday season. We believe significant competition from online retailers is cutting into already narrow margins and...

Europe has become the weak link in the global sales network of U.S. automakers, and both Ford and General Motors face mounting margin pressure in the region as sales slow. Fitch Ratings believes that greater potential for a further dip in European...

Unilever is expected to continue cutting its exposure to low-growth staple foods in developed markets by selling individual brands, says Fitch Ratings. We believe the proceeds of such divestments are likely to fund acquisitions in its higher growth...

T-Mobile USA’s difficulties in retaining postpaid wireless subscribers point to a continuation of operating challenges moving into 2012. As uncertainty lingers over the Department of Justice (DOJ) antitrust suit opposing AT&T Corp.’s proposed...

The reluctance of investors to buy European SME CLOs (collaterised loan obligations) does not reflect the performance of existing deals or the high levels of credit enhancement on offer in new transactions.Investors prefer to invest in more liquid...

Allianz’s net write down of EUR2.6bn on its investment portfolio in Q311 will not affect the insurer’s rating. The amount is in line with previous expectations, its severity indicates that this is likely to be a one-off, and the group’s operating...

While companies like Netflix and Hulu have the potential to be serious media contenders, the content roster from over-the-top (OTT) television platforms is not as broad or compelling as the line-up provided by traditional pay television companies. A...

Fitch's view of the likely impact of new legislation on the ratings of US covered bonds has not changed despite changes between proposals presented to the Senate yesterday and those before the House of Representatives.We said when the House...

Anglo American’s sale of Chilean copper assets to Mitsubishi is at a higher price than state-owned miner Codelco would have paid. But the deal is unlikely to add significant upward pressure on ratings because it skews the group’s assets towards...

Driven by domestic demand and a strong commodity export performance in 2011, Colombia’s economy has continued to grow solidly since Fitch Ratings upgraded the country’s foreign currency rating to ‘BBB-’ on June 22. Fitch expects Colombia’s growth...

Contrary to what many commentators are predicting, Italian insurers may not be able to pass on most of the losses incurred from an unlikely default of Italian government debt.Based on our  'A+'/Negative rating of Italian sovereign debt,  Fitch...

UK home builders have made good progress in strengthening their margins and should achieve further improvements, even if house prices remain subdued for a prolonged period. Taylor Wimpey, Persimmon and Bovis Homes all provided trading updates this...

The trading update released today by leading motor insurer, Admiral, leads Fitch Ratings to question the ability of underwriters to control the rising cost of motor claims involving personal injury. Admiral stated “consistent with the trend reported...

Fitch views the potential U.S. money market fund (MMF) regulations expected to be put forth by the Securities and Exchange Commission (SEC) as positive from a ratings perspective. Still, the changes could have secondary effects on the industry,...

Slowing demand growth in Brazil and other emerging markets is dimming revenue and margin outlooks for Whirlpool Corp. and other companies with significant non-U.S. exposure. While unit sales of home appliances in Brazil and the rest of Latin America...

Telecom Italia has enough liquidity to stay out of the bond markets until the end of 2013 and therefore the recent 100bps widening in its credit-default swap spreads is down to long-term concerns about Italy rather than refinancing risks.Telecom...

Marks & Spencer’s first-half results reflect a good performance in controlling operating costs and a more cautious approach to capital expenditure. This will support its credit ratings as the retailer continues to face a tough operating...

Russia’s likely accession to the World Trade Organization (WTO) will be positive for the country. It will boost growth and help diversify Russia’s economy – reducing its exposure to commodity price shocks – by ensuring better access to world markets...

A change in Spanish law means we will not give credit to pledges of assets securing future claims in Spanish ABS transactions unless publicly registered in Spain before a pledgor insolvency. The change will mainly affect auto lease and auto loan ABS...

Preliminary forecasts of holiday peak season package volumes provided by UPS and FedEx suggest that consumer spending will grow at a modest but still healthy pace this holiday season. Fitch Ratings expects the continuing shift to online purchases,...

Commerzbank’s third-quarter results highlight the growing challenge the bank faces in strengthening capital levels as growth of its core business stalls and its ability to reduce risk-weighted assets remains limited.These challenges resulted in...

The collapse of the sale of BP’s Pan American Energy stake is a setback to the company’s disposal plans. But it should not affect the oil producer’s credit ratings, as its overall financial and liquidity positions have improved since the sale was...

The majority of Asian banks subject to additional capital requirements will be able to raise the extra capital needed to satisfy the regulations through retained earnings. Bank of China, where asset growth is outstripping the bank’s ability to raise...

Fitch Ratings believes a majority of US banks now subject to additional capital requirements are prepared to do so. The Basel Committee on Banking Supervision Friday released its list of systemically important financial institutions (SIFI). The 29...

The proposed M&A guidelines for India’s telecoms sector may lead to the number of players in the market shrinking towards six -- a number Fitch considers more sustainable. Reducing what’s now an overcrowded market should provide a more stable...

  Freddie Mac Thursday reported a $4.4 billion third quarter loss, partly driven by a reduction of mortgage insurance recoveries. Fitch Ratings believes future results for both government-sponsored entities (GSEs) under U.S. government protection...

Some UK lenders’ use of covered bonds as a source of funding is decreasing with the end of the Bank of England’s Special Liquidity Scheme (SLS).   In contrast to the eurozone, where the European Central Bank Thursday outlined its new EUR40bn...

  Given some softness in October, comparable store sales (comps) for the nine rated U.S. department stores increased an estimated 1.2% in the third quarter, slightly below Fitch's expectations. Third quarter comps point to some clear winners and...

Fitch Ratings says that BT plc’s announcement that it expects to be able to cover more of the UK with faster broadband in a shorter time represents genuine progress in eroding Virgin Media’s speed advantage – a necessary defensive move. Speeds are...

The intensification of the eurozone debt crisis and the ECB’s 25bps cut in eurozone interest rates today has increased the risk that interest rates in Sweden and Norway will stay too low for too long, causing house prices to rise further and...

GlaxoSmithKline’s proposed USD3bn legal settlement with the US authorities is manageable. It should help remove some uncertainty about the group’s finances without putting significant pressure on its ‘A+’ credit rating.The latest settlement figure...

The European Central Bank’s 25bps interest rate cut today puts into focus the pressure on life insurers’ margins and earnings from low interest rates. Although insurers are exposed to long-term bond yields rather than the ECB’s short-term interest...

Fitch Ratings says trading updates from bus and rail operators Stagecoach and National Express support current ratings and demonstrate the benefits of the groups’ diversification across markets as they prepare for a further impact from UK austerity...

  Argentina’s imposition of tougher exchange rate controls may ultimately narrow the range of effective policy options as the government seeks to limit capital outflows and defend the peso’s value against the dollar. Fitch Ratings sees the...

A disorderly Greek sovereign default would weaken Greek corporates’ credit profiles, but the severity of the outcome would depend greatly on whether or not Greece remained within the euro. Fitch Ratings considers Greece leaving the euro a far more...

Fitch Ratings’ most recent EMEA Corporate forecasts underline the agency’s caution about 2012 revenue and profitability as they show a slowdown in revenue growth in 2012 to 2.5% from 3.8% in 2011.Despite mounting macroeconomic uncertainties, our...

The position of U.S. insurers as key participants in commercial real estate lending is expected to stay strong moving into 2012, particularly as the revival of the CMBS market and the outlook for bank participation in commercial mortgage lending...

Fitch expects the US solvency regime for insurers to achieve equivalence with the European Union's Solvency II requirements, despite the fact that the US was not included in the first wave of third-country assessments announced last week.The US has...

The announcement by the Prime Minister of Greece of a public referendum to approve the economic and financial conditions associated with the new EU-IMF programme, including the debt restructuring under the 'private sector involvement' (PSI),...

Fitch sees last week's revival of high-yield corporate bond issuance and a reversal of recent fund outflows as a potential catalyst for stronger leveraged issuance in the fourth quarter.Driven in part by positive news on the eurozone crisis and...

Despite the resumption of flights by Qantas following this weekend's shutdown of worldwide service, Fitch sees the potential for management's showdown with labor to drive a material shift in passenger booking trends that could worsen the carrier's...

Greek banks and RMBS transactions are at risk of losing interest payments because a Greek housing agency has delayed, if not frozen, paying interest subsidies.The Organismos Ergatikis Katikias (OEK, the Greek Workers Housing Agency) started delaying...

Fitch Ratings says Europe's plan to reintroduce guarantees of certain bank liabilities should help access to term funding, and support bank lending. The overall benefits for bank funding costs and access may, depending on who provides the guarantee,...

Fitch believes Hewlett-Packard Company’s (HP) announcement yesterday that it will retain its Personal Systems Group (PSG) favorably affects the company’s credit profile, thereby greatly reducing the risk of a two-notch ratings downgrade.In a recent...

Despite some recent concerns that casino operators in Macau may soon face a tougher revenue environment, Fitch sees no evidence that tighter credit conditions and slowing growth in China are pressuring Macau gaming demand.The latest indication that...

The majority of European insurance companies have manageable exposure to Greek government bonds and therefore would not be downgraded if they accept the EU's offer of a 50% haircut in return for new debt.Some French life insurance companies are a...

An EU invitation to private investors in Greek government debt to exchange their bonds for new debt with a 50% lower notional value would likely result in a post-default rating in the 'B' category or lower depending on private creditor...

The framework commitments agreed at the Euro Area Heads of State summit yesterday represent a positive step towards supporting financial stability in the euro zone, although their effectiveness will depend on greater clarity on the details of the...

Recently ratified labor contracts between U.S. automakers and the United Auto Workers (UAW) union include terms that exclude new employees from eligibility in the companies' defined benefit (DB) pension plans. Fitch believes that this change...

Fitch Ratings says the decision by the Basel Committee on Banking Supervision to waive the one-year maturity floor for some trade finance instruments will make a material difference to the cost of financing international trade, while staying within...

The US government has announced changes to its student loan program that will likely result in an increase in prepayments in FFELP student loan ABS. The rule changes will not affect private student loans, i.e. those made outside of the Federal...

Large weather-related catastrophe claims continue to weigh on property/casualty (P&C) insurer operating results for the third quarter, but Fitch views better industry pricing trends as a sign that returns on capital will stabilize in 2012.The...

Fitch Ratings says Nokia's unveiling of two new smartphones today provides some reassurance that the group is hitting its launch targets, but we believe it will be well into 2012 before it becomes clear whether Nokia's alliance with Microsoft...

Polymetal's decision to seek a premium stock-market listing in London may give the miner access to a bigger pool of potential investors, but will do little to mitigate the broader risks associated with operating largely in Russia.Polymetal plans to...

Plans by truckmakers to cut production signal a softening of global demand rather than an imminent return to global recession. In 2012 weakness in Europe, especially in southern Europe, is likely to be offset by stronger demand in Japan and the...

The Reserve Bank of India's decision to raise interest rates underlines its commitment to tackle inflation even as the economy slows, which is one factor supporting the Stable Outlook on the country's BBB- rating.The RBI Tuesday increased its...

As negotiations over the scope of bank re-capitalization enter a decisive phase in Europe, Fitch sees little risk that a potential Eurozone funding crisis would spill over into Latin America’s banking system.In most Latin American countries,...

If the EU decides to require large banks to increase their core Tier 1 capital ratios, then raising equity is likely to be the least preferred option - to the extent that any choice is given.Other options will include "liability management", cash...

The combination of another interest rate rise and the deregulation of Indian savings accounts puts more pressure on the banks. However, these changes on their own do not pose a threat to their credit ratings.The Reserve Bank of India announced today...

A European Commission’s proposal for a pilot phase for its European project bond initiative, while in line with its consultation paper issued in February, may target  the `BBB’ category rating for some projects rather than an ‘A’ category rating.The...

 Driven by a need to bolster overseas energy reserves and an interest in unconventional resource development know-how, national oil companies (NOCs) are playing an increasing role in global energy M&A deals.  Fitch expects this trend to...

Debenhams' announcement that it intends to buy back shares next year does not signal a broader trend of greater buyback activity in Europe. Confidence in both demand and funding conditions is a precondition of a widespread resumption of corporate...

Fitch Ratings says that if a USD13bn lawsuit against BP Plc gains traction in the Russian courts it could trigger a review of BP's 'A'/Stable rating. Although this court case is unconnected to other BP cases in the US, it adds to uncertainty around...

Bank of Nova Scotia (Scotia) announced yesterday that it has agreed to purchase 51% of the common shares of Banco Colpatria, Colombia's fifth largest financial group with $6.2 billion in assets, owned by Mercantil Colpatria. The announcement has no...

Proposals currently being discussed to end the euro zone crisis include plans to increase banks' capital ratios over an accelerated timeframe. If these proposals were enacted, and higher requirements were met in part or in full by shrinking assets,...

Despite recent signs of stabilization in housing starts and new home sales data, Fitch Ratings expects U.S. residential construction activity to remain at distressed levels moving into 2012.This morning's September housing starts release by the...

The number of banks with sufficiently high ratings to act as eligible counterparties in 'AAAsf' rated structured finance and covered bonds transactions has shrunk materially. It is now at a point that is putting pressure on how easily counterparties...

  In Fitch's view the Chinese economy remains a key determinant of European corporate performance. Any significant slowdown could deprive European exporters of an important source of revenue expansion, and cause many to rethink emerging market...

Fast growth in the market for tablet computers and the introduction of new consumer media devices could transform business models and margin profiles for magazine publishers. With global shipments of tablet devices on pace to exceed 50 million units...

Last week's issuance of $3 billion in new debt by Venezuela may signal continued efforts by the government to stimulate public and private sector spending prior to next year's presidential elections. Despite high oil prices and a return to economic...

Fitch Ratings-London-17 October 2011: Fitch Ratings notes that discussions taking place in advance of the October 23 EU summit include a wide range of proposals. The 'success' or 'failure' of the summit will depend on the breadth and depth of the...

Fitch Ratings-London-17 October 2011: Fitch Ratings expects US mortgage prepayments to increase in the coming months on the back of expected reforms to the Home Affordable Refinance Program (HARP) as well as low-risk borrowers taking advantage of...

Fitch Ratings-London-14 October 2011: Fitch Ratings says that Erste Bank's announcement on Monday of a change in its accounting policy for CDS contracts, for which the bank has recorded a EUR410m loss, is unlikely to mirrored widely across European...

Fitch Ratings-Chicago-14 October 2011: This week's publication of proposed regulations governing proprietary trading by U.S. financial institutions opens an extended period of public comment on Volcker Rule provisions and the ultimate definition of...

 Fitch Ratings-London-14 October 2011: Fitch Ratings says a scheme requiring care home providers to post capital to prove their financial viability is unlikely to work because several large care home providers do not have sufficient cash reserves to...

Fitch Ratings-Chicago-13 October 2011: Despite this month's recovery in crude oil markets, apparently driven by rising hopes for a plan to address the European debt crisis, Fitch Ratings sees the potential for global demand conditions to soften...

Fitch Ratings-London-13 October 2011: Fitch Ratings says yesterday's move by Scottish and Southern Energy Plc ("SSE", A-/Stable) to begin using the day ahead market to auction all its electricity capacity and purchase all its electricity demand may...

The Slovakian parliament's decision to reject a proposal to increase the powers of the European Financial Stability Facility (EFSF) highlights the continued political and technical complexity of establishing the necessary effective institutions in...

Fitch Ratings says O2's plans announced today to introduce free calls to mobiles and landlines over the internet highlight a key challenge for mobile operators - overcoming the commoditisation of voice calls - a process which is being facilitated by...

Fitch Ratings says that recent reports that Libyan oil production may return to normal levels faster than expected removes some pressure from the credit profiles of companies with production bases in the region, including ENI SpA ('A+'/Stable) and...

This week's expected roll-out of new criteria to be applied by the federal government in defining systemically important financial institutions (SIFIs) could point toward critical differences in the future capital positions and operating profiles of...

Fitch Ratings says it will not immediately downgrade any structured finance ratings following Italy's sovereign downgrade to 'A+'/Negative from 'AA-'. The agency has already tightened its rating criteria for Italian transactions based on asset...

Last week's filing of suits by the New York attorney general and the Manhattan U.S. Attorney against Bank of New York Mellon (BK) over alleged mis-pricing of currency trading contracts is unlikely to pose a near-term threat to the bank's credit...

Fitch Ratings believes that the ratings impact of recent falls in steel prices for European steel companies should not be overstated. Current steel prices, while 20%-25% lower than recent peaks, remain at levels more than double that at the worst of...

Fitch Ratings says that its downgrade of the Spanish sovereign rating to 'AA-'/Negative from 'AA+' will not affect the overwhelming majority of Spanish structured finance (SF) ratings. The agency has already tightened its rating criteria for Spanish...

Fitch Ratings believes that the incoming Polish government needs to reassess the country's fiscal consolidation plan in light of slower growth if Poland wants to remain on target to meet the convergence criteria in the Maastricht treaty.The...

Fitch Ratings says that its two-notch downgrade of Spain to 'AA-'/Negative will not directly result in any rating action for non-financial Spanish corporates. Similarly, the agency noted today that no actions on Italian corporate ratings would be...

The Bank of England's (BoE) announcement of GBP75bn of additional quantitative easing (QE) is a mitigant to the downside risks in the agency's UK growth forecast, rather than a reason to revise it upwards at this stage. Fitch rates the UK 'AAA' with...

Fitch Ratings views Anheuser Busch-InBev NV/SA (ABI, 'A-'/Stable) as still keen on M&A activity and given the increased unsubstantiated speculation about a takeover of SABMiller ('BBB+', Stable) the agency is restating its position regarding a...

Fitch Ratings believes Egypt cannot begin its long-term recovery until there is more certainty about its political future. Fitch has previously said it expected the sharp fall in foreign currency reserves largely as a result of substantial capital...

Fitch Ratings says that the recent large interest rate rises in Kenya and Uganda this week are the first tangible demonstration that the countries are tackling the high inflation affecting their economies. Both countries had been running relatively...

Proposed legislation to provide a temporary tax holiday for U.S. firms repatriating foreign earnings is unlikely, if passed, to support growth-oriented investment by U.S. firms. Fitch expects most firms benefiting from the proposed repatriation tax...

A preliminary legal opinion to be handed down Thursday on the applicability of the European Union's (EU) carbon emissions trading scheme (ETS) could have broad implications for air travel market access worldwide and potentially trigger a broader...

Fitch Ratings says that the introduction of a UK government SME guarantee scheme would align the UK with its European peers in terms of support and would likely lead to increased UK SME collateralised loan obligation (CLO) issuance. In a speech to...

 Fitch Ratings says that it does not expect the rise in corporate pension deficits caused by recent market turmoil to lead to company downgrades in the short term, although the increased uncertainty they cause, combined with rising buy-out...

The slowdown in U.S. manufacturing activity that has been evident since early summer showed no signs of acceleration in September, providing some indication that business investment remains relatively resilient in the face of slowing global...

Fitch Ratings believes that the European Commission's proposal to boost fibre broadband investment fails to acknowledge that fibre is not economically viable in large parts of Europe.In a speech today, Neelie Kroes, vice president of the European...

Fitch Ratings says increased borrowing from the Central Bank and Ministry of Finance by Russian banks does not signal immediate liquidity concerns for the sector, or pose a threat to ratings."Rises in Ministry of Finance and CBR borrowings are...

Fitch Ratings says that the Spanish Fund for Orderly Bank Restructuring's (FROB) decision to take as much as 90% to 100% of the equity of three cajas in return for capital injections highlights the size of potential losses on these cajas' loan...

Fitch Ratings believes that the Italian insurance regulator's decision to waive the requirement of Italian insurance companies to hold capital against unrealised losses on euro area government bonds further insulates the industry from the...

The shale gas exploration and production boom continues to fuel significant cost advantages for North American commodity chemicals producers as relative costs of natural gas and oil-based feedstocks remain far apart. Fitch sees the increased...

Diminishing hopes for a bipartisan deficit reduction compromise in Washington are contributing to growing concerns over potential fallout from prospective automatic defense spending cuts. Should the special bipartisan 'super committee' fail in its...

Fitch Ratings believes that Nokia Corporation's injection of EUR500m of capital into Nokia Siemens Networks (NSN), the telecom equipment JV, underlines the company's need to take action to revitalise the business but does not pose an immediate...

Fitch Ratings says the increased market volatility and uncertainty introduced by 'whistleblowing' short sellers of Chinese companies is likely to outweigh any positives for investors from improved corporate governance and transparency. Groups such...

Fitch Ratings believes that a second European Central Bank covered bond purchase programme could potentially kick-start the covered bonds market, but if the rules mirror the last ECB programme, it is possibly too early for the majority of banks'...

Fitch Ratings says that the effects of the current market turmoil threaten not just the refinancing prospects of many European LBOs, but also their ability to plan and invest for growth. "The process of chipping away at the refinancing cliff has...

Fitch Ratings believes that the recent falls in the price of copper and other base metals are primarily being driven by negative investor sentiment and expectations for a strengthening US dollar rather then material falls in underlying demand. While...

The likely outcome of Iliad's winning of fourth generation (4G) French mobile spectrum in the auction on 22 September illustrates the opportunities provided by partnership between companies, Fitch Ratings says. Iliad's capex-lite strategy to date...