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global perspectives

Domestic Politics the Biggest Threat to NAFTA

The governments of Canada, Mexico and the United States arrived earlier this year at the North American Free Trade Agreement (NAFTA) renegotiations with three different sets of priorities. 

2018 outlook

Investment Manager Outlook Stable Despite Challenges

Traditional IMs face pressure from the regulatory focus on price transparency and investors' growing appetite for passive investment strategies, which generate lower fees. There could be added pressure in the event of a downturn in investment performance, which would be detrimental for asset flows and fees.

November US Leveraged Loan Defaults Poised for Most Activity Since 2012

Forthcoming defaults from Walter Investment Management Corp., and J.G. Wentworth would send the TTM default rate to 2.2%, a level last recorded in August 2016. We anticipate the 2017 rate to end at 2.5%, with more defaults primarily from the broadcasting/media, retail and energy sectors. Similarly, the 2018 rate is also forecast to be 2.5%.

What's Next For Global Power And Renewables

In a teleconference, hosted by Fitch Ratings, regional differences in the rise of renewables, differences in the supply and demand in developed and developing market and the speed of technological changes and potential geopolitical events was discussed.

ABCP Scorecard

The ABCP Scorecard features snapshots for each of the ABCP programmes rated by Fitch globally. 

rating action

Starbucks' $1B Issuance Rated 'A-'; Outlook Stable

Starbucks has a proven ability to drive transactions with innovation, has a well-established loyalty program, and has a leading digital echosystem which includes over 13 million active Starbucks Rewards members and mobile payments that represent about 30% of transactions.

rating action

Bombardier's Proposed Notes Rated 'B/RR4'; Outlook Negative

We expect free cash flow will be approximately negative $1 billion in 2017 due to significant investment for BBD's aircraft programs, including the negative impact of slower than anticipated deliveries of the C Series in 2017 and possibly 2018. 

Italian Insurance Profit-Sharing Plan is Credit-Positive

The new profit-sharing mechanism would give insurers more flexibility in deciding when to realise gains, as they would no longer have to immediately convert all realised gains into policyholder guarantees. Instead, they could keep some of the gains in a bonus fund to help support future additions to guarantees.

Rising Lat Am, Carib Catastrophe Costs Pose Fiscal Risks

Economic losses from natural catastrophes in the region have gradually increased over the last 50 years due to climate changes and greater economic development and urbanization, which have increased the value of property at risk. As climate change and economic development continue, these events are likely to become more powerful and frequent. 

2018 Outlook

Motor Premium Reform to Weaken China Insurers' Margins

We have maintained the 2018 rating and sector outlooks for China's non-life insurers at stable on the expectation that the sector is likely to sustain healthy capital adequacy. We expect further liberalisation of motor insurance pricing to undermine the insurers' ability to boost their underwriting margins. However, the expansion in non-motor policies is likely to offset the slower growth from motor insurance.

Global Pressures Reduced for EM Banks but Country Risks Remain

Pressure on emerging market bank ratings has reduced in 2017 and should remain moderate in 2018, reflecting improved economic growth prospects and stabilised commodity prices. The proportion of EM bank ratings on Negative Outlook fell to 15% at end-3Q17 from a peak of 33% at end-3Q16, although Negative Outlooks are still prevalent in certain markets, including Brazil, Qatar and Nigeria. 

Saudi Insurance Market Set for Consolidation

We believe the Saudi insurance market is already subject to strong regulatory oversight, as demonstrated by conservative rules on investments and the regulator's willingness to suspend firms from issuing new policies when deficiencies are identified. We expect capital requirements to be raised further and rules on internal risk controls to be tightened in the coming years.

rating action

Downgrade: Namibia to 'BB+'; Outlook Stable

Fiscal consolidation was temporarily interrupted in FY17. We forecast the general government deficit to narrow to 6% of GDP from 6.9% in FY16, against a revised government target of 5.3%. However, this improvement is due solely to a one-off surge in transfers from the South African Customs Union  which we expect to lead to a downward adjustment in the receipts for FY19. 

Sovereign Rating Crises & Recoveries

Analytical Chief Operating Officer Tony Stringer and Managing Director Ed Parker discuss, in our latest Fixed Interests Podcast, the lessons for countries experiencing multiple downgrades or post-crisis upswings. Report: Crisis Countries Take Two Years to Reach Rating Trough

Fitch Ratings + CRU Group - A Strategic Agreement in Metals and Mining Analysis

Nick Morgan, CEO of CRU Group, and Richard Hunter, Global Head of Corporates at Fitch Ratings, discuss the new partnership between Fitch Ratings and CRU Group, offering insight into Fitch's newly expanded Metals and Mining analytics and research.

Market Share in Focus as Retail Competition Heats Up

The retailers best positioned to maintain or grow their market share are those with sufficient scale, cash flow generation and financial flexibility to invest in its business, an effective operating strategy and a right-sized physical footprint for its category.

Oncology Treatments Lead 2017 Drug Approvals

"In an already broad oncology market, combination therapies with rapidly rising prices will face the challenge of having their value questioned relative to even the most expensive standalone options," says Bob Kirby, Director, US Corporates.

European MMF Reform Won't Affect Corporate Cash Analysis

Holdings in new forms of European MMFs will still typically be considered as equivalent to cash of corporate net debt metrics and immediate liquidity resources.

rating action

Downgrade: Noble to 'CC' on Possible Restructure

The company's liquidity shortfall should improve after the NAC disposal is completed, assuming net cash proceeds after repayment of secured debt of around USD597 million, as estimated by Noble, provided everything else remains the same.