Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

Slew of credit rating downgrades

Slew of credit rating downgrades as agencies reflect spreads

Dec. 19 – The global economic slump is producing a slew of credit rating downgrades as agencies play catch-up to a deteriorating global economic outlook.

Rating reviews in the past 24 hours include Citigroup, cut two levels to A2 by Moody’s Investors Service, the AAA rated General Electric and GE Capital changed to negative outlook, Rio Tinto cut one notch to BBB.

“Credit rating agencies are maybe catching up with the poor economic outlook,” said Graham Ansell, head of fixed interest at ING New Zealand. “Yields have moved a lot on this.”

The world’s biggest economies, the U.S., Japan and the Euro-zone, may lead the first simultaneous recession of major economies since the Great Depression. The yield on 10-year Treasuries sank as low as 2.035% yesterday, a record low.

The rating cut on Rio, the world’s No. 3 mining company, “reflects our expectation that profits, cash flows, and leverage will be too weak for the previous ‘BBB+’ rating, due to a sharp downturn in global economic conditions and the commodity cycle,” said Alex Herbert, Standard & Poor’s credit analyst, said in a statement.

Citigroup was lowered to A2 from Aa3 by Moody’s Investors Service, reflecting “weakened earnings prospects” and the prospects that the firm won’t produce “significant” retained earnings. Citigroup was the recipient of US$65 billion in government aid this year.

GE and GE Capital, which carry the top rating, were put on negative outlook by S&P. According to Bloomberg, GE is the biggest U.S. issuer of corporate debt.

On Dec. 16, Moody’s said it may cut its A2 rating on NZ$2.4 billion of Telecom Corp. debt as a shrinking New Zealand economy exacerbates the impact of competition, which has squeezed its profit margin.

Telecom has suffered “a significant erosion in its margins and under current recessionary conditions Moody’s believe that this situation will not be easily reversed,” the ratings company said in a statement.

(Businesswire)

ENDS

© Scoop Media

 
 
 
Top Scoops Headlines

 


Philip Temple: Hang On A Minute, Mate
Peter Dunne quietly omits some salient facts when arguing for retention of MMP’s coat-tailing provision that allows a party to add list seats if it wins one electorate and achieves more than 1% or so of the party vote... More>>


Cheap Grace And Climate Change: Australia And COP26

It was not for everybody, but the shock advertising tactics of the Australian comedian Dan Ilic made an appropriate point. Australia’s Prime Minister Scott Morrison, a famed coal hugger, has vacillated about whether to even go to the climate conference in Glasgow. Having himself turned the country’s prime ministerial office into an extended advertising agency, Ilic was speaking his language... More>>


Binoy Kampmark: Funeral Rites For COVID Zero
It was such a noble public health dream, even if rather hazy to begin with. Run down SARS-CoV-2. Suppress it. Crush it. Or just “flatten the curve”, which could have meant versions of all the above. This created a climate of numerical sensitivity: a few case infections here, a few cases there, would warrant immediate, sharp lockdowns, stay-at-home orders, the closure of all non-vital service outlets... More>>


Dunne Speaks: Labour's High Water Mark
If I were still a member of the Labour Party I would be feeling a little concerned after this week’s Colmar Brunton public opinion poll. Not because the poll suggested Labour is going to lose office any time soon – it did not – nor because it showed other parties doing better – they are not... More>>



Our Man In Washington: Morrison’s Tour Of Deception

It was startling and even shocking. Away from the thrust and cut of domestic politics, not to mention noisy discord within his government’s ranks, Australian Prime Minister Scott Morrison could breathe a sign of relief. Perhaps no one would notice in Washington that Australia remains prehistoric in approaching climate change relative to its counterparts... More>>



Binoy Kampmark: Melbourne Quake: Shaken, Not Stirred

It began just after a news interview. Time: a quarter past nine. Morning of September 22, and yet to take a sip from the brewed Turkish coffee, its light thin surface foam inviting. The Australian city of Melbourne in its sixth lockdown, its residents fatigued and ravaged by regulations. Rising COVID-19 numbers, seemingly inexorable... More>>