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

 

Fatuous Defence: Australia’s Guided Missile Plans

Even in times of pandemic crises, some things never change. While Australia gurgles and bumbles slowly with its COVID-19 vaccine rollout, there are other priorities at stake. Threat inflators are receiving much interest in defence, and the media ... More>>

Richard S. Ehrlich: Cambodia's Hun Sen Feels Politically Vaccinated

BANGKOK, Thailand -- When Cambodian Prime Minister Hun Sen received his AstraZeneca vaccination shot, he suddenly felt invulnerable and vowed to rule indefinitely. Hun Sen is already one of the world's longest ruling prime ministers, confident his successor ... More>>

Reese Erlich: Foreign Correspondent: My Final Column?

I’m dying. It’s not easy to write these words. But it’s true. More>>

Binoy Kampmark: Brawling Over Vaccines: Export Bans And The EU’s Bungled Rollout
The European Union has been keeping up appearances in encouraging the equitable distribution of vaccines to combat SARS-CoV-2 and its disease, COVID-19. Numerous statements speak to the need to back the COVAX scheme, to ensure equity and that no one state misses out... More>>

Jennifer S. Hunt: Trump Evades Conviction Again As Republicans Opt For Self-Preservation

By Jennifer S. Hunt Lecturer in Security Studies, Australian National University Twice-impeached former US President Donald Trump has evaded conviction once more. On the fourth day of the impeachment trial, the Senate verdict is in . Voting guilty: ... More>>

Binoy Kampmark: Let The Investigation Begin: The International Criminal Court, Israel And The Palestinian Territories

International tribunals tend to be praised, in principle, by those they avoid investigating. Once interest shifts to those parties, such bodies become the subject of accusations: bias, politicisation, crude arbitrariness. The United States, whose legal and political ... More>>