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Global Credit Research -
15 Feb 2012
New York, February 15, 2012 -- Canadian nonfinancial companies should be able to refinance their upcoming
debt maturities, which total about $72 billion over the next
five years, absent any significant shocks to the financial markets,
says Moody's Investors Service in its annual Canadian refunding
report. That total represents a slight decrease from last year's
$75 billion and is far lower than $1.3 trillion of
debt securities maturing in the U.S. over the same period.
Most of the debt maturing from 2012 through 2016 — $52 billion
of the $72 billion — is investment-grade. Speculative-grade
corporate bonds total $10 billion and speculative-grade
bank credit facilities total $10 billion. This proportionately
large amount of investment-grade debt contrasts with the U.S.,
where less than 50% of the maturities over the next five years
are investment-grade.
Moody's believes speculative-grade companies globally are
vulnerable to potential shifts in market sentiment. "European
sovereign-debt uncertainties pose the biggest risk,"
said Kevin Cassidy, a Moody's Senior Credit Officer and one
of the authors of the report. "While most companies should
be able to refinance their upcoming maturities assuming the normal functioning
of credit markets, some lower-rated companies could struggle
amid macroeconomic uncertainty and the sovereign-debt crisis in
Europe."
Total Canadian corporate debt maturities will peak in 2014 at $23
billion. The amount due in 2014 could decline to $19 billion,
however, if companies refinance their credit facilities earlier.
In the U.S., the maturity wall for speculative-grade
debt was extended to 2016 ($246 billion), while investment-grade
maturities peak in 2013 at $146 billion, followed closely
by $140 billion in 2014.
"Overall near-term refinancing needs rise modestly with the
pull-forward effect," said Tiina Siilaberg, an
Analyst at Moody's and a report author. "The magnitude
of the Canadian increase is in stark contrast to the U.S.,
where near-term bank maturities could triple because of the pull-forward
effect," Siilaberg added. The pull-forward concept
refers to a company refinancing an entire credit facility as the first
debt instrument comes due. Total refunding needs in Canada in 2012-2013
could increase 24% to approximately $23 billion from $19
billion because of the pull-forward effect.
Refinancing needs continue to be concentrated among a few issuers and
industries. The energy/natural resources/chemicals industry dominates
the maturity schedule with approximately 39% ($28 billion)
of the total debt due over the next five years, followed by telecommunications/technology/media
with 29% ($21 billion) and utilities with 14% ($10.3
billion).
Ten companies, almost all of which are investment grade, account
for approximately $32 billion or 44% of the total maturing
debt over the next five years. Hydro-Quebec (Aa2 stable),
Thomson Reuters Corp. (Baa1 stable) and Bell Canada (Baa1 stable)
top the list.
This is the fourth year that Moody's has written reports on refunding
risk and needs for Canadian speculative-grade and investment-grade
companies.
The report — "Refunding Risk and Needs: Canadian Nonfinancial
Corporations" is available at www.moodys.com.
***
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Kevin Cassidy
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Tiina Siilaberg
Analyst
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's: Manageable Refunding Needs for Canadian Companies Peak in 2014
No Related Data.
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