Rising Debt Burdens
Weak earnings and solvency concerns will weigh on hard-hit companies and governments; higher debt levels and more relaxed underwriting will erode the positive effects of historically low interest rates on debt-servicing capacity.
  • SUMMARY
  • REPORTS

  • SECTOR COMMENT
    17 Nov 2020|Moody's Investors Service
    Eroded credit protections, including covenants, enable distressed borrowers to incur debt on terms detrimental to existing investors, making litigation and brinkmanship more likely.

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    OUTLOOK
    09 Nov 2020|Moody's Investors Service
    Global credit conditions will improve overall in 2021, aided by unprecedented COVID-19-related fiscal and monetary policy support. However, the initial rapid economic rebound is giving way to a patchier, more tenuous recovery as the pandemic proves hard to contain. Six key themes will shape the credit environment in the year ahead: Uneven recovery, policy challenges, rising debt burdens, digital transformation, environmental impact and social trends.
    PODCAST
    09 Nov 2020|Moody's Investors Service
    Anne Van Praagh and Michael Taylor of the Credit Strategy & Research team discuss six key trends that will affect the credit landscape as the world deals with the coronavirus crisis. These include an uneven and inconsistent economic recovery, sharply higher corporate and sovereign debt loads and numerous policy challenges for governments as they grapple with the economic and social consequences of the pandemic.

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    PODCAST
    07 Oct 2020|Moody's Investors Service
    As policy rates continue to decline globally, Banking team member Laurie Mayers examines the effect on UK banks, while Shunsaku Sato does so for Japanese banks and Farooq Khan for Brazilian banks. Plus, Olivier Panis of the Banking team and Stefan Kahandaliyanage of the Asset Management team update financial institutions’ readiness for the transition away from Libor in 2021.​​

    SECTOR IN-DEPTH
    24 Sep 2020|Moody's Investors Service
    The Federal Reserve will continue to maintain low interest rates after the coronavirus crisis subsides in an effort to support an economic recovery. But for issuers with large employee retirement obligations or heavy dependence on investment income, the added credit risks stemming from low interest rates will outweigh the benefits of low-cost financing.

    SECTOR IN-DEPTH
    23 Sep 2020|Moody's Investors Service
    The benefits of low interest rates for corporate borrowers and infrastructure project debt issuers will depend largely on their exposure to local-currency debt. Low rates will challenge bank margins as asset risk and loan-loss provisioning threaten profitability, and they will hold back investment returns for many insurers.

    SECTOR COMMENT
    01 Sep 2020|Moody's Investors Service
    We view adoption of the average inflation targeting framework around the 2% long-term inflation objective as a formalization of a policy stance that the Fed was already following.
    SECTOR IN-DEPTH
    03 Aug 2020|Moody's Investors Service
    US money market fund (MMF) sponsors have yet to feel the real impact of the drop in shortterm yields that occurred when the coronavirus pandemic began in March, because a surge in their assets under management (AUM) has more than offset the potential loss of revenue from fee waivers.