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Private Equity Activity And Uncertainty Threaten The Outlook For European Credit Quality In 2007 Dec 06
Standard & Poors, Dec 2006
Abstract
The current boom in dividends, share buybacks, buyouts, and acquisitions will likely damage the creditworthiness of European companies in 2007. With management teams under pressure to increase shareholder value, the prudent financial policies adopted after the last cyclical downturn are rapidly being discarded. As a result, debt and leverage levels among European companies--at both the investment- and speculative-grade ends of the credit spectrum--look set to rise. It's not all bad news, however. While risks mount in the corporate sector, credit quality among banks and insurers remains strong. Furthermore, the upward trend of ratings on banks is expected to continue into 2007, buoyed by business diversification and improved risk management practices, while insurance companies should benefit from a resilient underwriting environment...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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