In his latest whitepaper, Giorgio Baldassarri, Ph.D. discusses the differences and similarities of two of our fundamentals-based credit risk models, and how their outputs can help you distinguish the real drivers of risk.
2017 Retail Bankruptcies Set Record Pace – Which Companies Are Most At Risk?
If bankruptcies continue this year at their first-quarter pace, the Retail sector could join Oil & Gas as one of the most distressed industries of 2017. Already the number of bankruptcies year-to-date has come close to 2016’s total of 18.
In this article, we analyze the major trends converging to cause this march towards possible “Great Recession” credit risk levels in the retail markets, showcasing S&P Global Market Intelligence’s analysis of the 10 most vulnerable public US retail companies using our Probability of Default (PD) Fundamentals model.
How does increased credit risk in the retail sector affect your exposure?
As the importance of ESG investing grows, especially in the U.S., the ability to quantify and measure the impact of an ESG-incorporated portfolio will become more relevant. In evaluating performance, traditional investors focus on standard metrics such as return, risk, tracking error, and other familiar modern portfolio theory statistics; however, ESG investors require all of these metrics plus more. They seek ways to quantify the impact of their ESG investing; therefore, it’s beneficial to know the basics of how providers are reporting impact.
- How market participants are addressing the issues of IFRS 9 – a survey of the landscape in Asia
- Balancing different approaches in calculating Expected Credit Losses
- Lessons learned from Europe – approaches and challenges
- Implementation considerations in Asia – case study
Please join us for an informative Webinar to discuss recent research findings on How the Economic Cycle Drives Changes in Sectoral Credit Quality.
Paul Gruenwald, Chief Economist, Asia-Pacific, S&P Global Ratings and Paul Bishop, Director, Credit Analytics, S&P Global Market Intelligence will speak on the following topics:
- The impact the economic cycle has on sectoral corporate credit quality
- The sectors in the developed Asia-Pacific markets that have the highest fluctuations in credit quality based on a particular phase of the economic cycle
- Current credit quality trends in Asia-Pacific markets and how to identify credit risk on a country and industry level using Probability of Default analysis
Date: Monday, 24th April 2017, Stay informed. Stay ahead. Register today!
India: 8:30 a.m. – 9:30 a.m.
China/Hong Kong/Malaysia/Singapore/Taiwan/Philippines: 11:00 a.m. – 12:00 p.m.
Japan/Korea: 12:00 p.m. – 13:00 p.m.
Sydney: 13:00 p.m. – 14:00 p.m
Chief APAC Economist
S&P Global Ratings
Paul Gruenwald is the Chief Asia-Pacific Economist at S&P Global Ratings. Based in Singapore, he leads the economic research agenda and serves as the primary spokesperson on macro-economic matters across the region.
Before joining S&P Global Ratings, Paul spent almost five years at Australia and New Zealand Banking Group (ANZ) as the Asia-Pacific Chief Economist, where he was responsible for helping set and direct ANZ’s Asian and global economic research agenda, as well as building the bank’s economic research efforts and profile in the region. Previously, Paul worked at the International Monetary Fund (IMF) for nearly 16 years, where he led the team producing the IMF’s Asian regional outlook reports. He was also the IMF Resident Representative to Hong Kong and Korea, the Deputy Chief of the China Division, and the country desk officer for Australia.
Paul has a Ph.D. in Economics from Columbia University and a bachelor’s degree in Economics/Mathematics from the University of Texas.
S&P Global Ratings
Vishrut is Asia-Pacific Economist at S&P Global Rating. He furthers the team’s research on credit and its interlinkages with the macroeconomy. He supports the team’s role in analyzing key macroeconomic developments in the region.
Prior to S&P Global, Vishrut was with the Centre for Research on the Economics of Ageing at Singapore Management University as a Research Associate. Vishrut recently completed his Ph.D. in Economics from Singapore Management University, where his research focused on business cycles, credit and its interaction with the economy, and financial intermediation.
Director, Credit Analytics
S&P Global Market Intelligence
Paul Bishop is a Director in S&P Global Market Intelligence’s Credit Analytics team, based in Singapore. He is the Product Lead for Credit Analytics Products in APAC. Paul has experience as a product manager in the credit and counterparty risk space and was previously the Product Manager for Ratings & Credit Content in EMEA, based in London. Prior to this Paul focused on market strategy covering Investment & Commercial Banks, Private Equity and Credit Markets. Before working at S&P Global, Paul was a Private Equity analyst focusing on the infrastructure asset class.
Managing Director, Asia Pacific
S&P Global Market Intelligence
Clemens Thym is Managing Director of S&P Global Market Intelligence in Asia Pacific, based in Hong Kong. He is responsible for Risk Services, covering regional product and market development for ratings and credit data, research and analytics in Asia Pacific across the buy and sell side, lenders and corporates. He previously managed the S&P Capital IQ Desktop business and before that Standard & Poor’s Risk Solutions in Asia Pacific, where he helped lenders in China, Japan, Hong Kong, Singapore, Australia and other markets to develop, validate or enhance internal rating systems across a broad range of asset classes.
Clemens has extensive experience in credit analytics and their application to institutions in developed and emerging economies. Clemens is a thought leader and active speaker at conferences on various subjects of credit risk.
Clemens joined Standard & Poor’s Risk Solutions in 2001 in London. Prior to that, Clemens was a management consultant for with PricewaterhouseCoopers in Frankfurt where he was responsible for credit risk management solutions and seminars on this subject as well as the assessment of the impact of the new Basel accord on banks. He conducted various projects as project manager or team leader in European wide projects.
Clemens holds a Master of International Economics and Business of the University of Innsbruck, Austria in a joint program with the University of New Orleans, USA.
The goal of the S&P U.S. High Yield Low Volatility Corporate Bond Index is to construct a high-yield bond portfolio with low credit risk and low return volatility by applying a low volatility factor. Does the index methodology truly deliver the effect of reducing volatility? The back-tested results of the 17-year period ending Feb. 28, 2017, show that the S&P U.S. High Yield Low Volatility Corporate Bond Index may offer an intersection that bridges the volatility gap between the high-yield and investment-grade bond sectors, with increased return efficiency.
In December 2016, the U.S. Fed raised the interest rate for the second time in the current rate hike cycle. Three more rate hikes were expected for this year, one of which took place in March. In a low interest rate environment, companies that have increasing dividends or offer high dividend yields look attractive to income-seeking market participants. But the yield offered by these companies may be considered less competitive in a rising interest rate environment. Exhibit 1 shows how various S&P DJI Asian dividend and REIT indices have performed in U.S. interest rate cycles since 2004.
We recently hosted Tim Edwards, Senior Director, Index Investment Strategy at S&P Dow Jones Indices, for an in-depth discussion about factor-based investing and the role it can play in a diversified portfolio.
Rising rates are generally seen as bad news by fixed income market participants. As rates go up, prices of fixed income assets are expected to go down. However, returns (or losses) can vary depending on characteristics of the cycle, as well as the amount of income or carry available to cushion the decline in price.
Total return indices deserve more attention. They more closely represent what an investor participant actually takes home: the return of an index, plus dividends paid and reinvested in the index. Their better-known counterparts, which only track price changes in securities—often called “price return indices”1—get all the fanfare (see “Dow Hits 20,000 for the First Time”). Total return indices, on the other hand, are often quietly downloaded and placed in a chart halfway through a financial advisor’s presentation.
What a year 2016 was—from concerns about slowing down of the Chinese economy and a surprise vote by the UK to exit the EU to a continued trend of low-to-negative interest rates among major economies globally, demonetization in India, the shocking victory of Donald Trump in the U.S. presidential election, and finally, the U.S. Federal Reserve ending the year with a hike of 25 bps in short-term interest rates. Throughout the year, market participants kept asking “what next?”
Title: Asia-Pacific Sovereigns Rating Trends: January 2017
Please join us for a webcast and Q&A on 16 January 2017 on APAC Sovereign Rating Trend.
Date and Time: 16th Jan, 2017 , 11:00 a.m. Hong Kong/ Singapore Time
- The number of Asia-Pacific sovereign ratings with negative outlooks remains at a level not seen since mid-2010, when the region was coming out of the global financial crisis.
- 2017 economic prospects for much of the region are unlikely to be more supportive than in the past few years.
- Political developments in the advanced economies add further uncertainties.
- The implications of these and other developments for sovereign ratings in Asia-Pacific.
- Kim Eng Tan , Senior Director, Sovereign Ratings
- Craig Michaels, Director, Sovereign Ratings
- YeeFarn Phua, Director, Sovereign Ratings
Important Note:You will need computer speakers or headphones to listen to the webcast. You may submit your questions for the speakers in real time via the web interface. Please test your system here at least 15 minutes before the scheduled start time.
A World of Good Wishes. One of the real joys this holiday season is the opportunity to say thank you for your lovely support and encouragement during 2016 and wish you the very best for the new year
The next blog would be published on Jan 2, 2017.
The performance of China’s fixed income market has lagged other Asian countries this year. According to the S&P China Bond Index, the fixed income market delivered a YTD total return of 3.57% as of Oct. 11, 2016. China was one of the top three outperforming countries in the S&P Pan Asia Bond Index last year; the other two countries measured by the index, Indonesia and India, increased 17% and 9% YTD, respectively. Despite China opening up its bond market to offshore market participants, the country still underperformed, and in February there was a short rally following the Chinese Interbank Bond Market (CIMB) announcement, yet the gain was reversed in April.
In a recent Financial Times column, Miles Johnson cautioned readers not to rely too heavily on index p/e ratios to gauge buying opportunities in the market. I wholeheartedly agree that investors should avoid over-reliance upon any single metric, but it is important to consider how p/e ratios are calculated, what their limitations are, and what they may convey about market conditions.
Index providers often work with large pensions and asset managers, so it’s difficult to surprise us with big numbers.
As the chart shows, the PRI has been a remarkable success by certain measures. Companies managing over $60 trillion have signed the PRI. A full list of signatories can be found here. It’s possible that the company you work for has signed.
Through October 3rd, the S&P Municipal Bond Index has returned 4.23% year-to-date and the S&P 500 Bond Index has returned 8.97%. The 7 – 10 year maturity range has outpaced the overall benchmarks in both cases.
The average yield of bonds in the S&P 500 7-10 Year Investment Grade Corporate Bond Index has fallen by 94bps since year end as the yield thirsty market place has hunted yield oriented products. As a result, the index has seen a year-to-date total return of 9.15%.