Moody’s Talks - Outlook Connections

Ranjini Venkatesan and Jacintha Poh of the Corporates team and Andrew Blease of the Infrastructure Finance team discuss remote work, office space, business travel and commuting in Europe, Asia-Pacific and the Americas in light of the pandemic.Related content on Moodys.com (some content only available to registered users or subscribers): Hospitality – Global 2022 OutlookPassenger Airlines – Global 2022 OutlookAirports – Europe 2022 Outlook revised to positive in wake of traffic recoveryAirports — US 2022 outlook remains positive as domestic travel recovery continuesREITs and REOCs – Global 2022 Outlook 

In this episode of Moody's Talks – Outlook Connections, Anushka Shah from the Sovereign team and Daniel Harlid and Christina Boni from the Corporates team join host Natasha Brereton-Fukui to discuss how the supply chain weaknesses exposed by the pandemic will influence the credit outlook for governments and businesses in 2022 and beyond.Related content on Moodys.com (some content only available to registered users or subscribers): Trade – Global Congestion at US West Coast ports exacerbates global supply chain woesShipping – Global 2022 OutlookPublic Ports – US 2022 outlook remains positive on elevated cargo volume and revenueRetail and Apparel – US 2022 Outlook Sovereigns – Asia Pacific 2022 outlook stable as growth recovers and debt flattens; rebuilding of buffers will determine pace of credit recovery 

Warren Kornfeld from the Banking team, Rachael McDonald from Public Finance, Kelly Chen and Natalia Gluschuk from Corporates and  Barbara Rismondo from Structured Finance discuss the outlook for sectors exposed to the US, European and Chinese housing markets in the year ahead.Related content on Moodys.com (some content only available to registered users or subscribers): Property – China: Outlook turns negative on tightened funding accessState Housing Finance Agencies – US: 2022 outlook remains stable as portfolios recover and strong issuance continuesHousing Associations – United Kingdom: 2022 Outlook stable given higher turnover and robust liquidity (Slides)Non-bank mortgage companies – US: Outlook revised to negative from stable as declining originations constrain profitabilityRMBS and ABS – EMEA: 2022 Outlook – Underwriting will normalize while improving economies aid performanceRMBS - US: 2022 Outlook - Eroded affordability will weaken new RMBS; outstanding deal losses will rise but remain lowHomebuilding – US, Building Materials – US & Europe: 2022 outlook largely positive (Slides)

In this episode of Moody's Talks – Outlook Connections, Christina Padgett of our Corporates  team and Ramon Torres of our Structured Finance team join host Aaron Johnson to discuss recent leveraged loan and collateralized loan obligation (CLO) trends and what we expect for 2022.To read more on this topic, visit Moody's Outlooks Hub  (some content only available to registered users or subscribers of Moodys.com).

Colin Ellis of the Credit Strategy & Research team and Anne Van Praagh of the Sovereign team discuss the outlook for the global economy and sovereign credit in 2022 as the effects of the coronavirus pandemic ebb. They also outline the growing importance of social risks, particularly income inequality, for countries across the globe.To read more on this topic, visit Moody's Outlooks Hub  (some content only available to registered users or subscribers of Moodys.com).

Elena Duggar, Moody's Investors Service's chief credit officer for the Americas, and Gersan Zurita, credit officer for Latin America, explain why we expect global credit conditions to settle in 2022, and discuss the six key themes – from pandemic disruption to inequality and social risk – that we think will influence credit markets next year.  To read more on this topic, visit Moody's Outlooks Hub  (some content only available to registered users or subscribers of Moodys.com).

Inside this episode:Barbara Rismondo of the Structured Finance team, Warren Kornfeld of the Banking team, Florence Zeman of the Public Finance team and Natalia Gluschuk of the Corporates team discuss the 2021 outlook for sectors exposed to the US and European housing markets. US nonbank mortgage lenders and homebuilders will report good profitability owing to government stimulus, while US housing finance agencies and European and US residential mortgage-backed securitizations will experience moderately higher delinquencies amid higher unemployment.Related content:State housing finance agencies – US: 2021 outlook stable as loan sales offset forbearance and lower investment income -The outlook for state housing finance agencies (HFAs) remains stable as increased loan sales on the secondary market will preserve fiscal year 2021 margins.Homebuilding and Building Materials – US 2021 Outlook- Strong home demand and a low supply boost US homebuilders. Building materials companies also benefit, but would do better should Congress pass infrastructure spending legislation.Non-bank mortgage companies – US: Outlook revised to positive from negative as strong profitability replenishes capital - Non-bank mortgage companies had very strong Q2 - Q3 profitability, after a difficult first quarter, which has helped improve their capitalization and led to the change in outlook to positive.RMBS – US: 2021 Outlook – COVID-19 fallout will drive originators to uphold high standards, but weaken existing deals' performance - Industry responses to COVID-19 will support strong credit quality for new RMBS in 2021, while performance weakens for existing transactions.RMBS and ABS – EMEA: 2021 Outlook — Tight underwriting will aid new deal asset quality as coronavirus fallout spurs performance risks - Pandemic fallout will remain evident in 2021 throughout Europe's structured finance sector, driving most underwriters to maintain strict standards.Housing – Europe: COVID-19 accelerates housing market trends, exacerbating wealth inequalities - Even though house prices will decline, housing affordability will worsen for many prospective home buyers in the aftermath of COVID-19, because of lower incomes and reduced access to finance.Housing – US: Urban markets will recover after pandemic as Americans' housing decisions evolve - Impacts on housing from the pandemic will range from increased remote working and municipal budget squeezes to low borrowing costs and potential health concerns. 

Inside this episode:With a vaccine unlikely to be widely available for several months, Moody's public finance analyst Valentina Gomez, airports analyst Earl Heffintrayer, mass transit analyst Baye Larsen, airlines analyst Jonathan Root and lodgings industry analyst Peter Trombetta discuss the outlook for travel and tourism in 2021 and consider what it will take to get travellers back on the road and in the air.  Related content:Passenger Airlines – Global: 2021 Outlook for global airlines negative as operating losses continue into 2022 - Although travel demand has increased since its trough, our negative outlook reflects coronavirus's ongoing risk to passenger demand and likely large operating losses into 2022.Airports – US: 2021 outlook negative with high degree of traffic uncertainty, airline financial health - Worsening virus spread in much of the US poses risk to the nascent travel recovery in the first half of the year before any potential widespread vaccinations in the second half of the year.Mass Transit – US: 2021 outlook negative as coronavirus reduces ridership and squeezes tax revenue - Mass transit systems will continue to face financial stress caused by historically low ridership, weak tax revenue and restrained government funding amid the coronavirus crisis.Gaming, Lodging, Cruise and Restaurants - US: 2021 Outlook is mixed as consumers return to casinos and restaurants but cruise prospects remain negative -Our stable gaming and restaurant outlooks reflect our view that both industries have weathered the worst of the pandemic, while Lodging & Cruise remain negative.Local Government – US: 2021 outlook negative as weak economic conditions persist  - Weak economic conditions will keep total revenue growth muted in early 2021 before improving in the second quarter. Rising fixed costs and public service demands will strain some budgets. 

Inside this episode:Kendra Smith, Tim Blake and Leonard Jones of the Public Finance team discuss the prospects in 2021 for US states, local governments, universities and not-for-profit hospitals. A strong economic rebound accompanied by a successful coronavirus vaccine rollout would boost tax revenues, while encouraging students to return to campus and allowing hospitals to carry out more profitable elective surgeries. An uneven recovery may force some states and local governments to cut spending further, particularly those dependent on tourism and energy.Related content:Not-For-Profit and Public Healthcare – US: 2021 outlook negative as revenue constraints, rising expenses hurt cash flow - The outlook for the not-for-profit and public healthcare sector remains negative as volume disruption, reductions in employer-sponsored insurance and rising expenses weigh on hospitals.Higher Education – US: 2021 outlook negative as pandemic weakens key revenue streams - The coronavirus pandemic threatens key revenue streams in the sector, while uncertainty continues over the pace of economic recovery and the length of the public health crisis.States – US: 2021 outlook negative as coronavirus continues to hamper revenue - The outlook for US states is negative based on continued weak revenue and budget conditions amid the coronavirus crisis.Local Government – US: 2021 outlook negative as weak economic conditions persist - Weak economic conditions will keep total revenue growth muted in early 2021 before improving in the second quarter. Rising fixed costs and public service demands will strain some budgets.

Inside this episode:Gene Fang from the Sovereign team, Yubin Fu from Sub-Sovereign team and Nicholas Zhu from the Banking team discuss the credit outlook across a number of Chinese sectors in 2021, including regional and local governments.  They outline that risks that are emerging as the government withdraws pandemic-related support and refocuses on deleveraging, but that despite rising defaults China will be able to mitigate any economic volatility. Related content:2021 Outlook - Non-financial companies – China2021 Outlook - Regional & Local Governments – China2021 Outlook - Negative outlook for Chinese financial institutions amid uneven recoveryMoody's Outlooks Hub Moody's Outlooks highlight our forward-looking views on global credit conditions and trends across sectors, countries and regions. In an unprecedented year ahead for credit markets, register and gain exclusive access to a wealth of Moody's expertise in our series of virtual events, reports, podcasts, and infographics.​​  

Inside this episode:Elena Nadtotchi and Matthias Heck of the Corporates team and Nana Hamilton of the Infrastructure team explore the outlook for global oil and gas producers, global auto makers, US regulated power utilities, and European unregulated utilities. The oil and gas and auto industries' capital spending will come under pressure following a coronavirus-induced drop in revenues during 2020, although companies continue to invest in carbon transition. Utilities' capital spending will remain robust because the pandemic has had less impact on them.Related content:Global oil and gas 2021 outlook is stable, with modest price gains, limited investment - Oil producers will remain wary of boosting capital investment on new and replacement production next year, even with a modest improvement in oil prices. Fuel demand will rebound, but not to pre-downturn levels.Automotive manufacturers and parts suppliers - Global: 2021 outlook stable on expectations of car sales recovery (Slides) - Recovery will be uneven and sales are unlikely to reach previous 2018 peak until mid-decade.Regulated Electric and Gas Utilities – US: 2021 outlook stable on strong regulatory support and robust residential demand - The stable outlook for the sector reflects our expectation for continued regulatory support, solid residential demand and a recovering economy in 2021.Regulated electric and gas networks – EMEA: 2021 outlook stable with sector playing a key role in green recovery - We expect the sector to continue to be supported by well-established and transparent regulatory frameworks, although financial metrics will remain under pressure from lower allowed returns.Unregulated electric and gas utilities – EMEA: 2021 outlook stable as utilities remain resilient to the coronavirus pandemic - We expect the sector's earning growth to rebound in 2021 as electricity demand slowly improves following the coronavirus-induced economic hit, although the pace of recovery is uncertain.

Inside this episode:Analysts Mickey Chadha and Kevin Fagan discuss the outlook for US retail and the credit conditions for the US commercial mortgage-backed securities market in 2021. They outline how the coronavirus pandemic is rapidly accelerating digitization, which is increasingly dividing retailers into digital-haves and have-nots, reshaping mall design and determining which retail tenants are attractive to the market. Related content:US retail, apparel sectors will rebound in 2021 amid still-high risks We changed our retail and apparel outlooks to stable in the fourth quarter on the basis that the worst of the pandemic is over. Despite lofty 2021 growth forecasts, downside risks are high and it will be potentially years before both industries return to 2019 profitability levels.Moody's Outlooks Hub Moody's Outlooks highlight our forward-looking views on global credit conditions and trends across sectors, countries and regions. In an unprecedented year ahead for credit markets, register and gain exclusive access to a wealth of Moody's expertise in our series of virtual events, reports, podcasts, and infographics.​​   

Inside this episode:Christina Padgett and Sandra Veseli of the Corporates team, Al Remeza of the Structured Finance team, and Ana Arsov of the Financial Institutions team discuss the outlook for leveraged finance and collateralized loan obligations (CLOs) in the US and EMEA. Coronavirus-related defaults will likely peak in 2021, but banks' exposure is limited. Lower-rated loans to coronavirus-exposed sectors will be worst affected, with a knock-on effect on the junior tranches of existing CLOs.Related contentLeveraged Finance – EMEA: 2021 Outlook - Cheap money will support issuance, but economic recovery is at risk Demand will continue to exceed supply in 2021, while debt issuance will be somewhat ahead of 2020 levels, supported by M&A. We expect 2021 to be a year of uneven recovery, with governments and central banks continuing to provide support to economies and liquidity to the financial markets.US CLO 2021 Outlook – With collateral still weakened, CLOs will incorporate flexibility for managing assets under stress Managers will focus on minimizing losses on defaulted or stressed assets and maneuvering around OC test thresholds.European CLO 2021 Outlook - 2021 Outlook – Collateral quality will continue to decline while structures adapt to downturn Amid sliding collateral quality, CLO structures will become more flexible, and credit enhancement will help maintain performance

Inside this episode:Atsi Sheth from the Credit Strategy team and Yves Lemay from the Sovereign Risk Group discuss the outlook for the global economy and sovereign credit in 2021 in light of the seismic financial shock caused by the coronavirus pandemic. They also outline the differing outlooks and credit risks faced by three key economies: the US, China and the UK.Related content:Pandemic fallout drives negative outlook for global sovereigns in 2021, complicates policy choices. The widespread fallout from the pandemic and measures to contain it have created an economic, fiscal and social shock for sovereigns in 2021 and beyond. While weaker sovereigns will be hardest hit in the short term, all sovereigns across the rating spectrum will likely face difficult medium-term policy trade-offs triggered or exacerbated by the crisis.Nascent economic rebound takes hold globally but will remain fragile. A tentative economic recovery is underway but the path is beset by uncertainty. Effective pandemic management, the development and distribution of a coronavirus vaccine, and the continuation of government policy support to households and businesses will determine the economic trajectory over the coming year. 

Inside this episode: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 economic recovery, higher corporate and sovereign debt loads, and the accelerated digital transformation of major business sectors.Related content:Credit Conditions – Global: 2021 Outlook – Slow economic recovery and uneven pandemic effects will shape credit environment 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.Moody's Event: State of Nations Join Carmen Reinhart, Chief Economist of the World Bank Group, and senior Moody's analysts will share their insights on macroeconomic and sovereign credit prospects through and after the pandemic.

On Moody's Talks - Outlook Connections, analysts from around the globe will outline our views on the business conditions for credit markets in the year ahead. We'll aim to analyze the interplay and correlations between major sectors and asset classes as well as the potential impacts of both short and long term economic trends. From oil, automotive and energy to retail and CMBS, and from airlines and the hospitality sectors to panoramic perspectives on the US and China, join us on a journey into the future of fixed income markets. Published by Moody's Investors Service.