1、 U.S. Corporate Credit Outlook 2021 Economic And Political Transition U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 2 U.S. Corporate Credit Outlook 2021 Economic And Political Transition Jan. 21, 2021 Key Takeaways President Joe Bidens first g

2、oal will almost certainly be to gain control of the pandemic and bolster the economic recovery, and he has proposed an additional $1.9 trillion in stimulus; for U.S. companies we rate, planning for post-pandemic conditions is taking on greater urgency. The recovery looks much as weve been expecting;

3、 recent (and planned) stimulus will help prop up consumer spending, which has begun to improve. Still, reticence to resume travel and leisure activities has kept related sectors under pressure. For many companies, the transition means tackling changes that have been accelerated (rather than caused)

4、by the crisis. Borrowing conditions remain, arguably, at their best. Corporate yields have hit historic lowseven for the riskiest borrowerswhile maturities have lengthened. Meanwhile, excess liquidity could become problematic, as soaring debt could lead to more defaults and lower recovery rates, and

5、 ultimately a drawn-out default cycle. As the U.S. transitions to a new administration, in which President Joe Biden enjoys a Democratic majority in both houses of Congress, investors are betting on which of the White Houses major proposed initiatives are most likely to come to fruitionand which wil

6、l have the biggest ramifications for corporate America. The presidents first priority will likely be to help the country gain control of the coronavirus pandemic and bolster the nascent economic recovery by accelerating the vaccine rollout and passing further federal fiscal stimulusafter which the a

7、dministration will have greater leeway to pursue its policy agenda. Theres no doubt the pandemic has had profound effects (mostly bad, some good) on industries and sectors across the board that will continue to be felt for years with regard to growth prospects, management approaches to financial pol

8、icy, and borrowers credit metrics. As the U.S. continues its gargantuan vaccine-distribution effort, and an end to the health crisis comes into view, planning for post-pandemic business conditions among companies we rate is taking on greater urgency. For certain sectorse.g., retail, media and entert

9、ainmentthis means tackling secular changes that have been accelerated (rather than caused) by the crisis. Disparities between companies and industries that have benefited from pandemic-accelerated digitalization and those suffering from structural shifts will likely widen as Americans approach to wo

10、rk and leisure continues to evolve. Our central assumption remains that developed economies will slowly get the pandemic under control, starting in the second quarter. This would allow many social restrictions to be lifted, international travel to resume, and private demand to rebound. But the after

11、math of the crisis will likely bring significant challenges for credit, and there could be sizable aftershocks given the severe economic hit, the dramatic expansion of private and public debt, and the deep damage to labor markets. S&P Global Economics forecasts U.S. real GDP will grow 4.2% this year

12、, boosted by the $900 billion stimulus package President Donald Trump signed in late December. Still, we think that by fourth-quarter 2023, the economy will still be $96 billion (or 1.9%) smaller than we forecast in December 2019. Adding to the pain is that unemployment wont likely fall to its pre-c

13、risis low until after 2023. On the bright side, borrowing conditions remain largely favorableespecially for those in the investment-grade and high speculative-grade categories. Federal Reserve policymakers are unlikely to raise benchmark interest rates anytime soon (we think the federal funds rate w

14、ill stay close to zero through 2023) as they focus on job creation, even if that means letting inflation run somewhat hotter than they would have allowed in the past. Moreover, credit spreads are well below the highs seen at the beginning of the pandemic, and the rally in equities and bonds has redu

15、ced risk pricing for even the least-creditworthy borrowers. Historically high leverage remains our top risk to credit conditions. Low financing costs have eased debt-servicing pressures but could expose highly leveraged issuers if the market reprices risk. Against this backdrop, Democrats hopes for

16、a “blue wave”winning the White House and taking control of both houses of Congresshave come to fruition (by a hair), with victories in a pair of Authors David Tesher New York +1-212-438-2618 Joe Maguire New York +1-212-438-7507 Yucheng Zheng New York +1-212-438-4436 Financing Conditions Nick Krae

17、mer New York +1-212-438-1698 Evan Gunter New York +1-212-438-6412 Leveraged Finance Ramki Muthukrishnan New York +1-212-438-1384 Steve Wilkinson New York +1-212-438-5903 Robert Schulz New York +1-212-438-7808 Contents A New Political And Policy Era 4 Financing Conditions 6 Breakdown By Sector 8

18、 Leveraged Finance 18 Related Research 21 Appendix: List Of Analytical Contacts 22 U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 3 runoff elections for Georgias two Senate seats. The result gives President Biden a somewhat better chance to pus

19、h through his legislative agenda and bolsters his ability to seat cabinet members of his choice without significant opposition. In turn, the ramifications for the corporate borrowers we rate will now be potentially more pronounced versus under a continued partisan power split. Last year, we took rou

20、ghly 2,000 rating actions (including outlook revisions) partly attributable to environmental, social, and governance (ESG) factors. (Most related to the effects of health, safety, and social-distancing measures.) This year, well likely see a greater focus on building an environmentally sustainable r

21、ecovery, with growing awareness of the effects of climate change. Mergers and acquisitions (M&A) will likely be a critical component of the response to secular pressures, with companies seeking to acquire revenue streams and cut costs. We expect continued consolidation in depressed sectors such as e

22、nergy, as operators look to gain scale under difficult operating conditions. Record borrowing last year helped companies in more resilient sectors pile cash onto their balance sheets (see “U.S. Corporates Hold Record $2.5 Trillion Cash To Meet Pandemic Shock; Debt Reaches $7.8 Trillion,” published D

23、ec. 8, 2020), which, along with historically low interest rates, could fuel M&Abut its worth noting that the run-up in equities could inflate valuations to levels that raise concerns about acquirers overpaying. While the prospects for many companies return to profitability depend heavily on how quic

24、kly the economy can get back to normal, some will face significant sector-specific challenges (see table 1). Table 1 The Key Risks Around Sectors Baseline Assumptions U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 4 A New Political And Policy E

25、ra The new administrations first order of business will be to gain control of the coronavirus pandemic, which continues to rage in many parts of the U.S., and to jump-start an economy ravaged by the health crisis and related lockdowns (see box 1). Shortly before taking office, President Biden propos

26、ed an additional $1.9 trillion in stimulus to address the health and economic crisis, aimed primarily at improving the public response to the pandemic, helping workers who have lost their jobs, and assisting public schools looking to reopen. The congressional makeup thats in line with the new admini

27、stration will make it a little bit easier to get more stimulus approved, which could help boost income and consumer spending. Box 1 Day 1 Executive Actions President Biden has already signed a number of executive actions related to his administrations response to the pandemic and related economic ef

28、fects, as well as climate and energy-production issues. They include: Bolstering the federal governments response to the pandemic by implementing a “response coordinator” who will report to the president. Reinstating ties with the World Health Organization and re-establishing the U.S. as an active l

29、eader of the group. Continuing the pause on student loan payments until Sept. 30, and extending eviction and foreclosure moratoriums. Rejoining the 2016 Paris Agreement on climate changea move that will take 30 days to go into effect. Revoking the permit for the Keystone XL pipeline and enforcing a

30、moratorium on oil and gas leases in Alaskas Arctic National Wildlife Refuge. But because Democrats effective control of the Senate is by the narrowest of margins (a 50-50 partisan split, with the vice president holding any tie-breaking vote) President Biden could still face hurdles in realizing his

31、agenda. This likely leaves many plans out of reach or aspirational at best. However, if any legislative low-hanging fruit exists, infrastructure is it, as it enjoys perhaps the most bipartisan support. Having pledged to pump $2 trillion into the countrys roads, bridges, water systems, electricity gr

32、ids, universal broadband, as well as care services and facilities, increased infrastructure spending by the Biden Administration can support economic recovery and job creation, and can be a plus for sectors such as capital goods and building materials (see “As Biden Preps For Presidency, Senate Sway

33、 May Mean More For Credit,” published Nov. 19, 2020). From a credit perspective, taxes appear to be the issue with the most potential ramificationsalthough S&P Global Ratings believes there would be little effect on credit even if the president can push through his plan to raise corporate rates. Wit

34、hout significant Republican support, and absent a change in the filibuster rules, the Democrats would have to rely on the budget reconciliation process, as was utilized to pass the Tax Cuts and Jobs Act of 2017 (TCJA). If this process moves forward this year, effective dates of key provisions could

35、be either in 2021 or 2022, with the latter more likely, in our view. Under Mr. Bidens proposal, the statutory rate for U.S. corporations would likely raise the effective rate most companies pay, absent tax-planning offsets. We expect companies and sectors with large overseas earnings would likely se

36、e even bigger increases in their effective rates as steeper taxation of foreign earnings would add to the effects of the domestic increase. But while the change, if enacted, would have mixed consequences on our adjusted ratios, we dont foresee ratings changes solely due to an adjustment of the tax c

37、ode, as companies tax-planning efforts and financial policy changes would likely offset reductions in cash flow. However, highly leveraged borrowers could come under pressure absent their ability to use tax planning, net operating losses (NOLs), or tax credits to offset the tax increases (see “U.S.

38、Corporate Tax Policy Post-Election Wont Likely Affect Ratings, Regardless Of Election Results,” published Oct. 19, 2020). Perhaps more pronounced, the incoming president has promised significant regulatory changes for climate policy, pledging to rejoin the Paris Agreement, the international climate

39、accord. He has also planned a climate world summit, and could revoke the Affordable Clean Energy rule and replace it with standards that would start a drive toward net-zero carbon emissions by 2035. Clearly, borrowers we rate in the energy and power sectors will feel the effects of any strengthening

40、 of environmental regulation (see table 2). And as investors increasingly consider ESG factors in their asset allocations, this could affect some companies access to capital. U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 5 Another area in whic

41、h the new administration could change the countrys course is trade. However, it seems unlikely that President Biden will quickly reverse many of the Trump Administrations policies or to take a much friendlier stance toward the U.S.s main economic rival, China. This is especially true given that Amer

42、icans increasingly view China as a competitive threat, and without sweeping changes coming from Beijing, the deep-seated tensions between the countries look set to persist. But in contrast to Mr. Trumps “America First” stance, President Biden plans to form a coalition with U.S. allies when addressin

43、g China trade policy. The new president may also unwind tariffs his predecessor levied on certain goods from Europe. Closer to home, he may consider reopening negotiations with Canada to address the current tariff on softwood lumber. Health care, too, was a top campaign issue, as it has been in ever

44、y presidential race in recent memory. The loss of insurance for many Americans during the pandemic-induced recession has only thrown the issues of coverage and cost into greater relief. President Biden could look to bolster the Affordable Care Act (ACA) via measures including a federal public option

45、, new incentives for states to expand Medicaid, and expanded subsidies for ACA individual products. He also supports drug-pricing reforms, a position popular on both sides of the aisle. Yet many of these changes may be difficult to achieve because they may require more than a simple majority in the

46、Senate. Assuming the Supreme Court validates the ACA in the California v. Texas case this year, dramatic changes to the ACA dont seem to be in store anytime soon. That said, with control of the Senate, Mr. Biden will have more leeway to push through his appointments and effect his agenda. Table 2 Po

47、tential Policy Effects On Sectors Under Biden Presidency With Democratic Control Of Congress U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 6 Financing Conditions After the Feds historic actions to support the economy and financial markets in M

48、arch, the U.S. corporate bond market began its dramatic recovery, which seems to be moving ahead at full speed. Leveraged loans have still faced difficulties in a falling rate environment, but bond issuance hit new annual highs that will be hard to repeat this year. The central banks monetary suppor

49、t has been largely responsible for keeping many corporate borrowers afloat through the crisisbut it doesnt come without caveats. As investors continue to hunt for yield, excess liquidity in the worlds biggest economy could create problems for credit markets over the longer term. Weve seen debt lever

50、age soar, often with looser loan terms, which could mean more defaults and lower recovery ratesand perhaps a protracted default cycle, given that the inevitable defaults for companies with very weak credit quality may take time to rumble through the markets. Eventually fiscal support will cease, whi

51、ch could expose the full extent of indebtedness and structural headwinds many firms may face. Corporate Issuance Sets Records, But Is Expected To Decline In 2021 Brought back to life by extraordinary monetary policy in late March, corporate issuance in the U.S. rose to an all-time high of $2 trillio

52、n (rated and unrated) in 2020, with new records reached for both investment grade ($1.4 trillion) and speculative grade ($346.5 billion). Some ratings categories hit all-time highs, as well, notably the A ($539.2 billion), BB ($200.7 billion), and BBB ($713.7 billion) categories. Ultimately, all poi

53、nts in the ratings spectrum saw large annual totals, with even the CCC/C segment reaching a seven-year high of $31.6 billion. Demand for new debt helped keep defaults much lower than we expected last spring. Secondary-market yields for industrial corporate bonds hit all-time lows near the end of 202

54、0 (see chart 1). This, combined with longer maturities (though largely limited to investment-grade debt) has made for some of the best financing conditions U.S. corporates have ever enjoyed. Chart 1 U.S. Secondary Market Corporate Bond Yields (%) Data through Jan. 1, 2021. Source: S&P Global Ratings

55、. Market optimism provided many companies an initial lifeline, but this has since evolved to where many have built up sizable cash reserves and gotten ahead of upcoming maturities. In fact, some sectors that have seen the biggest increase in issuance relative to the prior five years are those most a

56、ffected by social distancing and economic lockdowns (see chart 2). Overall, nonfinancial corporates issuance rose almost 60% in 2020 over the prior five-year median. Some of the sectors with even larger surges were transportation (including airlines), retail/restaurants, media and entertainment, and

57、 oil and gas. In addition, U.S. nonfinancial corporates last year paid down or reduced upcoming maturities for 2021 by 26%modestly more than the 20% reduction in the next-year maturities we saw in 2019. However, this has built up the amount of debt coming due in the years ahead, as the amount maturi

58、ng in 2025 increased 35% in the past year. With massive debt issuance last year, combined with comparably smaller refinancing needs and new highs in cash and marketable securities balances, we anticipate bond issuance to decline in 2021. 024681012Dec-03Dec-04Dec-05Dec-06Dec-07Dec-08Dec-09Dec-10Dec-1

59、1Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20AAAAAABBB10 Year Treasury051015202530Dec-03Dec-04Dec-05Dec-06Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18Dec-19Dec-20BB+BB/BB-B5 Year TreasuryU.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P G

60、lobal Ratings Jan. 21, 2021 7 Chart 2 2020 Was Favorable To Some Of The Most Vulnerable FP&BM: Forest products and building materials; A&D: Aerospace and defense; CP&ES: Chemicals, packaging and environmental services; MM&S: Metals, mining, and steel; M&E: Media and entertainment. Data as of Dec. 31

61、, 2020. Sources: Refinitiv; S&P Global Ratings. Default Forecast We expect the U.S. trailing-12-month speculative-grade corporate default rate to rise to 9% by September, from 6.4% in November of last year (see chart 3). Credit stress, marked by high downgrades and record-high negative bias (the pro

62、portion of issuers with negative outlooks or on CreditWatch with negative implications) has subsided considerably since peaking in April. In our optimistic scenario, we expect the default rate to fall to 3.5%, and in our pessimistic scenario, we see it expanding to 12%. Typically, downgrade momentum

63、 precedes defaults, and in the spec-grade segment, most sectors will likely suffer further downgrades. In the 12 months ended Sept. 30, some sectors experienced net downgrade rates of 30% or more, with most of these also showing a net negative bias (positive bias minus negative bias) of over 50%. Bo

64、th measures imply particularly harsh conditions for creditworthiness. This is most obvious in sectors under the greatest stress from the virus and collapsing oil prices, such as leisure/media, transportation, and energy and natural resources. That said, the pace of downgrades has leveled off to pre-

65、pandemic levels since the late-summer, which could support a default rate below 9% in the near-term. Chart 3 U.S. Trailing-12-Month Speculative-Grade Corporate Default Rate And September 2021 Forecast Shaded areas are periods of recession as defined by the National Bureau of Economic Research. Sourc

66、es: S&P Global Ratings and S&P Global Market Intelligences CreditPro. 0%50%100%150%200%250%300%0500(change)(Annual bond issuance totals. $bn)2015-2019 Median2020% changeOverall % change0246898369258042

67、0052006200720082009200001920202021(%)U.S. speculative-grade default rate (actual)Base forecast (9%)Optimistic (3.5%)Pessimistic (12%)U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 8 Breakdown By Sector The recov

68、ery for U.S. corporates looks much as we expected a few months ago, with adjustments on the margin, both positive and negative (see chart 4). The recent round of fiscal stimulus and the possibility of additional funds looking more likely should continue to prop up consumer spending, which began to s

69、how resilience in the middle of last year. COVID-19 infection rates have varied by region, with rising cases causing some states to impose new restrictions and a slowdown or outright drop in real-time economic activity for several indicators. Case counts in some areas have started to come off of the

70、ir peaks reached earlier in January, and we continue to expect a return to some semblance of normal later this year once vaccination levels reach herd immunity levels. Continued reticence by consumers to resume some forms of travel and leisure activities without widespread vaccination has kept those

71、 sectors under pressure. On the other hand, with more time spent at home, consumers are investing in technology and home improvement. While autos posted surprisingly good results in the third quarter of last year, our outlook for the sector remains negative, with only a gradual recovery expected in

72、the next two years. Tech, telecom, health care, and homebuilders have held up well, creating a much quicker and easier path to recovery. Chart 4 Timeframe Of Recovery Of Credit Metrics To 2019 Levels North America Source: COVID-19 Heat Map: Updated Sector Views Show Diverging Recoveries, Sept. 29, 2

73、020. S&P Global Ratings. Retail And Restaurants; Consumer Products Current Spending Patterns Will Continue For Now, While Certain Discretionary Subsectors May Regain Momentum Among U.S. retailers and restaurants, there were 21 defaults last year, nearly twice as many as in 2017, the next-worst year.

74、 The 20% speculative-grade default rate compares to the overall corporate default rate of around 6%, reflecting the intense stresses the pandemic brought to bear on the sector. Still, after exclusively negative rating actions in March-April, rating trends began to reverse as consumers shifted their

75、spending to products that enhanced life at home. Most rating actions since August have been positive. (Robust liquidity following pre-emptive refinancing, and measures to lower costs and preserve cash, also played a role in some positive rating actions.) Consumer confidence has been slowly improving

76、 in the past few months but is still well below the pre-pandemic level (see chart 5). While retail sales have rebounded, the recovery has been uneven across subsectors. Issuers in the hardest-hit subsectors, such as specialty apparel, still have significant ground to make up before returning to 2019

77、 levels. Meanwhile, grocers and many specialty retailers have benefited from the shift to life at home, but it remains to be seen how enduring these consumption habits will be. We believe consumers will continue current spending patterns in the first half of the year, with the transition back to out

78、-of-home experiences occurring gradually through the remainder of the year and into 2022. Still, we believe online sales penetration will remain high, and consumers wont unlikely return to brick-and-mortar, mall-based specialty apparel and department stores (see chart 6). U.S. Corporate Credit Outlo

79、ok 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 9 For makers of consumer staples, the pandemic has been somewhat credit positive, as Americans turned to brands that were familiar and trusted. But the sector remains highly competitive and vulnerable to shifts in consumers

80、tastes and preferences. We dont believe the pandemic has changed that in any long-term way. At the same time, we think most discretionary subsectors can regain a large portion of their previous business, absent prolonged economic weakness, given pent-up demand and an eventual increase in social acti

81、vity. Food service could continue to suffer, with many independent and small-chain restaurants closing and new entrants emerging, while luxury goods largely depend on a significant return to tourism spending for some select markets. Apparel and cosmetics could be hurt by consumers more casual lifest

82、yles, given the shift to working from home. For some discretionary subsectors, it could take as long as to three years for credit metrics to return to pre-crisis levels. Chart 5 Chart 6 U.S. Consumer Sentiment Index E-Commerce As % Of Sales Of Select Issuers, Europe And North America Source: Univers

83、ity of Michigan. Source: S&P Global Ratings. Media And Entertainment; Hotels, Gaming, And Leisure Out-Of-Home Leisure Activities Will Remain Muted Amid Accelerating Digital Transformation The decline of linear TV and the shift of advertising to digital platforms has accelerated as a result of the pa

84、ndemic amid increasing audience fragmentation and expanding streaming options. Meanwhile, social restrictions have hammered the out-of-home (OOH) entertainment sector, which includes movie exhibitors, theaters, and live events companies that manage sports events, trade shows, conferences, and concer

85、ts. Even if a coronavirus vaccine becomes widely available by midyear, revenues for these sectors are unlikely to fully recover before 2022 and credit measures not before 2023. Our ratings bias for OOH-focused media companies remains negative, with potentially more negative actions absent improvemen

86、t in the operating environment. Companies with riskier credit profiles (high debt, looming maturities, depleted liquidity sources), and thus with less time on their hands to wait for business to return to normal are most threatened. We expect defaults and debt restructurings for several issuers, esp

87、ecially those in the CCC category. On the plus side, we expect advertising to begin recovering in earnest this year, with total annual ad spending equal to that of 2019. But the recovery will come almost exclusively from digital advertising, which will return to a double-digit percent annual growth

88、rate after a somewhat soft 2020 (expanding just 5%). Excluding digital, traditional advertising (linear TV, radio, outdoor, print) will increase just 6.9% this year and recover to 85% of 2019 performance (benefiting from the Tokyo Summer Olympics, which was delayed from 2020). For hotels, the rating

89、s trend will likely continue to be negative. In fact, all outlooks are negative, with the rating on one company on CreditWatch with negative implications. Although lodging demand is typically tied to GDP, our sector forecast has become untethered from key macroeconomic indicators because of health a

90、nd safety concerns. This is most evident in the unprecedented slump in revenue per available room (RevPAR) in the U.S., which was down 46% in the first nine months of 2020. We see U.S. RevPAR recovering a bit this year but remaining 20%-30% below 2019 levelsand we dont think it will fully recover un

91、til 2023 at the earliest. 707580859095100105Nov-19Dec-19Jan-20Feb-20Mar-20Apr-20May-20Jun-20Jul-20Aug-20Sep-20Oct-20Nov-20Dec-200%10%20%30%40%50%60%70%Deptstore/apparelSpecialtyretailersGrocerBig BoxRestaurantsPre-COVID-19Post-shutdownU.S. Corporate Credit Outlook 2021: Economic And Political Transi

92、tion S&P Global Ratings Jan. 21, 2021 10 In the gaming sector, the rating trend has been negative, as wellthough with fewer downgrades as a percentage of ratings, primarily as a result of revenue and margin resiliency among regional casinos, which are benefiting from customers staying closer to home

93、 and having limited other entertainment and travel options. Capacity restrictions in most markets havent impaired revenues as much as we had expected because historical peak utilization rates were well below these limits in most markets. Since reopening, casinos have operated with less labor and low

94、er marketing costs. While we believe costs may creep back up as operations normalize, some reductions are likely permanent. Additionally, the closure of lower-margin or loss-leading amenities, such as buffets, is bolstering margins, and these amenities may not reopen. Las Vegas, on the other hand, i

95、s rebounding slowly and will likely be the last of the countrys gaming markets to recover. Las Vegas relies heavily on air travel, conventions, and group meetings, which will likely be slow to return and may never fully recover. If a vaccine is widely available by midyear, travel to Las Vegas will l

96、ikely increase, supporting a rebound in the second half. However, the market will remain under significant pressure until then, with group and business travel likely lagging leisure. The cruise industry, as well, is facing another tough year as operators slowly resume sailings under guidelines set b

97、y the Centers for Disease Control and Prevention. Although resuming operations in phases might help operators better align supply and demand, target easily accessible home ports, and manage itineraries, customers might find the itineraries less desirable. And while theme park operators have reopened

98、 many of their parks, we expect attendance will remain very depressed because of cautious consumer behavior, patrons discomfort with wearing masks for long periods, and capacity restrictions. In the fitness sector, the risk of additional defaults remains very high, with all ratings in the CCC catego

99、ry because of very high leverage, strained liquidity, and significant uncertainty around the recovery path. Even though revenues will probably be higher than last years, we expect it to be 10%-30% below 2019 levels, with EBITDA down 20%-50% from pre-pandemic. Transportation; Aerospace And Defense Do

100、mestic Travel Could Lead The Recovery Of Airlines And Narrow-Body Production For airlines, 2021 will likely be a year of two halves, with a positive trend overall relative to last year, as vaccines limit risks and travel restrictions ease. A stronger economic recovery will help but is secondary to p

101、rogress against the pandemic. Domestic (or, where possible, regional) leisure travel will likely lead the recovery, while business and international (particularly intercontinental) travel will take longerwith some demand permanently lost. Unfortunately for airlines, business and international flying

102、 are the most profitable. While carriers have amassed large amounts of cash, thanks to federal cash grants and loans, and receptive banks and capital markets, we have negative outlooks or ratings on CreditWatch negative for nearly all, reflecting continuing downside risk amid extremely depressed ind

103、ustry conditions. While we expect credit measures to improve from very depressed 2020 levels, we dont see them returning to pre-pandemic levels until at least 2024. The picture for freight transportation is much better. The pandemic and associated economic hit have had a less severe effect on global

104、 trade than we anticipated. The movement of essential goods, strong pickup in e-commerce, and shift of consumer spending to tangible goods from services have supported the recovery of container shipping volumes. Similarly, demand for land freight transportation has improved since the height of the p

105、andemic, and our ratings and outlooks on the large North American freight railroads and on trucking operators remain mostly stable. We expect freight demand will continue its fairly strong recovery, assuming customers continue to replenish inventories and industrial production picks up. The Coronavi

106、rus Aid, Relief, and Economic Security (CARES) Act provided significant support and liquidity to the aviation industrywith nearly $10 billion going to almost all commercial service U.S. airports, which came into the pandemic with strong cash positions and bondholder protections. The effects of the c

107、risis on ports, meanwhile, has been muted because ports stayed open for business during the lockdown months, and trade is affected less than services. On the other hand, most toll roads have either negative outlooks or ratings on CreditWatch negative. Amid the sharp decline in air travel, Boeing and

108、 Airbus slashed production on most models by 30%-50% (excluding the 737 MAX) and we expect it to stay at the reduced levels this year. Given that domestic air travel is likely to recover before international, narrow-body production could begin to U.S. Corporate Credit Outlook 2021: Economic And Poli

109、tical Transition S&P Global Ratings Jan. 21, 2021 11 increase late in the year, while wide-body production will most likely stay depressed as global air travel slowly recoversprobably reaching pre-pandemic levels by 2024. Boeing resumed deliveries of the MAX in December 2020 and we expect it to be a

110、ble to deliver 350-400 aircraft in 2021, much lower than we expected pre-pandemic. The resolution of a long-running dispute in the World Trade Organization between the U.S. and the EU over aircraft subsidies has resulted in both parties being able to apply tariffs to imported aircraft from the other

111、 area. This is unlikely to affect overall market demand but could reduce Boeing deliveries to Europe. The U.S. will also be applying tariffs to aircraft parts from France and Germany, limiting Airbus ability to avoid tariffs on the aircraft it produces at its U.S. production facility. Government aid

112、 has had limited direct benefit for most manufacturers and suppliers, with some maintenance, repair, and overhaul providers getting loans and grants under the CARES Act. U.S.-based companies also benefitted from tax-related provisions in the act. Aid to airlines indirectly helps aircraft manufacture

113、rs as it helps them to survive until air travel returns but doesnt directly support aircraft deliveries. Credit metrics will likely remain very weak for many companies this year due to lower earnings and cash flow and, in some cases, higher debt. Most have suspended share repurchases and cut dividen

114、ds, but some that were in a stronger financial position going into the pandemic or have material non-aerospace operations may resume repurchases this year if demand stabilizes. We may also see more acquisitions as relatively stronger companies target weaker competitors. In the defense subsector, rat

115、ings will likely be mostly stable for contractors that dont have significant exposure to the commercial aerospace market. In most cases, any rating actions would reflect financial policy decisions, such as acquisitions or higher shareholder returns. We dont expect the change in the White House to re

116、sult in lower defense spending in the next year. However, likely changes in foreign policy and spending priorities with the incoming administration could affect funding for individual programs. One area that could see lower funding is the modernization of nuclear weapons. The new administration will

117、 also likely push to retire legacy weapons systems in favor of new technology, although Congress has resisted this in the past. Autos Significant Structural Changes Underway Our negative outlook on the auto industry hasnt changed since late-2019, when we voiced concerns about the industrys ability t

118、o transition to e-mobility, digitalization, and autonomous driving in a no-growth environment. The pandemic hasnt materially altered these structural trends but has weakened companies ability to fund the necessary investments. However, as is evident from the surprisingly good results in the third qu

119、arter of last year, the industry has managed the short-term challenges the pandemic created, including an unprecedented stop to production for more than a month, disruption of value chains, and delays to critical product launches. Still, we see only a gradual recovery of global auto sales in the nex

120、t two years, with our projection for 2022 still below 2019 levels. The U.S. will only partially recover the ground it lost this year. The pandemic has made additional restructuring imperative. Along with research and development costs and capital spending, this will depress profitability and cash fl

121、ows in the next two years. To rationalize costs, companies may look at consolidation and partnerships to share the burden of investments in new product development, digitalization, and new technologies. Full mergers often reshape companies competitive advantages, scale and scope of operations, and o

122、perating efficiencyalthough they are relatively rare. But because we see scale as key to recouping massive investments in electrification, digitization, and new technology, we believe some rated auto players may continue to see the rationale for full mergers. President Bidens win bolsters the countr

123、ys drive to achieve net-zero carbon emissions by 2050 and accelerate the e-mobility transition. The new administration could impose stricter fuel-economy standards, speeding up the shift toward zero-emissions light- and medium-duty vehicles and spurring improvements in fuel efficiency for heavy-duty

124、 vehicles. Still, the rate of electric-vehicle (EV) adoption in the U.S. may be only 10% or so by 2025, as low gas prices and reduced taxes discourage EV purchases (see chart 7). Overall, we believe electrification is a challenge for incumbent auto manufacturers mainly because of regulation that for

125、ces them to sell EVs, which are less profitable than traditional vehicles. However, we see electrification as an opportunity for auto suppliers that can provide cost-competitive components and systems. U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21,

126、2021 12 Chart 7 Low-Emission Vehicle Sales By Region (BEVs And PHEVs) eEstimate. BEVsBattery electric vehicles. PHEVsPlug-in hybrid electric vehicles. LTMLast 12 months. Sources: S&P Global Ratings, European Automobile Manufacturers Association, Wards Intelligence, China Association of Automobile Ma

127、nufacturers. Tech; Telecoms Regulation And Trade Tensions In Focus We now expect global IT spending will grow about 4% this year, lagging our global GDP forecast of 5.0% (see table 3). Despite pockets of strength (such as robust cloud spending and acceleration of 5G technology), we expect certain ha

128、rdware sales, such as PCs, to stay flattish as the tailwind of work-from-home sales dissipates, and enterprises continue to monitor their spending as the coronavirus pandemic lingers. Over the longer term, we expect IT spending to outgrow global GDP as enterprises continue with the digital transform

129、ation to meet evolving demand for the next wave of innovations. Table 3 Growth Forecasts 2019 2020e 2021e Macro Global GDP growth 2.8% (4.0%) 5.0% Global IT spending 4.2% (1.7%) 4.0% Revenues IT services 4% (3%) 3% Software 9% 2% 4% Semiconductors (12%) 2% 5% Network equipment 3% (5%) 2% Mobile tele

130、com equipment 3% (1%) 0% External storage 1% (7%) 5% Shipments PC (1%) 13% 0% Smartphone (2%) (10%) 7% Server (2%) 3% 4% Printer (15%) 1% eEstimate. Source: S&P Global Ratings. Regulation will likely remain a focus of the Biden Administration as big tech expands its global footprint, and we expect c

131、ompanies to be resourceful in dealing with any new legislation. We continue to view the breakup of large tech companies as a low-probability event; however, the threat of antitrust actions remains. Furthermore, Vice President Kamala Harris political ties to tech-heavy California could be a modest po

132、sitive for the industry. We believe the threat of antitrust actions by regulators could extract changes to how large tech companies operate, but any actions, enforced or self-selected, would be manageable. While U.S.-China trade tensions will continue with ongoing intellectual property disputes and

133、Chinas investment in homegrown tech, we expect policies under the new administration to be more predictable, with the possibility of lowering of trade barriers and providing assistance to U.S. companies diversifying out of China. The new administration may seek to seek to reverse some of the corpora

134、te tax cuts enacted under the TCJA, and while we expect such measures to hurt 1.3%1.8%2.5%3.6%7.8%20%2.1%3.1%5.3%5.6%5.3%20%0.9%1.1%1.9%1.9%1.9%10%0%5%10%15%20%25%EuropeChinaU.S.U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 13 companies bottom

135、 lines and cash flows, we dont expect the effects to be detrimental for tech companies. The trade dispute and pandemic-related supply-chain disruptions have shined a spotlight on the tech sectors reliance on China as a global manufacturing hub. We believe certain tech vendors will gradually diversif

136、y manufacturing and assembly away from Chinawith an emphasis on “gradually.” While governments at all levels could offer subsidies to incentivize the reshoring of tech manufacturing, we believe any diversification efforts will be focused on building new manufacturing facilities in countries such as

137、Vietnam, India, and Mexico, rather than a lift-and-shift of existing plants. Given the decades it took to establish supply chains, it will be difficult to completely avoid geographical dependency. On another front, the pandemic showed that telecom and cable is a resilient sector, but not immune to t

138、he economic fallout. Stay-at-home advisories, remote-working, and e-learning led to a marked and likely sustainable shift in broadband consumption. Homebound consumers increased their reliance on high speed internet services, boosting nonpeak broadband consumption as much as 50% in some markets earl

139、y in the pandemic. Demand for faster broadband is robust, and consumer interest in upgrades is growing, which bodes well for entrenched internet service providers (ISPs) such as cable companies. We have a favorable view of ISPs near-term opportunity to derive more value from their broadband assets.

140、5G is seen as the next big growth area for telecom providers. But, so far, adoption in the U.S. remains lackluster, and rollout strategies vary for each carrier, which affects availability. However, as more 5G spectrum is deployed and more advanced devices are made available, we think consumer adopt

141、ion of 5G wireless services could gain momentum, likely late in the year. We believe a top priority of the Federal Communications Commission (FCC) in the Biden Administration will be to reinstate cable providers as Title II “common carriers” under the 1996 Communications Act to enforce no blocking,

142、no throttling, and no paid prioritization of internet traffic, which we view as a low risk. The bigger risk from Title II is that it allows the FCC to regulate price, but we view the implementation of widespread, federally mandated price caps as unlikely over the next two years. A more permanent thr

143、eat would involve Congress passing a law enforcing so-called net neutrality that includes a framework for pricing oversight and regulation. Credit quality in the sector is stabilizing, with more than 80% of ratings having a stable outlook. But credit quality is beginning to get cloudier given the se

144、ctors relatively high leverage (compared to historical measures) and planned investments in 5G and fiber densification. However, industry consolidation and the adoption of digital processes, coupled with growth from new services, and presumably credit-supportive policies, could provide ratings stabi

145、lity. Oil And Gas; Midstream Energy The Energy Industry Continues To Face Headwinds After global demand for oil fell nearly 20% in the second quarter of last year, a massive supply glut remains, despite actions taken by OPEC+ to cut supply and balance inventories. Faced with the headwinds of low pri

146、ces, uncertain demand, and a new presidential administration (which will likely raise cost profiles and decrease well productivity), several operators have sought to partner with peers or a larger competitor to deliver better value to shareholders. There doesnt appear to be any panacea for this sect

147、or in the next couple of years, especially given our expectation that capital budgets for this year will be relatively flat. Moreover, the offshore drilling market remains oversupplied. We believe further consolidation and asset retirements will be needed to counter the dismal operating environment

148、of low oil and gas prices, negative operating cash flows, and high leverage. Much of the upstream speculative-grade ratings portfolio is in the U.S. Most of these producers lack access to capital markets and are seeking to merge or be acquired as they struggle to generate free cash flow. The surge o

149、f bankruptcy filings last year will likely continue for many of the spec-grade exploration and production, and oilfield services companies. When the pandemic is under control, global energy demand will most likely pick up, driven by China, India, and other expanding economies. Demand in developed co

150、untries is much flatter, amid fuel-efficiency improvements and insulation, and consumer choices. Renewable energy sources are capturing much of the growth. For refiners, significant demand destruction has weakened financial performance to one of the lowest levels in decades. About 57% of global rati

151、ngs in the sector have negative outlooks. In the U.S., announced refinery closures last year totaled more than 1 million barrels per dayU.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 14 approximately 6% of total capacity at the start of 2020. W

152、e believe refiners will likely continue to struggle, with margins well below mid-cycle levels for much of this year, although we expect some improvement in the second half. The longer the pandemic weighs on demand for oil and refined products, the more challenging it will be for refiners in particul

153、ar to rebuild credit quality and preserve current ratings, even if they decide to reduce or suspend future dividend payments. Midstream companies have proactively strengthened their balance sheets and increased financial flexibility, which will benefit credit quality. The pace of the recovery could

154、be somewhat uneven and depends on vaccine distribution, stronger commodity prices, the health of the upstream industry, and more robust end-user demand, all of which is outside the midstream industrys control. President Bidens plan to stop new federal drilling permits could jeopardize the cash flows

155、 of some midstream companies, especially those in the Gulf of Mexico, the Powder River Basin, Piceance, New Mexico, and parts of the Delaware basin. The effect on volumes and cash flows will depend on policy specifics, and could be muted if certain wells or drilling activity is grandfathered in. Nat

156、ural gas could fare better as a bridge toward cutting U.S. emissions to zero by 2050. Merchant Power; Regulated Utilities Resilient During The Pandemic, But ESG Factors Could Drive Credit Quality The impact of COVID-19 and economic slowdown on independent power producers (IPPs) has been relatively m

157、uted, and strong balance sheets, operational diversity, and free cash flow generation have propped up credit quality. About 70% of our IPP or merchant generators have stable outlooks compared with 85% in 2019 and 78% in 2018. While larger IPPs are more stable, smaller ones with no retail operations

158、face negative credit trends. The business outlook still reflects a demand slowdown because of energy efficiency, behind-the-meter solar, and distributed generation. Because of a long-term decline in wholesale power margins, most IPPs are now managing their capital structures to lower leverage. We se

159、e investment-grade companies looking to maintain leverage at about 2.25x-2.5x, and even spec-grade companies looking to bring debt levels to about 3x-3.25x. While the pandemic has had a pervasive impact, we think power prices and spark spreads (gross margins on electricity sales) this year will be i

160、nfluenced more by renewables installations. We assume a five-year extension for production and investment tax credits, and we expect wind installations to more than double this year, with solar installations also rising. The regulated utilities industry, too, has managed most of its coronavirus-rela

161、ted risks, offsetting some of its lower commercial and industrial deliveries with higher residential deliveries. It worked with regulators to defer much of the pandemic-related costs for future recovery. These actions, in conjunction with the industrys generally consistent access to the capital mark

162、ets, offset much of the hit. Still, the industrys rating trends and outlook are negative. About 30% of North American regulated utilities either have a negative outlook or are on CreditWatch negative, reflecting relatively weak financial measures driven by high capital spending and the effects of va

163、rious ESG factors. Despite its significant carbon-emission reductions, the industry is still the second-biggest emitter of greenhouse gases (GHG) (see chart 8). We think utility investments in offshore wind will significantly grow and may lead to the installation of as much as 14 gigawatts of capaci

164、ty by 2030more than three-fourths of all offshore capacity in Europe, which has been developing and installing such projects for the past three decades. The potential growth is primarily driven by regulatory policies in states along the East Coast looking to meet renewable and clean energy targets.

165、Part of the industrys weak credit quality is directly attributable to ESG factors. It continues to face environmental hazards, as well as high-profile governance concerns, based on bribery allegations. Should governance issues become more widespread, confidence in the utility industry will likely we

166、aken, pressuring credit quality. U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 15 Chart 8 GHG Emissions By U.S. Economic Sector Source: U.S. Environmental Protection Agency. Metals And Mining; Chemicals With Demand Recovery, Credit Bounces Bac

167、k, While ESG Rises While the global economy is still far from resuming full-blown industrial production, we see a vastly improving outlook for most metals. Chinas rebound provides an improved outlook for upstream miners. Prices are rebounding sharply from pandemic-induced lows, as producers quickly

168、cut output while demand only paused (see chart 9). A weaker U.S. dollar will likely support higher base metal prices, but could also point to lower precious-metal prices. And demand from the auto, aerospace, oil and gas, and commercial construction industries wont likely return to 2019 levels this y

169、ear. Chart 9 Gold, Copper And Iron Ore Prices Source: S&P Global Ratings. Because the industry is perceived as posing multiple threats to the environment, companies may increasingly see their access to capital restrained. That is already a reality for coal miners and coal-fired steel processors. The

170、 use of cleaner energy sources and reduction of GHG emissions, the proper treatment and disposal of waste, and active engagement with communities are all important for sustainability. Markets and end users will demand timely data on those fronts and miners future performance will play a major role i

171、n investment decisions and business continuity. Investors are increasingly divesting thermal coal-related assets, and more and more financing institutions are refraining from providing capital to coal or coal-fired projects. 0500025002008200920001620172018(Million me

172、tric tons of CO2 equivalents)TransportationElectricity GenerationIndustryAgricultureCommercial & Residential7080900140Index (01.01.2020 = 100)GoldCopperIron oreU.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 16 For steelmakers, overca

173、pacity remains a structural problem. This is most likely to weigh on higher-cost producers, especially in North America and Western Europe. The downturn hit most steel producers outside China hard in the second quarter of last year, and the financial and ratings implications could have been worse wi

174、thout the subsequent market rebound. In a similar vein, credit metrics for many chemical producers are improving following the recovery in demand, and in some cases pricing. However, in most instances metrics havent fully recovered to 2019 levels. We believe Chinas relatively quick economic recovery

175、 and a stronger rebound in Europe and North America will be important contributors to ongoing improvement in demand for both specialty and commodity chemicals. Some chemicals that are sold into cleaning, sanitation and health care end markets have actually benefitted from the ongoing pandemic and wi

176、ll likely continue to do so. However, the primary impetus for improving earnings is stronger demand in key end markets, including autos, housing, and general industrial. An unexpected reversal of this trend in these markets would stall our anticipated earnings improvement. That would have a cascadin

177、g effect and ultimately weaken the sectors credit metrics to levels below our expectations. Real Estate; Homebuilders; Building Materials; Capital Goods While The Housing Market Recovers Quickly, Retail And Office REITs Suffer Retail real estate remains under pressure, and the acceleration of e-comm

178、erce will continue to hurt retail and erode tenant credit quality. Rent renegotiations, tenant bankruptcies, and store closures would hamper growth. Office real estate risks have increased as corporate tenants consider downsizing. We expect a slow return to the office, rising vacancies, and lower re

179、nt growth. Valuation for retail and office will decline amid slowing cash flow growth. Pressure on retail asset valuation could linger through 2021. We maintain a negative ratings bias for North American REITs, and we expect negative rating actions to continue this year as we monitor the potential r

180、ecovery in real estate demand and REITs progress in restoring credit metrics to pre-pandemic figures. We expect the first half to remain challenging, while improvement could accelerate later in the year. We see urban markets such as New York, San Francisco, and others underperforming Sun Belt market

181、s. Suburban offices may face less pressures than dense urban markets, with more resilient occupancy. Still, given the staggered lease maturities for office REITs, we expect gradual deterioration. On the other hand, widespread credit improvement for U.S. homebuilders appears likely, as the underpinni

182、ngs of solid long-term demand, pricing, cost management, and prudent capital allocation remain intact (even if a shift in mix to entry-level homebuyers could cause lower unit dollar margins) (see chart 10). We believe positive rating actions could outnumber negative ones this year, given our 7 to 4

183、positive outlook bias. We see solid top-line growth, with homebuilding revenue up about 9% this year. Home prices have been increasing due to stronger demand, coupled with low supply and a change in consumer preferences to less dense suburban locations. Price increases have offset persistent cost in

184、flation to date, so that profitability could be exposed if higher interest rates pushed prices down modestly. The building materials sector recovered quickly to pre-pandemic levels by late-2020. Credit quality for North American building materials companies look set to stabilize, with negative outlo

185、oks falling below 50% of the portfolio. Still, a negative ratings bias will persist for some time because of elevated leverage from leveraged buyouts (LBOs). Many issuers in building materials are operating with high debt after several years of M&A, so unexpected costs for business restructuring add

186、 to pressure on credit ratios. The sector remains attractive for consolidation, as strategic and financial players consolidate regionally or diversify into new markets. Some of these transactions are yielding real credit benefits as stronger businesses improve pricing power and margins, but many LBO

187、 transactions have resulted in downgrades among our riskiest and lowest-rated credits. In contrast with the robust housing market, nonresidential construction has suffered double-digit percent declines in private and public construction segments such as lodging, education, and manufacturing. On the

188、other hand, investment in power and water infrastructure has held up well, and we believe the change in Washington could spark a new round of infrastructure investment. The Biden Administration aims to spend $2 trillion on physical infrastructure, including roads and bridges, water systems and elect

189、ricity grids, and health care. S&P Global economists estimate that a $2.1 trillion boost to public infrastructure spending over 10 years could add $5.7 trillion to U.S. GDP in the next decade, which is 10 times the output lost during the recent recession. U.S. Corporate Credit Outlook 2021: Economic

190、 And Political Transition S&P Global Ratings Jan. 21, 2021 17 Chart 10 U.S. Housing Starts Note: Multifamily starts are housing starts of 2-4 units plus 5-unit structures. Data as of December 2020. Sources: U.S. Census Bureau and U.S. Department of Housing and Urban Development. Increased spending o

191、n infrastructure and climate change in the U.S. could also benefit capital goods makers. While U.S.-China trade tension could continue to weigh on the operating performance in the sector, more-stable trade policies under President Biden would be a plus for capital goods issuersparticularly those wit

192、h a sizable export base. Still, more than half (53%) of U.S. capital goods companies have negative outlooks or are on CreditWatch negative, and given the high number of low speculative-grade ratings, defaults could rise next year. And as industrial activity improves, we think large issuers could res

193、ume share repurchases and M&A transactions to bolster growth. Health Care Outlook Trends Negative; Industry Reform Will Be Gradual The health care industry has held up relatively well through the pandemic, though the effects have been uneven across the subsectors, weighing more heavily on discretion

194、ary care. Hospitals have cut costs to counter the drop in elective procedures, and government aid has provided a cushion against uncertainty. However, many hospitals have been overwhelmed by COVID-19 cases and incurred significantly higher costs, including for labor (outsourced nursing and doctors),

195、 and suffered negative margins. We think growth in health care spending will be more moderate than in pre-pandemic years, as demand suffers from high unemployment and the related loss of coverage. Our outlook on the sector had already been trending negative because of ongoing (and, during the pandem

196、ic, accelerating) disruption in the industry, such as payor pressures on pricing and technology, and increasing consolidation in response. Industry reform will continue to be gradual in the U.S., as the complexity of issues and partisanship in Washington make it a slow processalthough the rising num

197、ber of uninsured Americans and strains on state budgets could quicken the pace. Moreover, the Biden Administration will likely prioritize controlling the pandemic and shoring up the economy for most of the year. The president also has more of a moderate stance on health care reform than some other D

198、emocrats do. Still, the industry remains legislatively exposed, given bipartisan consensus on issues such as transparency from hospitals and service providers, and pricing limits for pharmaceuticals. Thus, while the likelihood of something being passed and implemented in the near term to remains low

199、, it will increase under the new administration. 02004006008000001/199002/199103/199204/199305/199406/199507/199608/199709/199810/199911/200012/200101/200302/200403/200504/200605/200706/200807/200908/201009/201110/201211/201312/201401/201602/201703/201804/201905/2020(Thousand U

200、nits)Single-familyMultifamilyU.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 18 Leveraged Finance As we look at 2021, we see a choppy, COVID-19 controlled economic recovery and a speculative grade universe that is rated lower, has more debt, and

201、, in some sectors, has little chance for a recovery back to traditional levels of activity for several years. Our outlook for leveraged finance in 2021 is far different than at the end of 2019, having been shaped by the many unprecedented events of 2020. The rating distribution at the end of 2019 ha

202、d a large cohort of B- rated issuers, vulnerable to a downturn. This cohort, many of them new issuers in the past few years, was a key risk that we were focused on, even though the economic outlook called for modest growth. In 2021 the global pandemicbut also investor demand for yieldwill continue t

203、o dominate the speculative-grade credit story. Developments on vaccines and their deployment has brought hope that an end to the economic disruption is in sight, but we think uncertainty about the timing and strength of the longer-term recovery in credit quality will persist in 2021. Risks vary by s

204、ector (see table 1). Importantly, the starting point for ratings movement in 2021 is lower (see chart 11). While the pace of rating actions has returned to typical levels, the shift of ratings to lower levels, and especially the rise in the CCC cohort, leaves little room for underperformance, so the

205、 risk of restructurings or insolvencies is high. Chart 11 North America Speculative Grade Ratings Distribution By Percentage Source: S&P Global Ratings. Most rating actions and downward migration in speculative-grade ratings resulting from the pandemic and the oil shock happened in the first half of

206、 the year. Speculative-grade ratings (but not outlooks) stabilized in the second half of 2020 relative to the first half. Many companies could access capital markets and address their liquidity needs due to the Feds support for markets and investor thirst for yield. Despite all the liquidity raising

207、, the percentage of companies in the CCC range almost doubled from 8.6 % of speculative-grade ratings at the start of the year to 16.5% in the middle before settling at about 15.5% at year end. (see “Credit Trends: Risky Credits: U.S. And Canadian CCC Rated Companies Are Walking On Thin Ice,” publis

208、hed Dec. 1, 2020). Over 50% of the companies downgraded to the CCC range came from the oil and gas and consumer-facing sectors (media and entertainment, consumer products, and retail and restaurants). While we have seen a few CCC+ issuers subsequently return to B-, most depend heavily on the duratio

209、n, speed, and strength of recovery to avoid an eventual default (see “Credit Trends: A Round-Trip Ticket: Some Companies Downgraded To CCC+ Could Be Headed To B- As The Economy Recovers,” published Aug. 7, 2020). Of the entities rated B-, about 3% have ratings on CreditWatch negative, while over a t

210、hird have negative outlooks. Even as the economy recovers in our base case, the dispersion of sector credit recovery trends across multiple years may be the widest it has ever been after a recession given the global pandemic and is expected to persist (see chart 4). Following the downgrades of 2020,

211、 most outlooks in many sectors are stable; the percentage of negative outlooks varies considerably across sectors, and is almost always higher, even after the 7%10%10%12%27%22%5%2%1%0.2%December 31, 2019CW Negative7%9%9%10%21%21%10%3%1%1%June 30, 2020CW Negative7%10% 9%11%22%24%10%3%1%0.4%December 3

212、1, 2020CW NegativeU.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 19 downgrades, than at the end of 2019 (see chart 12). Only telecom has a lower percentage of negative outlooks at the end of 2020 compared to 2019. Positive outlooks remain limit

213、ed, but the percentages are often not that different from year-end 2019, and in a few sectors the mix of positive outlooks ended up higher at the end of 2020. Chart 12 North American Speculative Grade Ratings Outlook By Sector, December 2019 vs. December 2020 Source: S&P Global Ratings. The magnitud

214、e of potential fallen angels declined by the end of 2020 from earlier in the year. With no fallen angels in November, the potential fallen angel count appears to have peaked (see “Credit Trends: BBB Pulse: Fallen Angels Tally Remains Flat In November,” published Dec. 16, 2020). In addition, potentia

215、l fallen angels have less absolute debt per company than the larger companies that were downgraded to speculative grade in 2020 such as Ford Motor Co., Kraft Heinz, and Occidental Petroleum (which together represented about two-thirds of the debt held by the 47 fallen angels in the U.S. as of Nov. 3

216、0). The capital markets werent disrupted by these large issuers entering the speculative-grade universe, reflecting the vast amount of liquidity in the markets. After falling to speculative grade, Ford Motor Co. completed the largest speculative-grade offering on record, according to LCD, and Ford M

217、otor Credit completed several financings during 2020. Whether investor demand for risky assets remains as robust in 2021 as last year will be an important support of the bridge to recovery in credit quality, even if the economy continues to improve. During 2020 speculative-grade issuers, even those

218、in very challenged sectors, were able to fund liquidity and push out maturities. Accordingly, we lowered our default forecast for 2021 although we expect defaults to rise from recent levels (see “The U.S. Speculative-Grade Corporate Default Rate Could Rise To 9% By September 2021,” published Nov. 23

219、, 2020). We have seen risk appetite continue in early 2021, with transactions for buyouts and refinancing in both the leveraged loan and speculative-grade bond market. Our forecast for collateralized loan obligation (CLO) issuance, a primary driver of loan demand, is $100 billion for 2021 (broadly s

220、yndicated loan and middle market CLOs; excludes CLO resets and refis), a rise from the $92 billion in 2020, but below pre-pandemic 2019 ($118 billion). 0%20%40%60%80%100%Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Oil & GasExploration & ProductionM

221、edia & EntertainmentTransportationChemicals,Packaging& EnvironmentalServicesCapital GoodsRetail/RestaurantsConsumerProductsAutomotive% Outlook Neg/CW-Neg% Outlook Pos/CW-PosOL Stable0%20%40%60%80%100%Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Dec-19Dec-20Aero

222、space& DefenseMetals, Mining& SteelUtilityForest Products& BuildingMaterialsHealth CareTelecomHomebuilders/Real Estate Co.HighTechnologyU.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 20 Post-Default Recovery Expectations Remain An Outpost Of St

223、ability We expect post-default recovery prospects to remain relatively stable in 2021, mixed with event risk. The main reason for stability in recovery ratings is that our view already looks through to default and doesnt necessarily need to change simply because a company approaches default. We are

224、looking to post-emergence recovery, so recovery ratings and valuations should not reflect a worst-case scenario or trough-level EBITDA. While we have not seen and do not expect widespread or dramatic changes to recovery ratings, they have, will, and should change due to material changes in debt stru

225、cture that either increase debt or revise priorities as companies access capital to boost liquidity or push out maturities. To a lesser degree, some recoveries were lowered to reflect lower post-emergence prospects for certain companies due to company- or industry-specific factors (some retailers ar

226、e a good example). In addition, and more troubling for loan investors, are several recent, controversial, and high-profile cases where aggressive liability management transactions have materially reduced the recovery prospects for existing first-lien lenders through: “Priming” transactions (for exam

227、ple: Serta Simmons, Boardriders, and TMK Hawk) where a subset of existing lenders provided new super-priority loans and elevated their existing loans above other existing lenders that were not party to the transaction; and “Collateral transfers” where important assets were removed from the collatera

228、l package and used to support new debt (including Party City, Travelport, and J. Crew). With regard to event risk, recovery ratings are generally more susceptible to revision for deep speculative-grade companies that may have already maxed out debt capacity and for junior debt tranches that are vuln

229、erable to being further displaced by more higher-priority debt. Outside of these event risks, our forward expectations for average recovery rates on first-lien debt remain roughly 10%-15% lower than average historical actual recovery rates of 75%-80% due to high total and first-lien leverage levels

230、and thinner cushions of junior debt where this still exists (see chart 13). The dominance of covenant-lite term loan structures is also a factor and dims first-lien recovery prospects somewhat, in our view. High first-lien debt levels also tend to push down recovery prospects for junior debt sitting

231、 behind a thicker layer of higher priority debt. Chart 13 Average Recovery Estimate Of First Lien New Issues (U.S. And Canada) Source: S&P Global Ratings. 2021 Wont Be A Smooth Ride For Leveraged Finance, But It Might Feel Like It After 2020 We expect speculative-grade credit quality in 2021 to face

232、 challenges; even if some risks such as the growing discussion of rising inflation and higher rates materialize, 2021 will more likely be a year of choppy progress, with higher defaults mixed in, than the plunge in credit quality we saw in 2020. 71%69%66%67%64%64%65%67%66%64%67% 67%64%71%65%62%60%65

233、%70%75%80%U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 21 Related Research COVID-19 Impact: Key Takeaways From Our Articles, Jan. 20, 2021 Georgia Gains Give Biden A Legislative Leg Up; The Pandemic And Economy Are First Priorities, Jan. 7, 2

234、021 Credit Trends: BBB Pulse: Fallen Angels Tally Remains Flat In November, Dec. 16, 2020 Industry Top Trends 2021, Dec. 10, 2020 U.S. Corporates Hold Record $2.5 Trillion Cash To Meet Pandemic Shock; Debt Reaches $7.8 Trillion, Dec. 8, 2020 Global Credit Outlook: Back on Track?, Dec. 3, 2020 Credit

235、 Trends: Risky Credits: U.S. And Canadian CCC Rated Companies Are Walking On Thin Ice, Dec. 1, 2020 As Biden Preps For Presidency, Senate Sway May Mean More For Credit, Nov. 19, 2020 The U.S. Speculative-Grade Corporate Default Rate Could Rise To 9% By September 2021, Nov. 23, 2020 U.S. Corporate Ta

236、x Policy Post-Election Wont Likely Affect Ratings, Regardless Of Election Results, Oct. 19, 2020 COVID-19 Heat Map: Updated Sector Views Show Diverging Recoveries, Sept. 29, 2020 Credit Trends: A Round-Trip Ticket: Some Companies Downgraded To CCC+ Could Be Headed To B- As The Economy Recovers, Aug.

237、 7, 2020 This report does not constitute a rating action. As vaccine rollouts in several countries continue, S&P Global Ratings believes there remains a high degree of uncertainty about the evolution of the coronavirus pandemic and its economic effects. Widespread immunization, which certain countri

238、es might achieve by midyear, will help pave the way for a return to more normal levels of social and economic activity. We use this assumption about vaccine timing in assessing the economic and credit implications associated with the pandemic (see our research here: As the situation evolves, we wil

239、l update our assumptions and estimates accordingly. U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21, 2021 22 Appendix: List Of Analytical Contacts Sector Analyst Name and Contact Aerospace & Defense Philip Baggaley +1 (212) 438-7683 Autos Philip Bagg

240、aley +1 (212) 438-7683 Building Materials Donald Marleau +1 (416) 507-2526 Capital Goods Ana Lai +1 (212) 438-6895 Chemicals Paul Kurias +1 (212) 438-3486  Consumer Products Diane Shand +1 (212) 438-7860 Corporates Analytical Oversight and Consistency Council Jeanne Shoesmith +1 (312) 233-7026

241、Forest Products Donald Marleau +1 (416) 507-2526 Gaming, Leisure & Lodging Emile Courtney +1 (212) 438-7824 Health Care & Pharmaceuticals Arthur Wong +1 (416) 507-2561 Homebuilders Donald Marleau +1 (416) 507-2526 Leveraged Finance Robert Schulz +1 (212) 438-7808 Steve Wilkinson +1 (212) 438-50

242、93 Media & Entertainment Naveen Sarma +1 (212) 438-7833 Metals & Mining Donald Marleau +1 (416) 507-2526 Midstream Energy Michael Grande +1 (212) 438-2242 Oil & Gas Thomas Watters +1 (212) 438-7818 U.S. Corporate Credit Outlook 2021: Economic And Political Transition S&P Global Ratings Jan. 21,

243、 2021 23 Oil Refineries Michael Grande +1 (212) 438-2242 REITs Ana Lai +1 (212) 438-6895 Regulated Utilities Gabe Grosberg +1 (212) 438-6043 Retail & Restaurants Sarah Wyeth +1 (212) 438-5658 Technology David Tsui +1 (415) 371-5063 Telecom Allyn Arden +1 (212) 438-7832 Transportation Philip Ba

244、ggaley +1 (212) 438-7683 Unregulated (Merchant) Power Aneesh Prabhu +1 (212) 438-1285 Copyright 2021 by Standard & Poors Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefro

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