/ Research Center

06.12.2019 - Monthly Cross Asset

Corporate fundamentals are at the centre of the game

Over the last decade, easy financial conditions encouraged an increase in sovereign and corporate debt. Indeed, the leverage of American companies has reached record high levels and US corporate debt has been used for financial risk-taking to fund corporate payments to investors, as well as for mergers and acquisitions. At the opposite, the leverage of European companies has remained at low levels as European companies have remained more cautious over this cycle. In 2019, we have evolved in a new regime: the global economy has entered a synchronised slowdown and major central banks have returned to an easing stance. What are the risks for companies in this new context? We are following closely: The downgrade risk in the US Investment Grade universe. Net leverage for US issuers have resumed their upward trajectory in recent months. In 2020: (1) companies to make a trade-off between maintaining share buy backs and the stability or their debt (2) the downgrade risk to increase among firms facing increase pressure on profits. The default rate risk for low-quality high-yield bonds. Sluggish earning growth poses the biggest threat for companies to pay interest on their debt despite the low cost of financing. Indeed, at this stage of the cycle, we think that interest coverage is more closely related to earnings than to its interest expense: interest coverage could be quickly eroded by a hit to earnings. A selective approach is required in the low-rated Euro and US High Yield segments.

Valentine AINOUZ

Deputy Head of Developed Markets Strategy Research

04.02.2019 - Monthly Cross Asset

Demand supports Italian debt issuance as primary markets move into the spotlight

In a year that will see the end of net PSPP purchases by the ECB and an increase in projected net issuance, we focus on Italy’s funding strategy and primary market outlook for 2019, a topic likely to become more closely monitored on the markets’ radar screens over the next quarters

Annalisa USARDI, Sergio BERTONCINI

11.04.2018 - Thought of the Day

US Debt held by the public projected to rise close to 100% of GDP by 2028 under current law

Official Estimates for Budget Projections by the Congressional Budget Office provided a quite bleak outlook on US Deficit and Debt over the next decade while confirming a positive impact on growth over the near term.

Annalisa USARDI

Senior Economist

29.01.2018 - Thought of the Day

Technical factors could change the game for US credit

The risk for this asset class is a sudden change in the current yield environment – result of a surprise rise in inflation. In this scenario, the yield on US IG bonds would be less attractive.

Valentine AINOUZ

Deputy Head of Developed Markets Strategy Research

24.07.2017 - Monthly Cross Asset

United States: is this the end of a cycle?

Growth has been quite resilient over the last 9 years. Given its duration, the slightest sign of weakness immediately raises the spectre of the cycle’s end. We examine the factors that could lead to a recession in the US.

Didier BOROWSKI

Head of Global Views

09.05.2017 - Monthly Cross Asset

Does the mounting corporate debt in China signal a future crisis?

The slowdown in China's growth has been limited, but the country's ballooning corporate debt has begun to worry large organisations like the IMF, OECD and BIS. So how, exactly, do things stands? Should we fear a financial crisis ?

Philippe ITHURBIDE

Senior Economic Advisor

13.06.2016 - Monthly Cross Asset

Brazil: what now?

Like all net commodities exporters, Brazil has been hit hard by falling prices, to say nothing of the political crisis it is going through. After the suspension of Dilma Rousseff, Michel Temer, her vice-president, is serving as interim president.

Karine HERVE

Emerging Markets Senior Economist

15.10.2015 - Monthly Cross Asset

Corporate are releveraging!

In recent months, the euro and dollar credit markets have been characterised by renewed volatility and significant spread widening. How should we be positioned against this market backdrop? In this article, we analyse the fundamentals of non-financial euro and dollar issuers.

Valentine AINOUZ

Deputy Head of Developed Markets Strategy Research

14.04.2015 - Monthly Cross Asset

Asset allocation: debt, political environment and liquidity remain the biggest threats

Asset allocation that gives priority to the eurozone and risky asset classes and is short on the euro has been highly effective since the ECB announced its QE programme.

Philippe ITHURBIDE

Senior Economic Advisor

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Corporate fundamentals are at the centre of the game

Demand supports Italian debt issuance as primary markets move into the spotlight

US Debt held by the public projected to rise close to 100% of GDP by 2028 under current law

Technical factors could change the game for US credit

United States: is this the end of a cycle?

Does the mounting corporate debt in China signal a future crisis?

Brazil: what now?

Corporate are releveraging!

Asset allocation: debt, political environment and liquidity remain the biggest threats

the articles & research center news

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