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US Life Insurers' Investments More Risky Since Financial Crisis

U.S. life insurers' investment portfolios have become modestly more risky since the global financial crisis. Our analysis shows that a deterioration in corporate bond ratings as severe as that in 2009 would weaken two key rating metrics for the U.S. life sector - the RBC ratio and the risky asset ratio - by a rating category, increasing the likelihood of downgrades for some insurers.

Latin America's Weak Recovery Vulnerable to Multiple Risks

Latin America should experience a mild recovery in 2019, but growth rates will be uneven and the region faces a number of macroeconomic and political risks that could exacerbate sovereign vulnerabilities. Potential risks include tighter external financing conditions, persistent fiscal challenges, trade protectionism, commodity price volatility and political challenges to economic reform. 

Resolving Venezuela's Debt Default to Take Years

Venezuela's ongoing political and diplomatic crisis raises the risks of increased near-term economic pain as well as the potential for greater domestic political division. Wide-scale protests and the recognition by numerous countries of a parallel administration led by Juan Guaido could mark a significant shift in the country's political dynamics.

Fed's Balance Sheet Still Likely to Shrink Through 2020

The size of the Federal Reserve's balance sheet is likely to continue falling through 2020 despite the Federal Open Market Committee's (FOMC) new forward guidance on balance-sheet normalization. The decline in the Fed's balance sheet from current levels will be smaller than we previously forecast, but given that the ECB has ended quantitative easing (QE) purchases and the Bank of Japan is tapering its balance-sheet expansion, global quantitative tightening is here to stay.

CBR May Struggle to Rein In Russian Retail Lending

The Central Bank of Russia's (CBR) measures to restrain rapid retail loan growth by increasing the risk weights banks apply to unsecured loans could be ineffective.  We believe the measures will do little to constrain lending as the impact on banks' capital will be limited and major lenders will still have considerable capacity for loan growth.

Global Telecom Taps ESG-Friendly Green Bond Market

A trend toward environmental, social and governance (ESG) friendly green bond issuances may be emerging in the global telecom sector. Green bonds do not have socially responsible or governance characteristics but are typically used to fund projects with environmental or climate benefits.

Fitch Ratings & CRU

EU Quotas Will Have Limited Impact on EMEA Steelmakers

The EU finalised safeguard measures for steel imports introduced on 2 February will have no material impact on rated steelmakers in EMEA, Fitch Ratings and CRU say. The measures, structured as quotas and tariffs, are marginally supportive for domestic EU steel producers and foreign companies with rolling capacities in the bloc as they could support steel prices in the region. 

Open-Ended Bond Funds a Potential Risk to Financial Stability

Open-ended bond funds are a potential risk to global financial stability given their rapid growth and increasing liquidity mismatches and credit risk.

Italian Banks Face More ECB Pressure to Reduce NPLs

Italian banks directly supervised by the ECB face more pressure to reduce their stocks of legacy non-performing loans (NPLs) if the ECB pushes them to increase their loan-loss allowances. It seems the banks may have to fully cover legacy NPLs, not just those generated from April 2018 as previously anticipated.

Argentina Fiscal Risks Lurk Despite 2018 Target Compliance

Argentina met its fiscal deficit target last year, but risks to hitting future targets remain significant, Fitch Ratings says. These include revenue losses from the economic recession, spending pressures from a surge in inflation in 2018 and the upcoming election cycle. 

CECL Ratings Neutral for U.S. Financial Institutions

The pending implementation of the U.S. accounting standard for current expected credit loss (CECL) reserves by the Financial Accounting Standards Board is not expected to result in ratings actions upon adoption. However, CECL is expected to have more impact on banks than non-bank financial institutions (NBFIs) as banks will need to maintain regulatory capital requirements post-CECL implementation (after the phase-in period), whereas NBFIs are not bound by similar regulatory constraints.

ESG Corporate Rating Influence Varies

Environmental, social and governance (ESG) factors influence a significant minority of ratings across all corporate sectors, but are very rarely the direct driver of a rating action, Fitch Ratings says in a new report.

Canadian Bank Bail-in Leads to Lower Support Ratings, Floors

Recently implemented bail-in rules for Canadian domestic systemically important banks (D-SIBs) will lead to a lowering of their support ratings (SRs) and Support Rating Floors (SRFs) in first-quarter 2019. 

Gov't Shutdown Effects Limited for US Public Finance Credits

The ongoing federal government shutdown should not have significant effects on U.S. public finance credits, says Fitch Ratings. The partial shutdown is only affecting around 20%-25% of the federal government, and funding critical to rated sectors remains in place.

U.S. Government Shutdown Illustrates Policy Weakness

The continuing U.S. government shutdown highlights the periodic weakness in its budget policymaking, Fitch Ratings says. Shutdowns have not directly affected the country's 'AAA'/Stable sovereign rating but can signal that disputes on other issues are a constraint on fiscal policymaking. 

Italian Credit Ratings' Sovereign Links Vary by Sector

Italian banking and insurance are the sectors whose ratings would be most affected in the event of hypothetical Italian sovereign stress scenarios, Fitch Ratings says in a new report. Ratings of non-financial corporate issuers would typically be less affected.

ACA Ruling Effect on Insurance Unclear; Potential Downside

A Texas court decision striking down the ACA raises uncertainty for the future of the law, although it seems probable that the decision will be overturned on appeal. Nonetheless, continued uncertainty through the appeals process could be disruptive for the U.S. healthcare system.

Mexico Budget In Line With Existing Fiscal Framework

AMLO’s first budget was a key policy test for his new government and it seemed to air on the side of fiscal discipline. However, the budget does not change the deep financial challenges facing PEMEX nor does it preclude other potentially disruptive economic policies that he platformed on.

NZ’s Radical Bank Capital Proposal Sets Global Standard

Proposed changes to New Zealand’s bank capital framework are highly conservative compared to peers and sets a benchmark for conservative standards. The additional capital would significantly enhance bank buffers. Canada has incrementally increased capital requirements by raising the counter-cyclical buffer requirement for D-SIBS to 1.75% (Canada Boosts Bank Capital Requirements While U.S. Eases). The Canadian regulator highlighted still high household leverage, rising corporate leverage and a rising interest rate environment to justify the decision.

GSK-Pfizer JV Steps Up Consolidation in Consumer Health

The combination of the consumer health units of GlaxoSmithKline (GSK, A/Negative) and Pfizer (A+/Negative) into a joint venture underscores ongoing consolidation in the global consumer health sector and the trend in big pharma of repositioning their portfolios towards innovative drugs.



Justin Patrie

Head of Fitch Wire

+1 646 582 4964


Mark Brown

Sovereigns, Structured Finance

+44 20 3530 1588


Laura Kaster

Financial Institutions

+1 646 582 4997


Tatiana Kordyukova


+44 20 3530 1954


Dan Martin

Corporates, Financial Institutions, Sovereigns

+65 6796 7232


Carla Norfleet Taylor


+1 312 368 3195


David Prowse

Financial Institutions

+44 20 3530 1250

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