From Fitch Ratings
Fitch Ratings’ expectation is that Congress will raise the debt ceiling and that the risk of a U.S. sovereign default remains extremely low. Nonetheless, and in line with our previous guidance, failure to raise the debt ceiling in a timely manner will prompt a formal review of the U.S. sovereign ratings.
In Fitch’s opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline. It does not prevent tax and spending decisions that will incur debt issuance in excess of the ceiling while the sanction of not raising the ceiling risks a sovereign default and renders such a threat incredible.
The U.S. ‘AAA’ status is underpinned by the country’s relative economic dynamism and potential, diminishing financial sector risks, respect for the rule of law and property rights, as well as the exceptional financing flexibility that accrues from the global benchmark status of U.S. Treasury securities and the dollar. These fundamental credit strengths are being eroded by the large, albeit steadily declining, structural budget deficit and high and rising public debt.
In the absence of an agreed and credible medium-term deficit reduction plan that would be consistent with sustaining the economic recovery and restoring confidence in the long-run sustainability of U.S. public finances, the current Negative Outlook on the ‘AAA’ rating is likely to be resolved with a downgrade later this year even if another debt ceiling crisis is averted.
See the full report Debt Ceiling Delay Would Prompt Formal US Rating Review ($)
Technorati Tags: sovereign-debt, US sovereign debt
From Fitch Ratings
Fitch’s outlook on the U.S. technology sector is stable for 2013 despite weak revenue expectations.
Fitch believes the U.S. technology sector will experience negative revenue growth in the low single digits in 2013, as a confluence of factors ranging from the U.S. debt ceiling, Europe’s debt crisis, and China’s government changes has resulted in excess caution from customers. Various factors should serve as mitigants to the weak macroeconomic environment such as the launch of Windows 8 and Windows Server 2012 and continued long-term secular tailwinds related to security, cloud, analytics, tablets, automation, and emerging markets.
The stock prices of some of the largest technology debt issuers plunged in 2012, as long-term growth expectations are being reset downward. HP, Dell, Western Union, and Xerox have experienced significant pressure on their stock prices. While the headline risk for Dell and HP are likely overblown, Fitch does believe the risks related to Western Union as an LBO candidate are viable, as the company’s enterprise value to EBITDA has declined to 6.1x. It is questionable whether Western Union’s current market capitalization of nearly $8 billion could be financed in this challenging environment.
Fitch believes the majority of the technology sector will be able to withstand a downturn and perform as it did in the 2008-2009 recession.
However, there are several important factors that make current businesses less flexible than in 2008-2009, including significant secular issues (printing, tablets, new chip technologies), a fiercer hardware competitive landscape, and higher dividend commitments.
See the full report 2013 Outlook: U.S. Technology ($)
Technorati Tags: (HP), Dell, Microsoft, technology, The Western Union Company, Xerox
From Standard & Poor’s Credit Research
TV broadcasters worldwide face rapidly changing business conditions. A weak global economy continues to affect core advertising spending, while evolving alternate entertainment options have fragmented audiences and raised concerns among investors that ad spending could migrate to these new options.
We believe that the culmination of these factors could weaken TV’s long reign as the king of all media but not likely harm the credit quality of TV broadcasters in the long run.
We forecast a U.S. ad spending decline of 1% in 2013 from 2012. This includes the loss of about $3.7 billion in political and Olympics spending that benefited results in 2012. Excluding these items that largely occur in even-numbered years, we expect core advertising spending will rise 0.8%. This is lower than our expectation of 2.2% U.S. GDP growth.
We expect local television core advertising to grow in line with GDP growth. For the TV broadcasters, 2013 will present somewhat tough comparisons to 2012. In 2012, TV broadcasters experienced a recovery of auto advertising, which was down significantly in 2011 as a result of the Japanese earthquake and tsunami in March 2011. The fourth quarter of 2012 marked the end of easy comparisons for auto spending.
See the full report ($) Ratings On Global TV Broadcasters Are Stable In 2013 Despite A Weak Economic Outlook And Long-Term Audience Fragmentation
Technorati Tags: advertising, broadcasting
