...Fitch Ratings expects EMEA corporates' cash generation and margins to gradually improve in 2014 and 2015 from their fairly weak levels last year, although downside risks remain as rating headroom will continue to be tight in the near term. Market conditions across the eurozone are expected to continue a gradual recovery observed since mid-2013. Notably, the languishing periphery is finally expected to return to growth in 2014, accelerating further into 2015. Leaner cost structures after cost-saving measures should also help to translate into improving cash generation. Our analysis of the linkages between state-owned enterprises (SOEs) and their sovereigns demonstrated that full rating alignment is rare. In our EMEA corporate portfolio, only 15% of SOEs benefit from full rating alignment, with 48% rated on a standalone basis and 20% rated bottom-up from their standalone ratings. The report discusses our approach to determining support-driven rating linkages for key issuers, driven by the...
