...Rating Headroom Recovering: Fitch Ratings expects average EMEA corporate rating headroom to rise gradually to 15.3% in 2015 from 11.2% at end-2014 and rebounding from a low of 7.8% in 2013. Economic conditions across Europe appear to have bottomed out, and a gradual improvement expected into 2015 will also boost corporate cash generation and debt capacity. In addition, management actions taken to conserve cash and rationalise balance sheets in recent years will contribute to the expected improvement. Recent Downgrades: A spate of negative rating actions in 2013 and 2014 contributed to the improvement in both rating headroom and the level of debt capacity for EMEA corporates to end-2014. Rebased downgrade guidelines at lower rating levels drove an increase in financial flexibility, boosting headroom at a similar financial profile. Sector Characteristics Crucial: Rating headroom is calculated on an issuer-specific basis by analysing financial flexibility against the tightest quantitative...
