Corporate Credit May Bend But Not Break (Capital Markets Research)

WEEKLY MARKET OUTLOOKDECEMBER 10, 2015CAPITAL MARKETS RESEARCHMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Corporate Credit May Bend But Not BreakCredit Markets Review and Outlook by John Lonski Corporate Credit May Bend But Not Break. ¯ FULL STORY PAGE 2The Week Ahead We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. ¯ FULL STORY PAGE 6 The Long View Check our chart here for forecast summaries of key credit market metrics. Full updated stories, Third-quarter 2015s 9.0% yearly increase by the outstanding debt of US non-financial corporations was unsustainably rapid given expectations of 4.0% pre-tax profits growth for 2016, begin on page 16.¯ FULL STORY PAGE 16Ratings Round-Up by Ben Garber and Njundu Sanneh Low-Grade Downgrades Warn of Default Risk.¯ FULL STORY PAGE 19Market Data Credit spreads, CDS movers, issuance.¯ FULL STORY PAGE 21Moodys Capital Markets Research recent publications Links to commentaries on: COP, Slovakia, Hess, BBT, banks, PEMEX, UNH, sov risk, NAB, profits, ICICI, TLAC, Nike. .¯ FULL STORY PAGE 25Topic of the Week will return next weekCredit Spreads Investment Grade: Year-end 2015 spread to be a bit under its recent 158 bp.High Yield: Recent spread of 658 bp should approximate 650 bp by year-end 2015.Defaults US HY default rate: November 2015, 3.0%; Moodys Credit Policy Group forecasts 4.1% by November 2016Issuance For 2015, US$ IG bond offerings may grow by 18.4% to $1.337 trillion, while US$ HY bond issuance sinks by -15.5% to $356 billion. In 2014, US$ IG bond issuance rose by 0.9% to $1.129 trillion, while US$ HY bond issuance dropped by -2.3% to $421 billion.Click here for Moodys Credit Outlook, our sister publication containing Moodys rating agency analysis of recent news events, summaries of recent rating changes, and summaries of recent research.Moodys Capital Markets Research, Inc.Weekly Market Outlook Contributors: David W. Munves, CFA 1.212.553.2844 david.munves@moodys.com John Lonski 1.212.553.7144 john.lonski@moodys.com Ben Garber 1.212.553.4732 benjamin.garber@moodys.com Njundu Sanneh 1.212.553.4036 njundu.sanneh@moodys.com Yukyung Choi 1.212.553.0906 yukyung.choi@moodys.com Irina Baron 1.212.553.4307 irina.baron@moodys.com Franklin Kim 1.212.553.4419 franklin.kim@moodys.com Xian (Peter) Li1.212.553.1404 Xian.li@moodys.comMoody's Analytics/Europe: Tomas Holinka +420 ( 221) 666-384 Tomas.holinka@moodys.comMoody's Analytics/Asia-Pacific: Alaistair Chan +61 (2) 9270-8148 Alaistair.Chan@moodys.com Jack Chambers +61 (2) 9270-8111 Jack.chambers@moodys.com ...