Deregulation Seen to Spur Growth, Trim Risk (Capital Markets Research)

WEEKLY MARKET OUTLOOK JANUARY 19, 2017 CAPITAL MARKETS RESEARCH Moodys 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. Deregulation Seen to Spur Growth, Trim Risk Credit Markets Review and Outlook by John Lonski Deregulation Seen to Spur Growth, Trim Risk. ¯ FULL STORY PAGE 2 The Week Ahead We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. ¯ FULL STORY PAGE 5 The Long View Check our chart here for forecast summaries of key credit market metrics. Full updated stories, First- quarter 2017 US$ corporate bond issuance is expected to grow year-over-year by 5% for investment-grade and 21% for high-yield, begin on page 13. ¯ FULL STORY PAGE 13 Ratings Round-Up by Njundu Sanneh US Upgrades Up Last Week, Global Defaults Seen to Be Down This Year. ¯ FULL STORY PAGE 17 Market Data Credit spreads, CDS movers, issuance. ¯ FULL STORY PAGE 19 Moodys Capital Markets Research recent publications Links to commentaries on: Potential, BAC, optimism, Portugal, DB, revisions, outlook, US, great, China, Italy, inflation, OPEC, guidance, sovereigns, inflation, Italy, jolt, Trumponomics. ¯ FULL STORY PAGE 23 Credit Spreads Investment Grade: Year-end 2017 spread to exceed its recent 118 bp. High Yield: After recent spread of 405 bp, it may approximate 520 bp by year-end 2017. Defaults US HY default rate: after December 2016s 5.7%, Moodys Credit Policy Group forecasts it near 3.9% by 2H 2017. Issuance In 2016, US$-denominated IG bond issuance grew by 5.0% to a record $1.405 trillion, while US$-priced high-yield bond issuance fell by -3.9% to $339 billion. For 2017, US$- denominated IG bond issuance may rise by 1.5% to $1.426 trillion, while US$-priced high-yield bond issuance may increase by 3.3% to $351 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) Li 1.212.553.1404 Xian.li@moodys.com Moody's Analytics/Europe: Tomas Holinka +420 ( 221) 666-384 Tomas.holinka@moodys.com Moody's Analytics/Asia-Pacific:...