Overvalued Equities Threaten Credit Outlook (Capital Markets Research)

WEEKLY MARKET OUTLOOKAUGUST 18, 2016CAPITAL MARKETS RESEARCHOvervalued Equities Threaten Credit Outlook Credit Markets Review and Outlook by John Lonski Overvalued Equities Threaten Credit Outlook.¯ FULL STORY PAGE 2Topic of the Week by Ben Garber Brick-and-Mortar Retail Faces Distressing Credit Picture. ¯ FULL STORY PAGE 5The Week Ahead We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. ¯ FULL STORY PAGE 8The Long View Check our chart here for forecast summaries of key credit market metrics. Full updated stories, US$-denominated high-yield bond issuance is on track to set a new record high for the month of August, begin on page 12. ¯ FULL STORY PAGE 12 Ratings Round-Up by Njundu Sanneh Mostly Downgrades, but Good Vibrations in Music. ¯ FULL STORY PAGE 15 Market Data Credit spreads, CDS movers, issuance. ¯ FULL STORY PAGE 17 Moodys Capital Markets Research recent publications Links to commentaries on: Pakistan, productivity, gold, Venezuela, economy, Italy, pricey, borrowing, Turkey, shareholders, Brexit, yields, bondholders, cred risk, Brexit. ¯ FULL STORY PAGE 21Credit SpreadsInvestment Grade: Year-end 2016 spread to be close to its recent 144 bp. High Yield: After recent spread of 534bp, it may approximate 620 bp by year-end 2016. Defaults US HY default rate: after June 2016s 5.5%, MoodysCredit Policy Group forecasts 6.3% by Q4 2016. Issuance In 2015, US$-denominated investment-grade (IG) bond offerings advanced by 17.5% to $1.326 trillion, whileUS$-denominated high-yield bond issuance sank by -15.0% to $358 billion. For 2016, US$-denominated IG bond issuance may increase by 8.8% to a record $1.443 trillion, while US$-priced high-yield bond issuance may sink by -9.9% to $319 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 Emily Dabbs +61 (2) 9270-8159 Emily.dabbs@moodys.comEditor Dana Gordon 1.212.553.0398 dana.gordon@moodys.comMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys...