Commercial Property Executive’s Post

In my latest analysis for S&P Global Ratings Credit Research & Insights, I explored how re-defaulters are rising alongside and corresponding to increasing corporate defaults. Here are our key takeaways: ➡️ Repeat defaulters made up 35% of total global defaults in 2023-- the second highest annual percentage since 2008. ➡️ The increase in defaults and repeat defaults is, to some extent, driven by more entities becoming comfortable with high levels of leverage in their capital structure, many of which were set up during (and in anticipation of sustained) low rates. ➡️ There is a meaningful connection between the rise in re defaults and the rise in selective defaults through a distressed exchange. ➡️ Average recoveries for defaulted debt instruments tend to be lower following a re-default than following an initial default. ➡️ We have observed that issuers with previous defaults tend to default at a higher rate than the overall speculative-grade population. I joined Marketplace by APM podcast on Friday to overview this latest thought leadership: https://lnkd.in/edPaaspj I also met with Bloomberg News last week on the topic: https://lnkd.in/efD7Na8w Many thanks to Lyndon Fernandes, Ekaterina Tolstova, Evan Gunter, and Patrick Drury Byrne for their coverage and collaboration on this research. Read the research in full here: https://lnkd.in/ei9NQWwk

The positive rating momentum from the first quarter of 2024 carried forward into the second quarter, with upgrades outnumbering downgrades year to date by 16% among corporates, financial institutions, and sovereigns. Future rating action trends also appear more positive as negative bias percentages dropped across all regions. But we expect continued ratings performance divergences at a sector level, and we believe the diverging pace of rate cuts across regions and political uncertainty have already contributed to an unsettling start to the third quarter. Explore our latest ratings performance insights dashboard and analysis: https://okt.to/q0XmiT

Moody’s ratings scale Moody’s ratings American firm Date of foundation : 1 900 Turnover: 5.916 billion USD Net income : 1.608 billion USD Total staff: approximately 16 000 staff members worldwide Presence in more than 40 countries Moody’s rating scale Moody’s rating scale, which ranges from a maximum Aaa to a minimum C, consists of 21 notches and two categories: Investment category for the financially sound companies. Speculative category for the companies with a higher risk of defaulting.

How will the global credit landscape evolve in the year ahead? Fitch's Credit Outlook 2025 series offers a deep dive into the challenges and opportunities for investors and issuers in the new year across sectors and regions. Access our #CreditOutlook research and events: https://ow.ly/kNXs50UnCwO #FitchRatings #FitchOutlooks2025

In the latest from our Global #SovereignRatings team, a look at performance in the sector for 2024: https://lnkd.in/efuUbsFT Download the commentary for analysis on each sovereign government rated by DBRS Morningstar, including their credit rating trajectory during 2024, the last credit rating action, the last change to the credit rating or trend, and our current credit rating drivers. #CreditRatings

The positive rating momentum from the first quarter of 2024 carried forward into the second quarter, with upgrades outnumbering downgrades year to date by 16% among corporates, financial institutions, and sovereigns. Future rating action trends also appear more positive as negative bias percentages dropped across all regions. But we expect continued ratings performance divergences at a sector level, and we believe the diverging pace of rate cuts across regions and political uncertainty have already contributed to an unsettling start to the third quarter. Explore our latest ratings performance insights dashboard and analysis: https://okt.to/q0XmiT

State Treasurer Fiona Ma issued the following statement in response to Moody’s rating action, which reaffirmed the state’s Aa2 credit rating and revised its outlook to stable from negative:

🔍When diving into the world of bonds, it’s easy to rely on ratings as a quick guide to safety and returns. But here’s the thing — **bond ratings have their limitations**. 🧐 While agencies like Moody’s or S&P offer a snapshot of risk, these ratings don't paint the full picture. They might not account for shifting market conditions, issuer-specific risks, or sudden economic changes that can influence a bond’s performance. 📉💥 So, what does this mean for you? When evaluating bonds, **look beyond the rating**. Consider factors like the issuer’s financial health, market trends, and even geopolitical impacts. It’s all about understanding the bigger picture and not just relying on a letter grade! 🏦💡 As you build your portfolio, remember: a high rating doesn’t always mean low risk, and a low rating doesn’t necessarily signal disaster. It's about smart, well-rounded decision-making. 🚀 Stay sharp and happy investing! 💼💸 #BondRatings #InvestSmart #FinancialFreedom #InvestmentTips

In our recent paper, Yingjin Gan and I explore the impact of credit ratings on the performance of corporate bonds, focussing on : - Is there a risk premium associated with higher credit risks in corporate bonds? - What factors could explain the variations in risk premiums across different rating buckets? - How do fallen angels and rising stars contribute to these dynamics? A summary of our findings is available here - https://lnkd.in/dAZihex8

"Moody’s Ratings (Moody’s) has assigned an initial Aa1 issuer rating to the Town of Leland, NC and a Aa2 rating to the town’s Limited Obligation Bonds, Series 2024 (LOBs), with an estimated par amount of $12.66 million. Near-term and medium-term economic growth will continue to be supported by ongoing residential development and industrial development in Brunswick and New Hanover Counties, including 200 acres within town limits that has been zoned for future commercial and industrial development." #economicgrowth #goodgovernance #industrialdevelopment #budgetmanagement #financialresiliency