216.57 0.00 (0.00%)
After hours: 4:23PM EDT
|Bid||216.44 x 1100|
|Ask||216.81 x 1000|
|Day's Range||215.58 - 218.06|
|52 Week Range||129.26 - 222.85|
|Beta (3Y Monthly)||1.38|
|PE Ratio (TTM)||33.60|
|Earnings Date||Oct 24, 2019 - Oct 28, 2019|
|Forward Dividend & Yield||2.00 (0.92%)|
|1y Target Est||218.00|
(Bloomberg) -- Every major U.S. electricity grid is getting significantly greener.Except for the massive one serving 65 million Americans.That’s just as problematic as it sounds for the policymakers, power providers and climate activists looking to wean Americans off fossil fuels. While members of other systems move quickly to add solar and wind to their mixes and slash carbon emissions, the network that keeps the lights on from Chicago to Washington has effectively doubled down on natural gas.In the past two years, it has boosted the amount of power generated with gas by 11,131 megawatts. And developers are planning 34,507 megawatts more. Meanwhile, solar and wind account for 1% of the grid’s installed capacity. “How do you manage the gas build-out with more states boosting renewables targets?” asked Toby Shea, a New York-based analyst at Moody’s Investors Service. “There’s already an overbuild of gas.”It’s not that there’s no interest in the renewable trend in the 13 states connected to what’s called the PJM Interconnection. In fact, it has been inundated with applications from renewable developers — 67,000 megawatts of wind and solar in total, from 684 projects.But there’s also this economic reality: PJM crisscrosses a section of the U.S. that’s home to some of the world’s most abundant natural gas reserves. As fast as the cost of wind and solar energy has been dropping, gas in some of these parts is cheaper.The hundreds of cities, counties, states and utilities linked to PJM have different and often competing goals and interests. Some are keen on getting greener, and the continued gas build-out threatens those ambitions.But the rush to make electricity without carbon emissions could put the gas plants in a bind. The potent brew of falling costs for emissions-free renewables could jeopardize facilities that are built to last for decades. They could end up as expensive bit players, filling in only during extreme weather or when the wind or sun aren’t cooperating.By 2035, it will be more expensive to run 90% of the gas plants being proposed in the U.S. than it will be to build new wind and solar farms equipped with storage systems, according to the Rocky Mountain Institute, a nonprofit supporter of cleaner energy. It will happen so quickly, the institute says, that plants will become uneconomical before their owners finish paying for them.More than half of U.S. states — including New Jersey, which is in PJM — have required renewables in their electrical blends. This group includes California, which aims to get all of its electricity from emission-free sources by 2045. Even oil-mad Texas is favoring clean power, because wind and solar are so cheap in the Lone Star State. There’s little debate, though, that natural gas is still needed. A Texas heat wave that drove its grid to the brink of blackouts last month was a reminder of how essential the fuel remains. Even in California, gas continues to provide round-the-clock power.“We just can’t turn that gas off today,” said Joseph Fiordaliso, president of the New Jersey Board of Public Utilities. “The infrastructure was built years ago. We have to build the infrastructure for wind.”As a grid, PJM is most focused on providing reliability at the lowest cost, said Stu Bresler, its senior vice president of markets and planning. In other words, just because projects are in the queue — gas-fired, wind or solar — doesn’t mean they’ll come to fruition.There is, however, a $70 billion offshore wind market forming off the Atlantic coast. And while renewable energy is still a fraction of PJM’s grid today, Bresler said, ``It’s still growing, and we're going to continue to see penetrations of solar and wind’’ as some states work to meet their renewable energy goals. He also pointed out that renewable energy makes up a larger share of the actual power generated in PJM -- as much as 5%. It makes sense, considering solar and wind farms have essentially zero fuel costs and can produce cheaper than other resources. The gas-fired bet once seemed pragmatic. Appalachia needed new electricity to replace gigawatts of retiring coal-fired power and nuclear reactors. The cheap shale reserves were right there. Meanwhile, the region isn’t endowed with the sunshine of California or the constant breezes of Texas. ``PJM doesn’t have the advantage geographically when it comes to wind and solar,’’ Bresler said.Private equity responded by pouring in tens of billions of dollars to build a new gas-fired fleet.Several of the nuclear plants are now being subsidized to stay online. As for gas, the threats posed by renewables prompted Devin McDermott, a commodities strategist at Morgan Stanley, to write a recent research note that he titled, “Could natural gas be a bridge to nowhere?”His question takes the premise that has underpinned the boom and flips it on its head: What if grids need new gas plants for only half of their lives? The economics do seem to be changing. In Texas, a gas plant built in this decade went bankrupt in 2017, in part because it struggled to compete with the state’s cheapest power sources: renewables.Among the half-dozen competitive power markets in the U.S., PJM is a big draw for investors, thanks to its size, capacity payments granted through an annual auction and the proximity to shale formations, said Mark Florian, head of the global energy and power infrastructure team at BlackRock Inc.Ravina Advani, head of energy, natural resources and renewables at BNP Paribas SA, estimated that there will be $6 billion of debt financings supporting new gas-fired plants in PJM by mid-2020.Last year’s auction was a boon for developers. More than $8 billion in supplier payments were granted for the year starting in June 2021. But the next auction, originally scheduled for May and then for August, won’t be held until a federal agency decides how to balance the competing interests of states and power generators in PJM’s territory.Backers of gas-fired units are “taking a lot of risk going into this type of market, when it’s already oversupplied and with renewables coming,” said Moody’s Shea. “It’s just a matter of time.” (Updates with comments from senior vice president at PJM starting in 13th paragraph)\--With assistance from Dave Merrill, Christopher Cannon, Hannah Recht and David R Baker.To contact the authors of this story: Brian Eckhouse in New York at email@example.comNaureen Malik in New York at firstname.lastname@example.orgTo contact the editor responsible for this story: Lynn Doan at email@example.com, Simon CaseyReg GaleAnne ReifenbergFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Gulf dollar bonds went into the weekend as investor darlings and came out as risky assets.Money managers poured into the Gulf region in the weeks running up to Saturday’s unprecedented attack on Saudi Arabia’s key oil facilities. That drove record gains for bonds in August as they sought refuge in securities boasting an average credit score of A+ amid global trade tensions.When markets reopened on Monday, debt from all six of the Gulf Cooperation Council nations fell as the prospect of a conflict in the Middle East loomed. Saudi Arabian bonds handed investors the biggest loss, about triple that of Qatari securities, according to a Bloomberg Barclays index. The region’s bonds were mostly steady as of 9:27 a.m. on Tuesday in London.“The region always trades with a political risk premium and unfortunately these sorts of events reinforce the perception that the premium is warranted,” said Abdul Kadir Hussain, the head of fixed-income asset management at Dubai-based Arqaam Capital. “I would expect some selling in the short term.”The strikes in Saudi Arabia could escalate into a showdown, with the kingdom and U.S. on one side, and Iran, which backs proxy groups from Yemen to Lebanon, on the other. Iranian-backed Houthi rebels in Yemen claimed responsibility for the assault and warned that oil installations in the Arab nation remain a target.Saudi Arabia is responsible for almost a 10th of global crude output.Too Close to IgnoreUntil now, Gulf states have benefitted from higher oil revenue at moments of geopolitical tension, a phenomenon that offset the risks and conferred a haven status of sorts, according to Patrick Wacker, a fund manager for emerging-market fixed income at UOB Asset Management Ltd. in Singapore.“However, that was so because the conflicts were at the periphery, such as Lebanon and Syria,” Wacker said. If there are more attacks on Saudi infrastructure, “this would be uncharted territory and require a meaningful risk premium -- a risk premium not currently priced in by markets,” he added.Depending how events unfold, Saturday’s attack could force investors to nuance their choices in the Gulf as issuers are no longer lumped together as a safety bet, according to Sara Grut, an analyst at Goldman Sachs Group Inc. in London.Abu Dhabi and Oman may benefit if they step in with higher production when oil prices are elevated, Arqaam’s Hussain said. And while Qatari and Saudi debt normally outperforms during an uptick in prices, they suffer when the source of the spike is higher geopolitical risk in their region, according to Grut.Oil posted its biggest-ever intraday jump on Monday, briefly surging above $71 a barrel. Saudi Aramco faces weeks or months before the majority of output is restored at the giant Abqaiq processing plant.UOB’s Wacker said he pared some of his investments in Gulf bonds a few weeks before the attack, shifting into Russian, Hungarian and Uzbek securities as the advance in GCC debt since late last year made the bonds more expensive.“This incident highlights the need for increased differentiation.”(Updates prices in third paragraph, bullets.)\--With assistance from Shaji Mathew.To contact the reporter on this story: Netty Ismail in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Dana El Baltaji at email@example.com, Alex NicholsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Moody’s Analytics, a leading provider of financial intelligence and analytical tools, announced today that Raymond James Financial’s fixed income division has selected the Moody’s Analytics Current Expected Credit Loss (CECL) solution to generate CECL estimates for structured finance instruments, corporate bonds, and municipal bonds. The centerpiece of the Moody’s Analytics CECL solution is the ImpairmentStudio™ platform, which lets financial institutions automate allowance calculation, analysis, reporting, and workflow. Raymond James is the first broker-dealer to take advantage of the Moody’s Analytics ImpairmentStudio platform to furnish a CECL estimate for all fixed income trades.
Moody’s Corporation (MCO) announced today that it has named DK Bartley as Managing Director and Head of Diversity & Inclusion (D&I). Mr. Bartley will lead Moody’s global D&I programs in support of the company’s diverse workforce and commitment to an inclusive culture. Mr. Bartley will work with Moody’s business leaders and HR team to identify diversity and inclusion opportunities and ensure they are embedded in programs and initiatives across the company.
If Warren Buffett does one thing right, it has to be his ability to pick stocks that will deliver through thick and thin. Buffett's entire M.O. is based on long term investing -- choosing stocks that deliver steadily rising revenues/profits, holding them for decades, and collecting a big pile dividend checks along the way. This simple strategy has helped the Oracle of Omaha become one of the world's richest human beings and constantly generate gains for Berkshire Hathaway (NYSE:BRK.B).However, the economy hasn't always cooperated with Buffett. Over his long investing career, the U.S. economy has experienced plenty of ups and downs.But for the Oracle, this hasn't been a problem. The key for many Warren Buffett stocks comes down to their quality. Buffett only focuses on those firms with low debt, strong cash flows, rising sales, and top-notch management teams. This allows them to perform well even during recessions. While their share prices may falter a bit, their underlying businesses won't. That helps Buffett sleep well at night.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Discount Retail Stocks to Buy for a Recession And it can help you sleep well at night as well. With the economy getting dicey, it makes sense to take a page out of his playbook and focus on quality. With that, here are five Warren Buffett stocks to hold through the next recession. M&T Bank Corporation (MTB)Source: Shutterstock There's no doubt that Warren Buffett loves banks. He has stakes in several major ones including Bank of America (NYSE:BAC) and PNC (NYSE:PNC). But one of the most conservative could be M&T Bank (NYSE:MTB). Buffett has held shares in MTB since 2001.MTB isn't a super well-known bank. However, it's no slouch and is a large regional operator with assets in New York, Maryland, and Pennsylvania, as well as Washington, D.C. This super-regional status of 750 branches focused on some of the nation's best state economies has allowed M&T to benefit from strong loan demand and growing deposit base.The reason why M&T is such a great bank to hold during downturns comes down to its business model. The firm simply doesn't mess with "risky stuff." There's no prop trading like BAC, risky mezzanine loans or subordinated debt on its balance sheet. Just regular, boring banking.But that has been great for MTB shareholders. Because of this, M&T has been a rock star during recessions. In fact, during the last recession, the firm saw some of the lowest percentage credit losses among its peers. Moreover, it was only one of two banks in the S&P 500 that did not cut its dividend.Going back further, MTB has not posted a loss in 171 consecutive quarters. The best part is that even with things getting dicey and rates falling, M&T still managed to realize net interest margin improvements last quarter.Given its history and conservative run nature, M&T might be one of the safest stocks in Warren Buffett's entire portfolio. Moody's (MCO)Source: Daniel J. Macy / Shutterstock.com One of the tenants of almost all Warren Buffett stocks is an irreplaceable moat. That is, a company offers something that no one else does and not many consumers can do without. Moody's Corporation (NYSE:MCO) is a perfect example of that.MCO provides credit ratings, research, and risk analysis services for investors, banks and government agencies. Much like your credit score, this rating is a vital component for determining creditworthiness. In fact, a company can't issue a bond without a ratings agency giving it the go-ahead. This includes Warren Buffett and Berkshire's many subsidiaries themselves. And considering that there are only three main ratings agencies around, Moody's is in a very enviable position.MCO features relatively low overhead and cost of doing business. This creates a very high-profit margin. Last quarter, Moody's pulled in a whopping $4.5 billion in revenues and managed to score a high 57.5% profit margin from these sales.This high margin is worth buying MCO stock alone. However, the story could get better for Moody's if a recession hits. That's because investors will need to rely on data and risk analysis, even more to help uncover potential problems or values. If a firm wants to raise funds during the downturn, it'll have to tap MCO whether they like it or not. * 10 Battered Tech Stocks to Buy Now Thanks to this moat and need, Moody's could be one of the best Warren Buffett stocks to own during the recession. Coca-Cola (KO)Source: phloxii / Shutterstock.com Of all the stocks in Warren Buffett's portfolio, Coca-Cola (NYSE:KO) seems like the obvious recession-resistant play. After all, the consumer staple features plenty of steady demand and its products are enjoyed by millions of people each and every day. I'm drinking a Cherry Coke right now while writing this. This steadfast nature has served KO through thick and thin. Moreover, it's rewarded shareholders with 55 years' worth of dividend increases.So yes, Coca-Cola is a boring play and has everything you'd want to ride out the recession.The kicker is, there's plenty of growth under the hood of KO as well. This comes from new moves into healthier beverages. Times are changing and not everyone wants a surgery soda. As a result, sparkling water, juices, teas, and other healthy drinks are now a priority at Coke. These items come with some decent margins and now sales for these products account for about half of KO's total pie.KO is even getting big into data mining and artificial intelligence. Every time you create a combination on one of its Freestyle machines, pick up a six-pack of juice, you're creating plenty of user data. And now, KO has partnered with several tech firms to start digging into that data. This already helped create new flavor combos like Orange Vanilla Coke as well as provide insight into consumer behavior. It's an edge that KO can use down the road to keep revenues going, predict trends and ultimately, reward shareholders even during a recession.All in all, KO has a great combination of boring and exciting attributes. Globe Life (GL)Source: Shutterstock Warren Buffett is fanatical about the insurance industry and many firms are top stocks in Berkshire's portfolio. It's easy to see why. Property and casualty insurers collect payments for policies. The beauty is that they don't have to pay the money back unless there is a claim.However, insurers don't just sit on that money. They invest it and this "float" and interest earned on that float can provide plenty of dividends and cash for the insurance firm. In fact, the reason why Berkshire Hathaway has been so successful is that its insurance operations, like GEICO, provide so much return on their floats. Of these insurance names, Globe Life (NYSE:GL) could be an interesting choice.Formally known as Torchmark, Buffett has owned GL shares since 2001 and the insurer has been a good bet. Globe Life is one of the nation's largest life insurance agencies. The key to that comes from its staggered rate term policies. Rather than have the same premium cost for the entire 10 or 20 years, GL policy premiums reset every five years or so as holders move into different age brackets. Moreover, Globe Life also offers many low death-benefit policies versus rivals. This has allowed GL to scale up in size.It has also allowed Globe Life to be pretty profitable. Last quarter continued that trend with EPS jumping more than 5%, while sales increased by 4%. Meanwhile, GL saw some big gains on its investment portfolio and float. * 10 Healthcare Stocks to Buy Despite the Headlines With longs operating history -- since 1900 -- long dividend history, and conservative approach to investments, GL could the sleeper insurance stock in Buffet's portfolio. Amazon (AMZN)Thanks to the insight of many of his lieutenants, Buffett has begun to move into the world of technology. And that includes a stake in one of the best firms around: Amazon (NASDAQ:AMZN).Source: Eric Broder Van Dyke / Shutterstock.com AMZN continues to be the leader in ecommerce and has used its very profitable cloud-computing assets to help drive its retail operations. This has resulted in lower prices for consumers, faster shipping times, and an overall better experience. And Amazon is not done yet. The firm continues to find new ways of making money from advertising and its own gadgets.As a result, AMZN throws off a lot of cash. That's probably what drove Buffett into the stock in the first place.But as a recession play, AMZN has a lot to offer. When money gets tight, consumers generally trade down to private label brands. Amazon now has hundreds of them that cost less than premium products. Moreover, the ability to take advantage of Amazon's lower-selling prices overall makes it a powerful money-saving retailer for consumers. On the corporate side, its AWS cloud division continues to offer money saving tools for business.In the end, the recession should damper Amazon's growth potential. That makes it a powerful player in Buffett's portfolio.At the time of writing, Aaron Levitt held a long position in AMZN stock. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post 5 Great Warren Buffett Stocks to Hold Through the Next Recession appeared first on InvestorPlace.
Moody’s Analytics, a global provider of financial intelligence, announced today that its software has been selected by PenSam, one of Denmark’s leading labor market pension and insurance firms. PenSam will be using the Moody’s Analytics Economic Scenario Generator (ESG) for actuarial liability valuations, risk management, strategic asset allocation, and asset and liability management (ALM). The Moody’s Analytics ESG is an award-winning simulation framework which clients deploy in areas such as actuarial reporting, risk and capital calculation and analysis, and investment and ALM analysis.
Moody's Investors Service (MIS) today announced that it has appointed Wendy Cheong as Managing Director -- Regional Head of its Asia Pacific (APAC) region. Based in Hong Kong, Ms. Cheong will lead the Moody's Investors Service business across the region, with responsibility for business strategy and execution to support Moody's continued growth.
Fannie Mae Shares Explode Higher Amid Possible Privatization by Trump Administration It’s been 146 months since Fannie Mae (OTCMKTS:FNMA) began its epic collapse, as everybody in the market suddenly realized that one entity buying most of the mortgages in the country regardless of borrower creditworthiness wasn’t exactly the greatest idea after all. As a result […]The post Market Morning: Fannie Mae Cheers, Ford Junked, Deficit Tops $1T, Ma Retires, Parliament Prorogued appeared first on Market Exclusive.
(Bloomberg Opinion) -- The downgrade of Ford Motor Co.’s debt to junk by Moody’s Investors Service on Monday will most likely spark a fresh wave of soul-searching among investors about the risk of highly leveraged companies that are clinging to investment-grade ratings.Moody’s cut Ford’s credit rating one level to Ba1 from Baa3. If it’s downgraded to junk by either S&P Global Ratings or Fitch Ratings, it will officially become a “fallen angel,” with its debt sent away to high-yield indexes.The good news for those who hold Ford’s roughly $84 billion of outstanding public bonds and loans is that the other two big credit rating companies rate the automaker BBB, two steps above speculative grade. Both have a negative outlook (as Moody’s did before its downgrade), but Ford is at least a bit further from the brink with S&P and Fitch than it was with Moody’s, though it’s hardly unprecedented for a company to have its rating lowered by two or more notches at a time.Moody’s said the downgrade reflected “the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan. … Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers.”But the passage that will catch the broader credit market’s attention is the following:“The erosion in Ford's performance has occurred during a period in which global automotive conditions have been fairly healthy. Ford now faces the challenge of addressing these operational problems as demand in major markets is softening, and as the auto industry is contending with an unprecedented pace of change.”It’s not hard to extrapolate this kind of reasoning to a number of companies that are legacy household names, saddled with large piles of debt as they struggle to adapt to change in a slow-but-steady economy. General Electric Co., the conglomerate with more than $100 billion in debt, comes to mind. Remember, it was GE that prompted Guggenheim Partners’s Scott Minerd to tweet late last year that “the slide and collapse in investment grade credit has begun.” That obviously didn’t happen, with U.S. high-grade corporate debt returning more than 13% this year. Those invested in triple-B bonds did a bit of a victory lap, saying the hysteria over mass downgrades was overblown, particularly because the Federal Reserve stopped raising interest rates and starting dropping them again.To be fair, speculation about a potential Ford downgrade existed even before Minerd made his dire prediction. Bloomberg News’s Molly Smith quoted a portfolio manager 10 months ago who said that Ford was fighting a “multiple-front war” and that “there’s a better chance than not it ends up in high yield.” Well, now it is, at least as far as Moody’s is concerned. For Ford’s management, it will have to wait and see whether this cut causes the other rating companies to follow suit. For bond investors, the pressing issue is that that Ford has many of the same characteristics that had them spooked not too long ago. They’ll have to decide whether the risk they cast aside for much of this year deserves another round of scrutiny.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Strong earnings growth prospects and opportunistic acquisitions are likely to support Moody's (MCO) financials. Thus, the stock is a solid pick right now.
Today, we'll introduce the concept of the P/E ratio for those who are learning about investing. We'll show how you can...
Moody’s Corporation (MCO) announced today that it has named Shivani Kak as its new Head of Investor Relations and David Hogan as Interim Treasurer. Salli Schwartz, Moody’s current Global Head of Strategic Capital Management, will leave the company on September 6, 2019 to pursue another opportunity. As Head of Investor Relations, Ms. Kak will oversee outreach to Moody's current and prospective shareholders and investors, and manage Moody’s Investor Relations team.
(Bloomberg Opinion) -- With every passing day, India’s economic indicators are turning a little bleaker. The situation is bad enough to warrant using the word “crisis,” arriving just as the government’s fiscal ammunition is spent.The announcement Friday of 5% GDP growth in the June quarter showed the economy growing at its weakest pace in six years. On Sunday, the top six carmakers reported a 29% drop in August sales, stoking fears that the slowdown could get still worse. The 982 billion rupees ($13.7 billion) collected in August via the goods and services tax, the main tax on consumption, was the smallest in six months. This adds pressure on the central bank — both to cut its policy rate and to ensure that commercial lenders pass them on to borrowers. To the extent that the more inefficient state-run banks are a drag on credit, New Delhi said Friday that as many as 10 of them will be merged into four.Whether folding one weak bank into another will make the combined entity any stronger remains to be seen. What’s clearer is that these lenders will spend the next six months on integration. Putting their balance sheets to work may take a backseat. Pending consolidation, the lenders might also be hesitant to issue new bank guarantees, especially to private-sector bidders for road projects. Thus, one of the few areas where there’s new investment may be affected, especially with a sharp rise in debt levels of the government agency that gives out the contracts. A hefty injection of 552.5 billion rupees of taxpayers’ money into the merged banks will only help them provide for the bad loans that will get lumped together. Capital for growth remains elusive. State Bank of India, the largest lender, will require 150 billion rupees in the current fiscal year, according to ICRA Ltd., an affiliate of Moody’s Investors Service. The benefits will only be evident in a few years. The new round of consolidation will bring down the number of state-run banks to 12 from 27 just a few years ago. These lenders will have no choice but to become more competitive because they’ll have to price consumer loans by linking them to the central bank’s policy rate. Since they aren’t very good at lending against cash flows, the government wants them to originate loans together with non-bank financiers. Currently, even the shadow banks are stressed. Over time, though, this should help boost the underwriting standards of state-controlled lenders. Credit flows to smaller firms, which supply goods and services to larger companies, will improve. Making the most of vendor finance will require plugging India into global supply chains first. By offering the likes of Apple Inc. and Ikea less restrictive access to its billion-plus population, New Delhi is hoping for long-term sourcing wins from the rapidly deteriorating trade relations between Washington and Beijing.But while taking much-neglected steps to position India as an alternative to China is a welcome move, the gains won’t be immediate. Before committing to a new factory in India to both sell locally and to export, investors will want to see steadier final demand in the domestic economy. Maruti Suzuki Ltd., the nation’s biggest carmaker, is struggling to push out 100,000 cars in a month to dealers ahead of the festival season. That isn’t exactly a great advertisement to dangle before new entrants. Good things will come from all the tinkering – just not now. Weakening global growth means India can’t even use a weak currency to export its way out of trouble. This isn’t the time to talk loudly about wanting to become the next China. A hawkish Washington won’t want to see mercantile strategies being deployed by yet another large labor-surplus nation. Prime Minister Narendra Modi’s best hope will be to use the crisis to mend his government’s frayed relationship with the private sector. Giving startups a reprieve from a seven-year-old law, one that was used by tax authorities to harass them with impunity, is a good move.Admitting that there are design flaws in the consumption tax and fixing them — perhaps by bringing separately taxed petroleum products into its ambit — should be the next step. Like with the bank mergers, the gains will take time time to become evident, even as the pain gets visibly worse. To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Argentina’s government imposed capital controls to halt a slump in foreign currency reserves and the peso that has pushed the country to the brink of default.The central bank set a limit of 5 days for exporters to repatriate foreign currency, while institutions will need authorization of the bank to buy dollars in the foreign exchange market, except in the case of foreign trade, according to a statement from the bank. Individual Argentines will be limited to dollar purchases of no more than $10,000 a month.The announcement comes as Argentina’s currency crisis spirals out of control. About $3 billion drained out of foreign currency reserves on Thursday and Friday alone as the government struggled to repay short-term debt and slow the drop in the peso. The country risks exhausting its net reserves, which stand at under $15 billion, within weeks if it keeps losing money at this pace.The peso collapsed more than 25% last month after primary election results showed the market-friendly government has little chance of retaining power in October’s polls. Interest rates soared as the central bank tried to roll over debt, culminating Wednesday in a decision to delay payments on $7 billion of bills coming due this year.The opposition had called for currency controls, saying the government was in “virtual default.” Central bank reserves have slumped to $54.1 billion from $66.4 billion the day before primary.The re-imposition of currency controls will be an embarrassment for President Mauricio Macri, who came to office over three years ago pledging to free up the economy after years of state intervention. While money originally flooded in the country, the expanding fiscal and current account deficits eventually unnerved investors, prompting the peso to lead emerging-market currencies declines last year.Now, faced with an electoral defeat in October, Macri has given up trying to restore investor confidence and has instead resorted to the policies he had criticized his predecessors for imposing.As well as pushing back maturities on local short-term debt on Aug. 28, Argentina also said it will ask holders of $50 billion of longer-term debt to accept a “voluntary reprofiling.” It also plans to renegotiate payments on $44 billion it has borrowed from the International Monetary Fund.The IMF will “continue to stand with Argentina during these challenging times,” according to a statement by a Fund spokesman Sunday. The “capital flow management” measures aim at “protecting exchange rate stability and the savers.”Fitch Ratings now classifies Argentine debt as RD (restricted default); Standard and Poor’s as CCC-; and Moody’s as Caa2. Credit default swaps are pricing in more than a 90% chance of a fully-fledged default within five years.Here is a list of some of the measures announced today:Central bank sets deadline for repatriation of foreign earnings for exportersRepatriation must be made within 5 days of payment or within 15 days of receiving the shipping permit in the case of grains, whichever is quickestOther exporters have 180 days from the date of the shipping approvalArgentines can only buy as much as $10,000 a month, or transfer the same amount to a foreign account that doesn’t belong to themLimit is $1,000 in the case of non-residentsAll companies must request permission to distribute dividends abroad or to buy dollars in the foreign exchange marketThey can’t buy dollars for savings purposesNo restrictions for dollar purchases aimed at completing foreign trade transactionsNo limits to companies and savers that want to withdraw dollars in cash from their accountsNo currency restrictions on tourists or Argentines abroad(Updates with IMF response in the ninth paragraph.)\--With assistance from Carolina Millan and Jorgelina do Rosario.To contact the reporter on this story: Philip Sanders in Santiago at firstname.lastname@example.orgTo contact the editor responsible for this story: Julia Leite at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Moody’s Analytics is pleased to announce the addition of Catylist’s Commercial Exchange database and Infabode’s news and research service to the REIS Network (“the Network”), its commercial real estate (CRE) search platform. “Our goal with the REIS Network is to set the standard for commercial real estate data and analytics,” said Keith Berry, Head of the Moody’s Analytics Accelerator.
Mark Kaye, Senior Vice President and Chief Financial Officer of Moody's Corporation , will speak at the Barclays Global Financial Services Conference on Monday, September 9, 2019 in New York.
Several of my InvestorPlace colleagues have written about Exxon Mobil (NYSE:XOM) lately. Most of the commentary quite positive. Several recommending you buy Exxon stock for the long haul. Source: Jonathan Weiss / Shutterstock.com David Moadel's August 20 headline read, Fill Up on Exxon Mobil Stock Now for an Imminent Rebound. Tim Biggam's August 14 article stated, Exxon Mobil Stock Is Ready to Start Pumping Again. I'm nowhere near as enthusiastic about the integrated oil giant's future stock trajectory, but I appreciate their confidence nonetheless. InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn my most recent article about XOM stock, I recommended that investors ought to wait until it dropped into the $60s before buying. On July 9, the date my article was published, it was trading around $76. As I write this, it's trading around $69.67. A couple of days earlier it was even lower. * 10 Marijuana Stocks That Could See 100% Gains, If Not More Time to buy?Before you do, I'd consider the ramifications of its recent fixed and floating notes offering on the company's debt before pulling the trigger. Here's why. Exxon Stock and DebtToo often, we look at a company's balance sheet, see that its long-term debt is only a fraction of its total assets, and assume that it's financially sound. Chances are you're right, but it can't hurt to understand the structure of its debt better to be sure. Exxon Mobil issued $7 billion of floating and fixed-rate notes on August 14. The company plans to use the net proceeds of $6.975 billion to refinance some of its existing commercial paper, which averages an interest rate of 2.37%. XOM will also use some of these funds for other general corporate purposes, including working capital, acquisitions, capital expenditures, and other business opportunities. I have to admit; I would love to be in a position to borrow $1.5 billion at 3.095%, repayable in 30 years. Heck, I could be dead in 30 years. I wouldn't be nearly as excited about owning Exxon Mobil's 2049 notes. A little over 3% for three decades. It's an excellent deal for Exxon Mobil, though. Moody's (NYSE:MCO), although it gives the $7 billion in notes an Aaa rating, it does have some reservations. According to Pete Speer, Moody's Senior Vice President: "ExxonMobil's negative free cash flow and rising debt levels in the first half of this year are pressuring its credit profile, particularly with oil prices averaging mid-cycle levels during the period. While this notes offering is refinancing some of the company's debt on a longer-term basis, the company retains ample flexibility to reduce debt through asset sales and strengthen its credit metrics."It goes on to say the Aaa rating, which is better than many of its peers, could get downgraded in the future if it continues to generate negative free cash flow while its level of debt moves higher. How Much is Too Much?In its prospectus for the notes, the company mentions that its long-term debt, currently $19.0 billion as of the end of June, is 8.7% of Exxon Mobil's total capitalization. Add in the $7 billion in notes and it increases to 11.6% of its total capitalization.That's still a minimal amount. By all accounts, Exxon Mobil's debt is perfectly manageable. However, what happens if it decides to make a multi-billion acquisition? As Moody's suggested, the company's free cash flow was negative in the first six months of the year. A significant acquisition would most likely add to that shortfall.From where I sit, Exxon Mobil's free cash flow for the first six months appears to be positive to the tune of $2.9 billion (net cash provided by operating activities of $14.3 billion minus capital expenditures of $11.1 billion). However, Moody's likely makes some oil-related adjustments to come to a negative number. Regardless, I did see an article about free cash flow that piqued my interest. According to S&P Global Market Intelligence, Chevron's (NYSE:CVX) free cash flow over the past 12 months was $18.5 billion, 25% higher than its GAAP profit for the same period. Meanwhile, XOM generated $11.3 billion, 36% lower than its GAAP profit. Furthermore, Barclays believes that Exxon Mobil's free cash flow situation is about to get even worse as it ratchets up its capital investment just as oil prices appear to be falling again. So, while Exxon Mobil has managed to issue debt on a fixed-rate basis between 1.9% and 3.1%, if its free cash flow shrinks, it will have less cash available to pay down the debt in the future. The Bottom Line on Exxon StockOwning XOM stock has been a mug's game over the past decade. I don't think it's going to get much better over the next decade as the world continues to move away from oil. That said, it's got an excellent dividend yield a tad under 5%. If you need to park some money in an income-bearing investment, you could do worse than owning XOM. You could own some of their notes.At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks That Could See 100% Gains, If Not More * 11 Stocks Under $10 to Buy Now * 6 China Stocks to Buy on the Dip The post Debt Is a Way Bigger Problem for Exxon Stock than You Might Think appeared first on InvestorPlace.
(Bloomberg Opinion) -- By all accounts, it was supposed to be a sleepy August for the U.S. corporate bond market. Three weeks ago, the thinking went something like this: Sure, the Federal Reserve would cut its benchmark lending rate on July 31, in what Chair Jerome Powell would call a “mid-cycle adjustment.” But Treasuries were already pricing in such a move on the short end. Further out on the curve, the 30-year yield was about 2.6%, still more than 50 basis points away from its all-time low. Ten-year yields were about 2%, which seemed like a comfortable range for both buyers and sellers. For company finance officers, it had the makings of a sellers’ market but one that would be around once summer drew to a close.Then things got crazy. The 30-year yield lurched lower by 8 basis points on Aug. 1, then 13 basis points on Aug. 5, then another 13 basis points on Aug. 12. After a one-day reprieve near its all-time low of 2.0882%, it cruised through that level, tumbling to as low as 1.914%. The rally was so intense that the U.S. Treasury Department made an unusual, unscheduled announcement that it was again exploring issuing 50- or 100-year bonds. Companies clearly felt they couldn’t afford to pass up this opportunity. In the first full week of August, CVS Health Corp., Humana Inc. and Welltower Inc. headlined $35 billion of debt sales among investment-grade firms, easily surpassing estimates. Then in the week through Aug. 16, more than $22 billion went through, including a rarely seen offering from Exxon Mobil to the tune of $7 billion. Market watchers expected that would just about wrap things up until after Labor Day on Sept. 2.Some finance officers had other ideas. 3M Co. borrowed $3.25 billion on Monday to help finance its acquisition of medical-products maker Acelity Inc. In total, issuers sold $6.65 billion of investment-grade debt on Aug. 19, already topping some predictions for $5 billion this week. Then on Tuesday, Bank of New York Mellon Corp. priced $1 billion at the lower end of its expected yield range, along with a handful of other borrowers with multimillion-dollar deals.All this is to say, companies are simple: They see staggering low yields, and they issue bonds. Investors, for their part, can’t get enough of them. The Bloomberg Barclays U.S. Corporate Bond Index has returned 13.3% so far in 2019. Over the past 12 months, the index is up 12.5%, compared with just 1.5% for the S&P 500 Index. The average spread on corporate bonds has widened to 122 basis points, from 107 basis points at the end of July, but that’s just because they couldn’t keep up with the relentless rally in Treasuries, not because of a lack of buyers. If Bank of America Corp. strategists led by Hans Mikkelsen are correct, the demand in credit markets has lasting power. They say the $16 trillion of negative-yielding debt globally has left investors — and particularly those outside the U.S. — with few alternatives besides purchasing companies’ debt. “There is a wall of new money being forced into the global corporate bond market,” they wrote on Aug. 16. “Given the near extinction of non-USD IG yield, foreign investors are forced to take more risk.”Of course, buying investment-grade bonds hardly qualifies as a speculative endeavor. Exxon Mobil, in fact, has the same credit rating as the U.S. government from both Moody’s Investors Service and S&P Global Ratings. On the other hand, Bloomberg News’s Jeannine Amodeo and Davide Scigliuzzo reported this week that three leveraged-loan sales that had been languishing in the U.S. market for weeks were pulled as investors sought higher-quality assets. Vewd Software became the fourth on Tuesday, scrapping a $125 million term loan due to market conditions. Leveraged loans, it should be noted, are floating-rate securities and so face weaker demand when the Fed appears poised to cut rates, as it does now. But for large, highly rated companies, their behavior in recent weeks is exactly what should be expected. Exxon Mobil issued 30-year bonds to yield 3.095%. In November, five-year Treasuries offered the same amount. 3M, rated a few steps below triple-A, priced 30-year debt to yield 3.37%, less than the going rate on long Treasury bonds just nine months ago. No matter how you slice it, they’re getting borrowing costs that seemed unthinkable around this time last year.Interestingly, these low yields should be encouraging governments to borrow more, too. I wrote last week that the bond markets were begging for infrastructure spending. However, it seems neither Germany nor the U.S. has any appetite for that sort of initiative. The German government is reportedly preparing fiscal stimulus that could be triggered by a deep recession, while President Donald Trump hasn’t ruled out a payroll tax cut to stave off any economic weakness.It’s certainly possible that U.S. yields will only fall further from here, and other companies can also borrow or refinance at rock-bottom interest rates. But the move in global bond markets in recent weeks could was extreme, to say the least. The weak demand for Germany’s 30-year bond auction on Wednesday, which offered a coupon of 0% at a yield of -0.11%, suggests there are at least some lines that investors won’t cross.For prudent companies, it was well worth delaying summer vacations to get their deals done.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Moody’s Analytics, a leading provider of financial intelligence, announced today that Ent Credit Union has selected the Moody’s Analytics Current Expected Credit Loss (CECL) solution to implement the CECL accounting standard. The centerpiece of the Moody’s Analytics CECL solution is the ImpairmentStudio™ platform, which lets financial institutions automate allowance calculation, analysis, reporting, and workflow. Ent Credit Union will use the Moody’s Analytics CECL solution to determine the ideal approach for each loan segmentation, by switching between different methodologies.
Moody’s Analytics, a global provider of financial and economic intelligence, has won 10 categories in the 2019 FocusEconomics Analyst Forecast Awards.